<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 7, 1999
REGISTRATION NO. 333-74847
________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
(ISSUER WITH RESPECT TO THE SECURITIES)
NCT FUNDING COMPANY, L.L.C.
(DEPOSITOR OF THE TRUST DESCRIBED HEREIN)
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
<TABLE>
<S> <C> <C>
DELAWARE 6799 22-363-4039
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
NCT FUNDING COMPANY, L.L.C.
2 GATEHALL DRIVE
PARSIPPANY, NEW JERSEY 07054
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
SCOTT J. MOORE, ESQ.
NCT FUNDING COMPANY, L.L.C.
2 GATEHALL DRIVE
PARSIPPANY, NEW JERSEY 07054
(973) 355-7053
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
M. DAVID GALAINENA, ESQ.
WINSTON & STRAWN
35 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60601
(312) 558-5600
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box: [ ]
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: [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE REGISTRATION FEE(2)
<S> <C> <C> <C> <C>
Receivable-Backed Notes........................ $4,000,000,000 100% $4,000,000,000 $1,112,000
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) $2,224 was previously paid 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>
THE INFORMATION IN THIS PROSPECTUS AND PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS AND PROSPECTUS SUPPLEMENT ARE NOT AN OFFER TO SELL THESE SECURITIES
AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED [ ], 1999
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1999
[ ]
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
OWNER TRUST
RECEIVABLE-BACKED NOTES
NCT FUNDING COMPANY, L.L.C.
DEPOSITOR
[LOGO]
SERVICER
THE DEPOSITOR AND SERVICER ARE MEMBERS OF THE NEWCOURT GROUP OF COMPANIES.
[LOGO]
CONSIDER CAREFULLY THE RISK
FACTORS BEGINNING ON PAGE
S-13 IN THIS PROSPECTUS
SUPPLEMENT AND ON PAGE 10 IN
THE ACCOMPANYING PROSPECTUS.
The notes represent
obligations of the owner
trust only.
This prospectus supplement
must be accompanied by the
prospectus.
THE OWNER TRUST WILL ISSUE THE FOLLOWING CLASSES OF
NOTES --
<TABLE>
<CAPTION>
Initial
Aggregate First Stated Price to Underwriting
Class of Principal Interest Rate Payment Maturity Public Discount
Notes Amount (per annum) Date Date Per Note Per Note
<S> <C> <C> <C> <C> <C> <C>
A-1 $ % % %
A-2 $ % % %
A-3 $ % % %
A-4 $ % % %
A-5 $ % % %
B $ % % %
C $ % % %
D $ % % %
</TABLE>
The total price to its public is $ .
The total underwriting discount is $ .
The total proceeds to the owner trust are $ .
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[LIST UNDERWRITERS]
Prospectus Supplement dated , 1999
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
The depositor tells you about the notes in two separate documents:
the accompanying prospectus, which provides general information, some
of which may not apply to you; and
this prospectus supplement, which describes the particular terms of
your series of notes.
The depositor includes cross-references in this prospectus supplement and
in the accompanying prospectus to captions in these materials where you can find
further discussions. The following Table of Contents and the Table of Contents
included in the accompanying prospectus provide the pages on which these
captions are located.
You should rely only on the information contained in this document,
including the information described under the heading 'Where You Can Find More
Information' in the prospectus. The depositor has not authorized anyone to
provide you with information that is different. This document may only be used
where it is legal to sell these notes.
If you have received a copy of this prospectus supplement and prospectus in
an electronic format, and if the legal prospectus delivery period has not
expired, you may obtain a paper copy of this prospectus supplement and
prospectus from NCT Funding Company, L.L.C., at 2 Gatehall Drive, Parsippany,
New Jersey 07054, telephone number (973) 606-3500, or an underwriter by asking
any of them for it.
S-2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT:
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED
IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS.................... S-2
PROSPECTUS SUPPLEMENT SUMMARY................. S-5
BACKGROUND INFORMATION........................ S-12
RISK FACTORS.................................. S-12
Future Contract Delinquency and Loss
Experience of the Contract Pool May
Vary Substantially from the
Originators' Historical Experience... S-12
Some Note Classes Will be Entitled to
Interest and Principal Payments
Before Others........................ S-12
Adverse Events in Five High
Concentration States May Cause
Increased Defaults and
Delinquencies........................ S-13
Adverse Economic Conditions in High
Concentration Industries May Cause
Increased Defaults and
Delinquencies........................ S-13
Product Defects or Obsolescence or
Adverse Economic Events for Two
Vendors Accounting for High
Proportions of the Contracts May
Cause Increased Defaults and
Delinquencies........................ S-15
<CAPTION>
PAGE
----
<S> <C>
The Owner Trust Not Having Security
Interests, in Computer Software and
Services and the Owner Trust Not
Being Named as Secured Party in Motor
Vehicle Title Certificates Will Leave
the Owner Trust Without Collateral
for the Associated Contracts......... S-15
Pending and Completed Business
Combinations May Affect the
Depositor's, Originators' and
Servicer's Operations................ S-15
THE OWNER TRUST............................... S-16
The Owner Trust......................... S-16
The Indenture........................... S-16
Capitalization of the Owner Trust....... S-17
The Owner Trustee....................... S-17
THE CONTRACTS................................. S-17
Description of the Contracts............ S-17
Statistics Relating to the Initial
Cut-Off Date Contract Pool........... S-17
Statistics Relating to Delinquencies and
Defaults............................. S-22
WEIGHTED AVERAGE LIFE OF THE NOTES............ S-24
DESCRIPTION OF THE NOTES AND INDENTURE........ S-26
General................................. S-26
Distributions........................... S-26
Interest................................ S-27
Principal............................... S-28
Redemption of Notes..................... S-35
Optional Purchase of Class A-5 Notes.... S-35
Cash Collateral Account................. S-35
Optional Purchase of Contracts and
Redemption of Notes.................. S-37
Reports to Noteholders.................. S-37
Servicing............................... S-37
The Indenture Trustee................... S-38
</TABLE>
S-3
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Representations and Warranties.......... S-38
Indemnification......................... S-39
RATINGS OF THE NOTES.......................... S-39
USE OF PROCEEDS............................... S-40
LEGAL PROCEEDINGS............................. S-41
PLAN OF DISTRIBUTION.......................... S-42
LEGAL MATTERS................................. S-43
EXPERTS....................................... S-43
NOTES TO THE BALANCE SHEET.................... S-44
REPORT OF INDEPENDENT AUDITORS................ S-45
INDEX OF TERMS................................ S-46
PROSPECTUS:
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED
IN THIS PROSPECTUS AND THE ACCOMPANYING
PROSPECTUS SUPPLEMENT...................... 3
PROSPECTUS SUMMARY............................ 4
<CAPTION>
PAGE
----
<S> <C>
RISK FACTORS.................................. 10
THE DEPOSITOR................................. 18
THE OWNER TRUSTS.............................. 20
NEWCOURT CREDIT GROUP INC..................... 21
THE SERVICER.................................. 22
THE SELLER AND ORIGINATORS.................... 23
THE CONTRACTS................................. 32
DESCRIPTION OF THE NOTES AND INDENTURE........ 52
DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS................................. 65
MATERIAL FEDERAL INCOME TAX CONSEQUENCES...... 70
ERISA CONSIDERATIONS.......................... 77
RATINGS OF THE NOTES.......................... 79
USE OF PROCEEDS............................... 79
PLAN OF DISTRIBUTION.......................... 79
LEGAL MATTERS................................. 80
WHERE YOU CAN FIND MORE INFORMATION........... 80
INDEX OF TERMS................................ 81
PART II....................................... II-1
</TABLE>
S-4
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The following is only a summary of note terms. It does not contain all
information that may be important to you. You should read this entire prospectus
supplement and the accompanying prospectus. In addition, you may wish to read
the documents governing the transfers of the contracts, the formation of the
owner trust and the issuance of notes. These documents have been filed as
exhibits to the registration statement of which this prospectus supplement is a
part.
There are material risks associated with an investment in the notes. See
'Risk Factors' on page S-12 of this prospectus supplement and on page 10 in the
accompanying prospectus for a discussion of factors you should consider before
investing in the notes.
<TABLE>
<S> <C>
Owner Trustee............................. The owner trustee is The Bank of New York
(Delaware), and its telephone number is
(212) 815-2793. See 'The Owner Trust' in this
prospectus supplement.
Originators............................... Newcourt Financial USA Inc.
Newcourt Leasing Corporation, formerly known
as AT&T Capital Leasing Services, Inc.
Newcourt Communications Finance Corporation,
formerly known as AT&T Credit Corporation.
Newcourt Commercial Finance Corporation,
formerly known as AT&T Commercial Finance
Corporation
The address of each originator is 2 Gatehall
Drive, Parsippany, New Jersey 07054.
Indenture and Indenture Trustee........... The notes will be issued under an indenture.
The Chase Manhattan Bank will serve as
indenture trustee. See 'Descriptions of the
Notes -- Indenture Trustee,' in this
prospectus supplement.
Terms of the Notes:
Payment Dates......................... The 20th day of each month, beginning on
August 20, 1999, or if that day is not a
business day, the next business day.
Interest.............................. The owner trust will calculate interest on the
Class A-1 Notes on the basis of the actual
number of days elapsed and a 360-day year. The
owner trust will calculate interest on the
Class A-2, Class A-3, Class A-4, Class A-5,
Class B, Class C and Class D Notes on the
basis
</TABLE>
S-5
<PAGE>
<TABLE>
<S> <C>
of a 360-day year comprised of twelve 30-day
months.
On each payment date and after the owner trust
repays any outstanding servicer advances and
pays the servicer's monthly servicing fee, the
owner trust will pay interest on the notes in
the following order:
</TABLE>
<TABLE>
<CAPTION>
CLASS OF RECEIVES INTEREST
NOTES BEFORE CLASS
----- ------------
<S> <C> <C> <C>
A-1, A-2, A-3, A-4 and A-5 B, C and D
B C and D
C D
D None
</TABLE>
<TABLE>
<S> <C>
If the available funds are insufficient to pay
interest on all classes of Class A Notes, the
owner trust will apply the available funds pro
rata to the classes of Class A Notes based on
their respective principal balances.
See 'Description of the Notes and Indenture --
Distributions' in this prospectus supplement.
Principal............................. After paying interest on the notes, the owner
trust will pay principal on the notes on each
payment date. The owner trust will pay
principal in the following order:
Before an Event of Default:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
1. The Class A principal payment amount to
the Class A Notes as follows:
(A) Until the payment date when the
Class A-1 Note principal balance
becomes zero, [ ]% to the
Class A-1 Notes and [ ]% to the
Class A-5 Notes
(B) On the payment date when the
Class A-1 Note principal balance
becomes zero, first to the
Class A-1 noteholders in an amount
equal to the remaining Class A-1
principal balance and then [ ]%
to the Class A-5 noteholders and
then [ ]% to the Class A-2,
A-3, A-4 and A-5 Notes in that
order, with each successive class
not being entitled to principal
until
</TABLE>
S-6
<PAGE>
<TABLE>
<S> <C> <C>
the prior class' principal balance
is reduced to zero
(C) After the payment date when the
Class A-1 Note principal balance
becomes zero, [ ]% to the
Class A-5 Notes and then among the
Class A-2, A-3, A-4 and A-5 Notes in
that order, with each successive
class not being entitled to
principal until the prior class'
principal is reduced to zero.
If the available amount is insufficient
for the full payment of the amounts
called for in (A), (B) or (C) above, the
allocation of the available amount will
be as provided in 'Description of the
Notes and Indenture -- Principal' in
this prospectus supplement;
2. to the Class B Notes, the Class B
principal payment amount;
3. to the Class C Notes, the Class C
principal payment amount; and
4. to the Class D Notes, the Class D
principal payment amount
</TABLE>
<TABLE>
<S> <C>
The principal payment amount on each class of
the notes on each payment date will be based on
the difference between the aggregate principal
balance of that class of notes on that payment
date and the target amount set for the class or in
the case of Class B, C and D a floor amount set
for the class, if greater than the target amount.
After an Event of Default:
Following an event of default with respect to the
notes, the owner trust will pay principal in the
following order:
</TABLE>
<TABLE>
<CAPTION>
CLASS OF
NOTES RECEIVES PRINCIPAL BEFORE CLASSES
----- ---------------------------------
<S> <C> <C> <C>
A-1 A-2, A-3, A-4, A-5, B, C and D
A-2 A-3, A-4, A-5, B, C and D
A-3 A-4, A-5, B, C and D
A-4 A-5, B, C and D
A-5 B, C and D
B C and D
C D
D None
</TABLE>
S-7
<PAGE>
<TABLE>
<S> <C>
See 'Description of the Notes and Indenture --
Distributions' in this prospectus supplement.
Stated Maturity Dates.................... The notes will mature on the respective dates
shown on the cover of this prospectus
supplement. However, if the day is not a
business day, then the stated maturity date
will be the next business day.
Optional Purchase of Class A-5 Notes..... The owner trust will have the right to
purchase all of the Class A-5 Notes, on any
payment date, at a purchase price equal to the
principal balance of the Class A-5 Notes plus
a premium.
Following any purchase, the Class A-5 Notes
will not be retired, but will continue to be
entitled to interest and principal payments.
See 'Description of the Notes and
Indenture -- Optional Purchase of Class A-5
Notes' in this prospectus supplement.
Optional Redemption When Note Principal is
Less Than 10% of Initial Contract Pool
Principal Balance......................... Newcourt Financial USA, Inc., the seller of
contracts to the depositor, has the option to
purchase the owner trust's assets when the
outstanding note principal balance is less
than 10% of the initial contract pool
principal balance. If the seller exercises
this option, the indenture trustee will redeem
all notes on the next payment date. The
redemption price for each note will be the
note's principal amount plus unpaid accrued
interest to but excluding the redemption date.
The contract principal balance of any contract
is the present value of the unpaid scheduled
payments due on that contract discounted at
the discount rate, called the 'statistical
discount rate,' of 6.95%. This prospectus
supplement uses this statistical discount rate
to calculate principal balances of contracts
throughout. The 'contract pool principal
balance' is the aggregate of the individual
discounted contract principal balances.
See 'Description of the Notes and Indenture --
Optional Purchase of Contracts' in this
prospectus supplement.
Cut-off Date.............................. June 1, 1999.
Closing Date.............................. On or about , 1999.
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
Servicing; Servicing Fee.................. The servicer will be responsible for
servicing, managing and administering the
contracts and related interests, and enforcing
and making collections on the contracts. The
servicer may make advances for delinquent
scheduled payments, to the extent it
determines that advances will be recoverable
in future periods. Servicer advances are
reimbursable from contract payments.
See 'Description of the Pooling and Servicing
Agreements -- Servicing' in the accompanying
prospectus.
The servicer's monthly fee will equal the
product of
one-twelfth of .75% and
the aggregate contract pool principal balance
as of the last day of the second preceding
collection period.
The servicer fee is payable out of contract
payments.
The servicer will pay any sub-servicer
servicing fees from its monthly servicing fee.
See 'Description of the Notes -- Servicing' in
this prospectus supplement.
Ratings................................... The owner trust will not issue any class of
notes unless Standard & Poor's Ratings
Services, Moody's Investors Service, Inc. and
Duff & Phelps Credit Rating Co. assign at
least the following ratings to each class of
notes:
</TABLE>
<TABLE>
<CAPTION>
CLASS S&P MOODY'S DUFF & PHELPS
----- --- ------- -------------
<S> <C> <C> <C> <C>
A-1
A-2
A-3
A-4
A-5
B
C
D
</TABLE>
<TABLE>
<S> <C>
See 'Ratings of the Notes' in this prospectus
supplement and the accompanying prospectus.
</TABLE>
S-9
<PAGE>
<TABLE>
<S> <C>
Owner Trust Assets
A. The Contracts.................... The contracts will consist of the following:
equipment lease contracts,
installment sale contracts,
conditional sales/financing agreements,
promissory notes, and
loan and security agreements.
As of June 1, 1999, the pool of contracts for
the owner trust had the following
characteristics. Percentages are based on the
contract pool principal balance:
Initial contract pool
principal balance ........... $1,777,838,645
Number of contracts ................... 79,494
Average contract
principal balance .................. $22,364
Leases as a percentage
of the contracts .................... 65.28%
Loans and other
financing arrangements
as a percentage
of the contracts ................... 34.72%;
Underlying equipment type concentration:
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL BALANCE
EQUIPMENT TYPE CONCENTRATION
-------------- -------------
<S> <C> <C>
telecommunications.............. 23.38%
manufacturing and
construction.............. 11.25%
computers and point of sale..... 16.31%
transportation.................. 14.64%
</TABLE>
<TABLE>
<S> <C>
No other single type of equipment accounted
for more than 10% of the initial contract
pool principal balance
Geographic concentration:
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL BALANCE
STATE CONCENTRATION
----- -------------
<S> <C> <C>
California...................... 12.45%
Illinois........................ 5.81
New Jersey...................... 8.48
New York........................ 8.61
Texas........................... 6.64
</TABLE>
S-10
<PAGE>
<TABLE>
<S> <C>
No other state represented more than 5% of the
initial contract pool principal balance
remaining terms
of the contracts ............... one month to
174 months
the weighted average
remaining term of the contracts ... 48 months
weighted average
age of the contracts ............... 7 months.
See 'The Contracts -- Statistics Relating to
the Cut-Off Date Contract Pool' in this
prospectus supplement.
B. Cash Collateral Account.......... The depositor will establish a cash collateral
account having an initial balance of
$ for the benefit of the
noteholders. The indenture trustee will use
cash collateral account funds to pay the
following amounts if payments on the contracts
are insufficient:
interest due on the notes;
the difference between the notes' aggregate
principal balances and the contract pool
principal balance and
principal on the notes on the applicable
stated maturity date.
See 'Description of the Notes and Indenture --
Cash Collateral Account' in this prospectus
supplement.
Use of Proceeds........................... After the deposit of funds from the note sale
proceeds into the cash collateral account and
payment of expenses, the owner trust will pay
the remaining proceeds of the sale of notes to
the depositor. The depositor will pay the
proceeds to a warehousing trust or to Newcourt
Financial USA Inc. in payment of the purchase
price of contracts acquired from them,
respectively.
See 'Use of Proceeds' in this prospectus
supplement.
Legal Investment.......................... The Class A-1 Notes will be eligible
securities for purchase by money market funds
under Rule 2a-7 under the Investment Company
Act of 1940.
</TABLE>
S-11
<PAGE>
BACKGROUND INFORMATION
The information in this section will help you understand the information in
this prospectus supplement and the accompanying prospectus.
The principal balance of any contract is the present value of the unpaid
scheduled payments due on the contract after a cut-off date. The principal
balance of a contract excludes all scheduled payments due on or prior to, but
not received as of, that date, as well as any scheduled payments due after but
received before that date. The principal balance also excludes any prepayments
received on or prior to that date. The scheduled payments are discounted monthly
at the rate of 6.95% per annum.
The aggregate principal balance of the contracts expected to be held by the
owner trust as of any particular date is referred to as the contract pool
principal balance. The contract pool principal balance, as of the initial
cut-off date, is referred to as the initial cut-off date contract pool principal
balance or the initial contract pool. The cut-off date shall be June 1, 1999 for
all contracts transferred to the owner trust on the closing date for the sale of
the notes. It will be the first day of the month of transfer to the owner trust
for each substitute contract.
Contract balance percentages and amounts discussed below are based on the
aggregate principal balance of the contracts being transferred to the owner
trust as of the initial cut-off date, unless a different date is noted. Changes
in the characteristics of the contract pool between the initial cut-off date and
the closing date will not affect more than 5% of the initial cut-off date
contract pool principal balance.
RISK FACTORS
You should carefully consider the following risk factors before you invest
in notes. You should also carefully consider the risk factors beginning on
page 10 of the accompanying prospectus.
FUTURE CONTRACT DELINQUENCY AND LOSS EXPERIENCE OF THE CONTRACT POOL MAY VARY
SUBSTANTIALLY FROM THE ORIGINATORS' HISTORICAL EXPERIENCE
The depositor presents the historical contract delinquency and loss
experience of the originators' portfolios of contracts similar to those being
transferred to the owner trust under 'The Contracts -- Statistics Relating to
Delinquencies and Defaults.' However, the actual results for the owner trust's
contracts could be substantially worse. If so, you may not receive note interest
and principal payments in the amounts and at the times you expect.
SOME NOTE CLASSES WILL BE ENTITLED TO INTEREST AND PRINCIPAL PAYMENTS BEFORE
OTHERS
The owner trust will pay interest, principal or both on some classes of
notes prior to paying interest, principal or both on other classes of notes. The
subordination of some classes of notes to others means that the subordinated
classes are more likely to suffer the consequences of delinquent payments and
defaults on the contracts than the classes having prior payment rights. See
'Description of the Notes -- Distributions', ' -- Subordination of Subordinate
Notes' and ' -- Cash Collateral Account' in this prospectus supplement.
S-12
<PAGE>
Moreover, the more senior classes of notes could lose the credit
enhancement provided by the more subordinate classes and the cash collateral
account if delinquencies and defaults on contracts increase and the collections
on contracts and amounts in the cash collateral account are insufficient to pay
even the more senior classes of notes.
ADVERSE EVENTS IN FIVE HIGH CONCENTRATION STATES MAY CAUSE INCREASED DEFAULTS
AND DELINQUENCIES
If adverse events or economic conditions were particularly severe in a
geographic region where 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 owner trust may differ from what you expect, and you may experience delays
or reductions in payments.
The following are the approximate percentages of the initial contract pool
principal balance of the owner trust's contracts whose obligors are located in
the following states:
12.45%in California,
5.81% in Illinois,
8.84% in New Jersey,
8.61% in New York and
6.64% in Texas.
The remaining states accounted for 42.35% of the initial contract pool principal
balance, and none of these remaining states accounted for more than 5% of the
initial contract pool principal balance.
Although the depositor does not know of any matters likely to increase the
rate of delinquencies or defaults in these states, an example of an adverse
event specific to a geographic region is the possibility 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, or in the oil and gas industry, which is
concentrated in the state of Texas could reduce revenues for obligors in those
states and ultimately reduce the associated obligors' ability to make timely
payments on their related contracts.
ADVERSE ECONOMIC CONDITIONS IN HIGH CONCENTRATION INDUSTRIES MAY CAUSE INCREASED
DEFAULTS AND DELINQUENCIES
If the industries in which there is a substantial concentration of
contracts experience adverse events or economic conditions, the timing and
amount of collections on the contracts held by the owner trust may differ from
what you expect. This could result in delays or reduced payments to you. As of
the initial cut-off date, of the contract pool principal balance approximately
S-13
<PAGE>
22.12% related to equipment used in the services industry, excluding
medical and professional services,
8.96% related to equipment used in professional services,
8.45% related to equipment used in transportation,
24.33% related to the manufacturing industry,
10.50% related to the retail and wholesale trade industry and
6.96% related to the financial services industry,
No other industry accounts for more than 5.00% of the contract pool principal
balance. While the depositor does not know of any industry conditions, practices
or other matters likely to increase the rate of delinquencies or defaults on
contracts with end-users in these industries, some of them may be adversely
affected by various economic conditions. For example, a rise in interest rates
may weaken the demand for construction services. Moreover, the retail trade
industry is dependent upon the level of consumer confidence and spending.
Adverse developments concerning these conditions will tend to increase the rate
of delinquencies and defaults by contract obligors in those industries. This, in
turn, could result in reductions of or delays in collection of funds for payment
of the notes.
PRODUCT DEFECTS OR OBSOLESCENCE OR ADVERSE ECONOMIC EVENTS FOR TWO VENDORS
ACCOUNTING FOR HIGH PROPORTIONS OF THE CONTRACTS MAY CAUSE INCREASED DEFAULTS
AND DELINQUENCIES
Lucent Technologies Inc., a leading producer of communications systems,
software and products, is the vendor of equipment for approximately 19.71% of
the contract pool principal balance calculated as of the initial cut-off date.
Products of Dell Computer Corporation, a leading producer of computer systems,
accounted for approximately 11.61% of the contract pool balance calculated as of
the initial cut-off date. Although the depositor is unaware of conditions which
increase the risk of an increase in the rate of defaults or delinquencies on
contracts pertaining to equipment produced by these two vendors, some events
concerning these vendors or their products could have that effect. For example,
if either of these vendors 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 with respect
to a vendor which is suffering financial difficulties. Additionally, the
occurrence of a substantial number of defects in products produced by either of
these vendors may result in decisions by the obligors on the contracts relating
to equipment that proved defective not to pay the contract amounts, to pay late
or to pay smaller amounts. This could result in reductions of or delays in
payments you expect on the notes. Moreover, obsolescence of the products of
either of these vendors could result in prepayments of contracts that would
cause the notes to be paid earlier than you expect. No other single vendor
originated more than 10% of the contract pool principal balance as of the
initial cut-off date.
S-14
<PAGE>
THE OWNER TRUST NOT HAVING SECURITY INTERESTS IN COMPUTER SOFTWARE AND SERVICES
AND THE OWNER TRUST NOT BEING NAMED AS SECURED PARTY IN MOTOR VEHICLE TITLE
CERTIFICATES WILL LEAVE THE OWNER TRUST WITHOUT COLLATERAL FOR THE ASSOCIATED
CONTRACTS
The owner trust will have no security interest in computer software and
computer services contracts, which accounted for 9.42% of the initial contract
pool balance, and the owner trust will not be named as a secured party in the
title certificates for motor vehicle contracts, which accounted for a
substantial portion of the 14.64% of the initial contract pool principal balance
attributable to the transportation industry. If the obligor on this type of
contract fails to pay or is late in paying, the owner trust will have no
recourse to the software, services or motor vehicles, as the case may be,
underlying the contracts. This increases the risk that the owner trust will be
unable to pay or will be late in paying the amounts you expect on the notes.
PENDING AND COMPLETED BUSINESS COMBINATIONS MAY AFFECT THE DEPOSITOR'S,
ORIGINATORS' AND SERVICER'S OPERATIONS
The indirect parent company of the depositor, originators and servicer,
Newcourt Credit Group Inc., has completed a number of acquisitions during the
past five years, including the acquisition of AT&T Capital Corporation in 1998.
See 'Newcourt Credit Group Inc. -- Acquisitions' in the accompanying prospectus.
The AT&T Capital Corporation acquisition has required a significant amount of
management time. Diversion of management attention from existing operations and
the task of integrating acquired businesses and their systems have affected the
originators' portfolio of receivables similar to the contracts and may continue
to do so in the future. See 'The Contracts -- Losses and Recoveries -- Twelve
Months Ended 12/31/98 versus Twelve Months Ended 12/31/97' in this prospectus
supplement.
Moreover, Newcourt Credit Group Inc. has entered into an agreement
providing for a business combination with The CIT Group, Inc. Preparing for the
completion of this combination and, if completed, integration of Newcourt and
CIT will require a substantial amount of management's time. Diversion of
management attention from Newcourt's existing business as well as problems that
may arise in connection with the integration of Newcourt and CIT may have a
material adverse impact on Newcourt's revenues and results of operations. The
integration of Newcourt and CIT may result in additional expenses which could
negatively impact Newcourt's results of operations. Further, the uncertainty
created by the combination may result in the loss of management and other
employees. The unavailability of these people and the resulting disruption in
Newcourt's operations could have a material adverse effect on Newcourt's
business.
The transaction is subject to a number of conditions, and the depositor
cannot assure you that the conditions will be satisfied or that the transaction
will be completed.
The transaction involves the integration of two companies that have
different corporate cultures and that have previously operated independently. In
addition, the composition of the combined company's management will be new. The
success of the combined company will depend to a significant degree on the
compatibility of key executives and its ability to retain highly-skilled
personnel. It is not certain that the
S-15
<PAGE>
two companies will be able to integrate their operations without encountering
difficulties, including
incompatibility of key executives,
the loss of key employees and customers,
the disruption of ongoing businesses or
possible inconsistencies in systems, standards, procedures and
policies.
It is possible that the servicer's operations and ability to provide the
services required under the pooling and servicing agreement could be disrupted
as a result.
THE OWNER TRUST
THE OWNER TRUST
The depositor will create the owner trust prior to the closing of the note
offering under a trust agreement, dated as of July 1, 1999, between the
depositor and the owner trustee.
Under a pooling and servicing agreement, dated as of July 1, 1999, among
the depositor,
the indenture trustee,
the owner trustee,
Newcourt Financial USA Inc. as an originator and the seller of
contracts to the depositor and
the servicer,
the depositor will transfer all of the contracts and the related security
interests to the owner trust. As noted in 'The Seller and
Originators -- Underwriting and Servicing -- Documentation' and 'The
Contracts -- Software and Services' in the accompanying prospectus, some
transferred contracts will not have associated security interests.
The owner trust will issue an equity certificate, representing the
beneficial ownership interest in the owner trust, to the depositor. The equity
certificate will be entitled to any excess amount available on any payment date
after reimbursement of servicer advances and payment of servicing fees,
principal and interest on the notes and amounts payable in connection with the
cash collateral account. See 'Description of the Indenture and
Notes -- Distributions' in this prospectus supplement. The depositor is not
offering and selling the equity certificate under this prospectus supplement and
the accompanying prospectus.
THE INDENTURE
Under an indenture dated as of July 1, 1999 between the owner trust and The
Chase Manhattan Bank, as indenture trustee, the indenture trustee will
authenticate and deliver the notes.
S-16
<PAGE>
CAPITALIZATION OF THE OWNER TRUST
If the issuance and sale of the notes had taken place on the initial
cut-off date, the capitalization of the owner trust on that date would have
consisted of notes with an aggregate principal amount of $ and an equity
certificate.
THE OWNER TRUSTEE
The Bank of New York (Delaware) will be the owner trustee under the trust
agreement. The owner trustee is a national banking association and its principal
offices are located at 101 Barclay Street, 12E, New York, New York 10286.
THE CONTRACTS
DESCRIPTION OF THE CONTRACTS
All of the contracts are commercial, rather than consumer, leases or loans.
See 'The Contracts' in the accompanying prospectus.
STATISTICS RELATING TO THE INITIAL CUT-OFF DATE CONTRACT POOL
The initial contract pool principal balance is $1,777,838,645. This amount
is based upon the contract pool principal balance determined as of the initial
cut-off date, but also includes an amount in respect of scheduled payments on
the contracts due prior to, but not received as of, the cut-off date.
COMPOSITION OF THE INITIAL CUT-OFF DATE CONTRACT POOL
<TABLE>
<CAPTION>
INITIAL WEIGHTED WEIGHTED AVERAGE
STATISTICAL AVERAGE AVERAGE CONTRACT
CONTRACT POOL ORIGINAL REMAINING PRINCIPAL
NUMBER OF PRINCIPAL TERM TERM BALANCE
CONTRACTS BALANCE (RANGE) (RANGE) (RANGE)
- -------------------- -------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C>
79,494 $1,777,838,645 55 months 48 months $22,364
(four months to (one month to ($0.00 to
180 months) 174 months) $20,352,356)
</TABLE>
TYPE OF CONTRACTS
<TABLE>
<CAPTION>
% OF INITIAL
AGGREGATE STATISTICAL
% OF TOTAL CONTRACT CONTRACT POOL
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL
TYPE OF CONTRACT CONTRACTS CONTRACTS BALANCE BALANCE
- ------------------------------------------- --------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
True Leases................................ 48,267 60.72% $ 573,672,280 32.27%
Finance Leases............................. 24,370 30.66 586,915,386 33.01
Loans...................................... 1,370 1.72 160,738,000 9.04
Installment Payment Agreements............. 5,487 6.90 456,512,979 25.68
------- ------ -------------- -------
Totals............................... 79,494 100.00% $1,777,838,645 100.00%
------- ------ -------------- -------
------- ------ -------------- -------
</TABLE>
S-17
<PAGE>
GEOGRAPHICAL DIVERSITY
<TABLE>
<CAPTION>
% OF INITIAL
AGGREGATE STATISTICAL
% OF TOTAL CONTRACT CONTRACT POOL
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL
STATE CONTRACTS CONTRACTS BALANCE BALANCE
- ------------------------------------------- --------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
Alabama.................................... 1,395 1.75% $ 23,685,893 1.33%
Alaska..................................... 169 0.21 4,125,514 0.23
Arizona.................................... 1,243 1.56 25,768,556 1.45
Arkansas................................... 571 0.72 19,900,686 1.12
California................................. 10,942 13.76 221,359,424 12.45
Colorado................................... 1,518 1.91 21,790,663 1.23
Connecticut................................ 1,319 1.66 27,157,604 1,53
Delaware................................... 272 0.34 6,668,105 0.38
District of Columbia....................... 443 0.56 6,535,488 0.37
Florida.................................... 4,764 5.99 87,374,752 4.91
Georgia.................................... 2,352 2.96 58,250,411 3.28
Hawaii..................................... 267 0.34 4,157,552 0.23
Idaho...................................... 497 0.63 8,472.672 0.48
Illinois................................... 3,004 3.78 103,334,512 5.81
Indiana.................................... 1,060 1.33 24,904,224 1.40
Iowa....................................... 430 0.54 11,246,623 0.63
Kansas..................................... 426 0.54 11,354,921 0.64
Kentucky................................... 718 0.90 20,304,709 1.14
Louisiana.................................. 650 0.82 15,493,951 0.87
Maine...................................... 417 0.52 17,245,891 0.97
Maryland................................... 1,574 1.98 39,936,248 2.25
Massachusetts.............................. 2,951 3.71 59,723,712 3.36
Michigan................................... 2,365 2.98 43,605,810 2.45
Minnesota.................................. 1,055 1.33 26,745,109 1.50
Mississippi................................ 485 0.61 12,480,653 0.70
Missouri................................... 930 1.17 27,496,080 1.55
Montana.................................... 202 0.25 2,886,047 0.16
Nebraska................................... 288 0.36 10,034,030 0.56
Nevada..................................... 639 0.80 13,512,694 0.76
New Hampshire.............................. 629 0.79 10,462,029 0.59
New Jersey................................. 4,323 5.44 150,824,423 8.48
New Mexico................................. 496 0.62 8,922,935 0.50
New York................................... 7,550 9.50 152,985,660 8.61
North Carolina............................. 1,765 2.22 32,585,780 1.83
North Dakota............................... 61 0.08 1,407,941 0.08
Ohio....................................... 2,253 2.83 55,851,419 3.14
Oklahoma................................... 596 0.75 13,246,794 0.75
Oregon..................................... 1,152 1.45 23,948,749 1.35
Pennsylvania............................... 3,655 4.60 62,309,856 3.50
Puerto Rico................................ 8 0.01 1,254,582 0.07
</TABLE>
(table continued on next page)
S-18
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
% OF INITIAL
AGGREGATE STATISTICAL
% OF TOTAL CONTRACT CONTRACT POOL
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL
STATE CONTRACTS CONTRACTS BALANCE BALANCE
- ------------------------------------------- ------- ------ -------------- -------
<S> <C> <C> <C> <C>
Rhode Island............................... 333 0.42 $ 6,318,746 0.36%
South Carolina............................. 716 0.90 12,178,201 0.69
South Dakota............................... 95 0.12 1,273,733 0.07
Tennessee.................................. 1,188 1.49 26,923,826 1.51
Texas...................................... 5,706 7.18 118,096,451 6.64
Utah....................................... 990 1.25 23,394,825 1.32
Vermont.................................... 270 0.34 6,817,057 0.38
Virginia................................... 1,809 2.28 47,415,521 2.67
Washington................................. 1,583 1.99 29,477,857 1.66
West Virginia.............................. 362 0.46 14,999,047 0.84
Wisconsin.................................. 846 1.06 18,948,853 1.07
Wyoming.................................... 162 0.20 2,641,827 0.15
------- ------ -------------- -------
Total................................ 79,494 100.00% $1,777,838,645 100.00%
------- ------ -------------- -------
------- ------ -------------- -------
</TABLE>
PAYMENT STATUS
<TABLE>
<CAPTION>
% OF INITIAL
AGGREGATE STATISTICAL
AGGREGATE % OF TOTAL CONTRACT CONTRACT POOL
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL
PAYMENT STATUS CONTRACTS CONTRACTS BALANCE BALANCE
- ------------------------------------------- --------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
Current, including 1 to 30 day delinquent
contracts............................... 75,665 95.18% $1,686,644,243 94.87%
31-60 Days Delinquent...................... 3,829 4.82 91,194,402 5.13
------- ------ -------------- -------
Total................................ 79,494 100.00% $1,777,838,645 100.00%
------- ------ -------------- -------
------- ------ -------------- -------
</TABLE>
S-19
<PAGE>
TYPES OF EQUIPMENT
<TABLE>
<CAPTION>
% OF INITIAL
AGGREGATE STATISTICAL
AGGREGATE % OF TOTAL CONTRACT CONTRACT POOL
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL
TYPE OF EQUIPMENT CONTRACTS CONTRACTS BALANCE BALANCE
- ------------------------------------------- --------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
Telecommunications......................... 15,423 19.40% $ 415,724,743 23.38%
Computers and Point-of-Sale................ 43,953 55.29 290,004,015 16.31
Transportation............................. 3,940 4.96 260,360,013 14.64
Computer Software.......................... 505 0.64 167,414,100 9.42
Medical.................................... 929 1.17 135,432,044 7.62
Construction............................... 2,535 3.19 138,374,260 7.78
Manufacturing.............................. 1,929 2.43 61,740,800 3.47
General Office............................. 1,689 2.12 31,616,384 1.78
Printing................................... 262 0.33 28,302,638 1.59
Automotive Diagnostic Equipment............ 3,106 3.91 43,092,869 2.42
Resources.................................. 288 0.36 34,448,452 1.94
Commercial/Retail Fixtures................. 72 0.09 8,032,479 0.45
Industrial................................. 13 0.02 2,094,492 0.12
Other...................................... 4,850 6.10 161,201,356 9.07
------- ------ -------------- -------
Total................................ 79,494 100.00% $1,777,838,645 100.00%
------- ------ -------------- -------
------- ------ -------------- -------
</TABLE>
CONTRACT PRINCIPAL BALANCES
<TABLE>
<CAPTION>
% OF INITIAL
AGGREGATE STATISTICAL
AGGREGATE % OF TOTAL CONTRACT CONTRACT POOL
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL
CONTRACT PRINCIPAL BALANCE CONTRACTS CONTRACTS BALANCE BALANCE
- ----------------------------------------- --------- ---------- --------------- -------------
<S> <C> <C> <C> <C>
$ 0 to $ 5,000.00.......... 41,248 51.89% $ 115,198,082 6.48%
$ 5,000.01 to $ 25,000.00.......... 25,422 31.98 282,365,359 15.88
$ 25,000.01 to $ 50,000.00........... 5,849 7.36 208,232,949 11.71
$ 50,000.01 to $ 100,000.00........... 4,260 5.36 303,197,317 17.05
$ 100,000.01 to $ 500,000.00........... 2,418 3.04 446,637,475 25.12
$ 500,000.01 to $1,000,000.00........... 188 0.24 129,171,102 7.27
$1,000,000.01 to $2,000,000.00........... 67 .08 91,203,857.78 5.13
$2,000,000.01 to $3,000,000.00........... 19 .02 46,540,466.74 2.62
$3,000,000.01 to $4,000,000.00........... 7 .01 24,929,242.17 1.40
$4,000,000.01 to $5,000,000.00........... 5 .01 21,500,076.07 1.21
Over $5,000,000.00....................... 11 .01 108,862,718.62 6.12
------- ------ --------------- -------
Total.............................. 79,494 100.00% $ 1,777,838,645 100.00%
------- ------ --------------- -------
------- ------ --------------- -------
</TABLE>
S-20
<PAGE>
REMAINING TERMS OF CONTRACTS
<TABLE>
<CAPTION>
% OF INITIAL
AGGREGATE STATISTICAL
AGGREGATE % OF TOTAL CONTRACT CONTRACT POOL
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL
REMAINING TERMS OF CONTRACTS CONTRACTS CONTRACTS BALANCE BALANCE
- ------------------------------------------- --------- ---------- -------------- -------------
(MONTHS)
<S> <C> <C> <C> <C>
0- 12................................... 2,255 2.84% $ 20,783,538 1.17%
13- 24................................... 12,042 15.15 123,333,621 6.94
25- 36................................... 41,218 51.85 412,164,541 23.18
37- 48................................... 6,548 8.24 333,180,248 18.74
49- 60................................... 16,597 20.88 673,257,873 37.87
61- 72................................... 530 0.67 83,242,088 4.68
73- 84................................... 178 0.22 53,724,786 3.02
85- 96................................... 7 0.01 3,417,436 0.19
97-108................................... 10 0.01 3,147,857 0.18
109-120................................... 107 0.13 70,333,870 3.96
Over 120.................................. 2 0.00 1,252,786 0.07
------- ------ -------------- -------
Total................................ 79,494 100.00% $1,777,838,645 100.00%
------- ------ -------------- -------
------- ------ -------------- -------
</TABLE>
TYPES OF OBLIGOR
<TABLE>
<CAPTION>
% OF INITIAL
AGGREGATE STATISTICAL
AGGREGATE % OF TOTAL CONTRACT CONTRACT POOL
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL
TYPE OF OBLIGOR CONTRACTS CONTRACTS BALANCE BALANCE
- ------------------------------------------- --------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
Manufacturing.............................. 8,963 11.28% $ 432,487,925 24.33%
Service, other than professional, medical
and financial........................... 29,171 36.70 393,340,711 22.12
Retail and Wholesale Trade................. 9,295 11.69 186,590,147 10.50
Professionals.............................. 5,192 6.53 159,381,724 8.96
Transportation............................. 3,636 4.57 150,288,575 8.45
Financial Services......................... 5,240 6.59 123,746,891 6.96
Construction............................... 1,988 2.50 70,184,083 3.95
Medical.................................... 925 1.16 36,218,027 2.04
Resources.................................. 2,253 2.83 31,867,285 1.79
Machine Tools.............................. 248 0.31 28,605,481 1.61
Government................................. 143 0.18 13,954,565 0.78
Printing and Copy Centers.................. 724 0.91 13,833,369 0.78
Other...................................... 11,716 14.74 137,339,862 7.73
------- ------ -------------- -------
Total................................ 79,494 100.00% $1,777,838,645 100.00%
------- ------ -------------- -------
------- ------ -------------- -------
</TABLE>
OBLIGOR CONCENTRATION
<TABLE>
<CAPTION>
AGGREGATE % OF INITIAL
AGGREGATE CONTRACT STATISTICAL
OBLIGORS (INCLUDING CONTRACTS NUMBER OF PRINCIPAL CONTACT POOL
SECURING VENDOR LOANS) CONTRACTS BALANCE PRINCIPAL BALANCE
- ---------------------------------------------------------- --------- ----------- -----------------
<S> <C> <C> <C>
Top 5..................................................... 181 $94,997,817 5.34%
</TABLE>
S-21
<PAGE>
STATISTICS RELATING TO DELINQUENCIES AND DEFAULTS
The following table shows contract delinquency statistics for the
originators' portfolios of receivables similar to the contracts, on an aggregate
basis, as of December 31 in each of the past five years and as of March 31, 1998
and 1999. The applicable originators used the underwriting standards described
in the prospectus under the section titled 'The
Originators -- Underwriting -- General' for all of these receivables. For these
purposes, a 'delinquency' means that the obligor on the contract has failed to
make a required scheduled payment in an amount equal to at least 90% of the
required scheduled payment within 60 days of the due date. For these purposes,
any payment made by the obligor on a contract subsequent to the required payment
date is applied to the earliest payment which was unpaid. These statistics are
not necessarily indicative of the future performance of the contracts. The
following table is based on the net investment for all contracts originated by
Newcourt Financial USA Inc. and the gross receivable for contracts originated by
the other originators. Net investment is equal to the outstanding funds deployed
for the acquisition of contracts less any principal payments made under the
contracts. The gross receivable is the sum of the remaining payments associated
with the contracts.
.
CONTRACT DELINQUENCIES
<TABLE>
<CAPTION>
PERCENTAGE OF CONTRACT BALANCES
WHICH WERE DELINQUENT
---------------------------------------
CONTRACT 31 TO 60 61 TO 90 OVER 90
AS OF BALANCE DAYS DAYS DAYS TOTAL
- ------------------------------------------ ---------------- -------- -------- --------- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
12/31/94.................................. $4,289,244 2.81% 0.77% 0.92% 4.50%
12/31/95.................................. $4,823,203 3.58% 0.86% 1.12% 5.56%
12/31/96.................................. $5,871,337 3.81% 1.14% 1.18% 6.13%
12/31/97.................................. $6,745,905 2.85% 0.83% 0.91% 4.59%
12/31/98.................................. $8,714,990 4.38% 1.28% 1.63% 7.29%
03/31/98.................................. $7,239,915 3.00% 1.12% 1.19% 5.31%
03/31/99.................................. $9,662,157 3.83% 1.37% 1.64% 6.84%
</TABLE>
LOSSES AND RECOVERIES
The following table shows statistics for gross losses and losses net of
recoveries on defaulted contracts within the originators' portfolios of
receivables similar to the contracts during the twelve-month period ending
December 31 in each of the past five years and the three-month periods ended
March 31, 1998 and 1999. Gross losses means total losses before recoveries
measured against the net investment of the contracts, gross of any allowance for
losses. Losses net of recoveries means losses after recoveries measured against
the net investment of the contracts, gross of any
S-22
<PAGE>
allowance for losses. These statistics are not necessarily indicative of the
future performance of the contracts.
<TABLE>
<CAPTION>
AGGREGATE NET GROSS LOSSES AS A NET LOSSES AS A
INVESTMENT OF PERCENTAGE OF NET PERCENTAGE OF NET
TWELVE MONTHS ENDED CONTRACTS INVESTMENT INVESTMENT
- ------------------------------------------------ ------------- ----------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
12/31/94........................................ $ 3,839,569 1.77% 1.22%
12/31/95........................................ $ 4,461,217 1.66% 1.22%
12/31/96........................................ $ 5,774,645 1.87% 1.34%
12/31/97........................................ $ 6,765,600 1.74% 1.27%
12/31/98........................................ $ 8,604,488 1.86% 1.16%
THREE MONTHS ENDED
03/31/98........................................ $ 7,400,799 1.79% 1.26%
03/31/99........................................ $ 9,509,069 1.58% 1.00%
</TABLE>
TWELVE MONTHS ENDED 12/31/98 VERSUS TWELVE MONTHS ENDED 12/31/97
The amounts classified as delinquent as a percentage of the originators'
owned and managed portfolios increased from 4.59% to 7.29%. The increase in
delinquencies is directly attributable to integration issues related to the
consolidation of offices, systems conversions and changes in business names
relating to the acquisition of AT&T Capital Corporation in early 1998. See
'Newcourt Credit Group Inc. -- Acquisitions' in the accompanying prospectus. The
servicer is addressing these issues, which is reflected in a decline in
delinquencies as of March 31, 1999. Net losses as a percentage of the
originators' owned and managed portfolios decreased slightly from 1.27% to
1.16%. The slight decrease is not attributable to any one factor and the
depositor has no basis to predict, and offers no assurances as to, whether net
losses as a percentage of the originators' owned and managed portfolios will
continue to decrease in subsequent periods. The originators' owned and managed
portfolios increased approximately 27% from $6,765,600,000 to $8,604,488,000 due
to normal growth in the amounts of contracts originated.
TWELVE MONTHS ENDED 12/31/97 VERSUS TWELVE MONTHS ENDED 12/31/96
The amounts classified as delinquent as a percentage of the originators'
owned and managed portfolios decreased from 6.13% to 4.59%. Net losses as a
percentage of the originators' owned and managed portfolios decreased slightly
from 1.34% to 1.27%. The slight decrease is not attributable to any one factor
and the depositor has no basis to predict, and offers no assurances as to,
whether net losses as a percentage of the originators' owned and managed
portfolios will continue to decrease in subsequent periods. The originators'
owned and managed portfolios increased approximately 17% from $5,774,645,000 to
$6,765,600,000 due to normal growth in the amounts of contracts originated.
THREE MONTHS ENDED 3/31/99 VERSUS THREE MONTHS ENDED 3/31/98
The amounts classified as delinquent as a percentage of the originators'
owned and managed portfolios increased from 5.31% to 6.84%. The increase in
delinquencies is directly attributable to integration issues related to the
consolidation of offices, systems conversions and changes in business names.
The servicer is addressing these
S-23
<PAGE>
issues which is reflected in a decline in delinquencies over the first
quarter of 1999. Net losses as a percentage of the originators' owned and
managed portfolios decreased slightly from 1.26% to 1.00%. The slight decrease
is not attributable to any one factor and the depositor has no basis to predict,
and offers no assurances as to, whether net losses as a percentage of the
originators' owned and managed portfolios will continue to decrease in
subsequent periods. The originators' owned and managed portfolios increased
approximately 28% from $7,400,799,000 to $9,509,069,000 due to normal
fluctuations in the amounts of contracts originated.
WEIGHTED AVERAGE LIFE OF THE NOTES
The rate of payments on contracts will directly affect
the rate of note principal payments;
the aggregate amount of each note interest payment; and
the yield to maturity of the notes.
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 predicted. Newcourt Financial
USA may purchase contracts from the owner trust if the contracts were ineligible
for transfer at the time of transfer to the owner trust. Any payments for these
reasons, 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, liquidation or repurchase of a contract, if the
contract is not replaced by the depositor with a comparable substitute contract
as described under 'The Contracts -- Substitution of Contracts' in the
accompanying prospectus, will shorten the weighted average remaining term of the
contracts and the weighted average life of the notes. See 'Risk
Factors -- Contract Prepayments, Ineligibility or Default May Cause 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 Repayment' in the
accompanying prospectus.
The following chart sets forth the percentage of the initial principal
amount of each class of notes which would be outstanding on the distribution
dates set forth below assuming the conditional prepayment rates indicated in the
chart. This information is hypothetical. The conditional prepayment rate assumes
that a fraction of the outstanding contracts is prepaid on each payment 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 contract pool principal balance, 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. The
conditional prepayment rate also assumes 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, and assume that:
the seller exercises its option to cause a redemption of the notes
when the aggregate note principal balance is less than 10% of the
initial aggregate discounted contract balance of the contracts, and
S-24
<PAGE>
the closing date for the sale of the contracts to the owner trust is
, 1999.
These tables are based upon the statistical discount rate of 6.95%.
In addition, it is assumed for the purposes of these tables only, that the
owner 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..................................... $ %
A-2.....................................
A-3.....................................
A-4.....................................
A-5.....................................
B.......................................
C.......................................
D.......................................
</TABLE>
S-25
<PAGE>
DESCRIPTION OF THE NOTES AND INDENTURE
This section adds to the information in the accompanying prospectus under
the caption 'Description of the Notes and Indenture.' However, as these
statements are only summaries, you should read the pooling and servicing
agreement and the indenture. The depositor filed the forms of these documents as
exhibits to the registration statement it filed with the Securities and Exchange
Commission for the notes.
GENERAL
The notes will be issued under an indenture between the owner trust and the
indenture trustee.
The owner trust will issue eight classes of notes, consisting of five
classes of senior notes, designated as the
Class A-1 Notes,
Class A-2 Notes,
Class A-3 Notes,
Class A-4 Notes and
Class A-5 Notes.
These are referred to in this document as 'Class A Notes.' The owner trust will
also issue three classes of subordinate notes, designated as the Class B Notes,
the Class C Notes and the Class D Notes. The Class B, Class C and Class D Notes
are the 'Subordinate Classes.'
Investors may purchase the notes in book-entry form in minimum
denominations of $1,000 and in integral multiples of $1,000. Each class will
initially be represented by one or more notes registered in the name of the
nominee of The Depository Trust Company. The owner trustee will pay note
interest and principal on the 20th day of each month, or, if not a business day,
the next succeeding business day, commencing August 20, 1999, to registered
noteholders as of the related record date. So long as the notes remain in
book-entry form, the record date for any payment date will be the business day
immediately preceding the payment date. If the notes are no longer in book-entry
form, the record date will be the last day of the calendar month immediately
preceding the payment date. However, the owner trust will make the final payment
on the notes only upon presentation and surrender of the notes to the indenture
trustee. The owner trust will make all payments on the notes in immediately
available funds. See 'Description of the Notes and Indenture -- Book-Entry
Registration' in the accompanying prospectus.
DISTRIBUTIONS
The owner trust will pay note principal and interest on each payment date
from the 'Available Pledged Revenue' for the payment date, as well as amounts
permitted to be withdrawn from the cash collateral account. See ' -- Cash
Collateral Account' below. The 'Available Pledged Revenue' is the sum of
(a) scheduled contract payments, except payments in respect of
taxes,
insurance premium reimbursements,
S-26
<PAGE>
security deposits,
late charges,
documentation fees,
extension fees,
administrative charges or,
maintenance premiums,
(b) prepayments of contracts,
(c) the purchase price paid by the seller in purchasing a contract
back from the owner trust,
(d) proceeds of liquidating defaulted contracts,
(e) investment earnings on amounts held in the collection account and
the note distribution account and
(f) the amounts paid by the seller to purchase the contracts in
exercise of its option to do so when the aggregate note principal
balance is reduced to less than 10% of the initial contract pool
principal balance.
However, Available Pledged Revenue does not include any amount allocable to
the depositor as representing the residual value of equipment subject to a
lease, except to the extent that the end-user or a vendor guaranteed the
equipment residual value.
On each payment date, the indenture trustee will apply Available Pledged
Revenues to the following payments in the following order of priority:
(1) reimbursement of servicer advances;
(2) the servicing fee;
(3) interest on the notes in the following order of priority:
(a) interest on the Class A-1, A-2, A-3, A-4, and A-5
Notes, including any overdue interest, in that order,
(b) interest on the Class B Notes, including any overdue
interest,
(c) interest on the Class C Notes, including any overdue
interest,
(d) interest on the Class D Notes, including any overdue
interest,
(4) principal on the notes in the amounts and priority described under
'Principal' below;
(5) any amount necessary to increase the cash collateral account
balance to its required level;
(6) amounts payable in connection with the cash collateral account; and
(7) any remainder to the holder of the equity certificate.
The owner trust is to make payments first from the Available Pledged Revenue,
and second, but only as to amounts described in clauses (3) and (4) immediately
above, from amounts permitted to be withdrawn from the cash collateral account
as described under 'Cash Collateral Account' below.
INTEREST
The priorities of interest payments are set forth under 'Distributions'
above.
The owner trust will pay interest on each class of notes at the interest
rate for the class specified on the cover of this prospectus supplement from and
including the
S-27
<PAGE>
closing date to but excluding August 20, 1999, and after that date
for each successive interest period. Interest on the Class A-1 Notes will be
computed on the basis of the actual number of days elapsed and a 360-day year.
Interest on the other classes of notes will be computed on the basis of a
360-day year comprised of twelve 30-day months.
If on any payment date, the owner trust does not have sufficient funds,
after payment of servicer advances and the servicing fee, to make a full payment
of interest on any class of notes, the amount of the shortfall will be carried
forward and, together with interest on the shortfall amount at the applicable
interest rate for that class, added to the amount of interest the affected class
of noteholders will be entitled to receive on the next payment date.
PRINCIPAL
OVERVIEW OF PRINCIPAL DISTRIBUTIONS
The principal required to be paid on the notes on each payment date will be
the amount necessary to pay the notes down so that their aggregate principal
balance equals the aggregate contract principal balance as of the last day of
the prior month. This amount will be allocated among the various classes of
notes according to the priorities described in this section.
For so long as the Class A-1 Notes are outstanding, 100% of the principal
will be allocated between the Class A-1 Notes and the Class A-5 Notes. After the
Class A-1 note principal balance has been paid to zero, the principal will be
allocated:
first, among the Class A Notes as a group, between the Class A-5 Notes
on one hand and the Class A-2, Class A-3 and Class A-4 Notes, on the
other hand, sequentially in that order, then again to the Class A-5
Notes;
second, to the Class B Notes;
third, to the Class C Notes; and
fourth, to the Class D Notes
Subject to the operation of the floors for each of the Subordinate Classes,
the principal paid after the payment date on which the the Class A-1 note
principal balance has been paid to zero will be paid proportionately, among the
Class A Notes as a group, the Class B Notes, the Class C Notes and the Class D
Notes, in the priorities listed above. However, the principal paydown rules
incorporate a concept of a floor on each class of the Subordinate Classes, which
means that the Subordinate Classes, for so long as any notes senior to that
class are outstanding, cannot be paid an amount of principal which would reduce
that Subordinate Class below its floor principal balance. If a Subordinate Class
is at its floor level, that Subordinate Class is 'locked out' from receiving
further principal payments, with the additional effect of reallocating the
principal that would otherwise have been paid to that Subordinate Class to the
most senior class then outstanding. The levels of the floors are not static,
but are subject to increase if the owner trust experiences contract pool losses
that cannot be funded from the current period's Available Pledged Revenue or the
cash collateral account. This increase in the level of the floors tends to 'lock
out' the Subordinate Classes earlier, which accelerates the payment of the
reallocated principal
S-28
<PAGE>
to the senior classes. If unfunded losses become severe
and the cash collateral account is depleted, the unfunded loss amount could be
so large that the principal paydown rules result in a sequential-pay senior
subordinated structure among the various note classes, with no principal being
paid to a Subordinate Class unless the note principal balance of each class
senior to it has been paid in full.
The section headed 'Definitions Concerning Principal Payments' set forth
below defines various terms relating to the payment of principal.
BEFORE AN EVENT OF DEFAULT
<TABLE>
<CAPTION>
CLASS PRINCIPAL PAYMENTS
<S> <C>
Class A-1 Begins receiving principal on first payment date
Receives [ %] of Total Principal Payment Amount until paid in full, but will receive
100% of the Total Principal Payment Amount if any of its principal is outstanding after
its stated maturity date until paid in full
Class A-2 Begins receiving principal once Class A-1 is paid in full
Receives the Class A Principal Payment Amount reduced by any amount paid to the
Class A-5, until the Class A-2 are paid in full[, but will receive 100% of the Class A
Principal Payment Amount if any of its principal is outstanding after its stated maturity
date, until paid in full
May also receive principal payments reallocated away from the Subordinate Classes through
the operation of the floors
Class A-3 Begins receiving principal once Class A-2 is paid in full
Receives the Class A Principal Payment Amount reduced by any amount paid to the
Class A-5, until the Class A-3 are paid in full, but will receive 100% of the Class A
Principal Payment Amount if any of its principal is outstanding after its stated maturity
date, until paid in full
May also receive principal payments reallocated away from the Subordinate Classes through
the operation of the floors
Class A-4 Begins receiving principal once Class A-3 is paid in full
Receives the Class A Principal Payment Amount reduced by any amount paid to the
Class A-5, until the Class A-4 are paid in full, but will receive 100% of the Class A
Principal Payment Amount if any of its principal is outstanding after its stated maturity
date, until paid in full
May also receive principal payments reallocated away from the Subordinate Classes through
the operation of the floors
</TABLE>
S-29
<PAGE>
<TABLE>
<CAPTION>
CLASS PRINCIPAL PAYMENTS
<S> <C> <C>
Class A-5 Begins receiving principal on first payment date
Receives [ %] of the Total Principal Payment Amount until Class A-1 is paid in full
Once Class A-1 is paid in full, Class A-5 receives an amount equal to % of the Total
Principal Payment Amount, but in no event greater than the Class A Principal Payment
Amount until paid in full, but will receive 100% of the Class A Principal Payment Amount
if any of its principal is outstanding after its stated maturity date, until paid in full
May also receive principal payments reallocated away from the Subordinate Classes through
the operation of the floors
Class B Begins receiving principal once Class A-1 is paid in full
Receives the Class C Principal Payment Amount until paid in full
Through the operation of its floor, Class B's principal payments are subject to
reallocation for the benefit of Class A
May also receive principal payments reallocated away from Class C and Class D through the
operation of the floors
Class C Begins receiving principal once Class A-1 is paid in full
Receives the Class D Principal Payment Amount until paid in full
Through the operation of its floor, Class C's principal payments are subject to
reallocation for the benefit of Class A and Class B
May also receive principal payments reallocated away from Class D through the operation
of the floors
Class D Begins receiving principal once Class A-1 is paid in full
Receives the Class D Principal Payment Amount until paid in full
Through the operation of its floor, Class D's principal payments are subject to
re-allocation for the benefit of Class A, Class B and Class C
</TABLE>
DETAILED PRINCIPAL DISTRIBUTION RULES
The priority of principal payments will be in the following order:
(1) prior to the payment date on which the Class A-1 Note principal balance
has been reduced to zero, the Class A Principal Payment Amount will
equal to the Total Principal Payment Amount and will be allocated
[ ]% to the Class A-1 Notes and [ ]% to the Class A-5 Notes;
provided, that if the Class A-1 Notes have not been paid to zero by
their stated maturity date, 100% of the Class A Principal Payment
Amount will be paid to the Class A-1
S-30
<PAGE>
Notes on their stated maturity date and on each subsequent payment
date until their note principal balance is zero;
(2) on and after the payment date on which the Class A-1 principal balance
has been reduced to zero, and disregarding any amount first used on the
payment date on which the Class A-1 principal balance is paid to zero,
the Total Principal Payment Amount will be allocated among the various
classes in the following order of priority:
(a) to the Class A Noteholders, an amount equal to the Class A
Principal Payment, allocated as follows:
(1) [ ]% of the Total Principal Payment Amount (but in no event
greater than the Class A Principal Payment Amount) to the
Class A-5 noteholders, and
(2) the Class A Principal Payment Amount reduced by any
payments to the Class A-5 noteholders under clause
(2)(a)(i) to the Class A-2 noteholders until the
Class A-2 principal balance equals zero, then to the
Class A-3 noteholders until the Class A-3 principal
balance equals zero, then to the Class A-4 noteholders
until the Class A-4 principal balance equals zero and then
to the Class A-5 noteholders until the Class A-5 principal
balance equals zero;
However, if the Class A-2, Class A-3 or Class A-4 Notes
have not been paid to zero by their respective stated
maturity dates, 100% of the Class A Principal Payment
Amount will be paid to that class on its stated maturity
date and on each subsequent payment date until its note
principal balance is zero;
(3) until the payment date on which the Class A-5
principal balance has been reduced to zero, to the
Class A-5 Notes until the Class A-5 principal balance
equals zero;
(b) to the Class B noteholders, the Class B Principal Payment Amount;
(c) to the Class C noteholders, the Class C Principal Payment Amount;
(d) to the Class D noteholders, the Class D Principal Payment Amount;
and
(e) any Reallocated Principal, sequentially to the Class A-2,
Class A-3, Class A-4, Class A-5, Class B, Class C and Class D
Notes.
On any payment date if Available Pledged Revenue is insufficient pay all of
the amount as described above, the Available Pledged Revenue will be allocated
pro rata based on the respective entitlements for that payment date as set forth
above.
PRINCIPAL DISTRIBUTIONS AFTER AN EVENT OF DEFAULT
After an event of default occurs, all principal distributions among the
classes will be made in sequential-pay fashion, as follows:
S-31
<PAGE>
<TABLE>
<CAPTION>
CLASS PRINCIPAL PAYMENTS
<S> <C>
Class A-1 100% of Total Principal Payment Amount until paid in full
Class A-2 100% of Total Principal Payment Amount until paid in full
Class A-3 100% of Total Principal Payment Amount until paid in full
Class A-4 100% of Total Principal Payment Amount until paid in full
Class A-5 100% of Total Principal Payment Amount until paid in full
Class B 100% of Total Principal Payment Amount until paid in full
Class C 100% of Total Principal Payment Amount until paid in full
Class D 100% of Total Principal Payment Amount until paid in full
</TABLE>
DEFINITIONS CONCERNING PRINCIPAL PAYMENTS
The CLASS A PRINCIPAL PAYMENT AMOUNT is the sum of the Class A Base
Principal Payment Amount plus the Class A Principal Shortfall Amount.
The CLASS A BASE PRINCIPAL PAYMENT AMOUNT is:
(1) as to any payment date until the payment date on which the Class A-1
principal balance equals zero, 100% of the Total Principal Payment
Amount; and
(2) for any subsequent payment date, and disregarding any amount first used
on the payment date on which the Class A-1 principal balance is paid to
zero, the excess of (x) the Class A principal balance immediately prior
to that payment date over (y) the Class A Target Principal Amount;
However, the Class A Principal Payment Amount may not exceed the Class A
principal balance.
The TOTAL PRINCIPAL PAYMENT AMOUNT for any payment date is the excess of
(x) the aggregate note principal balance immediately prior to that payment date
over (y) the contract pool principal balance as of the last day of the
collection period immediately preceding the payment date.
The Total Principal Payment Amount will be deemed to be zero on any payment
date on which the contract pool principal balance is less than $1,000,000. The
contract principal balance of any contract which became a defaulted contract
during a given collection period or which was a contract subject to a warranty
claim which the depositor was obligated to purchase as of the end of a given
collection period will, for purposes of computing the Total Principal Payment
Amount and the requisite amount for the cash collateral account, be deemed to be
zero on and after the last day of the collection period.
The CLASS A PRINCIPAL SHORTFALL AMOUNT means, for any payment date that is
the stated maturity date for a class of Class A Notes and any subsequent payment
date until that class' principal balance is zero, the excess of (a) sum of the
principal balance of that class, plus, until the Class A-4 principal balance has
been reduced to zero, % of the Total Principal Payment Amount over (b) the
Total Principal Payment Amount.
S-32
<PAGE>
The CLASS A TARGET PRINCIPAL AMOUNT for any payment date will be the
product of (a) the Class A Percentage and (b) the contract pool principal
balance as of the last day of the collection period immediately preceding the
payment date.
The CLASS A PERCENTAGE will be [ ]%.
The CLASS B PRINCIPAL PAYMENT AMOUNT will equal
(1) zero until the payment date on which the Class A-1 principal
balance equals zero; and
(2) for any subsequent payment date the excess, if any, of (a) the
Class B principal balance over (b) the greater of (x) the Class B
Target Principal Amount and (y) the Class B Floor.
However, the Class B Principal Payment Amount may not exceed the Class B
principal balance.
The CLASS B TARGET PRINCIPAL AMOUNT for any payment date will be the
product of (a) the Class B Percentage and (b) the contract pool principal
balance as of the last day of the collection period immediately preceding the
payment date.
The CLASS B PERCENTAGE will be [ ]%.
The CLASS B FLOOR for any payment date will equal (1) [ ]% of the
initial contract pool principal balance, plus (2) the Unfunded Loss Amount, if
any, for that payment date, minus, (3) the sum of the Class C principal balance,
the Class D principal balance, prior to giving effect to any payments of
principal on the Class C or D Notes on that payment date, and the amount on
deposit in the cash collateral account after giving effect to withdrawals to be
made on the payment date. However, the Class B Floor may not be greater than the
Class B principal balance or less than zero.
The UNFUNDED LOSS AMOUNT for any payment date will equal any excess of:
(a) the aggregate note principal balance, prior to giving effect
to the payment of principal on the notes on the payment date,
over
(b) the Total Principal Payment Amount for that payment date,
The CLASS C PRINCIPAL PAYMENT AMOUNT will equal
(1) zero until the payment date on which the Class A-1 principal
balance equals zero; and
(2) for any subsequent payment date, the excess, if any, of (a) the
Class C principal balance over (b) the greater of (x) the Class C
Target Principal Amount and (y) the Class C Floor.
However, the Class C Principal Payment Amount may not exceed the Class C
principal balance.
The CLASS C TARGET PRINCIPAL AMOUNT for any payment date will be the
product of (a) the Class C Percentage and (b) the contract pool principal
balance as of the last day of the collection period immediately preceding the
payment date.
The CLASS C PERCENTAGE will be [ ]%.
S-33
<PAGE>
The CLASS C FLOOR for any payment date will equal (1) [ ]% of the
initial contract pool principal balance, plus (2) the Unfunded Loss Amount, if
any, for the payment date, minus (3) the sum of the Class D principal balance,
prior to giving effect to any payments of principal on the Class D Notes on the
payment date and the amount on deposit in the cash collateral account after
giving effect to withdrawals to be made on the payment date. However, the
Class C Floor may not be greater than the Class C principal balance or less than
zero. Furthermore, if the Class B principal balance immediately prior to any
payment date is less than or equal to the Class B Floor for that payment date,
the Class C Floor for that payment date will equal the Class C principal balance
immediately prior to that payment date.
The CLASS D PRINCIPAL PAYMENT AMOUNT will equal
(1) zero until the payment date on which the Class A-1 principal
balance equals zero; and
(2) for any subsequent payment date, the excess, if any, of (a) the
Class D principal balance minus (b) the greater of (x) the Class D
Target Principal Amount and (y) the Class D Floor.
However, Class D Principal Payment Amount may not exceed the Class D
principal balance.
The CLASS D TARGET PRINCIPAL AMOUNT for any payment date will be the
product of (a) the Class D Percentage and (b) the contract pool principal
balance as of the last day of the collection period immediately preceding the
payment date.
The CLASS D PERCENTAGE will be [ ]%.
The CLASS D FLOOR for any payment date will equal (1) [ ]% of the
initial contract pool principal balance, plus (2) the Unfunded Loss Amount, if
any, for the payment date, minus, (3) the amount on deposit in the cash
collateral account after giving effect to withdrawals to be made on the payment
date. However, the Class D Floor may not be greater than the Class D principal
balance or less than zero. Furthermore, if the Class C principal balance on any
payment date is less than or equal to the Class C Floor on that payment date,
the Class D Floor for that payment date will equal the Class D principal balance
immediately prior to that payment date.
The REALLOCATED PRINCIPAL for any payment date will equal the excess, if
any, of (1) the Total Principal Payment Amount, over (2) the sum of the Class A
Principal Payment Amount, the Class B Principal Payment Amount, the Class C
Principal Payment Amount and the Class D Principal Payment Amount.
A DEFAULTED CONTRACT as to any collection period is any contract (a) which
the servicer has charged off as uncollectible during the collection period in
accordance with its credit and collection policies and procedures, (b) as to
which during the collection period 10% or more of a scheduled payment shall have
become delinquent 180 days or more, or (c) as to which the end-user has suffered
an insolvency event.
The COLLECTION PERIOD for any payment date is the calendar month preceding
the month in which the payment date occurs.
S-34
<PAGE>
PRINCIPAL BALANCE means, when used with respect to a class of notes, the
initial principal balance of the class set forth on the cover page of this
prospectus, less all distributions previously made to the class in respect of
principal.
REDEMPTION OF NOTES
The notes are subject to redemption in whole. See 'Optional Purchase of
Contracts and Redemption of Notes' below.
OPTIONAL PURCHASE OF CLASS A-5 NOTES
The depositor may purchase all of the Class A-5 Notes, on any payment date.
The purchase price shall be equal to the Class A-5 principal balance plus a
premium equal to the excess, discounted as described below, of (1) the scheduled
future interest payments on the Class A-5 Notes, over (2) the interest that
would have accrued on the Class A-5 Notes over the same period at a per annum
rate of interest equal to the bond equivalent yield to maturity on the fifth
business day preceding that payment date on a United States Treasury security
maturing on a date closest to the end of the remaining weighted average life of
the Class A-5 Notes. That excess shall be discounted to present value to the
payment date at the yield described in clause (2) above. For purposes of this
paragraph only, the depositor will determine (1) the Class A-5 principal balance
upon which interest will be deemed to accrue, and (2) the weighted average
remaining life of the Class A-5 Notes, based upon the amortization of the
contract pool principal balance remaining at the payment date at a rate of
[ ]%. The depositor will pay the holders of record on the related record date
interest payable on the Class A-5 Notes on the payment date in the ordinary
manner. Following purchase, the owner trust will not retire the Class A-5 Notes,
but will, after the authentication and issuance of replacement notes to the
depositor, continue treat them as being entitled to interest and principal
payments on each payment date in the manner described above. Following the
giving of proper notice of purchase, all holders of Class A-5 Notes must
surrender them for purchase on the relevant purchase date. Effective on the
purchase date, the owner trust will not treat the former holders of the
Class A-5 Notes as the holders of the notes except for purposes of their right
to be paid the purchase price.
CASH COLLATERAL ACCOUNT
The depositor will establish the cash collateral account on or prior to the
closing date. It will be available to the indenture trustee. The depositor will
initially fund the cash collateral account in the amount of $[ ].
Available amounts on deposit from time to time in the cash collateral account
shall be used to fund the amounts specified below in the following order of
priority to the extent that amounts on deposit in the collection account as of
any deposit date are insufficient:
(1) to pay interest on the notes in the order of priority described
under 'Distributions' above;
(2) to pay any principal deficiency amount, which is equal to the
lesser of:
S-35
<PAGE>
(a) the aggregate liquidation losses on all contracts that became
defaulted contracts during the related collection period, or
(b) the excess, if any, of
(A) the aggregate principal balance of the notes, after
giving effect to all distributions of principal from
available pledged revenues on the payment date, over
(B) the aggregate of the required payoff amounts for all
contracts as of the last day of the related collection
period; and
(3) to pay principal on the notes at the applicable stated maturity
date thereof and on the first payment date on which the contract
pool principal balance is less than $1,000,000.
Liquidation loss means, as to any liquidated contract, the excess, if any,
of
(1) the required payoff amount of the contract for the collection
period during which the contract became a liquidated contract, over
(2) that portion of the liquidation proceeds for the liquidated
contract allocated to the owner trust, as described under
'Description of the Notes and Indenture -- Liquidation Proceeds' in
the accompanying prospectus.
To the extent that the amount on deposit in the cash collateral account as
of any payment date is less than the requisite amount, the servicer is to
restore this deficiency from the remaining amount available in the collection
account, after payment of any servicer advances, the servicing fee and interest
and principal on the notes, as described under 'Distributions' above. The
requisite amount of the cash collateral account will be
(1) for any payment date on or prior to the payment date occurring in
[ ], [ ]% of the initial contract pool principal
balance, and
(2) for any payment date after that, an amount equal to the greater of
(a) the sum of
(1) [ ]% of the contract pool principal balance for the
payment date, plus
(2) the excess, if any, of
(A) the sum of the principal balances of the notes,
after giving effect to all distributions of
principal on the payment date, over
(B) the contract pool principal balance for the payment
date,
and
(b) $[ ], which is [ ]% of the initial contract pool
principal balance.
However, in no event will the requisite amount exceed the sum of the
principal balances of the notes.
The servicer and indenture trustee will release any amount on deposit in
the cash collateral account in excess of the requisite amount and all investment
earnings on
S-36
<PAGE>
funds in the cash collateral account. The indenture trustee will pay these
amounts to or upon the servicer's order, and they will not be available to make
payments on the notes.
The cash collateral account must be maintained with a qualified
institution. Funds on deposit in the cash collateral account will be invested in
eligible investments, as defined under 'Description of the Notes and
Indenture -- Trust Accounts' in the accompanying prospectus.
OPTIONAL PURCHASE OF CONTRACTS AND REDEMPTION OF NOTES
The seller may purchase all of the contracts on any payment date following
the date on which the aggregate note principal balance at the time is less than
10% of the initial contract pool principal balance. The purchase price that the
seller would pay in connection with a purchase shall be at least equal to the
unpaid principal balance of the notes as of the payment date plus interest to be
paid on the notes on the payment date. The proceeds of the purchase shall be
applied on the payment date to the sum of the
payment of the remaining principal balance of the notes, together with
accrued interest,
unreimbursed servicer advances and unpaid services fees, and
any other amounts payable at the time from Available Pledged Revenues,
minus
available amounts on deposit in the pledge account.
If the seller does purchase the contracts, the notes shall be redeemed on
the payment date on which the purchase occurs. The redemption price will be the
principal amount of the notes redeemed plus accrued and unpaid interest on the
principal amount of each class of notes to but excluding the redemption date.
REPORTS TO NOTEHOLDERS
The servicer will furnish to the indenture trustee, and the indenture
trustee will include with each distribution, a statement in respect of the
related payment date. The statement shall set forth, among other things, all
information necessary to enable the indenture trustee to make the distribution
required for the notes and to reconcile all deposits to and withdrawals from
accounts.
See 'Description of the Notes and Indenture -- Reports to Noteholders' in
the accompanying prospectus. You will not receive reports directly from the
indenture trustee. The servicer will file the reports with the Securities and
Exchange Commission. However, in accordance with the Securities Exchange Act of
1934 and the rules and regulations of the Securities and Exchange Commission,
the owner trust expects that its obligation to file these reports will be
terminated at the end of 2000.
SERVICING
The servicer will be responsible for
managing,
S-37
<PAGE>
administering,
servicing and
making collections
on the contracts. Compensation to the servicer will include
(1) a monthly servicing fee, which will be payable to the servicer from
the amount available on each payment date, in an amount equal to
the product of one-twelfth of .75% per annum multiplied by the
contract pool principal balance determined as of the last day of
the second preceding collection period, or, in the case of the
servicing fee with respect to the collection period commencing on
the cut-off date, the contract pool principal balance as of the
cut-off date;
(2) any late fees, late payment interest, documentation fees, insurance
administration charges, extension fees and other administrative
charges, collectively, the administrative fees, collected with
respect to the contracts during the related collection period; and
(3) any investment earnings on collections prior to their deposit
thereof in the collection account.
The indenture trustee may terminate the servicer as servicer under certain
circumstances, in which event the indenture trustee would appoint a successor
servicer to service the contracts. See 'AT&T Capital Corporation' and
'Description of the Pooling and Servicing Agreements -- Servicing -- Events of
Termination' in the accompanying prospectus.
THE INDENTURE TRUSTEE
The Chase Manhattan Bank will serve as the indenture trustee. The indenture
trustee may resign at any time, in which event the owner trust will be obligated
to appoint a successor trustee. The owner trust may also remove the indenture
trustee if
(1) the indenture trustee ceases to be eligible to continue as
indenture trustee under the indenture,
(2) if the indenture trustee becomes insolvent or
(3) if the rating assigned to the long-term unsecured debt obligations
of the indenture trustee or its holding company by the rating
agencies shall be lowered below the rating of 'BBB,' 'Baa3' or
equivalent rating or be withdrawn by any rating agency. In these
circumstances, the owner trust will be obligated to appoint a
successor trustee. Any resignation or removal of the indenture
trustee and appointment of a successor trustee will not become
effective until acceptance of the appointment by a successor
trustee.
REPRESENTATION AND WARRANTIES
The seller will make representations and warranties with respect to the
contracts as described in the accompanying prospectus under 'The
Contracts -- Representations and Warranties Made by the Seller.'
S-38
<PAGE>
On the date that the depositor adds a substitute contract to the contract
pool, the seller and the depositor will make the same representations and
warranties as if the transfer occurred on the closing date. However, for these
purposes (i) the contract pool on the closing date shall be deemed to include
the substitute contract in lieu of the contract being replaced or substituted
and (ii) the contract principal balance of the substitute contract shall be
equal to or greater than the contract principal balance of the contract being
replaced or substituted as of the related cut-off date.
The owner trust shall reassign to the depositor, and the seller will be
obligated to purchase from the depositor, any contract transferred by the owner
trust at any time there is a breach of any of these representations or
warranties. However, the cure of the breach in all material respects, or the
waiver of the breach, will be an adequate remedy. This purchase shall occur no
later than the second deposit date after the servicer becomes aware, or receives
written notice, of the breach. The 'deposit date' means the business day
preceding a payment date. This purchase obligation will constitute the sole
remedy against the depositor and the seller available to the owner trust, the
indenture trustee and the noteholders or equity certificateholder for a breach
of these representations or warranties.
Under the pooling and servicing agreement, a contract transferred by the
owner trust shall be reassigned to the depositor and the depositor shall make a
deposit in the collection account in immediately available funds in an amount
equal to the contract principal balance of the contract. Any amount the
depositor deposits into the collection account in connection with the
reassignment of a contract transferred by the owner trust shall be considered
payment in full of the ineligible contract. This amount shall be treated as
Available Pledged Revenue. In the alternative, the seller may cause the
depositor to convey to the owner trust a substitute contract satisfying the
terms and conditions applicable to substitute contracts in replacement for the
affected contract. The affected contract shall be deemed released by the owner
trust and indenture trustee and reconveyed to the depositor and by the depositor
to the seller.
INDEMNIFICATION
The pooling and servicing agreement provides that the servicer will
indemnify
the depositor,
the owner trust,
the owner trustee,
the indenture trustee,
the holder of the equity certificate and
the noteholders
from and against any loss or injury sustained from third party claims resulting
from acts or omissions of the servicer with respect to trust assets or any duty
or obligations of the servicer under the agreement, except where the claims
result from willful misconduct, gross negligence or bad faith of the indemnified
person.
RATINGS OF THE NOTES
It is a condition of issuance that each of Standard & Poor's Ratings
Services, Moody's Investors Service, Inc. and Duff & Phelps Credit Rating Co.,
Inc.
S-39
<PAGE>
rate the Class A-1 Notes in its highest short-term rating category,
rate the Class A-2, Class A-3, Class A-4 and Class A-5 Notes in its
highest long-term rating category,
rate the Class B Notes at least [ ], respectively,
rate the Class C Notes at least [ ], respectively, and
rate the Class D Notes at least [ ], respectively.
The ratings address the likelihood of the timely receipt of interest and
payment of principal on each class of notes on or before the stated maturity
date for the class. The ratings will be based primarily upon the Available
Pledged Revenue, the cash collateral account and the subordination provided by
the Subordinate Classes, in the case of the Class A Notes,
the Class C and Class D Notes, in the case of the Class B Notes and
the Class D Notes, in the case of the Class C Notes.
There is no assurance that any rating will not be lowered or withdrawn by
the assigning rating agency. In the event that ratings with respect to the notes
are qualified, reduced or withdrawn, no person or entity will be obligated to
provide any additional credit enhancement with respect to the notes.
The ratings should be evaluated independently from similar ratings on other
types of securities. A rating is not a recommendation to buy, sell or hold
notes, inasmuch as these ratings do not comment as to market price or
suitability for a particular investor. The ratings do not address the likelihood
of payment of principal on any class of notes prior to the stated maturity date
or the possibility of the imposition of United States withholding tax with
respect to non-United States Persons.
The term 'United States Person' means
(1) a citizen or resident of the United States,
(2) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof,
(3) an estate the income of which is includable in gross income for
United States federal income tax purposes, regardless of its
source, or
(4) a trust, (A) with respect to which a court within the United States
is able to exercise primary supervision over its administration,
and one or more United States fiduciaries have the authority to
control all of its substantial decisions, or (B) otherwise, the
income of which is subject to U.S. federal income tax regardless of
its source.
USE OF PROCEEDS
The owner trust will use the proceeds from the sale of notes, after paying
funds into the cash collateral account and paying expenses, to pay the purchase
price for the contracts to the depositor. The depositor will use the proceeds to
pay amounts owed to another trust for the acquisition of contracts from the
trust and to pay amounts owed to the seller for contracts the depositor acquired
from the seller. The trust from which the owner trust acquired contracts will
use the proceeds it receives to pay down a warehouse receivables securitization
facility.
S-40
<PAGE>
LEGAL PROCEEDINGS
None of
the depositor,
the servicer,
the originators,
the seller or
the owner trust
are parties to any legal proceedings which could have a material adverse impact
on noteholders' interests in notes or the owner trust's assets.
S-41
<PAGE>
PLAN OF DISTRIBUTION
Under the terms of an underwriting agreement dated , 1999,
the underwriters have severally agreed to purchase the following respective
initial principal amounts of notes at the respective public offering prices less
the respective underwriting discounts shown on the cover page of this prospectus
supplement:
<TABLE>
<CAPTION>
INITIAL INITIAL INITIAL INITIAL INITIAL
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF
UNDERWRITER CLASS A-1 NOTES CLASS A-2 NOTES CLASS A-3 NOTES CLASS A-4 NOTES CLASS A-5 NOTES
- -------------------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
INITIAL INITIAL INITIAL
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF
UNDERWRITER CLASS B NOTES CLASS C NOTES CLASS D NOTES
- --------------- ------------- ------------- -------------
<S> <C> <C> <C>
</TABLE>
In the underwriting agreement, the underwriters have agreed to purchase all
of the notes being offered, if any of the notes are purchased. The underwriters
have advised the depositor that they propose initially to offer the notes to the
public at the respective public offering prices shown on the cover page of this
prospectus supplement, and to certain dealers at that price, less a concession
not in excess of the amount noted in the table below. The underwriters may allow
and the dealers may reallow to other dealers a discount not in excess of the
amount noted in the table below.
<TABLE>
<CAPTION>
DEALER DEALER
CONCESSION DISCOUNT
CLASS OF NOTE NOT TO EXCEED NOT TO EXCEED
- ------------- ------------- -------------
<S> <C> <C>
A-1
A-2
A-3
A-4
A-5
B
C
D
</TABLE>
After the notes are released for sale to the public, the offering prices
and other selling terms may be varied by the underwriters.
In connection with the offering of the notes, [ ] on behalf of
the underwriters, may engage in overallotment, stabilizing transactions and
syndicate
S-42
<PAGE>
covering transactions in accordance with Regulation M under the Securities
Exchange Act of 1934. Overallotment involves sales in excess of the offering
size, which creates a short position for the underwriters. Stabilizing
transactions involve bids to purchase the notes in the open markets for the
purpose of pegging, fixing or maintaining the price of the notes. Syndicate
covering transactions involve purchases of notes in the open market after the
distribution has been completed in order to cover short positions. Stabilizing
and syndicate covering transactions may cause the price of the notes to be
higher than it would otherwise be in the absence of those transactions. If
engage in stabilizing or syndicate covering transactions, they may
discontinue them at any time.
and certain of its affiliates have agreed to
indemnify the underwriters against some liabilities in connection with the sale
of notes, including liabilities under the Securities Act of 1933, as amended.
The notes are new issues of securities with no established trading market.
The underwriters have advised the depositor that the underwriters intend to make
a market in the notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the notes.
The depositor has estimated that it will spend approximately $1,855,000 for
printing, rating agency, trustee and legal fees and other expenses related to
the offering.
LEGAL MATTERS
Winston & Strawn, Chicago, Illinois, has provided a legal opinion relating
to the notes in its capacity as special counsel to the owner trust, the
depositor, the originators, the servicer and the administrator. Other legal
matters for the underwriters will be passed on by Dewey Ballantine LLP, New
York, New York. The indenture, the pooling and servicing agreement, the trust
agreement and the notes will be governed by the laws of the State of New York.
EXPERTS
Ernst & Young, LLP, independent auditors, have audited the balance sheet of
Newcourt Equipment Trust Securities 1999-1 at July 2, 1999 as set forth in their
report. The depositor included this balance sheet in this prospectus supplement
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
S-43
<PAGE>
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
BALANCE SHEET AS OF JULY 2, 1999
<TABLE>
<S> <C>
Assets -- Cash...................................................................... $ 0
---
---
Beneficial Equity................................................................... $ 0
---
---
Liabilities......................................................................... $ 0
---
---
</TABLE>
NOTES TO THE BALANCE SHEET
Newcourt Equipment Trust Securities 1999-1 (the 'Owner Trust') is a limited
purpose business trust established under the laws of the State of Delaware. It
was formed on July 2, 1999 by NCT Funding Company, L.L.C. (the 'Trust
Depositor') and The Bank of New York (Delaware) (the 'Owner Trustee') under a
trust agreement dated as of July 2, 1999 between the Trust Depositor and the
Owner Trustee. The activities of the Owner 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 related activities. Prior to and including July 2, 1999, the Owner
Trust did not conduct any activities.
The Trust Depositor will pay all fees and expenses related to the
organization and operations of the Owner Trust, other than withholding taxes,
imposed by the United States or any other domestic taxing authority. The
depositor has also agreed to indemnify the indenture trustee and Owner Trustee
and certain other persons involved in the sale of notes.
S-44
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Trustee of
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
We have audited the accompanying balance sheet of Newcourt Equipment Trust
Securities 1999-1 (the 'Trust'), as of July 2, 1999. This balance sheet is the
responsibility of the Trust's management. Our responsibility is to express an
opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Newcourt Equipment Trust Securities
1999-1 at July 2, 1999 in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
New York, New York
July 2, 1999
S-45
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Pledged Revenue................................................................................ S-26
Class A Base Principal Amount............................................................................ S-32
Class A Principal Payment Amount......................................................................... S-32
Class A Target Principal Amount.......................................................................... S-33
Class A Percentage....................................................................................... S-33
Class A Principal Shortfall Amount....................................................................... S-32
Class B Principal Payment Amount......................................................................... S-33
Class B Target Principal Amount.......................................................................... S-33
Class B Percentage....................................................................................... S-33
Class B Floor............................................................................................ S-33
Class C Principal Payment Amount......................................................................... S-33
Class C Target Principal Amount.......................................................................... S-33
Class C Percentage....................................................................................... S-33
Class C Floor............................................................................................ S-34
Class D Interest Rate.................................................................................... S-34
Class D Principal Payment Amount......................................................................... S-34
Class D Target Principal Amount.......................................................................... S-34
Class D Percentage....................................................................................... S-34
Class D Floor............................................................................................ S-34
Collection Period........................................................................................ S-34
Contract Pool Principal Balance.......................................................................... S-12
Contract Principal Balance............................................................................... S-12
Defaulted Contract....................................................................................... S-34
Delinquency.............................................................................................. S-22
Principal balance........................................................................................ S-35
Reallocated Principal.................................................................................... S-34
Subordinate Classes...................................................................................... S-26
Total Principal Payment Amount........................................................................... S-32
Unfunded Loss Amount..................................................................................... S-33
United States Person..................................................................................... S-40
</TABLE>
S-46
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROSPECTUS
NCT FUNDING COMPANY, L.L.C.
RECEIVABLE-BACKED NOTES
(ISSUABLE IN SERIES)
NCT FUNDING COMPANY, L.L.C.
DEPOSITOR
The depositor will form an owner trust for each series of notes. Each owner
trust will offer receivable-backed notes under this prospectus and a prospectus
supplement. The prospectus supplement will be prepared separately for each
series of notes. Each series may include one or more classes of notes.
Each owner trust will use the note sale proceeds to acquire a pool of
contracts which the depositor will simultaneously transfer to the owner trust.
The right of each class of notes to receive payments may be senior or
subordinate to the rights of one or more of the other classes of notes. The rate
of payment on the notes of any class will depend on the priority of payment of
the class and the rate and timing of payments of the related contracts.
THE NOTES OF EACH SERIES WILL BE OBLIGATIONS OF THE RELATED OWNER TRUST
ONLY.
------------------------
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 10 OF THIS PROSPECTUS AND
THE OTHER RISK FACTORS INCLUDED IN THE ACCOMPANYING PROSPECTUS
SUPPLEMENT.
----------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------------
This prospectus may not be used to consummate sales of notes unless
accompanied by the prospectus supplement relating to the notes.
Prospectus dated , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS
SUPPLEMENT.............................................................................................. 3
PROSPECTUS SUMMARY......................................................................................... 4
RISK FACTORS............................................................................................... 10
THE DEPOSITOR.............................................................................................. 18
THE OWNER TRUSTS........................................................................................... 20
NEWCOURT CREDIT GROUP INC.................................................................................. 21
THE SERVICER............................................................................................... 22
THE SELLER AND ORIGINATORS................................................................................. 23
THE CONTRACTS.............................................................................................. 32
DESCRIPTION OF THE NOTES AND INDENTURE..................................................................... 52
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS........................................................ 65
MATERIAL FEDERAL INCOME TAX CONSEQUENCES................................................................... 70
ERISA CONSIDERATIONS....................................................................................... 77
RATINGS OF THE NOTES....................................................................................... 79
USE OF PROCEEDS............................................................................................ 79
PLAN OF DISTRIBUTION....................................................................................... 79
LEGAL MATTERS.............................................................................................. 80
WHERE YOU CAN FIND MORE INFORMATION........................................................................ 80
INDEX OF TERMS............................................................................................. 81
PART II.................................................................................................... II-1
</TABLE>
2
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
The depositor tells you about the notes in two separate documents:
this prospectus, which provides general information, some of which may not
apply to a particular series of notes, including your series of notes; and
the prospectus supplement related to the particular terms of your series
of notes.
SOME PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR IN SOME WAY AFFECT THE PRICE OF THE NOTES. THESE TYPES OF
TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF NOTES TO COVER SYNDICATE
SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, PLEASE READ THE SECTION ENTITLED 'UNDERWRITING' IN YOUR PROSPECTUS
SUPPLEMENT.
3
<PAGE>
PROSPECTUS SUMMARY
The following is only a summary of the terms of the notes. It does not
contain all information that may be important to you. You should read this
entire prospectus and any accompanying prospectus supplement. In addition, you
may wish to read the 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' beginning on page 10 for a discussion of factors you should
consider before investing in notes.
<TABLE>
<S> <C>
Issuer and Owner Trust.................... For each series of notes, the depositor will form an owner trust and
prepare a prospectus supplement. Each owner trust will own a pool of
contracts and other assets. The depositor will identify the owner
trust and trustee in your prospectus supplement.
Servicer.................................. AT&T Capital Corporation, an indirect subsidiary of Newcourt
Financial USA Inc., unless otherwise specified in your prospectus
supplement.
Indenture Trustee......................... For your series of notes, the depositor will identify the indenture
trustee in your prospectus supplement.
The Notes................................. Each owner trust will issue one or more classes of notes.
Terms of the Notes........................ See 'Description of the Notes and Indenture' in this prospectus and
your prospectus supplement.
Payment Dates......................... Each owner trust will pay interest and principal on notes on the
dates specified in a prospectus supplement.
Interest.............................. The prospectus supplement will state the interest rates for the notes
described in the prospectus supplement.
Principal............................. The principal payments to be made by the trust on notes will be as
described in the prospectus supplement for the notes.
Subordination......................... A class of notes may not be entitled to receive payments of principal
and interest until after the owner trust pays one or more other
classes of notes. This makes it more likely that senior notes will be
paid all interest and principal due on
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
them, and less likely that subordinate notes will be paid all
interest and principal due on them.
Ratings............................... An owner trust will not issue a series of notes unless one or more
nationally recognized rating agencies have assigned investment grade
ratings to the notes. For a more complete description of note
ratings, see 'Ratings of the Notes' in this prospectus and in your
prospectus supplement.
Trust Assets.............................. Each owner trust will make payments on notes it issues, primarily
from funds from the following assets:
equipment lease contracts,
installment payment contracts,
promissory notes,
conditional sale agreements,
financing agreements,
and
deposits in bank accounts.
The Contracts............................. Your prospectus supplement provides the particular terms of your
series of notes and information about:
the initial principal balance of the contracts transferred to the
owner trust issuing the notes;
the number of contracts;
the average contract principal balance;
the various types of contracts;
the geographical distribution of the contracts;
the remaining term of the contracts; and
the weighted average remaining term of the contracts.
All of the contracts will be commercial contracts. 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 loans
to equipment manufacturers, dealers or distributors or to computer
software distributors, all of which
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
are secured by one or more end-user contracts. As of the cut-off date
for each pool of contracts, no contract in that pool will be
delinquent.
The 'contract principal balance' of any contract is the present value
of the unpaid scheduled payments on that contract, discounted at a
discount rate that will be stated in your prospectus supplement. This
prospectus and the prospectus supplement refer to the aggregate of
the contract principal balances as the 'contract pool principal
balance.'
Seller and Originators.................... Newcourt Financial USA Inc., a subsidiary of Newcourt Credit Group
Inc., will be the seller of the contracts to the depositor for
deposit into the owner trust. The seller will itself originate or
acquire contracts. The seller will also acquire contracts originated
or acquired by other subsidiaries of Newcourt Credit Group Inc. Prior
to the offering of a series of notes, the seller may have sold
contracts to the depositor for deposit into a trust used in
connection with temporary financing arrangements. The depositor may
acquire some or all of these contracts for deposit into the owner
trust in connection with the offering and sale of a particular series
of notes. See 'Newcourt Credit Group Inc.' and 'The Seller and
Originators' in this prospectus.
Contract Prepayments...................... Some contracts may:
not permit the obligor to prepay or terminate the contract prior to
its expiration date,
allow for a prepayment or early termination upon payment of at least
the contract principal balance
allow for a prepayment or early termination without the payment of
the contract principal balance, or
permit the obligor to prepay the contract at any time by paying the
unpaid principal plus accrued interest.
Liquidated Contracts...................... Your prospectus supplement will describe how liquidation proceeds
from a defaulted contract will be allocated.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Mandatory Purchase or Replacement of
Contracts.............................. Newcourt Financial USA, as the seller of contracts to the depositor,
will make representations regarding the contracts. In the event of an
uncured material breach of any of these representations, Newcourt
Financial USA must purchase or replace any contract.
See 'The Contracts -- Representations and Warranties made by the
Seller' in this prospectus and 'Weighted Average Life of the Notes'
in your prospectus supplement.
Leased Equipment.......................... The depositor will not transfer to any owner trust the depositor's
interest in equipment covered by lease contracts. Amounts
representing payment of the residual value of leased equipment are
not available to pay principal or interest on notes, except to the
extent that a vendor or obligor has guaranteed the residual value of
leased equipment.
Credit Enhancement........................ The depositor may arrange for credit enhancement for some notes.
Credit enhancement may include:
a cash collateral account;
a financial guaranty insurance policy;
subordination of one or more other classes of notes;
a reserve account;
overcollateralization;
letters of credit or liquidity facilities;
repurchase obligations;
third party payments or other support;
cash deposits; or
other arrangements which may become suitable in light of credit
enhancement practices or developments in the future.
Your prospectus supplement will describe any credit enhancement
applicable to your notes.
Priority of Payments...................... The indenture trustee for your notes will apply contract payments as
described in the prospectus supplement for your notes.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Optional Purchase of Contracts............ Once the principal balance of a note series is less than 10% of the
initial contract pool principal balance, the depositor may repurchase
all the contracts held by the owner trust. That would result in a
prepayment of the outstanding notes. See 'Description of the Notes
and Indenture -- Optional Purchase of Contracts' in this prospectus
and in your prospectus supplement.
Substitution.............................. Newcourt Financial USA and the depositor may substitute into the
owner trust one or more similar contracts for prepaid contracts or
contracts in default. They may not make substitutions for defaulted
contracts if all substitutions together would exceed 10% of the
contract pool principal balance in the owner trust at any time. They
are not required to replace any contract. See 'The
Contracts -- Substitution of Contracts.'
U.S. Taxation............................. In the opinion of the depositor's counsel, Winston & Strawn, the
notes will be characterized as debt and the owner trusts will not be
characterized as 'associations' or 'publicly traded partnerships'
taxable as corporations for federal income tax purposes.
By purchasing a note, you agree to treat your note as debt for
federal, state and local income tax purposes.
The depositor suggests that you consult your own tax advisor about
the federal income tax consequences of purchasing, owning and
disposing of notes, and the tax consequences in any state or other
taxing jurisdiction. See 'Material Federal Income Tax Consequences'
below.
ERISA Considerations...................... Subject to the considerations described in 'ERISA Considerations' in
this prospectus, employee benefit plans that are subject to the
Employee Retirement Income Security Act of 1974, as amended, may
purchase notes.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
Registration, Clearance and Settlement of
Notes.................................. Each of the notes will be registered in the name of Cede & Co., as
the nominee of The Depository Trust Company. You may purchse the
notes only in book-entry form on the records of The Depository Trust
Company and participating members. The owner trust will issue the
notes in definitive form only under the limited circumstances
described in this prospectus under 'Description of the Notes and
Indenture -- Issuance of Certificated Notes at a Later Date.'
</TABLE>
9
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors and additional
risk factors listed in your prospectus supplement 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 the depositor 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. The
depositor does not intend to apply for listing of the notes on any securities
exchange or for the inclusion of the notes on any automated quotation system.
Even if a secondary market does develop, it may not continue.
CONTRACT PREPAYMENT, INELIGIBILITY OR DEFAULT MAY CAUSE EARLIER REPAYMENTS 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 or liquidation of contracts
that become defaulted may cause an owner trust to pay principal on the notes
sooner than you expected. Also, an owner trust may pay principal sooner than you
expected if Newcourt Financial USA repurchases ineligible contracts. Similarly,
upon the occurrence of an event of default under the indenture, you may receive
principal of the notes sooner than you expected. See 'Description of the Notes
and Indenture -- Events of Default; Rights Upon Event of Default.' 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 or repurchases of contracts due to
prepayments ineligibility, or 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.
Most contracts do not permit prepayment or early termination. Nevertheless,
AT&T Capital, as servicer, historically has permitted lessees to terminate
leases early either in connection with the execution of a new lease of
replacement equipment or upon payment of a negotiated prepayment premium or
both. Under the pooling and servicing agreement, the servicer may allow an
obligor to prepay a contract at any time if the payment, alone, or together with
the contract's remaining contract principal balance and any scheduled payment
owed and not yet received, is equal to the entire contract principal balance of
the contract. The principal balance of a contract is the present value of the
future scheduled payments under the contract, discounted at a discount rate that
will be specified in the prospectus supplement for your notes.
10
<PAGE>
The depositor cannot assure you that prepayments on the contracts held by
the trust will conform to any historical experience. The depositor cannot
predict the actual rate of prepayments which will be experienced on the
contracts. However, your prospectus supplement will present information as to
the principal balances of the notes remaining at various times under several
hypothetical prepayment rates. See 'Weighted Average Life of the Notes' in your
prospectus supplement.
THE PRICE AT WHICH YOU CAN RESELL YOUR NOTES MAY DECREASE IF THE RATINGS OF YOUR
NOTES CHANGE
At any time, the rating agencies may lower their respective ratings of the
notes or withdraw their ratings entirely. In the event that a rating assigned to
any note is subsequently lowered or withdrawn for any reason, you may not be
able to resell your notes or to resell them without a substantial discount. For
more detailed information regarding the ratings assigned to any class of the
notes, see 'Ratings of the Notes' in this prospectus and the prospectus
supplement.
THE SUBORDINATION OF SOME CLASSES OF NOTES IS ONLY A LIMITED FORM OF CREDIT
ENHANCEMENT AND DOES NOT ENSURE PAYMENT OF THE MORE SENIOR CLASSES
An owner trust will pay interest and principal on some classes of notes
prior to paying interest and principal on other classes of notes. 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 more senior classes of notes.
The more senior classes of notes could lose the credit enhancement provided
by the more subordinate classes if delinquencies and defaults on the contracts
increase and if the collections on the contracts and any credit enhancement
described in your prospectus supplement are insufficient to pay even the more
senior classes of notes.
Your prospectus supplement will describe any subordination provisions
applicable to your notes.
LIMITED ASSETS ARE AVAILABLE FOR PAYMENT OF THE NOTES; NOTEHOLDERS WILL HAVE NO
RECOURSE TO THE ORIGINATORS, DEPOSITOR, SERVICER OR THEIR AFFILIATES IN THE
EVENT DELINQUENCIES AND LOSSES REDUCE THE TRUST'S ASSETS
Each owner trust will be a limited purpose trust with limited assets.
Moreover, you have no recourse to the general credit of the servicer, depositor,
originator or their affiliates. Therefore, you must rely solely upon the
contracts and any credit enhancement described in your prospectus supplement for
payment of principal and interest on the notes.
An increase in delinquent or defaulted payments on contracts could result
in your being paid less than you expect on the notes or in delays in payment.
If a contract is a vendor loan, you must rely solely upon the end-user
contracts securing the vendor loan for payments in respect of that contract.
Most vendor loans are non-recourse to the vendors. In non-recourse loans you are
limited to recovering amounts due solely from the end-user contracts and related
security.
11
<PAGE>
EVEN IF AN OWNER TRUST REPOSSESSES AND SELLS 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 owed 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. Since the market value of
the equipment may decline faster than the discounted contract balance, the owner
trust may not recover the entire amount due on the contract and might not
receive any recoveries on the equipment. The prospectus supplement for your
notes may describe some forms of credit enhancement which 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 the depositor anticipates.
NOT HAVING POSSESSION OF CONTRACT FILES MAY HINDER AN OWNER TRUST'S ABILITY TO
REALIZE THE VALUE OF EQUIPMENT SECURING THE CONTRACTS.
To facilitate servicing and reduce administrative costs, the servicer or a
sub-servicer will retain possession of the documents evidencing the contracts
held by the owner trust. As a result, a subsequent purchaser of contracts could
take physical possession of the documents without knowledge of their assignment.
That subsequent purchaser could then have a security interest in the contracts
senior to the owner trust's security interest. In the event that the owner trust
must rely upon repossession and sale of the equipment securing defaulted
contracts to recover amounts due on the defaulted contracts, the owner trust's
ability to realize upon the equipment would be limited by the existence of the
third party's senior security interest in those contracts. In this event, there
may be a delay or reduction in distributions to you.
Similarly, with respect to contracts securing vendor loans, the vendor will
retain the original documents associated with some contracts. The applicable
originator will file Uniform Commercial Code financing statements 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 were able to take physical possession of
the related documents without knowledge of the pledge to the originator, the
owner trust's security interest in those contracts could be defeated. In this
event, there may be a delay or reduction in distributions to you.
FAILURE TO TAKE ALL STEPS NECESSARY TO PERFECT SECURITY INTERESTS IN EQUIPMENT,
TO RECORD ASSIGNMENT OF SECURITY INTERESTS TO THE OWNER TRUST OR TO RECORD
SECURITY INTERESTS IN TITLED EQUIPMENT MAY HINDER THE OWNER TRUST'S ABILITY TO
REALIZE THE VALUE OF EQUIPMENT SECURING THE CONTRACTS
The depositor will receive security interests in financed equipment
securing contracts from the originators and the depositor will assign the
security interests to the owner trust. However, in some instances, the
originators may not file financing statements for equipment relating to a single
obligor in a single jurisdiction when the value of the equipment is less than
the amounts described in the following paragraph. As a result, the originator
will not acquire, and the depositor and owner trust will not
12
<PAGE>
have, a perfected security interest in the equipment. As a result, creditors of
the end-user may acquire superior interests in the equipment.
As originators, none of
Newcourt Commercial Finance Corporation,
Newcourt Leasing Corporation,
Newcourt Communications Finance Corporation or
Newcourt Technologies Corporation.
file financing statements against an obligor in the appropriate 'filing'
jurisdiction unless the fair market value of the equipment relating to a
contract is at least $20,000. However, if the contract is a lease with a 'fair
market value' purchase option, then the threshold fair market value of the
equipment is $50,000. As originator, Newcourt Financial USA Inc., does not file
financing statements against an obligor in the appropriate 'filing' jurisdiction
unless the fair market value of the related equipment relating to a contract is
at least $25,000.
Additionally, regardless of equipment value, the depositor's practice is to
require the originators to annotate their records to note the depositor's
security interest but not to require the filing of assignments of financing
statements for the equipment to reflect the depositor's, the owner trust's or
the indenture trustee's interests. Because of this, an originator or the
servicer could inadvertently release the security interest in the equipment
securing a contract. The owner trust would then not have a security interest in
the equipment.
Also, any transfer to the depositor of an originator's security interest in
motor vehicles securing the contracts is subject to state vehicle registration
laws. The depositor's transfer of a security interest in motor vehicles to the
owner trust is also subject to these registration laws. These registration laws
require that the secured party's name appear on the certificate of title or
similar registration of title to a motor vehicle in order for the secured
party's security interest to be perfected. The applicable originator will be
identified on the certificates or similar registrations of title. However, the
certificates of title or similar registrations of title will not identify the
depositor or owner trust as secured party. In addition, some equipment related
to the contracts may constitute fixtures under the real estate or Uniform
Commercial Code provisions of the state in which the equipment is located. The
relevant originator will not file assignments of fixture filings in favor of the
depositor or owner trusts. Therefore, a third party could acquire an interest in
the motor vehicles or real estate fixtures superior to that of the owner trusts.
REPURCHASE OBLIGATION OF THE SELLER PROVIDES YOU ONLY LIMITED PROTECTION AGAINST
PRIOR LIENS ON THE CONTRACTS OR EQUIPMENT
Federal or state law may grant liens on contracts or equipment that have
priority over the owner trust's interest. If the creditor associated with any
prior lien exercises its remedies it is unlikely that sufficient cash proceeds
from the contract and related equipment will be available to pay the contract
balance to the trust. In that event, there may be a delay or reduction in
distributions to you. An example of a lien arising under federal or state law is
a tax lien on property of the originator or the depositor
13
<PAGE>
arising prior to the time a contract is conveyed to the owner trust. The tax
lien has priority over the interest of the owner trust in the contracts.
In most cases where vendors have assigned contracts to originators, the
vendors have warranted to the originators that there are no prior liens on the
contracts. Additionally, where vendors have assigned contracts to originators,
the vendors have agreed not to grant any lien on any contracts transferred to
the originators. In all cases, the seller will warrant to the depositor and the
owner trust that there are no prior liens on the contracts. The seller also will
warrant to the depositor and the owner trust that it will not grant any lien on
the contracts. In the event that those warranties are not true as to any
contract, the seller is required under the pooling and servicing agreement to
repurchase the contract. There can be no assurance that the seller will be able
to repurchase a contract at the time when it is asked to do so.
IF A BANKRUPTCY COURT RULES THAT THE TRANSFER OF CONTRACTS FROM A VENDOR TO AN
ORIGINATOR WAS NOT A TRUE SALE THEN PAYMENTS ON THE CONTRACTS MAY BE REDUCED OR
DELAYED
Vendors sell contracts to the originators, which contracts will be
transferred directly or indirectly to the depositor and then the owner trust. If
a bankruptcy court decides that the acquisition of a contract by an originator
is not 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
be available to the vendor's creditors. In that case, it is unlikely the trust
will receive all of the scheduled payments on the contracts, and there may be a
delay or reduction in distributions to you. In order to treat the transfer of
contracts to the trust as not being a true sale, the bankruptcy court would
recharacterize the transfer as a pledge of the contracts to secure borrowings by
the vendor. Additionally, if the transfer of contracts to an originator from a
vendor is recharacterized as a pledge, then a tax or government lien on the
property of the pledging vendor arising before the contracts came into existence
may have priority over the owner trust's interest in the contracts.
A BANKRUPTCY COURT DETERMINATION THAT THE TRANSFER OF CONTRACTS FROM ORIGINATORS
TO THE SELLER, FROM THE SELLER TO THE DEPOSITOR OR FROM THE DEPOSITOR TO THE
OWNER TRUST WAS NOT A TRUE SALE THEN PAYMENTS ON THE CONTRACTS COULD BE REDUCED
OR DELAYED
If an originator, the seller or the depositor became a debtor in a
bankruptcy case, creditors of that party, or that party acting as a
debtor-in-possession, may assert that the transfer of the contracts was
ineffective to remove the contracts from that party's estate. In that case, the
distribution of contract payments to the trust might be subject to the automatic
stay provisions of the United States Bankruptcy Code. This would delay the
distribution of those payments to the noteholders for an uncertain period of
time. Furthermore, if the bankruptcy court rules in favor of the creditors or
the debtor in possession, the result may be reductions in payments under the
contracts to the trust. In either case, you may experience delays or reduction
in distributions to you. 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
14
<PAGE>
originator, the seller or the depositor, as the case may be. 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, the seller or the depositor were to file for reorganization under
Chapter 11 of the Bankruptcy Code. Each of these parties will represent and
warrant that the conveyance of the contracts by it is in each case a valid sale
and transfer of the contracts. In addition, in agreements conveying the
contracts, the originators, the seller and the depositor have agreed that they
will each treat the transactions described in this prospectus as a sale of the
contracts.
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 oligation to make payments would also become subject to the
insolvency proceedings. In that event, payments to the owner trust in respect of
those vendor contracts may be reduced or delayed. Payments to you may be reduced
if collections from the remaining unaffected contracts are insufficient to cover
losses to the owner trust. In those cases in which transfers of end-user
contracts by vendors to originator provide that the originator have 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, the vendor's bankruptcy, may
similarly result in reductions or payment delays in amounts due from the vendor.
END-USER BANKRUPTCY DECLINE IN VALUE OF EQUIPMENT MAY REDUCE OR DELAY
COLLECTIONS ON THE CONTRACTS AND DISPOSITION OF EQUIPMENT RELATING TO THESE
END-USERS MAY BE DELAYED OR MAY NOT RESULT IN COMPLETE RECOVERY OF AMOUNTS DUE
Bankruptcy and insolvency laws could affect your interests in contracts
with end-user obligors who become subject to bankruptcy proceedings. Those laws
could result in contracts of a bankrupt end-user being written off as
uncollectible or result in delay in payments due on the 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. Foreclosure sales of equipment and obtaining
deficiency judgments following foreclosure sales may not yield sufficient
proceeds to pay off the balance owed on a contract. If you must rely on
repossession and disposition of equipment to recover amounts due on defaulted
contracts, those amounts may be insufficient. 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 owner 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.
COMMINGLING OF COLLECTIONS COULD RESULT IN REDUCED PAYMENTS TO YOU
Cash held by the servicer may be commingled and used for the benefit of the
servicer prior to the date on which the collections are required to be deposited
in a collection account as described under 'Description of the Pooling and
Servicing
15
<PAGE>
Agreements -- Collections on Contracts.' In the event of the insolvency or
receivership of the servicer, an owner trust may not have a perfected ownership
or security interest in these collections. In that case, you may suffer losses
on your investment as a result.
BANKRUPTCY OF DEPOSITOR OR THE OWNER TRUST MAY CAUSE DELAYS IN OR REDUCE
COLLECTION UNDER THE CONTRACTS
If an owner trust or the depositor becomes insolvent under any federal
bankruptcy or similar state laws, the right of an indenture trustee to foreclose
upon and sell the assets of an owner trust is likely to be significantly
impaired by applicable bankruptcy laws. This would be the case before or
possibly even after an indenture trustee has foreclosed upon and sold the assets
of an owner trust. Under the bankruptcy laws, payments on debts are not made,
and secured creditors are prohibited from repossessing their security from a
debtor in a bankruptcy case or from disposing of security repossessed from the
debtor, without bankruptcy court approval. Moreover, the bankruptcy laws may
permit the debtor to continue to retain and to use collateral even though the
debtor is in default under the applicable debt instruments, if the secured
creditor is provided adequate protection. The meaning of the term adequate
protection may vary according to circumstances, but it is intended in general to
protect the value of the security from any diminution in the value of the
collateral as a result of its use by the debtor during the pendency of the
bankruptcy case. Because there is no precise definition of the term adequate
protection and because the bankruptcy court has broad discretionary powers, it
is impossible to predict if or how you would be compensated for any diminution
in value of the owner trust assets.
THE SELLER'S OBLIGATION TO REPURCHASE CONTACTS COULD BE IMPAIRED BY BANKRUPTCY
Newcourt Financial USA Inc., as the seller of contracts to the depositor,
will make representations and warranties regarding the contracts, the equipment
and other matters. See 'The Contracts -- Representations and Warranties Made by
the Seller.' If any representation or warranty with regard to a specific
contract is breached, is not cured within a specified period of time, and the
value of the contract is materially and adversely affected by the breach, the
seller must purchase the contract from the applicable owner trust at a price
equal to the amount required to pay off the contract. If the seller becomes
bankrupt or insolvent, each indenture trustee's right to compel a purchase would
both be impaired and have to be satisfied out of any available 'assets' of the
seller's bankruptcy estate. In that case, you may suffer a loss on your
investment in a note as a result.
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 owner trust will relate to software that
is not owned by an originator or related support and consulting services. 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, the owner trust will not have an interest in the
software or related support and consulting services. The owner trust will own
solely the associated contracts' cash flow. Accordingly, if any of these
contracts becomes a defaulted contract, the owner trust
16
<PAGE>
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, the owner
trust 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.
YEAR 2000 ISSUES MAY IMPACT THE SERVICER'S ABILITY TO SERVICE THE CONTRACTS
If a servicer does not have computerized systems that are Year 2000
compliant by the Year 2000, its 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 that 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.
The originators' and servicer's indirect parent, Newcourt Credit Group
Inc., has established procedures for evaluating and managing the risks and costs
associated with this problem. However, there can be no assurance that all of
Newcourt Credit Group Inc.'s internal computer systems will be able to handle
all Year 2000 problems. Furthermore, Newcourt Credit Group Inc. does not
guarantee that the systems and software of other companies on which its systems
and operations rely will be able to handle all Year 2000 problems.
THE YEAR 2000 PROBLEM MAY ALSO AFFECT THE DEPOSITORY TRUST COMPANY'S
RECORD-KEEPING AND DISTRIBUTIONS
The Depository Trust Company has reported that it has developed and is
implementing a program so that its systems, as the same relate to
the timely payment of distributions to securityholders,
book-entry deliveries, and
settlement of trades within The Depository Trust Company,
continue to function appropriately on and after January 1, 2000. However, The
Depository Trust Company's ability to perform properly its services is dependent
upon other parties, such as its participating organizations through which you
may hold your notes, and third party service providers of computer systems. The
Depository Trust Company has reported that it is contacting and will continue to
contact third party vendors from whom The Depository Trust Company acquires
services to determine the extent of their efforts for Year 2000 remediation and,
as appropriate, testing of their services. In addition, The Depository Trust
Company has stated that it is in the process of developing contingency plans. If
problems associated with the Year 2000 issue were to occur with respect to The
Depository Trust Company and the services described above, distributions to you
could be delayed or otherwise adversely affected.
17
<PAGE>
LIMITATIONS ON ENFORCEABILITY OF SECURITY INTERESTS IN THE EQUIPMENT MAY HINDER
THE OWNER TRUST'S ABILITY TO REALIZE THE VALUE OF EQUIPMENT SECURING THE
CONTRACTS
State law limitations on the enforceability of security interests and the
manner in which a secured party may dispose of collateral may limit the owner
trust's ability to obtain or dispose of collateral in a timely fashion. This
could reduce or delay the availability of funds to pay the notes. Under these
state law limitations:
if the obligor becomes bankrupt or insolvent, the owner trust may need
the permission of a bankruptcy court to obtain and sell its
collateral;
some jurisdictions require that the obligor be notified of the default
and be given a time period within which it may cure the default prior
to repossession; and
the obligor may have the right to redeem collateral for its
obligations prior to actual sale by paying the lessor or secured party
the unpaid balance of the obligation plus the secured party's expenses
for repossessing, holding and preparing the collateral for
disposition.
BANKRUPTCY COURT REJECTION OF 'TRUE LEASES' MAY REDUCE FUNDS AVAILABLE TO PAY
NOTES
A bankruptcy trustee or debtor-in-possession under federal bankruptcy or
similar state laws has the right to assume or reject any executory contract or
unexpired lease which is considered to be a 'true lease' under applicable law. A
'true lease' is a contract under which the applicable originator or vendor holds
a residual interest in equipment of more than a nominal amount. Some contracts
will be true leases and thus subject to rejection by the lessor under federal
bankruptcy or similar state laws. For this reason, the originator, as
debtor-in-possession or the originator's bankruptcy trustee may reject the
leases of which that originator is the lessor. Upon any rejection, payments to
the applicable originator under the rejected contract may terminate and your
investment may be subject to losses. In addition, any contract which is a true
lease that a vendor originated and transferred to an originator in a transaction
whereby the vendor continues to be the lessor, will be subject to rejection by
the vendor, as debtor in possession, or by the vendor's bankruptcy trustee. An
example of this transaction is a transfer by a vendor to an originator of a
security interest in the lease contract or a transfer by a vendor to an
originator of an interest in the right to payments only under the lease
contract. Upon any rejection, payments to the applicable originator under the
rejected contract may terminate and your investment may be subject to losses.
THE DEPOSITOR
The depositor is NCT Funding Company, L.L.C., a limited liability company
organized under the laws of the State of Delaware. Newcourt Financial USA Inc.
owns all of the depositor's membership interests. On or before the closing date
for a series of notes the depositor will arrange for Newcourt Financial USA to
transfer contracts and interests of the originators in the related equipment to
the depositor in exchange
18
<PAGE>
for cash proceeds. The transfer of a contract and related equipment to the
depositor will be from either or both of:
Newcourt Financial USA Inc.; or
The Newcourt Equipment Trust -- VFC Series, a trust the depositor
established to finance contracts and related equipment interests
through a warehouse receivable securitization facility.
In each case Newcourt Financial USA Inc. will have obtained contracts and
equipment interests from the originators or shall itself have been the
originator or shall have acquired contracts from third parties not affiliated
with Newcourt Financial USA.
The depositor will pay to Newcourt Financial USA Inc., as seller, or the
receivables securitization facility trust noted above, as the case may be, the
net proceeds received from the sale of the notes of each series.
Newcourt Financial USA Inc. formed NCT Funding Company, L.L.C., the
depositor, solely for the transactions described in this prospectus and other
similar transactions. Under the depositor's formation documents and the pooling
and servicing agreement, executed in connection with each owner trust, the
depositor is permitted to engage only in the following activities:
acquiring contracts, interests in pools of contracts and interests of
originators in equipment and other real or personal property;
transferring and conveying the contracts and security interests in the
related equipment to owner trusts and other similar trusts;
issuing and selling notes, certificates or other securities secured by
representing interests in pools of contracts and other property;
executing and performing obligations under the relevant trust
agreements, sale and contribution agreements, and pooling and
servicing agreements covering the transfer and servicing of a pool of
contracts;
holding or transferring other securities issued by each owner trust;
investing proceeds from the sale of securities representing interests
in pools of contracts;
engaging in other transactions, including entering into agreements
that are necessary, suitable or convenient to accomplish the foregoing
or are incidental or connected to the foregoing; and
other transactions of the type described in this prospectus.
The depositor is prohibited from incurring any debt, issuing any obligations or
incurring any liabilities, except in connection with the formation of any owner
trust and the issuance of the related series of securities issued by the owner
trust. The depositor is not responsible for payment of any principal, interest
or any other amount in respect of any series of notes.
19
<PAGE>
THE OWNER TRUSTS
The depositor will form each owner trust under a trust agreement between
the depositor and the owner trustee, as described in your prospectus supplement.
Each owner trust may issue one or more classes of securities, representing debt
of or beneficial ownership interests in the owner trust. The trust will not
offer the beneficial ownership interests under this prospectus.
The assets of each owner trust, as further specified in your prospectus
supplement, will consist of:
(1) a pool primarily of the following types of contracts:
equipment lease contracts,
conditional sale/financing agreements,
installment payment agreements,
promissory notes, and
loan and security agreements;
(2) amounts on deposit in, and any eligible investments allocated to,
accounts established under the related indenture and the pooling and
servicing agreement;
(3) the depositor's rights under the related purchase and sale agreement or
other instrument by which it acquired contracts, if any; and
(4) the depositor's rights with respect to any cash collateral account or
other form of credit enhancement for the notes.
The owner trust will have the right to:
all funds payable under the contracts after the cut-off date, the
date on which the owner trust's right to contract payments
commences. This includes all scheduled but unpaid amounts due prior
to the cut-off date, but excludes any scheduled payments due on or
after, but received prior to, the date the depositor transfers the
contracts to an owner trust. This does not include contract payments
in respect of taxes, insurance premiums, security deposits, late
charges, administrative fees or charges;
prepayments, except for any portion allocated to the depositor in
respect of equipment leases;
liquidation proceeds received with respect to defaulted contracts,
except for any portion allocable to the depositor under an equipment
lease;
earnings from the investment of funds in the collection account and
note distribution account maintained by the servicer; and
security interests in the equipment related to the contracts, but
excluding ownership rights.
No owner trust will engage in any business activity other than
issuing notes and ownership interests in the owner trust,
purchasing contracts and related assets;
holding and dealing with the assets of owner trust,
20
<PAGE>
making payments on the notes and other securities it issued,
entering into and performing the duties, responsibilities and
functions required under any of the related pooling and servicing
agreement, indenture, contracts, and related documents, and
matters incidental to the above.
The assets of an owner trust will be separate from the assets of all other
owner trusts the depositor creates. Accordingly, the assets of one owner trust
will not be available to make payments on the securities issued by any other
owner trust.
The depositor will specify the owner trustee of the owner trust for notes
being offered in your prospectus supplement. The owner trustee's liability in
connection with the sale of notes will be limited to the express obligations of
the owner trustee in the related trust agreement and indenture. An owner trustee
may resign at any time, in which event the depositor or its designee must
appoint a successor owner trustee. The depositor or its designee may also remove
an owner trustee if the owner trustee ceases to be eligible to continue as such
under the related trust agreement or if the owner trustee becomes insolvent. Any
resignation or removal of an owner trustee will not become effective until
acceptance of the appointment of a successor owner trustee.
NEWCOURT CREDIT GROUP INC.
GENERAL
Newcourt Credit Group Inc. was formed in 1984 as an investment bank. It
originated and structured asset-based financings for the corporate and
institutional asset finance market and syndicated the financings to Canadian
financial institutions. In 1988, Newcourt Credit Group Inc. broadened its
activities to include vendor and direct equipment financing. Today, Newcourt
Credit Group Inc. is one of the world's largest providers of vendor finance and
one of the world's largest non-bank commercial asset finance companies. Newcourt
Credit Group Inc. has approximately U.S. $23.4 billion (Canadian $36.2 billion)
of owned and managed assets and U.S. $3.0 billion (Canadian $4.7 billion)
shareholders' equity at December 31, 1998.
Newcourt Credit Group Inc.'s international origination and servicing
capabilities span 26 countries around the globe. Newcourt Credit Group Inc.
serves clients in Canada, the United States, the United Kingdom, the
Asia/Pacific region, Europe, Mexico and South America.
Newcourt Credit Group Inc.'s United States asset-based operations are
conducted through indirect subsidiaries owned by Newcourt Credit Group USA Inc.,
a wholly owned subsidiary.
Newcourt Credit Group has entered into a business combination agreement
with The CIT Group Inc. The proposed business combination is subject to a number
of conditions. There can be no assurance that the parties will be able to
satisfy these conditions to the completion of the transaction or that they will
complete the transaction in accordance with agreements between them.
21
<PAGE>
Newcourt Credit Group Inc.'s principal executive offices are located at
Queens Quay Terminal, 207 Queens Quay West, Floors 6 & 7, Toronto, Ontario
M5J 1A7, (416) 507-2400.
ACQUISITIONS
In January 1998, Newcourt Credit Group Inc. consummated the acquisition of
all of the outstanding shares of AT&T Capital Corporation. The aggregate
purchase price paid by Newcourt Credit Group Inc. on the acquisition closing was
approximately Canadian $2.4 billion (U.S. $1.7 billion). As a result, AT&T
Capital Corporation became a wholly owned subsidiary of Newcourt Credit Group
USA Inc.
THE SERVICER
AT&T Capital Corporation is currently expected to be the servicer. However,
if the depositor selects a different servicer for any particular series of
notes, the relevant prospectus supplement will provide information about that
servicer.
AT&T Capital Corporation is a full-service, diversified, equipment leasing
and finance company that operates principally in the United States and also has
operations in the Asia/Pacific region, Mexico and South America. AT&T Capital
Corporation is one of the largest equipment leasing and finance companies in the
United States and is the largest lessor of telecommunications equipment in the
United States, in each case, based on the aggregate value of equipment leased or
financed.
AT&T Capital Corporation, a Delaware corporation, is a wholly owned
subsidiary of Newcourt Credit Group USA Inc., which in turn is a wholly owned
subsidiary of Newcourt Credit Group Inc. AT&T Capital Corporation's chief
executive offices are currently located at 2 Gatehall Drive, Parsippany, New
Jersey 07054 and its telephone number is (973) 606-3500.
AT&T Capital Corporation, through some of the originators, leases and
finances a wide variety of equipment, including
telecommunications equipment, such as private branch exchanges,
telephone systems and voice processing units,
information technology equipment, such as personal computers, retail
point of sale systems and automated teller machines,
general office, manufacturing and medical equipment, and
transportation and construction equipment.
In addition, the group provides franchise financing for franchises and financing
collateralized by real estate.
AT&T Capital Corporation markets its leasing and financing services to
customers of equipment manufacturers, distributors and dealers with which AT&T
Capital Corporation has a marketing relationship for financing services and
directly to end-users of equipment. AT&T Capital Corporation's approximately
500,000 customers include large global companies, small and mid-sized businesses
and federal, state and local governments and their agencies.
22
<PAGE>
As of December 31, 1998, AT&T Capital Corporation had, on a consolidated
basis, total assets of $10.8 billion, total liabilities of $9.9 billion and net
income for the year ended December 31, 1998 of $97.5 million.
AT&T Corp. founded AT&T Capital Corporation in 1985 as a captive finance
company to assist AT&T Corp.'s equipment marketing and sales efforts by
providing its customers with sophisticated financing.
THE SELLER AND ORIGINATORS
The information in this section describes several companies which may be
originators in respect of a particular pool of contracts. Your prospectus
supplement may provide information on other originators. Each of the seller and
originators will be an indirect wholly owned subsidiary of Newcourt Credit Group
Inc.
NEWCOURT FINANCIAL USA INC.
Newcourt Financial USA Inc., an originator and the seller of contracts of
the depositor, was incorporated on January 8, 1992 in Delaware and is a wholly
owned subsidiary of Newcourt Credit Group USA Inc. Newcourt Credit Group USA
Inc. is a wholly owned subsidiary of Newcourt Credit Group Inc. Newcourt
Financial USA originates and acquires
conditional sales agreements,
leases,
secured promissory notes, and
purchase arrangements
These contracts finance equipment of the following types:
transportation,
construction,
information technology,
communications,
commercial and
industrial and resource.
Newcourt Financial USA typically structures its vendor financing
arrangements as
direct originations with customers and end-users of a vendor's
products, either with or without recourse, or
assignments of contracts, either with or without recourse, by a vendor
to Newcourt USA.
Newcourt Financial USA will sell to the depositor contracts which the
seller will have originated or acquired from other originators. The seller will
sell its contracts to the depositor under a purchase and sale agreement
containing seller representations and warranties as to the contracts. Prior to
the offering of your series of notes, the seller may have sold contracts to the
depositor for deposit into a trust used in connection with a warehouse
receivables securitization facility. The depositor may
23
<PAGE>
reacquire some or all of these contracts for deposit into the owner trust in
connection with the offering and sale of a particular series of notes.
Newcourt Financial USA's principal executive offices are located at 2
Gatehall Drive, Parsippany, New Jersey 07054 and its telephone number is (973)
606-3500.
NEWCOURT LEASING CORPORATION
Newcourt Leasing Corporation, an originator formerly known as AT&T Capital
Leasing Services, Inc., provides leasing and financing programs for certain
targeted manufacturers and distributors as well as leasing and financing to
existing customers. Newcourt Credit Group Inc. acquired Newcourt Leasing
Corporation as part of the acquisition of AT&T Capital Corporation. Newcourt
Leasing Corporation is a wholly owned subsidiary of AT&T Capital Corporation.
Newcourt Leasing Corporation is headquartered in Westborough,
Massachusetts. The Newcourt Leasing Corporation portfolio, which includes both
contracts owned by Newcourt Leasing Corporation and contracts serviced on behalf
of others, is primarily comprised of leases of and loans on the following
equipment types:
computer,
machine tool manufacturing,
copier,
medical/dental,
printing and
automobile test/repair.
NEWCOURT COMMUNICATIONS FINANCE CORPORATION
Newcourt Communications Finance Corporation, an originator formerly known
as AT&T Credit Corporation, supports the sales of Lucent Technologies Inc. and
NCR Corporation equipment by providing leasing and financing options to
customers who have selected equipment manufactured or supplied by these vendors.
AT&T Corp. established Newcourt Communications Finance Corporation's predecessor
as a captive finance company in 1985. Newcourt Credit Group Inc. acquired
Newcourt Communications Finance Corporation as a result of the acquisition of
AT&T Capital Corporation. Newcourt Communications Finance Corporation is a
wholly owned subsidiary of AT&T Capital Corporation.
Lucent Technologies and NCR Corporation generate substantially all of
Newcourt Communications Finance Corporation's transactions. Lucent Technologies
manufactures and distributes telecommunications and related equipment. NCR
Corporation manufactures and distributes information technology, including
retail point-of-sale systems, automated teller machines and computers. The
Newcourt Communications Finance Corporation portfolio of contracts is primarily
comprised of both leases and loans on the following equipment types:
telecommunication,
retail point-of-sale system,
24
<PAGE>
automatic teller machine and
computer.
NEWCOURT COMMERCIAL FINANCE CORPORATION
The Portland Division of Newcourt Commercial Finance Corporation, an
originator, provides financing and leasing programs for manufacturers and
distributors of material handling and construction equipment. Newcourt
Commercial Finance Corporation is a wholly owned subsidiary of AT&T Capital
Corporation. Prior to being acquired by Newcourt Credit Group Inc., Newcourt
Commercial Finance Corporation operated as the Portland division of AT&T
Commercial Finance Corporation. Newcourt Commercial Finance Corporation was
formed in December 1989 in connection with the acquisition of substantially all
the assets of two divisions of Pacificorp Credit, Inc.
Newcourt Commercial Finance Corporation is headquartered in Parsippany, New
Jersey. The Newcourt Commercial Finance Corporation portfolio, which includes
both contracts owned by Newcourt Commercial Finance Corporation and contracts
serviced on behalf of others, is comprised entirely of leases of and loans on
construction and material handling equipment.
NEWCOURT TECHNOLOGIES CORPORATION
Newcourt Technologies Corporation, formerly known as AT&T Systems Leasing
Corporation, provides leasing, financing and remarketing of computer equipment,
electronics, manufacturing and other capital equipment. Newcourt Technologies
Corporation's predecessor was established in 1987 and acquired by AT&T Capital
in 1990. Newcourt Credit Group Inc. acquired Newcourt Technologies as a result
of the acquisition of AT&T Capital. Newcourt Technologies Corporation is a
wholly owned subsidiary of AT&T Capital and is headquartered in Bloomfield
Hills, Michigan.
UNDERWRITING AND SERVICING
CREDIT MANAGEMENT PHILOSOPHY
Each originator strives to manage risks in connection with its business,
including credit risk and residual value risk associated with acquiring and
holding contracts. The management of these risks is critical to the success of
each originator. Each originator has in place policies, controls, systems and
procedures intended to manage and limit these risks and promote early problem
recognition and corrective action, as well as facilitate consistent portfolio
performance measurements. Newcourt Credit Group Inc.'s risk management
department, which includes credit and asset management personnel, Newcourt
Credit Group Inc.'s internal and external auditors and Newcourt Credit Group
Inc.'s audit committee periodically reviews these policies, controls, systems
and procedures. In addition, the investment committee of Newcourt Credit Group
Inc. monitors overall risk profile.
Each originator seeks to minimize its credit risk through diversification
of its portfolio by customer, industry segment, equipment type, geographic
location and transaction maturity. Each originator's financing activities cover
a wide range of
25
<PAGE>
equipment types, including, general equipment, telecommunications equipment,
office equipment, information technology and transportation equipment, and a
large number of end-users located throughout the United States and, to a lesser
extent, abroad.
CREDIT APPROVAL
Each originator has a chief credit officer who is responsible for
overseeing the quality, integrity and performance of the originator's credit
portfolios. Before any transaction can be committed to, it must first qualify
for credit approval under one of Newcourt Credit Group Inc.'s proprietary credit
scoring models. Alternatively, a duly authorized credit officer must approve the
transaction in accordance with clearly defined authorities, policies and
procedures. Each originator's chief credit officer has the responsibility of
establishing credit policies appropriate for the originator's business and
periodically reviewing its credit personnel's exercise of credit authority for
adherence to the established credit policies.
Credit authorities are an important tool that each originator uses to
manage and control its portfolio risk. The originators set credit authorities in
order to enable individual credit officers to handle approximately 80-85% of the
transactions flowing to them. This approach results in higher credit authorities
reviewing approximately 15-20% of the transactions. This ensures oversight of an
individual's judgment, credit skills and compliance with credit policy by more
senior credit officials. Each originator's chief credit officer is empowered to
establish credit authorities for qualified members of their credit staff for up
to $500,000. Approval of new credit authorities up to $5,000,000 requires the
approval of Newcourt Credit Group Inc.'s chief investment officer in addition to
the approval of the originator's chief credit officer. Approval of new credit
authorities in excess of $5,000,000 also requires the approval of the president
of Newcourt Credit Group Inc. services business unit or Newcourt Credit Group
Inc.'s chief executive officer. The existing credit authorities allow each
originator's chief credit officer to approve transactions:
up to $7,500,000 in the case of Newcourt Communications Finance
Corporation,
up to $5,000,000 in the case of Newcourt Leasing Corporation,
up to $1,500,000 in the case of Newcourt Commercial Finance
Corporation and
up to $5,000,000 in the case of Newcourt Technologies Corporation and
Newcourt Financial USA.
Approval of Newcourt Credit Group Inc.'s chief investment officer is required
for transactions in excess of an originator's credit authority. Each originator
reports all investment decisions involving amounts in excess of $10,000,000 to
the Investment Committee of Newcourt Credit Group, Inc.'s Board of Directors
each month. The Investment Committee must approve amounts in excess of
$20,000,000 for transactions risk rated below investment grade, while each
originator's authority for transactions risk rated low investment grade or
higher is $35,000,000.
The credit authority granted to approve transactions may not be delegated.
26
<PAGE>
Each originator monitors portfolio quality regularly to assess the overall
condition of the portfolio and identify the major exposures within the
portfolio. Each originator utilizes the 'one obligor concept' in computing total
credit exposure; this means that the level of credit authority required to
approve an incremental transaction must be sufficient to approve the customer's
total credit exposure. Newcourt Credit Group Inc. tracks credit exposure in an
automated fashion aggregating all originators' exposure to each customer
including its subsidiaries, affiliates and commonly controlled companies. Unless
otherwise specifically approved, credit approvals are valid for up to 180 days.
UNDERWRITING -- GENERAL
The purpose of each originator's underwriting standards is to evaluate a
prospective customer's credit standing and repayment ability. Each originator
makes credit decisions based upon the credit characteristics of the applicant,
loss experience with comparable customers, the amount and terms and conditions
of the proposed transaction and the type of equipment to be leased or financed.
For almost all transactions under $50,000, the originators, other than Newcourt
Commercial Finance Corporation and Newcourt Technologies Corporation, utilize
credit scoring systems to make credit decisions. In a credit scoring system, a
computer makes the initial credit decision after inputting credit application
data and credit bureau information into a statistical model of such originator's
prior loss experience. Newcourt Credit Group Inc. intends the proprietary credit
scoring systems to improve credit decisions on new lease applications, expedite
response times to customers and increase business volume and portfolio
profitability while maintaining credit quality.
With respect to credit decisions for those transactions which are not based
on credit scoring, each originator's credit officers conduct various credit
investigations, including reference calling and the procurement and analysis of
data from credit reporting agencies such as Dun & Bradstreet and other credit
bureaus. In the case of larger sized transactions (generally over $100,000),
each originator's credit officers will obtain and analyze financial statements
from the customer. The analysis is to determine the reliability of the financial
statements and to ascertain the financial condition and operating performance of
the potential customer. Each originator carefully reviews asset quality and
stated liabilities are compared to the information obtained from reference
checking and credit reports. Each originator checks cash flow for reliability
and adequacy to service funded debt maturities and other fixed charges. The
financial analysis typically involves a review of the potential customer's
leverage, profitability, liquidity and cash flow utilizing a variety of
financial ratios and comparing the company to other companies its size in
similar businesses. In this connection, the analysis utilizes various reference
sources, such as Robert Morris Associates Annual Statement Studies.
Additionally, the originator may obtain information from rating agencies,
securities firms, Bloomberg and numerous other sources. The credit officer then
prepares a written analysis summarizing the amount and terms of the credit
request and setting forth the credit officer's recommendation including detailed
supporting rationale. Each originator also considers alternative exit
strategies, including an analysis of the value of the equipment as well as its
essentiality of use, in the event the customer fails to honor its payment
obligations, No originator imposes
27
<PAGE>
either rigid loan-to-value ratios in its underwriting processes or a maximum
loan-to-value ratio.
The credit approval will also set forth any conditions of approval such as
personal or corporate guarantees, shorter lease terms, more advance payments or
other credit enhancements, and it will dictate the necessary documentation. One
of Newcourt Credit Group Inc.'s authorized credit officers must re-approve any
subsequent modification of approval terms or required documentation. Newcourt
Credit Group Inc. also requires the credit personnel of each originator to rate
the creditworthiness of each of unit's customer accounts over $100,000. In the
process, the credit personnel are also required to take into account other
factors affecting the credit risk of a particular transaction, such as
collateral value, credit enhancement and duration of the credit.
UNDERWRITING -- ADVANCED CREDIT SCORING SYSTEMS
In 1992, AT&T Capital Corporation commissioned the Bell Laboratories
Operations Research Department to design decision support systems and associated
strategies for credit risk management throughout the customer's financing life
cycle. This life cycle approach, while commonplace in the consumer credit field,
is not common in commercial leasing. This process developed and implemented
three sets of decision support systems, covering each stage of the small ticket
leasing life cycle:
front-end credit decisions,
credit line management, and
delinquent account collections.
See ' -- Collections' below. Each system includes
a suite of statistically derived risk prediction models,
a sequential decision strategy which determines the model to be used
in each instance, and
a risk based strategy which determines the optimal decision based upon
the model results.
The current front-end credit decisioning systems follow a series of steps
including:
the selection and electronic retrieval of credit bureau information,
the quantification of credit risk and
the decision to accept, reject or manually review the credit
applicant.
While both Newcourt Leasing Corporation and Newcourt Communications Finance
Corporation have been using credit application scoring models based on more
traditional credit scorecards since 1991 and 1989, respectively, Newcourt
Leasing Corporation implemented an improved decisioning system in March 1993,
while Newcourt Communications Finance Corporation implemented this system in May
1995.
Additionally, Newcourt Communications Finance Corporation has developed and
implemented credit line management models since May 1995. This originator
monitors the credit scoring systems using various reporting mechanisms and has
upgraded the
28
<PAGE>
system over time to incorporate the value of more recent data and to take
advantage of improved statistical techniques. Authorized credit officers may
override credit scoring decisions, but are discouraged from doing so unless the
originator uncovers additional information which materially strengthens the
transaction or if sufficient credit enhancements can be obtained to mitigate the
risk. Operating units track overrides each month. Overrides are more common at
Newcourt Communications Finance Corporation than they are at Newcourt Leasing
Corporation. Newcourt Commercial Finance Corporation and Newcourt Technologies
Corporation do not use these advanced scoring systems because the contracts
originated by them have larger original balances.
The originators also underwrite contracts representing smaller ticket
commercial assets originated through some of Newcourt Financial USA's vendor
programs utilizing computerized credit scoring models. The computer makes the
initial credit decision after consideration of the credit application data and
credit bureau information based on statistical historical loss analysis and
developed in conjunction with Fair Isaac. Fair Isaac is a major credit scoring
company and has a long history of consumer, small business and related credit
data. This empirical data is used to develop specific parameters within a
designated group and to predict future delinquency and default rates. By setting
approval cutoff levels on total scores at levels associated with predetermined
default rates, Newcourt USA is able to provide a program level credit score
according to its internal policies.
In the third quarter of 1998, Newcourt Credit Group Inc. hired four full
time Phd's formerly employed by AT&T Labs and who constituted the principal
development team behind AT&T Capital's credit automation program. This program,
which is briefly described above, involves dozens of individual credit models as
well as behavioral collections programs. Newcourt Credit Group, Inc. refers to
this group as the Management Science Team and is based in Shrewsbury, NJ. In
addition to monitoring and periodically refreshing the existing credit models,
this group will also expand the scope of credit automation within Newcourt
Credit Group, Inc.'s portfolio.
UNDERWRITING -- VENDOR PROGRAMS
In initially establishing a program agreement or other form of financing
arrangement with a vendor, Newcourt Financial USA completes a formal
underwriting review of the vendor to ensure that the vendor can perform the
financial and other obligations contained in any vendor agreement. This review
encompasses a financial review, a product review (including an analysis of
market acceptance of the vendor's products) and a general operational and
managerial review of the vendor. Vendors must generally be established in their
field and must market industry accepted equipment or other products. The vendor
must have sufficient financial resources to support the financing relationship
contemplated by the respective originator. Program agreements are continually
monitored by the respective originator. Each originator performs a formal annual
review of a vendor's financial condition for a vendor which generates a
substantial amount of contracts.
29
<PAGE>
DOCUMENTATION
Contract documentation may include:
a credit application,
a signed lease/installment sale or financing agreement,
a vendor invoice, initial lease/advance payment,
proof of insurance, where relevant,
delivery and acceptance acknowledgments and
financing statements.
The originators typically require filing of financing statements as
follows:
in the case of originations by Newcourt Commercial Finance
Corporation, Newcourt Leasing Corporation, Newcourt Communications
Finance Corporation and Newcourt Technologies Corporation, in the
appropriate 'filing' jurisdiction if the fair market value of the
equipment is at least $20,000 or, in the alternative, at least $50,000
if the equipment relates to a lease with a 'fair market value'
purchase option, and
in the case of originations by Newcourt Financial USA Inc., in the
appropriate 'filing' jurisdiction if the fair market value of the
related equipment is at least $25,000.
BILLING
Third parties handle billing for the originators. The third parties prepare
and mail monthly invoices. All customers have a billing cycle, and the billing
party generates invoices automatically and mails them out before the due date,
with the exception of end-users as to whom payment coupon books evidence their
payment obligations or from whose accounts the billing party automatically
debits their payments. From time to time to facilitate customer needs, the
originators will provide manual invoices. Monthly invoices include the scheduled
payment, taxes, insurance and late charges, if any. The vast majority of
contracts provide for level payments throughout their term. Substantially all
customers forward payments to lockboxes with certain financial institutions.
PORTFOLIO MONITORING
The originators track and calculate delinquency monthly for each major
portfolio segment, including segmentation by classification of days past due.
They monitor credit losses each month and compare them with credit losses for
previous months and the corresponding month in a number of prior years. Each
originator also employs other techniques in evaluating the performance of its
portfolio. These techniques include:
roll rate analysis -- a type of portfolio analysis examining the rate
at which accounts in various stages of delinquency become, or 'roll'
into, losses, and
30
<PAGE>
a type of vintage analysis -- another type of portfolio analysis in
which each originator's assets are classified by age and then compared
across different years, e.g., comparing loss experience for
two-year-old portfolio in 1996 with that in 1995.
For transactions over $1,000,000, each originator conducts annual reviews
of customer financial condition and risk rating. The originators conduct these
annual reviews on transactions over $500,000 which have high risk ratings. They
monitor all other transactions via the normal collection process, meaning that
they would receive individual attention only if they became delinquent or for
some other reason came to the attention of the company's credit and collections
personnel. For example, a material adverse change in the financial condition of
the obligor in the transaction would trigger an individual review.
In addition to providing an initial credit review, ongoing credit review
procedures exist to identify at an early stage those customers that may be
experiencing financial difficulty. Credit personnel monitor these customers once
they are identified. The credit personnel periodically make recommendations to
the originator's chief credit officer as to
what remedial actions the originator should take;
what portion, if any, of total credit exposures the originator should
write off; or
whether the originator should make a specific allocation of the
originator's loss reserves.
In establishing allowances for credit losses, each originator's management
reviews:
the aging of the originator's portfolio,
all non-performing leases and receivables,
prior collection experience, and
originator's overall exposure and changes in credit risk.
COLLECTIONS
Each originator collects overdue payments using several different methods.
Newcourt Communications Finance Corporation and Newcourt Leasing Corporation
have deployed computerized collection management systems. Newcourt Leasing
Corporation has used outbound call management systems and behavioral scoring
systems in prioritizing collection activities in its collection process since
March 1994. Newcourt Communications Finance Corporation has utilized similar
technology in its collection activities since 1989 with the exception of
behavioral scoring, which it implemented in September 1996 following a testing
period in several of Newcourt Communications Finance Corporation's units. The
collection management systems prioritize delinquent accounts into automated
queues using delinquent account scoring systems, also referred to as behavioral
scoring. Telephone calls to delinquent accounts are automatically dialed by the
system eliminating no answer and busy line calls, which the system automatically
reschedules.
31
<PAGE>
Newcourt Financial USA, Newcourt Technologies Corporation and Newcourt
Communication Finance Corporation rank accounts using a suite of statistically-
derived risk prediction indicators for handling in order of risk weighted
exposure. The collection management systems utilize different account collection
strategies as a function of risk level and account balance. Accounts with low
balances or low risk or both get a low impact collection strategy which involves
greater reliance upon letters in the early stages of delinquency and less
reliance on telephone calls until the later stages of delinquency. Also, the
number of days between actions is greater for a low risk account than in the
case of a high risk account. A high impact collection strategy applies to
accounts with high balances and/or high risk scores. In this case, telephone
calls commence sooner in the collection process, and the originators space
collection actions more closely.
During 1999, the originators will continue to move some of their small to
mid-ticket collection activities into a centralized call center located in
Memphis, Tennessee. The call center employs approximately 200 people, primarily
collectors and customer service representatives, and utilizes a Davox call
management system and other collection technologies such as behavioral scoring
to efficiently collect on past due accounts.
The originators frequently use outside collection agencies and attorneys to
supplement collection activity. Typically, the originators place an account with
an outside collection agency or attorney when it is 180 days or more past due.
However, they may place accounts past due less than 180 days with a collection
agency or attorney depending upon the circumstances of its delinquency. They may
repossess equipment at any time after the contractual default but typically do
not do so until the account is past due between 90 and 180 days, or earlier if
they determine the equipment to be at risk.
NON-ACCRUAL AND WRITE-OFF POLICY
Each originator maintains non-accrual and write-off policies. The policies
require that all accounts which are 90 days past due, or less in the event of a
bankruptcy, be categorized as non-performing. The majority of delinquent
accounts will be written off or specifically reserved for no later than 180 days
past due. While smaller accounts, generally $50,000 or less, will be written off
at that time, larger accounts will have specific reserves recorded which
appropriately reduce the carrying value of the contracts to an amount roughly
equivalent to the estimated market value. However, the servicer will evaluate
some delinquent accounts and if the obligor appears likely to make payment in
full despite the delinquency, the servicer may decide not to write-off or
reserve at that time.
THE CONTRACTS
With respect to any series of notes, this prospectus and any prospectus
supplement refer to the aggregate of the contracts in an owner trust, as of any
particular date, as the contract pool. This prospectus and any prospectus
supplement refer to the contract pool, as of the cut-off date specified in the
prospectus supplement for your notes, as the cut-off date or initial contract
pool. Changes in the
32
<PAGE>
characteristics of the contracts between the cut-off date and the closing date
will not affect more than 5% of the cut-off date contract pool principal
balance. This prospectus and any prospectus supplement refer to equipment,
software and services collectively as financed items.
DESCRIPTION OF THE CONTRACTS
All of the contracts in each owner trust will be commercial, rather than
consumer, leases or loans. The following description of the contracts describes
the material terms of the contracts to be included in each contract pool,
although an immaterial number of contracts in a contract pool may differ in one
or more provisions from the description below.
END-USER CONTRACTS
Each owner trust will include contracts to which the end-user of the
equipment is a party. The depositor lists the types of contracts under 'The
Owner Trusts' above.
There will be no limit on the number of contracts in a particular contract
pool which may consist of any of those types. Each contract is required,
however, to be an 'eligible contract,' as of the date the depositor transfers
the contracts to the respective owner trusts. An eligible contract is a contract
as to which the representations and warranties listed below under
' -- Representations and Warranties Made by the Seller' are true as of the
transfer date.
CONDITIONAL SALE AGREEMENTS
Each originator will offer financing for equipment under conditional sale
agreements assigned to the applicable originator by the vendor of the equipment.
Each originator will generally use its standard pre-printed form to document the
conditional sale agreements in a contract pool. In some instances, the
originator will use a vendor's standard, pre-printed form. The conditional sale
agreement sets forth the description of each financed item and the schedule of
installment payments. Typically, loans under conditional sale agreements are
fixed rate and are for a term of one to seven years. Payments under conditional
sale agreements typically are due monthly. Conditional sale agreements
typically:
provide for a grant by the end-user of the equipment of a security
interest in the equipment, which security interest is 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;
require the end-user to maintain the equipment, keep it free and clear
of liens and encumbrances and pay all taxes related to the equipment;
restrict the modification or disposal of the equipment without the
vendor's, or its assignee's, consent;
include a disclaimer of warranties;
33
<PAGE>
include the end-user's indemnity against liabilities arising from the
use, possession or ownership of the equipment;
include the end-user's absolute and unconditional obligation to pay
the installment payments on the loan; and
include specific events of default and remedies for default.
A conditional sale agreement typically 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. The
originator's legal department and levels of management must approve
modifications before the originator will agree to accept an assignment of the
conditional sale agreements from a vendor unless the vendor has indemnified the
originator against any losses or damages it may suffer as a result of
modifications.
LEASES
Each originator, either directly or by assignment from vendors, will offer
financing of equipment, software and services under leases. Leases may consist
of individual lease agreements relating to a single, separate transaction and
financed item. Alternatively, the individual leases may be 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, software and services being leased or financed and the schedule of
related rental payments, are typically 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 to the master
lease agreement incorporates the master lease agreement by reference, and is
treated by the originator as a separate lease. The originator or the vendor
originates each lease in the ordinary course of business. Vendors who originate
leases assign them to the originator. An originator also may purchase leases on
a portfolio basis.
The initial terms of the leases in the contract pool typically range from
one to seven years. Each lease provides for the periodic payment by the end-user
of rent in advance or arrears, generally monthly or quarterly. The periodic
payments represent the amortization, generally on a level basis, of the total
amount that an end-user is required to pay throughout the term of a lease.
A contract pool will include 'net leases' under which the end-user assumes
responsibility for
the financed items, including operation, maintenance, repair, and
insurance or self-insurance,
return of the equipment at the expiration or termination of the lease,
and
the payment of all sales, use and property taxes relating to the
financed items during the lease term.
The end-user further agrees to indemnify the lessor for any liabilities
arising out of the use or operation of the financed items. In most cases, the
end-user also authorized the lessor 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 contain 'hell or
high water' clauses unconditionally
34
<PAGE>
obligating the end-user to make periodic payments, without setoff, at the times
and in the amounts specified in the lease. If an originator is the lessor, the
lease will contain no express or implied warranties with respect to the financed
items other than a warranty of quiet enjoyment. If a vendor is the lessor, the
lease or a related agreement may contain representations and warranties with
respect to the financed items in addition to a warranty of quiet enjoyment.
However, the end-user typically agrees not to assert any warranty claims against
any assignee, including the originator, of the vendor by way of setoff,
counterclaim or otherwise, and further agrees that it may only bring that type
of claim against the vendor. Leases of equipment often 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 these risks, if
approved in advance by the originator or vendor, as applicable.
The leases will 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, except for the risk of loss of
the equipment, which is passed to the end-user under the leases. The lessor also
takes any tax benefits associated with the ownership of depreciable property
under applicable law. No title is conferred upon the lessee. The lessee under a
'true lease' has the right to the temporary use of property for a term shorter
than the economic life of the property in exchange for payments at scheduled
intervals during the lease term. Additionally, 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
these leases depend on the terms of the related individual lease agreement or
master lease agreement supplement, but often these terms provide for the
purchase of the equipment at a prestated price, which may be nominal. The
inclusion of 'true leases' in a contract pool should have no federal income tax
impact on holders of notes since the notes are treated as debt for federal
income tax purposes. However, the inclusion of 'true leases' may result in the
imposition of state and local taxes which would reduce cash available for
payment on the notes.
A lease will either prohibit the end-user from altering or modifying the
equipment or permit the end-user to 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 leases, the lessee may relocate the
equipment upon giving the lessor prompt written notice of the relocation. The
right to grant or deny consent or to receive written notice will be exercised by
the servicer under the authority delegated to it in the related pooling and
servicing agreement. Some leases will permit the end-user to substitute
substantially identical leased equipment for leased equipment scheduled to be
returned to the lessor under the lease.
35
<PAGE>
While the terms and conditions of the leases will not usually permit
cancellation by the end-user, the lessor and the end-user may modify or
terminate some leases before the end of the lease term. The originator, or a
vendor, with the consent of the originator, may permit the modifications to a
lease term or early lease terminations. The modifications typically arise in
connection with additional financing opportunities from the same end-user.
End-users may also negotiate with the originator, at the originator's
discretion, an early termination arrangement allowing the end-user to purchase
the equipment during the term of a lease. The early-termination purchase price
is often equal to or in excess of the present value of the remaining rental
payments under the lease plus the anticipated market value of the related
equipment as of the end of the lease term. The originator may permit early
termination of a lease in connection with the acquisition of new technology
requiring replacement of the equipment. In these cases, the end-user returns the
related equipment to the vendor or originator and pays an amount generally equal
to the present value of the remaining rental payments under the lease plus an
early termination fee to the originator. Modifications usually involve repricing
a lease or modification of the lease term. Occasionally the lessor and the
end-user may modify a lease 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 to be coterminous
with the desired term of the lease relating to the upgrade. In some cases,
subject to conditions described under 'Description of the Pooling and Servicing
Agreements -- Servicing,' base lease extensions may remain in a contract pool.
The depositor expects that the servicer will continue to permit these
modifications and terminations with respect to leases included in a contract
pool under the authority delegated to it in the related pooling and servicing
agreement. The servicer's ability to modify leases is limited by the conditions
and covenants of the servicer described under 'Description of the Pooling and
Servicing Agreements -- Servicing.'
The originator may modify the standard terms and conditions of the lease
agreement at the inception of a lease at the request of the end-user. The
originator's legal department or levels of management must approve the
modifications before the originator will agree to enter into the lease or accept
an assignment of the lease from a vendor unless the vendor must indemnifies 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:
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 financed
items to an affiliated entity, so long as the end-user remains liable
under the lease and promptly notifies the lessor or its assignee of
the assignment or sublease; and
extended grace periods for late payments of rent.
36
<PAGE>
In some cases, after a lease term expires the originator may permit the
end-user to continue to use the related equipment for so long as the end-user
continues to make lease payments. After the expiration of the term of a lease,
any continued lease payments will belong to the depositor, not the owner trust.
SECURED NOTES
Each originator will also provide direct initial financing or refinancing
of equipment and software under secured promissory notes, which consist of an
installment note and a separate security agreement. In an initial financing
transaction, the originator pays to the vendor the purchase price for the
equipment or software. In a refinancing transaction, the originator pays off an
end-user's existing financing source, and the initial financing or refinancing
is documented as a direct loan by the originator to the end-user of the
equipment or software using a secured note. In the case of a refinancing
transaction, upon payment to the existing financing source, the originator
obtains a release of the original financing party's lien on the financed
equipment. In either case, the originator records its own lien against the
financed equipment or software and takes possession of the secured note. Except
for the lack of references to 'sale' or 'purchase' of equipment, a secured note
contains terms and conditions substantially similar to those contained in
conditional sale agreements.
INSTALLMENT PAYMENT/FINANCING AGREEMENTS
Each originator will provide financing for software license fees and
related support and consulting services under
installment payment supplements to software license agreements;
separate installment payment agreements, and
other forms of financing agreements assigned to the originator by
vendors of software.
Each financing agreement of this type:
is an unsecured obligation of the end-user;
generally provides for a fixed schedule of payments with no end-user
right of prepayment;
is noncancellable for its term;
generally contains a 'hell or high water' clause unconditionally
obligating the end-user to make periodic payments, without setoff, at
the times and in the amounts specified. If a financing agreement does
not provide for noncancellability or a 'hell or high water' clause,
the financing agreement will have the benefit of a vendor guarantee.
See 'The Contracts -- Program Agreements with Vendors;'
permits the assignment of the payment agreement to a third party,
including the originator, and includes the end-user's agreement, upon
an assignment, and includes the end-user's agreement not to assert
against assignee any claims or defenses the end-user may have against
the vendor; and
37
<PAGE>
contains default and remedy provisions that usually include
acceleration of amounts due and to become due and, in some cases, the
right of the vendor, or the originator by assignment, to terminate the
underlying software license and all related support and consulting
activities.
EQUIPMENT
The end-user contracts will cover a wide variety of new and used:
information technology equipment, including:
computer work stations,
personal computers,
data storage devices,
mainframe and mini-computers and
computer related peripheral equipment,
communications equipment, such as telephone switching and networking
systems,
commercial business and industrial equipment, such as:
printing presses,
machine tools and other manufacturing equipment,
photocopiers, facsimile machines and other office equipment,
energy savings and control equipment,
automotive diagnostic and
automated testing equipment,
medical equipment, such as diagnostic and therapeutic examination
equipment for radiology, nuclear medicine and ultrasound and
laboratory analysis equipment,
resources equipment, such as feller-bunchers and grapplers,
transportation and construction equipment, such as:
heavy and medium duty trucks and highway trailers,
school buses,
bulldozers,
loaders,
graders,
excavators,
forklifts,
other materials handling equipment,
golf carts,
other road and off-road machinery and
electronics manufacturing equipment.
38
<PAGE>
In each case, the depositor will transfer the security interests of the
originator in the equipment subject to each related end-user contract, but not
ownership interests in the case of leased equipment, to the relevant owner
trust.
SOFTWARE AND SERVICES
Some end-user contracts will cover license fees and other fees owed by the
end-user under either perpetual or term software license agreements and other
related agreements in connection with the end-user's use of computer software
programs. The 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 obligor's use of the software.
Neither the vendors or licensors of the software nor the end-users under the
related end-user contracts will convey to the originator any interest in the
software or the software license agreement, other than the right to collect the
payment of software license fees. However, in some cases, the vendors may convey
to the originator the right to exercise rights and remedies under the relevant
software license agreement or related agreements. Consequently, an owner 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 or related servicer under a related end-user contract upon a default by
the end-user.
VENDOR LOANS
The contracts may include limited recourse loan or repayment obligations of
a vendor. These may take the form of promissory notes with related security
interests documented by security agreements or specific provisions in related
program agreements. Each of the obligations is secured by all of the vendor's
interest in an individual end-user contract originated by the vendor and by the
equipment related to the end-user contract.
The originator may originate vendor loans through, and the vendor loans may
incorporate terms and conditions of, a program agreement. See 'Program
Agreements with Vendors.' Vendor loans generally are non-recourse to the vendor,
meaning that the 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, the originator may have recourse to a vendor for nonpayment
of a vendor loan through a limited recourse arrangement in the related program
agreement. The repayment terms under a vendor loan, including periodic amounts
payable and schedule of payments, will correspond to the payment terms of the
end-user under the end-user contract collaterally assigned under the vendor
loan. Each vendor loan will either include most, if not all, of the
representations and warranties regarding the end-user contract and related
equipment typically included in a vendor agreement, or incorporate these
representations and warranties included in any related program agreement by
reference.
PROGRAM AGREEMENTS WITH VENDORS
An originator's program agreement is typically an agreement with equipment
manufacturers, dealers and distributors, or software licensors or distributors,
located in the United States. The program agreement provides an originator with
the
39
<PAGE>
opportunity to finance transactions relating to the acquisition or use by an
end-user of a vendor's equipment, software, services or other products. Vendor
program arrangements provide an originator with a steady, sustainable flow of
new business, often with lower costs of origination than asset-based financings
marketed directly to end-users.
Some of the program agreements take the form of a referral relationship, which
is less formal, and may or may not include credit or remarketing support to the
originator from the vendor.
Each program agreement under which vendors or another party originate and
document contracts and assign them to the originator typically includes vendor
representations, warranties and covenants regarding each contract assigned to an
originator, including that:
the obligations of the end-user under the assigned contract are
absolute, unconditional, noncancellable, enforceable in accordance
with their terms and free from any rights of offset, counterclaim or
defense;
the originator holds the sole original of the contract and has either
title to or a first priority perfected security interest in the
equipment, except with respect to situations where no financing
statement is filed due to the minimum value involved;
the equipment and the contract are free and clear of all liens, claims
or encumbrances except for permitted liens;
the end-user has irrevocably accepted the equipment or the software;
and
the end-user duly authorized and signed the assigned contract;
Each program agreement under which the originators document and originate
contracts typically include vendor representations, warranties and covenants
reagarding each contract, including that
the equipment has been delivered to and accepted by the end-user;
the vendor has not received any advance payments;
the vendor has good title to the equipment; and
the vendor has not made any misrepresentations to the end-user.
In each of the two above programs, relevant agreements also typically
provide for
remedies for misrepresentations or breaches of warranties or covenants
by the vendor regarding an assigned contract. These remedies usually
require the vendor to repurchase the affected end-user contract for
the originator's investment balance in the contract plus costs
incurred by the originator in breaking any underlying funding
arrangement;
in the case of 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 contract, to assist
the originator in realizing proceeds from the equipment securing the
end-user contract obligations; and
the right of an originator to further assign its interests in assigned
contracts, all related payments and any related interest in equipment.
40
<PAGE>
In addition, the originators may enter into profit sharing arrangements
with vendors. These arrangements typically will define the originators' rights
in the equipment and payments from a contract. Also, a program agreement or
profit sharing arrangement may include recourse against a vendor with respect to
end-user defaults under some end-user contracts,
by specifying that the assignment of the 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;
by inclusion of the contract in an ultimate net loss pool created
under the program agreement as well as guarantees by the applicable
vendor with respect to certain contracts which are cancelable or which
do not contain 'hell or high water' provisions; or
by providing for vendor repurchase of the contract or vendor
indemnification payments for breaches of certain representations and
warranties made by the vendor with respect to the contract.
If an end-user defaults under a contract which the vendor assigned to the
originator subject to a net loss pool, the originator may be permitted to draw
against the net loss pool up to the amount of the originator's remaining unpaid
investment balance in the defaulted contract. The originator may also be
permitted to draw against the net loss pool with respect to contracts that are
not included in the pool of contracts in a particular owner trust and,
accordingly, there can be no assurance that any amounts contributed by a vendor
to a net loss pool will be available with respect to a defaulted contract
included in the pool of contracts owned by a particular owner trust.
The manner in which the vendor assigns contracts to the originator varies
from one program agreement to another, depending upon
the nature of the items financed,
the form of the contract,
the accounting treatment sought by the vendor and
the end-user, and
tax considerations.
For example, an originator might:
accept a vendor loan and collateral assignment of the contract and
related equipment or security interest therein from the vendor; or
accept a full assignment of the contract and a collateral assignment
of the related equipment or security interest from the vendor, which
collateral assignment secures the end-user's obligations under the
contract or lease.
The originator also may receive, from a vendor with respect to software, a full
assignment of leases, installment payment agreements, installment payment
supplements to license agreements, and other types of financing agreements used
in financing software license payments and related support and consulting
services. These assignments may include an assignment of the software vendor's
or licensor's right, or the agreement of the vendor or licensor, at the
originator's instructions, to terminate
41
<PAGE>
the software license covered by the contract and suspend related support in the
event of an end-user default under the contract. In some cases, the software
vendor also agrees not to relicense the same or similar software to a defaulted
end-user for some period of time, e.g., one year, unless the end-user cures its
default.
Some portion of the contracts included in the pool of contracts, especially
in the case of conditional sale agreements, are likely to consist of contracts
originated by vendors and assigned to the originator in vendor assignments, each
of which relates to an individual contract, rather than under a program
agreement. Each vendor assignment will either be with or without recourse
against the vendor for end-user defaults. Each vendor assignment will typically
contain many, if not all, of the representations, warranties and covenants
typically contained in program agreements, as well as a vendor repurchase
requirement in the event of a breach by the vendor of the representations,
warranties or covenants. Vendor assignments may or may not provide for any
vendor remarketing support in the event of an end-user default.
RESIDUAL INVESTMENTS
Any of the originators may finance all or a portion of the residual
interest in the equipment under program agreements and under direct transactions
between an obligor and the applicable originator. Any investment by the
originator in a residual interest shall be referred to as a residual investment.
Program agreements may provide that the originator may, at its sole discretion
and in connection with the funding of a lease of equipment, make a residual
investment in that equipment by advancing additional funds against a portion of
the anticipated residual value of the equipment, and not just against the
discounted present value of the rental payments due under the contract. Residual
investments may take the form of an advance of the present value of some
specified percentage of the anticipated residual value of the equipment or a
specified percentage, typically not greater than 10%, of the amount to be paid
by the originator in funding the present value of the rental payments due under
the contract.
With respect to vendor assignments, the originator may advance the entire
purchase price of the equipment subject to a true lease, take title to the
equipment, and accept an assignment of the true lease contract from a vendor.
With respect to the leases originated by the originator the originator may
advance the entire purchase price of the equipment to the vendor, take title to
the equipment from the vendor, and enter into a true lease contract with an
obligor. In either of the two foregoing types of transactions, the originator
will have advanced more than the discounted present value of the rents payable
under the true lease contracts by paying the purchase price for the equipment,
and so will have made a residual investment in the equipment.
In some program agreements, the originator may make the residual investment
in the form of a full recourse loan of additional funds to the vendor. That loan
is repayable by the vendor at the expiration or termination of the contract with
interest and is secured by a security interest in the financed equipment. In
some transactions involving vendor assignments or direct transactions with
obligors under true lease contracts, the originator may obtain the obligation of
either the vendor or the obligor to purchase the equipment at the end of the
lease term for the full amount of the originator's residual investment in the
equipment with accrued interest. Any transaction in which the originator may
look to either the vendor or the obligor, and
42
<PAGE>
not just the value of equipment itself, to recover its residual investment with
interest shall be referred to as a 'guaranteed residual investment'. Other than
guaranteed residual investments, a residual investment will not be included in
the discounted contract balance of any contract and, therefore, would not be
financed with the proceeds of the notes. This type residual investment is
referred to herein as the 'excluded residual investment.'
The seller or an affiliate of the seller will transfer the excluded
residual investment associated with any contract included in a pool of contracts
to the depositor or another affiliate under the terms of a purchase and sale
agreement or other transfer agreement. The depositor will not transfer the
excluded residual investment to an owner trust under the related pooling and
servicing agreement. The related owner trust's interest in contracts with
associated residual investments, other than with guaranteed residual
investments, will be limited to the discounted present value of the rental
payments due under the contract and a security interest in the related
equipment. The originator may assign its excluded residual investment to a third
party, including the security interest in the equipment in respect of the
residual investment.
CONTRACT FILES
Each originator will indicate in the appropriate computer files relating to
the contracts being transferred to an owner trust that the originator has
transferred the contracts for the benefit of the holders of the notes. Each
originator will also deliver to the indenture trustee a computer file,
microfiche or written list containing a true and complete list of all contracts
which it has transferred, identified by account number and by the discounted
contract balance of the contracts as of the transfer date.
COLLECTIONS ON CONTRACTS
Your prospectus supplement will describe how all collections received with
respect to the contracts will be allocated.
PAYMENTS GENERALLY
The contracts usually require that an obligor make periodic payments on a
monthly basis. Some contracts, however, provide for quarterly, semi-annual or
annual payments. Obligors must make the payments under all of the contracts in
United States dollars. Payment requirements usually are fixed and specified,
rather than being tied to a formula or are otherwise at a floating rate.
Payments under the contracts are ordinarily payable in advance, although a small
percentage provide for payments in arrears.
EXPENSES RELATING TO EQUIPMENT
The contracts require the obligors to assume the responsibility for payment
of all expenses of the related equipment including, without limitation,
any expenses in connection with the maintenance and repair of the
related equipment,
43
<PAGE>
the payment of any and all premiums for casualty and liability
insurance, and
the payment of all taxes relating to the equipment.
INSURANCE; REPAIR AND REPLACEMENT
Most lease contracts require that the obligors will maintain liability
insurance which must name the lessor as additional insured. Contracts which are
subject to
leases,
installment sales contracts,
promissory notes or
loan and security agreements
require obligors to procure property insurance against the loss, theft or
destruction of, or damage to, the equipment for its full replacement value,
naming the lessor, or lender, as loss payee. An originator will waive this
requirement from time to time for a small number of transactions. For some lease
contracts, the obligor's already existing self-insurance program permits the
obligor to self-insure the equipment.
For lease contracts that Newcourt Communications Finance Corporation
originates relating to equipment with a cost of $100,000 or less, and for lease
contracts which Newcourt Leasing Corporation or Newcourt Technologies
Corporation orginates after March 4, 1997 relating to equipment with a cost of
$250,000 or less, the originator often provides the obligor with written
information concerning its property insurance obligations under the contract.
The obligor is given a specified time period in which to provide evidence of
insurance coverage. A third party tracking company and licensed broker
independently verifies and tracks proper evidence of coverage. If the obligor
does not provide satisfactory evidence of insurance coverage then the originator
will provide insurance. If the originator provides the insurance coverage, the
originator charges the obligor a monthly fee covering the insurance charges and
other related administrative charges. If, at any time, the obligor provides
evidence of its own coverage, these monthly charges cease. The obligor has the
ability to opt out of the program by providing evidence of its own coverage.
For transactions involving equipment with a cost of more than $100,000, in
the case of lease contracts that Newcourt Communications Finance Corporation
originates, or more than $250,000, in the case of lease contracts that Newcourt
Leasing Corporation or Newcourt Technologies Corporation originates after
March 4, 1997, insurance coverage generally is verified and tracked by the
respective originator. The failure to maintain this insurance constitutes an
event of default under the applicable contract. Usually, the obligor also agrees
to indemnify the originator for all liability and expenses arising from the use,
condition or ownership of the equipment.
If the equipment is damaged or destroyed, each lease contract requires that
the obligor:
repair the equipment;
make a termination payment to the lessor in an amount not less than
the amount required to pay off the contract; or
44
<PAGE>
in some cases, replace the damaged or destroyed equipment with other
equipment of comparable use and value.
The related pooling and servicing agreement permits the servicer, in the case of
the destruction of the equipment related to a particular lease contract, either
to:
allow the lessee to replace this equipment, provided that the
replacement equipment is, in the judgment of the servicer, of
comparable use and at least equivalent value to the value of the
equipment which was destroyed, or
accept the termination payment referred to above.
ASSIGNMENT OF CONTRACTS
The contracts will permit the assignment of the contract by the lessor or
secured party without the consent of the obligor. However, a small number of
contracts require notification of the assignment to, or the consent of, the
obligor. The seller will represent and warrant in the purchase and sale
agreement that these notices have been given, or approvals will have been
received, not more than ten days following the date of the transfer of the
contract to the depositor. The contracts do not permit assignment of the
contracts, or the related equipment, by the obligor without the prior consent of
the lessor or secured party, except the contracts may permit:
assignments to a parent, subsidiary or affiliate;
the assignment to a third party, provided the obligor remains liable
under the contract; or
assignment to a third party with a credit standing, which the
originator determines in accordance with its underwriting policy and
practice at the time for an equivalent contract type, term and amount,
to be equal to or better than the original obligor.
Under the related pooling and servicing agreement, the servicer may permit an
assignment of a particular contract from an obligor to a third party only if the
servicer, utilizing the current underwriting criteria for its contract
origination activities, determines that the third party is of sufficient credit
quality that the servicer would permit the third party to become an obligor with
respect to a contract that the servicer originates.
EVENTS OF DEFAULT AND REMEDIES
Events of default under the contracts ordinarily include:
the failure to pay all amounts required by the contract when due;
the failure of the obligor to perform its agreements and covenants
under the applicable contract;
material misrepresentations made by the obligor;
the bankruptcy or insolvency of the obligor or the appointment of a
receiver for the obligor; and
in some cases, default by the obligor under other contracts or
agreements.
45
<PAGE>
Some of these default provisions are, in some instances, subject to notice
provisions and cure periods. Remedies available to the lessor or secured party
upon the occurrence of an event of default by the obligor include the right
to cancel or terminate in the case of a contract subject to a true
lease,
to accelerate payments in the case of a contract subject to financing,
to recover possession of the related equipment and
to receive an amount intended to make the lessor or secured party, as
the case may be, whole plus costs and expenses, including legal fees,
which the lessor or secured party incurs as a result of the default.
Notwithstanding these events of default and remedies, the pooling and servicing
agreement, permits the servicer to take the actions, with respect to delinquent
and defaulted contracts, a reasonably prudent creditor would take under similar
circumstances. See 'Description of the Pooling and Servicing
Agreements -- Servicing'. The originators may occasionally provide payment
extensions, typically of three months or less. Longer extensions are
occasionally granted to customers experiencing delays in payment due to cash
flow shortages or other reasons. However, originators do not intend extensions
to be used to provide a temporary solution for a delinquent account. Rather,
extensions are intended to be used when, in the judgment of the relevant credit
authority, the extension is necessary to avoid a termination and liquidation of
the contract and will maximize the amount to be received by the related owner
trust with respect to the contract.
PREPAYMENTS AND EARLY TERMINATION
Any contract may either:
not permit the obligor to prepay the amounts due under the contract or
otherwise terminate the contract prior to its scheduled expiration
date;
allow for a prepayment or early termination upon payment of an amount
that is at least equal to the contract principal balance, determined
using a discount rate specified in your prospectus supplement; or
allow for a prepayment or early termination without the payment of the
contract principal balance.
Some contracts, often written as installment sales contracts, promissory notes
or loan and security agreements, permit the obligor to prepay the contract, in
whole or in part, at any time at par plus accrued interest.
Under each pooling and servicing agreement, the servicer may allow the
prepayment of any contract, but only if the amount paid, or, in the case of a
partial prepayment, the sum of that amount and the remaining principal balance
of the contract after application of that amount, is at least equal to the
amount required to pay off the contract. The required payoff amount, with
respect to any collection period for any contract, is equal to the sum of:
the scheduled payment due in that collection period and not yet
received, together with any scheduled payments due in prior collection
periods and not yet received; plus
46
<PAGE>
the discounted contract principal balance of the contract as of the
last day of that collection period, after taking into account the
scheduled payment due in that collection period.
In no event will revenues pledged for a series of notes include, nor will
the notes otherwise be payable from, any portion of a prepayment on a contract
that exceeds the required payoff amount for that contract.
Under the pooling and servicing agreement, the depositor may replace any
prepaid contract with a substitute contract. See ' -- Substitution of Contracts'
below.
DISCLAIMER OF WARRANTIES
The contracts which are subject to a true lease contain provisions whereby
the lessor, or the originator, as assignee of the lessor, disclaims all
warranties with respect to the equipment. In the majority of cases, the lessor
assigns the manufacturer's warranties to the obligor for the term of the lease.
Under true leases, the obligor accepts the equipment under the applicable
contract following delivery and an opportunity to inspect the related equipment.
ADDITIONAL EQUIPMENT
Some of the contracts which are subject to a true lease constitute leases
of additional equipment, generally costing $25,000 or less, with existing
obligors. Pursuant to the terms of the original contract between the lessor and
the obligor, the parties document leases for additional equipment on a written
form that the lessor prepares and delivers to the obligor, but the obligor does
not execute, which written form describes all of the terms of the lease. Under
the terms of the contract, the obligor agrees that unless it objects in writing
within a specified period of time, it is deemed to have accepted the lease of
this additional equipment.
REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER
Newcourt Financial USA Inc., as the seller of contracts to the depositor,
will make the following representations and warranties regarding the contracts
and the related equipment included in each pool of contracts transferred to an
owner trust as of the related transfer date. The representations and warranties
will also apply to contracts that the depositor reacquires from a trust to which
the depositor previously transferred the contracts in connection with a
warehouse receivables securitization facility.
(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 transfering party free and clear of any adverse claim
except for permitted claims;
(3) the contract is not a defaulted or delinquent contract;
(4) no provisions of the contract has been waived, altered or modified in
any material respect, except by instruments or documents contained in
the files relating to the contract;
47
<PAGE>
(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;
(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 in any material respect;
(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, the seller, the depositor or any related
financing trust; and
(b) either
(i) the contract is secured by a perfected lien, subject to
permitted liens and subject to minimum filing value
exceptions, 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 a vehicle, within 90
calendar days of the origination or a acquisition of the
contract by the originator all required state registration
or recording procedures were initiated, and the originator's
interest will be so noted or recorded within 180 days of the
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 depositor have been made in all appropriate
jurisdictions, except that the parties have not made filings to note
the seller, the depositor or the trust as an assignee of the interests
of originators other than the seller, and except that only filings in
the State of New Jersey have been made in favor of the owner trust
describing security interest in equipment;
(11) the obligor is not, to the seller's knowledge, subject to bankruptcy
or other insolvency proceedings;
(12) the contract is a U.S. dollar-denominated obligation and the obligor's
billing address is located in the United States or Puerto Rico;
(13) the contract does not require the prior written notifications to a
consent of an obligor or contain any other restriction on the transfer
or assignment of the contract other than notifications that will have
been given and consents or waivers of restrictions that will have been
obtained within ten days after 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 not
irrevocable and unconditional, are guaranteed by the vendor; or in the
case of leases with governments, upon a cancellation of the lease,
either the vendor is obligated to repurchase
48
<PAGE>
the lease or the seller will indemnify the trust depositor in respect
of the cancellation;
(15) no adverse selection procedure was used in selecting the contract for
transfer;
(16) 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;
(17) the contract constitutes chattel paper, an account, an instrument or a
general intangible as defined under the Uniform Commercial Code;
(18) no lease is a 'consumer lease' as defined in Section 2A-103(1)(e) of
the Uniform Commercial Code;
(19) to the best knowledge of the relevant originator each lessee has
accepted the related equipment and that it has had a reasonable
opportunity to inspect and test the equipment;
(20) except as provided in (14) above, the contract is not guaranteed by
any originator nor has the originator established any specific credit
reserve with respect to the related obligor;
(21) 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;
(22) each vendor loan is secured by an eligible end-user contract(s) having
an aggregate contract principal balance(s) equal to the outstanding
principal amount of the vendor loan. In this context, an eligible
end-user contract is one that
satisfies all of these representations and warranties except
number (2) above and number (8) above, in respect of ownership
by the applicable originator;
in which the relevant originator or financing trust has a
perfected lien; and
in which the transfer of the relevant originator's or
financing trust's security interest in the contract to the
owner trust creates a duly perfected lien;
(23) the obligor is not the United States of America or any agency,
department, subdivision or instrumentality of the United States of
America;
(24) the contract contains customary provisions for this type of financing,
and the provisions are sufficient and enforceable, except as listed as
noted in (5) above, to enable the relevant originator or its assignees
to realize against the financed items securing the contract; and
(25) if the obligor is a state or local government entity, the transfer of
the contract does not violate any applicable state or local laws
restricting or prohibiting transfer.
49
<PAGE>
The owner trust may modify the above representations and warranties and
will describe any modification in the relevant prospectus supplement.
In the event of a breach of any representation or warranty with respect to
a contract that materially and adversely affects the owner trust's or any
noteholder's or equity certificateholder's interest in the contract or the
collectibility of the contract, the owner trust will have a warranty claim
against the seller. The seller will then be obligated to repurchase the
contract. However, the seller need not do so if the seller cures the breach by
the second deposit date after the date on which the servicer becomes aware and
gives notice to the seller of the breach. Any purchase shall be made on the
deposit date immediately following the end of the second collection period at a
price equal to the required payoff amount of the contract. The purchase price
will be allocated to the related owner trust plus, if applicable, the book value
of the related equipment which will be allocated to the depositor. The related
indenture trustee may enforce this purchase obligation on your behalf, and will
constitute your sole remedy available against the seller the depositor, the
trust or the originators for any uncured breach, except that the seller will
indemnify
the related indenture trustee,
the related owner trustee,
the related owner trust and
you
against losses, damages, liabilities and claims which may be asserted against
any of them as a result of third-party claims arising out of the facts giving
rise to that breach. The seller may, in lieu of repurchasing the contract, cause
the depositor to deliver a substitute contract as provided in the next-following
section of this prospectus.
Upon the purchase by the seller of a contract, the depositor will release
the contract and related equipment to the seller.
SUBSTITUTION OF CONTRACTS
The depositor will have the option to substitute one or more contracts
having similar characteristics for contracts which are in default or have been
prepaid or which have undergone material modification. In addition, in the case
of a contract subject to a warranty claim, as described in ' -- Representations
and Warranties Made by the Seller' above, the seller may choose to replace the
contract with a substitute contract.
Some contracts may permit the obligor to prepay the amounts due under the
contract or otherwise to terminate the contract prior to its scheduled
expiration date. The depositor may replace any prepaid contract with a
substitute contract in lieu of applying the proceeds of the prepaid contract to
the pledged revenues as described in this section.
Material modification of a contract means a termination, release amendment,
modification or waiver of a contract that is not otherwise permitted under the
pooling and servicing agreement. The depositor may provide substitute contracts
for any that have been so materially modified. The depositor may also replace
any defaulted contract with a substitute contract. The aggregate contract
principal balances of the defaulted contracts for which the depositor may cause
substitution is limited to 10% of
50
<PAGE>
the cut-off contract pool principal balance. The depositor may replace a prepaid
contract with a substitute contract and the seller may choose to replace
contracts subject to a warranty claim or a material modification with substitute
contracts, in either case without regard to the 10% limitation described above.
The same credit criteria and eligibility standards for the contracts in the
contract pool on the closing date will also apply to substitute contracts added
to the assets of the owner trust. The servicer will include information with
respect to these substitute contracts, to the extent the servicer deems them
material, in required periodic reports under the Securities Exchange Act of 1934
filed with the Securities and Exchange Commission on behalf of the owner trust.
The substitute contracts will have contract principal balances equal to or
greater than the contracts being replaced. The representations and warranties
the seller makes with respect to the contracts in ' -- Representations and
Warranties Made by the Seller' above will be equally applicable to substitute
contracts.
DELINQUENCY AND NET LOSS EXPERIENCE
Your prospectus supplement will set forth statistics relating to the
delinquency and net loss experience on contracts within the originators' owned
and managed portfolios of receivables similar to the contracts in a contract
pool.
51
<PAGE>
DESCRIPTION OF THE NOTES AND INDENTURE
GENERAL
The issuance of each series of notes will be under an indenture, a form of
which was filed with the Securities and Exchange Commission as an exhibit to the
registration statement of which this prospectus is a part. In addition, a copy
of the indenture for a series of notes will be filed with the Securities and
Exchange Commission following the issuance of each series. The following summary
describes certain material terms which may be common to each indenture and the
related notes, but does not purport to be complete and is subject to all of the
provisions of the indenture, the related notes and the description set forth in
your prospectus supplement.
The notes of each series will be issued in fully registered form only and
will represent the obligations of a separate owner trust.
Payments on the notes will be made by the indenture trustee on each payment
date to persons in whose names the notes are registered as of the related record
date. Unless otherwise specified in your prospectus supplement, the payment date
for the notes will be the 20th day of each month, or if the 20th is not a
business day, the next succeeding business day. The record date for any payment
date will be the calendar day immediately preceding the payment date.
A business day is any day other than a Saturday, Sunday or legal holiday on
which commercial banks in New York City are open for regular business.
DISTRIBUTIONS
Your prospectus supplement will describe as to your series of notes
the timing and priority of distributions,
the amount or method of determining distributions,
allocations of loss and
the interest rates.
CREDIT ENHANCEMENT
As further specified in the your prospectus supplement, a
cash collateral account,
a financial guaranty insurance policy;
subordination of one or more classes of notes,
overcollateralizations,
letters of credit or liquidity facilities,
repurchase obligations,
third party payments or other support,
cash deposits,
reserve fund or
52
<PAGE>
other form of credit enhancement which may become suitable in light of
credit enhancement practices or developments in the future
may be established on or prior to the date the contracts are transferred. The
credit enhancement would be available to the related indenture trustee to pay
interest and principal on the notes in the manner and to the extent specified in
your prospectus supplement.
LIQUIDATION PROCEEDS
The allocation of liquidation proceeds which will consist generally of all
amounts the servicer receives in connection with the liquidation of a contract
and disposition of the related equipment, net of any related out-of-pocket
liquidation expenses will be as follows:
with respect to any contract subject to financing, the liquidation
proceeds will be allocated to the owner trust; and
with respect to any contract subject to a lease, the liquidation
proceeds will, unless otherwise specified in your prospectus
supplement, be allocated on a pro rata basis between the depositor, on
the one hand, and the owner trust, on the other, based respectively on
(a) the book value of the related equipment and
(b) the required payoff amount for the contract;
provided that, in the event the liquidation proceeds in respect of
any contract subject to a lease and the related equipment exceed
the sum of the required payoff amount for the contract and the
book value of the equipment, the excess shall be allocated solely
to the depositor.
For example, if the servicer, in connection with a defaulted contract subject to
a lease, derived liquidation proceeds in the amount of $100 from the liquidation
of the contract and disposition of the related equipment, and if the required
payoff amount of the contract was, as of the collection period during which the
contract became a liquidated contract, $120 and the book value of the equipment
was $30, the liquidation proceeds would be allocated to the owner trust in the
amount of $80 and to the depositor in the amount of $20. All liquidation
proceeds which are so allocable to the owner trust will be deposited in a
collection account and constitute pledged revenues to be applied to the payment
of interest and principal on the notes in accordance with the priorities
described under ' -- Distributions' above.
OPTIONAL PURCHASE OF CONTRACTS
The depositor may purchase all of the contracts owned by an owner trust on
any payment date following the date on which the unpaid principal balance of the
related notes is less than 10% of the initial contract pool principal balance.
The purchase price to be paid in connection with the purchase shall be at least
equal to the sum of
the unpaid principal balance of the related notes as of that payment
date,
accrued but unpaid interest,
unreimbursed servicer advances, and
53
<PAGE>
accrued but unpaid servicer fees.
The proceeds of the purchase shall constitute available pledged revenues and be
distributed in accordance with the indenture provisions for available pledged
revenues.
TRUST ACCOUNTS
Except as otherwise specified in your prospectus supplement, the applicable
indenture trustee will establish and maintain under each indenture segregated
trust accounts which need not be deposit accounts, but which must be with a
qualified institution. These accounts will include, among others, the
'Collection Account' and the 'Distribution Account.' The accounts may, as
described in the prospectus supplement for your notes, also include a cash
collateral or reserve fund account as credit enhancement. All of these accounts
are referred to collectively as the 'Trust Accounts.'
Eligible institution means the corporate trust department of the indenture
trustee or any other depository institution
organized under the laws of the United States or any state or any
domestic branch of a foreign bank,
the deposits of which are insured by the Federal Deposit Insurance
Corporation and
which has, or whose parent corporation has, short-term or long-term
debt ratings acceptable to Moody's Investors Service, Inc., Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.
and Duff & Phelps Credit Rating Co.
The servicer, as agent for the indenture trustee of any series, may
designate, or otherwise arrange for the purchase by the indenture trustee of,
investments to be made with funds in the trust accounts. All investments shall
be eligible investments as defined in the related indenture that will mature not
later than the business day preceding the applicable monthly payment date or any
other date approved by the rating agencies. Eligible investments include, among
other investments:
obligations of the United States or of any agency thereof backed by
the full faith and credit of the United States;
demand deposits, certificates of deposit, time deposits demand notes
or bankers acceptance of eligible financial institutions;
highly rated commercial paper;
repurchase agreements in respect of United States government
securities or securities guaranteed or otherwise backed by the full
faith and credit of the United States Government with eligible
institutions; and
other investments which have been approved by each rating agency.
REPORTS TO NOTEHOLDERS
With respect to each series of notes, the servicer will furnish to the
applicable indenture trustee, and the indenture trustee will include with each
distribution to you,
54
<PAGE>
a statement, as specified in your prospectus supplement, in respect of the
related payment date.
If you purchase a note, you may receive these reports by making a written
request to the indenture trustee. These reports do not constitute financial
statements prepared in accordance with generally accepted accounting principles.
Neither the depositor nor the servicer intends to send any of their respective
financial reports to owners of notes. The servicer, on behalf of an owner trust,
will file with the Securities and Exchange Commission legally required periodic
reports concerning the owner trust.
With respect to any series, the notes will be registered in the name of a
nominee of The Depository Trust Company and will not be registered in the names
of the beneficial owners or their nominees. As a result, unless and until
definitive notes are issued in the limited circumstances described under
' -- Issuance of Certificated Notes at a Later Date' below, the indenture
trustee will not recognize you as a noteholder, as that term is used in the
related indenture. Hence, until that time, you will receive reports and other
information provided for under the related indenture only if, when and to the
extent The Depository Trust Company and its participating organizations provide
this information. The servicer will file a copy of each report with the
Securities and Exchange Commission on Form 8-K to the extent the Securities
Exchange Act of 1934 and the rules and regulations of the Securities and
Exchange Commission thereunder require it.
BOOK-ENTRY REGISTRATION
Unless your prospectus supplement states otherwise, you may hold your notes
through The Depository Trust Company, referred to as 'DTC,' in the United
States, or Cedel Bank 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.
55
<PAGE>
To facilitate subsequent transfers, DTC will register all deposited notes
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 the 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 have no entitlement to receive a certificate representing your 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. All distributions, notices, 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 the
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 payments will be forwarded to Cede as
nominee of DTC. The indenture trustee will not recognize you as a noteholder, as
that term is used in the indenture. You may 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, there may be limits on 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 notes, due to the absence of
physical notes for the notes.
Arrangements among the various parties govern 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,
subject to any statutory or regulatory requirements as may be in
effect from time to time.
Standing instructions and customary practices govern payments by DTC
participants to noteholders, 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 the 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 the payments to direct participants shall be the responsibility
of DTC and disbursement of 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
56
<PAGE>
interest of each actual noteholder is in turn to be recorded on the direct
participants' and indirect participants' records. Noteholders 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. Entries
made on the books of DTC's participants acting on behalf of noteholders evidence
transfers of ownership interests in the notes.
DTC will not comment or vote with respect to the notes. DTC has advised
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 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 the action only at the direction of
and on behalf of direct participants, whose holdings include undivided interests
that satisfy the 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 these circumstances, in the event that a successor securities
depositary is not obtained, fully registered, certificated notes are required to
be printed and delivered. 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
are from sources that the depositor believes to be reliable, but neither the
depositor nor the owner trustee 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 these 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.
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. The Brussels, Belgium
office of Morgan Guaranty Trust Company
57
<PAGE>
of New York operates Euroclear, under contract with Euroclear Clearance Systems
S.C., a Belgian cooperative corporation. Euroclear's operator conducts all
operations 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,
including banks, securities brokers and dealers, and other professional
financial intermediaries.
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, the Board of Governors of the Federal Reserve System and the New York
Banking Department, as well as the Belgian Banking Commission, regulates and
examines it.
Euroclear holds all securities 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.
DTC will effect, under DTC rules, 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,
through the relevant European international clearing system through its
Depositary; however, these cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in this 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 the credits or any transactions in
the securities settled during the processing day will be reported to the
relevant Cedel participant or Euroclear participant on that 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.
58
<PAGE>
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 these
procedures and these procedures may be discontinued at any time.
Except as required by law, none of the seller, any originator, the owner
trustee, the 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 beneficial ownership interests.
ISSUANCE OF CERTIFICATED NOTES AT A LATER DATE
The owner trust will issue notes in fully registered, certificated form to
beneficial owners or their nominees rather than to DTC or its nominee, only if:
(1) the owner trustee advises the indenture trustee in writing that DTC
is no longer willing or able to discharge properly its responsibilities as
depository with respect to the notes, and the owner trustee or the
indenture trustee is unable to locate a qualified successor,
(2) the owner trustee elects to terminate the book-entry system, or
(3) after the occurrence of an event of default under the indenture,
the holder of at least 66 2/3% of the principal amount of its outstanding
notes advises the indenture trustee that the continuation of the book-entry
system is met in their best interests.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the indenture trustee must notify all beneficial owners for
each class of notes held through DTC of the availability of notes in fully
registered, certificated form. Upon surrender by DTC of the global note
representing the notes and instructions for reregistration, the indenture
trustee will issue these fully registered, certificated notes, and the indenture
trustee will recognize the holders of fully registered, certificated notes as
noteholders under the indenture.
Additionally, upon the occurrence of any event described above, the
indenture trustee will distribute principal of and interest on the notes
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
five days' notice to noteholders for the class, however, the indenture trustee
will make the final payment on any note only upon presentation and surrender of
the note at the office or agency specified in the notice of final distribution
to noteholders. The indenture trustee will make the final payment in this manner
whether the notes are fully registered, certificated notes or the note for the
class registered in the name of Cede & Co. representing the notes of the class.
You may transfer any fully registered, certificated notes of any class 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 that class. There is no service
charge for any registration of
59
<PAGE>
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.
MODIFICATION OF INDENTURE WITHOUT NOTEHOLDER CONSENT
Unless your prospectus supplement states otherwise, the owner trust and the
indenture trustee for a note series may, without your consent, enter into one or
more supplemental indentures for any of the following purposes:
to change the collateral description;
to provide for a successor to the owner trust to assume the notes and
the indenture obligations;
to add additional covenants for your benefit, or to surrender any
rights or power of the owner trust;
to transfer or pledge any property to the indenture trustee;
if not adverse to the interests of noteholders, to correct or
supplement any provision in the indenture that is ambiguous or
inconsistent with any other provision of the indenture or to make any
other provision in respect of matters under the indenture;
to accept a successor indenture trustee or to change the provisions of
the indenture to facilitate the administration by more than one
trustee;
to comply with the Trust Indenture Act of 1939, as amended; or
to elect to come under the FASIT provision of the Internal Revenue
Code, if the owner trust provides an opinion of counsel as to no
adverse impact on noteholders.
MODIFICATION OF INDENTURE WITH NOTEHOLDER CONSENT
Unless your prospectus supplement states otherwise, with the consent of the
holders of a majority of the principal balance of each class of the related
series of notes, prior notice to each rating agency and an opinion of counsel,
the owner trustee and the indenture trustee may modify the indenture and your
rights under it.
Without the consent of the holder of each outstanding note affected,
however, no modification of the indenture may:
reduce the note principal amount, interest rate or redemption price or
change the timing of payments;
modify the manner of application of payments in respect to contracts
to the notes;
impair your right to sue to enforce payment provisions of the
indenture;
reduce the percentage needed for consents of noteholders;
permit the creation of any lien on collateral under the indenture
ranking prior to or on a parity with the lien of the indenture;
60
<PAGE>
adversely affect the manner of determining notes outstanding or the
requisite note for liquidating the trust estate; or
modify the provisions of the indenture relating to these types of
indenture modification without the consent of all noteholders.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT
Events of default under each indenture will consist of:
a default for five calendar days or more in the payment of interest
due on any note;
failure to pay the unpaid principal amount of any class of notes on
the maturity date for the notes;
failure of the seller to make any required payment under the pooling
and servicing agreement within three business days of the due date, or
failure of the seller, the depositor or the owner trustee to observe
any other provisions set forth in the purchase and sale agreement, the
pooling and servicing agreement or the indenture, which failure has a
material adverse effect on the noteholders and continues for 60
calendar days after written notice;
any representation or warranty made by the seller, depositor or owner
trustee in the purchase and sale agreement, pooling and servicing
agreement or indenture was incorrect as of the time made, and
continues to be incorrect for a period of 60 calendar days after
notice is given and as a result of which the noteholders are
materially and adversely affected. A breach of a representation or
warranty as to a contract will be considered not to have occurred if
the seller purchases the contract or effects a substitution for it, as
provided in 'The Contracts -- Representations and Warranties Made by
the Seller' and ' -- Substitution of Contracts' above;
events of bankruptcy, insolvency, receivership or liquidation of the
owner trust or the depositor; or
the owner trust becomes an investment company.
If an event of default should occur and be continuing with respect to the
notes of a series, the required holders may, except as to a bankruptcy or
insolvency event of default, deem the event not to have occurred.
If the indenture trustee declares the notes of a series due and payable
following an event of default, the applicable indenture trustee may:
institute proceedings to collect amounts due or foreclose on the
indenture collateral,
exercise remedies as a secured party, or
sell the indenture collateral, or elect to have the owner trust
maintain possession of the pledged revenues.
The indenture trustee, however, may not sell the indenture collateral
following an event of default, unless:
61
<PAGE>
the holders of all the outstanding notes consent to the sale;
the proceeds of the sale distributable to holders of the notes are
sufficient to pay in full the principal and accrued interest on all
the outstanding notes at the date of the sale; or
the indenture trustee determines that the trust estate would not be
sufficient on an ongoing basis to make all payments on the notes as
the payments would have become due if the obligations had not been
declared due and payable, and the indenture trustee obtains the
consent of the required holders.
Following a declaration upon an event of default that the notes are immediately
due and payable, the application of any proceeds of liquidation of the pledged
revenues will be in the order of priority described in the prospectus supplement
for your class of notes.
If an event of default occurs and is continuing, the indenture trustee will
be under no obligation to exercise any of the rights or powers under the
indenture at the request or direction of any of the holders of the notes, if the
indenture trustee reasonably believes it will not be adequately indemnified
against the costs, expenses and liabilities which it may incur in complying with
that request. A majority of the noteholders will have the right to direct the
time, method and place of conducting any proceeding or any remedy available to
the indenture trustee. Additionally, a majority of the noteholders may, in some
cases, waive any default, except a default in the payment of principal or
interest or a default in respect of a covenant or provision of the indenture
that cannot be modified without the waiver or consent of all of the holders of
the outstanding notes.
No holder of a note will have the right to institute any proceeding with
respect to the indenture, unless:
the holder previously has given to the indenture trustee written
notice of a continuing event of default;
the holders of not less than 25% in principal amount of the
outstanding notes make written request of the indenture trustee to
institute the proceeding in its own name as indenture trustee;
the holder or holders offer the indenture trustee reasonable
indemnity;
the indenture trustee has for 60 days failed to institute the
proceeding; and
no direction inconsistent with that written request has been given to
the indenture trustee during the 60-day period by the holders of a
majority in principal amount of the outstanding notes.
In addition, the indenture trustee and you, by accepting the notes, will
covenant that they will not at any time institute against the seller, the
depositor or the owner trust any bankruptcy, reorganization or other proceeding
under any federal or state bankruptcy or similar law.
Neither the indenture trustee nor the owner trustee in its individual
capacity, nor the seller, the depositor, nor any of their respective owners,
beneficiaries, agents, officers, directors, employees, affiliates, successors or
assigns will, in the absence of an
62
<PAGE>
express agreement to the contrary, be personally liable for the payment of the
notes or for any agreement or covenant of the owner trust contained in the
indenture.
OWNER TRUST COVENANTS
Each indenture will provide that the related owner trust may not
consolidate with or merge into any other entity, unless:
the entity formed by or surviving the consolidation or merger is
organized under the laws of the United States or any state;
the entity expressly assumes the owner trust's obligation to make due
and punctual payments upon the notes and the performance or observance
of every agreement and covenant of the owner trust under the
indenture;
no event of default shall have occurred and be continuing immediately
after the merger or consolidation;
the rating agencies advise the owner trustee that the rating of the
notes then in effect would not be reduced or withdrawn as a result of
the merger or consolidation;
the owner trustee has received an opinion of counsel to the effect
that the consolidation or merger would have no material adverse tax
consequence to the owner trust or to any noteholder or equity
certificate holder; and
the owner trust or the person, if other than the owner trust, formed
by or surviving the consolidation or merger has a net worth,
immediately after the consolidation or merger, that is (a) greater
than zero and (b) not less than the net worth of the owner trust
immediately prior to giving effect to the consolidation or merger.
Each owner trust will not, among other things:
except as expressly permitted by the related indenture or trust
agreement, transfer any of the assets of the owner trust;
claim any credit on or make any deduction from, the principal and
interest payable in respect of the related notes, other than amounts
withheld under the bankruptcy code or applicable state law, or assert
any claim against any present or former holder of notes because of the
payment of taxes levied or assessed upon the owner trust;
dissolve or liquidate in whole or in part;
permit the validity or effectiveness of the indenture to be impaired
or permit the release of any person from any covenants or obligations
relating to the notes under the indenture except as expressly
permitted in the indenture; or
except as expressly permitted in the indenture, the pooling and
servicing agreement or the trust agreement, permit any lien or claim
to burden any assets of the owner trust.
No owner trust may engage in any activity other than as specified above
under 'The Owner Trusts.' Each owner trust will not incur, assume or guarantee
any
63
<PAGE>
indebtedness other than indebtedness incurred under the related notes and the
related indenture or otherwise in accordance with the related indenture, trust
agreement and pooling and servicing agreement.
ANNUAL COMPLIANCE STATEMENT
Each owner trust will be required to file annually with the applicable
indenture trustee a written statement as to the fulfillment of its obligations
under the indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT
Each indenture trustee will be required to mail each year to all
noteholders of the related series a brief report relating to:
its eligibility and qualification to continue as indenture trustee
under the related indenture,
any amounts advanced by it under the indenture,
the amount, interest rate and maturity date of certain indebtedness
owing by the owner trust to the indenture trustee in its individual
capacity,
the property and funds physically held by the indenture trustee and
any action taken by it that materially affects the notes and that has
not been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE
The discharge of an indenture will occur with respect to the collateral
securing the notes of a series upon the delivery to the related indenture
trustee for cancellation of all the notes or, with certain limitations, upon
deposit with the indenture trustee of funds sufficient for the payment in full
of all of the notes.
THE INDENTURE TRUSTEE
The indenture trustee for any series will be specified in your prospectus
supplement. An indenture trustee may resign at any time, in which event the
depositor will be obligated to appoint a successor trustee. The depositor may
also remove an indenture trustee
if the indenture trustee ceases to be eligible to continue to serve
under the indenture,
if the indenture trustee becomes insolvent, or
if the rating assigned to the long-term unsecured debt obligations of
the indenture trustee (or the holding company thereof) by the rating
agencies shall be lowered below the rating of 'BBB', 'Baa3' or
equivalent rating or be withdrawn by any rating agency.
In these circumstances, the depositor will be obligated to appoint a successor
trustee. Any resignation or removal of an indenture trustee and appointment of a
successor trustee will not become effective until acceptance of the appointment
by a successor trustee.
64
<PAGE>
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS
The following summarizes the material terms of each pooling and servicing
agreement, a form of which was filed with the registration statement of which
this prospectus is a part. In addition, a copy of the pooling and servicing
agreement relating to a series of notes will be filed with the Securities and
Exchange Commission following the sale of those notes. This summary describes
terms expected to be common to each pooling and servicing agreement, but the
depositor does not intend this summary to be complete. This summary is subject
to the provisions of the pooling and servicing agreement relating to a
particular series and the description set forth in your prospectus supplement.
You should read the form of the pooling and servicing agreement filed as noted
above.
TRANSFER OF CONTRACTS AND EQUIPMENT
Newcourt Financial USA Inc., a subsidiary of Newcourt Credit Group Inc.,
will be the seller of contracts to the depositor for deposit into the owner
trust. The seller will originate contracts and acquire contracts originated by
other subsidiaries of Newcourt Credit Group Inc. Prior to the offering of a
series of notes, the seller may have sold contracts to the depositor for deposit
into a trust used in connection with temporary financing arrangements. The
depositor may reacquire some or all of these contracts for deposit into the
owner trust in connection with the offering and sale of a particular series of
notes. On or before the applicable closing date, the seller will transfer to the
depositor under one or more purchase agreements all of its interest in the
following:
the contracts and the related equipment,
the right to receive all scheduled payments and prepayments received
on the contracts on or after the date of transfer, but excluding any
scheduled payments due on or after, but received prior to, the
transfer date,
all rights under insurance policies maintained on the equipment under
the contracts,
all documents contained in the files and
all proceeds derived from any of the above.
Under the pooling and servicing agreement, on the applicable closing date,
the depositor will transfer to the owner trust:
all of its rights in the contracts and rights in the equipment and
other rights listed above, except that in the case of leased
equipment, the depositor will retain ownership of the equipment, any
rights to payments made or attributable to the leased equipment upon
expiration of the related lease contract, of contract prepayments and
liquidation proceeds allocable to the depositor under the pooling and
servicing agreement and of any portion of the purchase amount
attributable to the book value of the leased equipment, other than any
guaranteed residual investment;
all funds on deposit from time to time in the trust accounts; and
all its rights under the purchase and sale agreement.
65
<PAGE>
Each pooling and servicing agreement will designate the servicer as
custodian to maintain possession, as the owner trust's agent, of the contracts
and all related documents. To facilitate servicing and save administrative
costs, the documents will not be physically segregated from other similar
documents that are in the servicer's possession. Financing statements will be
filed on the transfer date in the applicable jurisdictions reflecting:
the transfer of the contracts and the equipment by the originators, other
than the seller, to the seller,
the transfer of the contracts and the equipment by the seller to the
depositor and, as applicable by any temporary financing trust to the
depositor,
the transfer by the depositor to the owner trust, and
the pledge by the owner trust to the indenture trustee,
The originators' accounting records and computer systems will also reflect
these assignments and this pledge.
COLLECTIONS ON CONTRACTS
The applicable indenture trustee will maintain a collection account, into
which the servicer will deposit the following amounts no later than the second
business day after their processing:
all scheduled payments made under the contracts;
all prepayments, excluding any portion which your prospectus supplement
states is allocable to the depositor;
amounts constituting liquidation proceeds on liquidated contracts, to the
extent specified in your prospectus supplement;
all payments made by the seller under the pooling and servicing agreement
to repurchase any contract as a result of a breach of a representation or
warranty, as described under 'The Contracts -- Representations and
Warranties Made by the Seller,' excluding, in the case of a lease
contract, any portion which your prospectus supplement states is allocable
to the depositor; and
the amount paid by the depositor to purchase the contracts, as described
under 'Description of the Notes and Indenture.'
So long as no event of termination shall have occurred and be continuing
with respect to the servicer, the servicer may make the required remittances to
the collection account net of its servicing fees.
The servicer may withdraw from the collection account any amounts deposited
in error or required to be repaid to an obligor, based on the servicer's
good-faith determination that the amount was deposited in error or must be
returned to the obligor.
The servicer will pay to the depositor all proceeds from the disposition of
equipment subject to a true lease, to the extent allocable to the depositor.
66
<PAGE>
SERVICING
Your prospectus supplement will identify the servicer for your trust. The
servicer will be obligated under each pooling and servicing agreement to service
the contracts with reasonable care, using that degree of skill and attention
that the servicer generally exercises with respect to all comparable contracts
and related assets that it services for itself or others in accordance with its
credit and collections policy and applicable law. In performing these duties, it
shall comply in all material respects with its credit and collection policies
and procedures described under 'The Originators -- Underwriting and Servicing,'
as modified from time to time. The servicer may delegate servicing
responsibilities to third parties or affiliates, provided that the servicer will
remain obligated to the related owner trust and the depositor for the proper
performance of the servicing responsibilities.
The servicer is obligated to act in a commercially reasonable manner with
respect to the repossession and disposition of equipment following a contract
default with a view to realizing proceeds at least equal to the equipment's fair
market value. The servicer may choose to dispose of equipment through a new
lease or in some other manner which provides for payment for the equipment over
time. In these cases, the servicer will be required to pay from its own funds an
amount which, in its reasonable judgment, is equal to the fair market value of
the equipment, less liquidation expenses, and the servicer will be entitled to
all subsequent payments in respect of the equipment. Any amounts the servicer
pays will constitute additional liquidation proceeds with respect to the related
contract and equipment and will be allocated as described under 'Description of
the Notes and Indenture -- Liquidation Proceeds.'
The servicer is responsible for:
reviewing and certifying that the contract files are complete;
monitoring and tracking any property and sales taxes to be paid by
obligors;
billing, collecting, and recording payments from obligors;
communicating with and providing billing records to obligors;
deposit of funds into the collection account;
receiving payments as the owner trust's agent on the insurance
policies maintained by the obligors and communicating with insurers;
issuance of reports to the indenture trustee specified in the
indenture and in the pooling and servicing agreement;
repossession and remarketing of equipment following obligor defaults;
and
paying the fees and ordinary expenses of the indenture trustee and the
owner trustee.
The servicer shall be entitled to recover all reasonable out-of-pocket
expenses incurred by it in liquidating a contract and disposing of the related
equipment. The servicer is entitled to retain, from liquidation proceeds, a
reserve for out-of-pocket liquidation expenses in an amount equal to the
expenses, in addition to those previously incurred, as it reasonably estimates
will be incurred. The servicer is permitted to grant payment extensions on a
contract in accordance with its credit and
67
<PAGE>
collection policies and procedures if the servicer believes in good faith that
an extension is necessary to avoid a termination and liquidation of the contract
and will maximize the amount to be received by the owner trust under the
contract. The servicer is permitted to agree to modifications or amendments to a
contract in accordance with its credit and collection policies and procedures.
PREPAYMENTS
The servicer may allow a prepayment of any lease contract, but only if the
amount paid or, in the case of a partial prepayment, the sum of its prepayment
and the remaining contract principal balance, is at least equal to the required
payoff amount of the contract.
EVIDENCE AS TO COMPLIANCE
Annually, the servicer must deliver to the indenture trustee an unqualified
audit report from a nationally recognized accounting firm on the financial
statements of the servicer or its parent and a statement as to the servicer's
controls over the servicing of:
equipment contracts,
installment sales contracts,
promissory notes,
loan and security agreements and/or
other similar types of receivables under servicing agreements
substantially similar one to another.
MATTERS REGARDING THE SERVICER
The servicer may not resign from its obligations under a pooling and
servicing agreement except if its duties are no longer permissible under
applicable law. No resignation will become effective until a successor servicer
has assumed the servicer's obligations and duties under the pooling and
servicing agreement. Removal of the servicer is permissible only upon the
occurrence of an event of termination as discussed below.
The servicer must maintain an insurance policy or financial guarantee bond
in customary form covering errors and omissions by the servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Compensation to the servicer will include a monthly fee equal:
to the product of one-twelfth of a percentage per annum specified in
your prospectus supplement multiplied by the contract pool principal
balance as of the last day of the second preceding collection period
or,
in the case of the servicing fee with respect to the collection period
commencing on the date of transfer of the contracts, the contract pool
principal balance as of the transfer date, plus any
late fees,
68
<PAGE>
late payment interest,
documentation fees,
insurance administration charges, other administrative fees and
any extension fees collected with respect to the contracts
during the prior collection period and investment earnings on
collections prior to deposit thereof in the collection account.
The servicer will pay all expenses incurred by it in connection with its
activities under the pooling and servicing agreement and the annual fees and
expenses of the owner trustee as indenture trustee in connection with the notes.
The servicer is authorized to waive any administrative fees or extension fees
that may be collected in the ordinary course of servicing any contract.
EVENTS OF TERMINATION
An event of termination under a pooling and servicing agreement will occur
if:
the servicer fails to make any required payment or deposit and the failure
continues for five business days, or three business days in the case of a
failure to pay the amount to purchase a contract required due to a breach
of representations and warranties, after notice from the indenture trustee
or discovery by the servicer;
the servicer fails to observe in any material respect any agreements of
the servicer set forth in the pooling and servicing agreement and the
failure (1) materially and adversely affects the rights of the owner
trust, the equity certificate holder or you, and (2) continues unremedied
for 30 days after written notice to the servicer;
events of bankruptcy or insolvency occur with respect to the servicer; or
any representation, warranty or statement of the servicer made under the
pooling and servicing agreement is incorrect in any material respect, and
(1) has a material adverse effect on the owner trust or holders of the
notes, and (2) continues uncured for 30 days after the acquiring of
written notice.
RIGHTS UPON EVENT OF TERMINATION
If an event of termination remains unremedied, the indenture trustee may,
and at the written direction of a majority of the noteholders shall, terminate
all of the rights and obligations of the servicer under the pooling and
servicing agreement. A successor servicer will succeed to all the
responsibilities, duties and liabilities of the servicer under the pooling and
servicing agreement. The successor servicer will be entitled to similar
compensation arrangements, except that any successor servicer will not be liable
for any acts or omissions of the prior servicer occurring prior to a transfer of
the servicer's servicing and related functions or for any breach by the prior
servicer of any of its obligations. A majority of the noteholders may waive any
default by the servicer under the pooling and servicing agreement and its
consequences.
69
<PAGE>
AMENDMENT
The parties may amend any pooling and servicing agreement:
to cure any ambiguity,
to correct or supplement any provision therein that may be
inconsistent with any other provision, or
to make any other provisions with respect to matters or questions
arising under the pooling and servicing agreement but only if the
amendment will not adversely affect in any material respect the
interests of the noteholders.
Any pooling and servicing agreement may also be amended in any respect by
the parties with the consent of a majority of the noteholders except that no
amendment
that reduces the amount or changes the timing of any contract
collections on any contracts or payments required to be distributed on
any note,
that changes the interest rate on any note, that adversely affects the
priority of payment of principal or interest to noteholders or
that reduces the noteholder percentage required to consent to these
amendments or any waiver under the pooling and servicing agreement,
may be effective without the consent of the holder of each note. Also, an
amendment under the foregoing sentence will not be effective unless each rating
agency confirms that the amendment will not result in a reduction, qualification
or withdrawal of the ratings on the notes.
MATERIAL 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. The discussion that follows constitutes the opinion of
Winston & Strawn, special tax counsel to the trust depositor, and is 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 to those described in this prospectus. As a result,
there can be no assurance that the Internal Revenue Service will not challenge
the conclusions reached in this description of Material Federal Income Tax
Consequences, and no ruling from the Internal Revenue Service 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 does not attempt to explain fully every relevant technical
aspect of the applicable tax provisions. Additionally, this summary does not
include 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. Also, the descriptions of the relevant tax rules are
intended to explain the general application of
70
<PAGE>
the rules. BECAUSE THIS SUMMARY OF MATERIAL FEDERAL INCOME TAX CONSEQUENCES IS
INTENDED TO BE GENERAL IN NATURE, THE DEPOSITOR SUGGESTS THAT YOU CONSULT WITH
YOUR OWN TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX
CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES.
This summary of 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-through 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 particular types
of investors or in particular special circumstances. Those rules and the
investors and circumstances to which they apply are separately described under
the caption 'Special Tax Rules.' THE DEPOSITOR SUGGESTS THAT YOU CONSULT A TAX
ADVISOR TO DETERMINE WHETHER ANY OF THE SPECIAL TAX RULES ARE APPLICABLE.
CLASSIFICATION OF THE NOTES AND THE TRUST
Under existing federal income tax law each 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 as indebtedness for federal
income tax purposes. The opinion of Winston & Strawn does not foreclose the
possibility of a contrary determination by the Internal Revenue Service or by a
court or of a contrary position by the Internal Revenue Service 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 Internal Revenue Service successfully asserted that one or more of
the notes did not represent debt for federal income tax purposes, the notes
might be treated as equity interests in the trust. 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 a 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
71
<PAGE>
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. This 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 generally would be subject to U.S. tax
and U.S. tax return filing and withholding requirements,
(3) individual holders might be subject to certain limitations 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 accordance 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 these capital losses which
can be deducted.
Information Reporting and Backup Withholding. The trust or an agent acting
on its behalf will be required to report annually to the Internal Revenue
Service, 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
72
<PAGE>
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 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
Internal Revenue Service as a credit 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:
(1) a corporation or partnership created or organized in or under the
laws of the United States or of any political subdivision thereof,
(2) an estate the income of which is subject to United States federal
income taxation regardless of its source, or
(3) 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,
certain 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 generally be considered to have purchased the
note at an original issue discount for United States federal income tax
purposes. In general, the stated redemption price at maturity for a note is
equal to the principal amount. If a note is acquired with original issue
discount 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 original issue discount. For cash basis investors, such as individuals, the
requirement that original issue discount 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 original issue discount 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
73
<PAGE>
original issue discount. Under these rules, investors generally will be required
to include in income increasingly greater amounts of original issue discount in
successive accrual periods.
In determining whether a note has original issue discount, the issue price
of the note may not necessarily equal the investor's purchase price, although
they generally should be the same. The issue price of a note will equal the
initial offering price to the public, not including bond houses, brokers or
similar persons or organizations acting in the capacity of underwriters or
wholesalers, at which price a substantial amount of the notes is sold.
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 original issue discount, 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 the remaining
term to maturity of the note unless the investor elects to accrue market
discount using the constant yield method, i.e., the original issue discount
method. Unlike original issue discount, 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, which has a 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. This 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.
Limitations imposed by the federal tax law which are intended to match
deductions with the taxation of income may defer deductions for interest paid by
an investor on indebtedness incurred or continued, or short sale expenses
incurred, to purchase or carry a note with market discount. A noteholder who
elects to include market discount in gross income as it accrues is exempt from
this rule.
Whenever an investor accrues and includes in income an amount of original
issue discount 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 original issue discount 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 original issue
discount 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
74
<PAGE>
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.
If an investor purchases in a secondary market transaction a note which was
originally issued with original issue discount for an amount which is less than
the sum of all amounts payable on the note after the purchase date other than
payments of qualified stated interest but in excess of its adjusted issue price,
i.e., the original issue price plus any accrued original issue discount as those
terms are described above, the excess is referred to for tax purposes as
'acquisition premium.' The investor would be permitted to reduce the daily
portions of original issue discount the investor would otherwise include in
income by an amount corresponding to the ratio of (1) the excess of the
investor's purchase price for the note over the adjusted issue price of the note
as of the purchase date to (2) the excess of all amounts payable on the note
after the purchase date, other than payments of qualified stated interest, over
the note's adjusted issue price.
Election to Treat All Interest as Original Issue Discount. An investor may
elect to include in gross income all interest that accrues on a note using the
constant-yield method described above under the heading 'Purchase at a Discount'
with modifications described below. For purposes of this election, interest
includes:
qualified stated interest,
original issue discount,
de minimis original issue discount,
market discount,
de minimis market discount, and
unstated interest,
as adjusted by any amortizable bond premium or acquisition premium.
In applying the constant-yield method to a note with respect to which this
election has been made, the issue price of the note will equal the electing
investor's adjusted basis in the note immediately after its acquisition. The
issue date of the note will be the date of its acquisiton by the electing
investor, and no payments on the note will be treated as payments of qualified
stated interest. This election, if made, may not be revoked without the consent
of the Internal Revenue Service. Investors should consult with their own tax
advisors as to the effect in their circumstances of making this election.
75
<PAGE>
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
(1) a citizen or resident of the United States,
(2) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof,
(3) an estate the income of which is includible in gross income for
U.S. federal income tax purposes, regardless of its source, or
(4) 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 generally
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. Additionally, the foreign investor must provide
or have a financial institution provide on its behalf to the trust or paying
agent an appropriate statement Form W-8, 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 generally 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 at a rate of 30% unless
reduced or eliminated under an applicable income tax treaty. To qualify for any
reduction as the result of an income tax treaty, the foreign investor must
provide the paying agent with Form 1001. This form is also effective for three
years.
The realization of any capital gain 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 United 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
76
<PAGE>
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 for certain items, unless it qualifies for a lower rate under an
applicable tax treaty.
Regardless of when a foreign investor acquired a note, Treasury Regulations
which will become effective for note payments made after December 31, 2000 may
change reporting requirements for certain 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, THE DEPOSITOR RECOMMENDS THAT YOU CONSULT YOUR OWN TAX
ADVISORS 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 these 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, and assets of the plans may
be invested in the notes, subject to the provisions of other applicable federal
and state law. Any 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.
77
<PAGE>
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 Interal Revenue Code Plans from engaging in some transactions
involving the plans or plan assets of the 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 engage or participate in these prohibited transactions. The
trust depositor,
underwriters,
servicer,
indenture trustee or
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 the 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 the assets: or
(b) has authority or responsibility to give, or regularly gives,
investment advice with respect to the assets under an
agreement or understanding that the advice will serve as a
primary basis for investment decisions with respect to the
assets and that the advice will be based on the particular
needs of the plan; or
(c) is an employer of employees covered under the plan unless the
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 bank collective
investment funds and parties in interest;
PTCE 91-38, which exempts transactions between bank collective
investment funds and parties in interest;
78
<PAGE>
PTCE 90-1, which exempts 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 that 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.
RATINGS OF THE NOTES
The owner trust will not sell notes of a series unless one or more
nationally recognized rating agencies rate the notes of that series in a rating
category that signifies investment grade. Any rating that is made may be lowered
or withdrawn by the assigning rating agency at any time if, in its judgment,
circumstances so warrant. If a rating or ratings of notes is qualified, reduced
or withdrawn, no person or entity will be obligated to provide any additional
credit enhancement with respect to the notes so qualified, reduced or withdrawn.
The rating of the notes should be evaluated independently from similar
ratings on other types of securities. A rating is not a recommendation to buy,
sell or hold notes, inasmuch as a rating does not comment as to market price or
suitability for a particular investor. The ratings of the notes do not address
the likelihood of payment of principal on any class of notes prior to the stated
maturity date of the notes, or the possibility of the imposition of United
States withholding tax with respect to non-United States persons.
USE OF PROCEEDS
The proceeds from the sale of the notes of each series, after funding a
portion of the cash collateral account or other form of credit enhancement for
the series and paying the expenses of the depositor, will be used by the
depositor to pay the purchase price due to Newcourt Financial USA Inc., as
seller, under the purchase and sale agreement or the trust through which the
depositor has arranged a warehouse receivables securitization facility relating
to the financing of contracts sold by the depositor to the owner trust. That
trust will use proceeds it receives to make payments on that facility.
PLAN OF DISTRIBUTION
The owner trust may sell notes to or through underwriters by a negotiated
firm commitment underwriting and public reoffering by the underwriters, and also
may sell notes directly to other purchasers or through agents. The depositor
intends to offer the notes through these various methods from time to time and
that offerings may be
79
<PAGE>
made concurrently through more than one of these methods or that an offering of
a particular series of notes may be made through a combination of these methods.
The originators, the depositor and certain of its affiliates may agree to
indemnify the underwriters and agents who participate in the distribution of the
notes against certain liabilities, including liabilities under the Securities
Act of 1933, as amended, or contribute to payments the underwritten may be
required to make.
Funds in cash collateral accounts and the trust accounts may, from time to
time, be invested in certain investments acquired from the underwriters.
LEGAL MATTERS
Winston & Strawn, Chicago, Illinois, will provide a legal opinion relating
to the notes in its capacity as special counsel to the owner trust, the
depositor, the seller, the originators, the servicer and the administrator.
Other legal matters for undewriters will be passed upon by counsel to
underwriters.
WHERE YOU CAN FIND MORE INFORMATION
Federal securities law requires the filing of certain information with the
Securities and Exchange Commission, including annual, quarterly and special
reports, proxy statements and other information. You can read and copy these
documents at the public reference facility maintained by the Securities and
Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. You can also read and copy the reports, proxy statements
and other information at the following regional offices of the Securities and
Exchange Commission:
<TABLE>
<S> <C>
New York Regional Office Chicago Regional Office
Seven World Trade Center Citicorp Center
Suite 1300 500 West Madison Street, Suite 1400
New York, NY 10048 Chicago, IL 60661
</TABLE>
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
more information about the public reference rooms or visit the Securities and
Exchange Commission's web site at http://www.sec.gov to access available
filings.
The Securities and Exchange Commission allows offerors of securities to
incorporate by reference some of the information they file with it. This means
that offerors can disclose important information to you by referring you to
those documents. The information that the depositor incorporates by reference is
considered to be part of this prospectus, and later information that the
depositor files with the Securities and Exchange Commission will automatically
update and supersede this information.
All documents filed by the servicer, on behalf of a respective owner trust,
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
after the date of this prospectus and prior to the termination of the offering
of the notes will be incorporated by reference into this prospectus.
If you are a beneficial owner of the notes to whom a prospectus has been
delivered, the depositor will, on request, send you a copy of the information
that
has been incorporated by reference in this prospectus. The depositor will
provide
this information at no cost to you. Please address requests to: Newcourt Credit
Group Inc., at 2 Gatehall Drive, Parsippany, New Jersey 02054, Telephone
No. (973) 606-3500.
80
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
TERM PAGE
- ----------------------------------------------------------------------------------------------------------- ----
<S> <C>
DTC........................................................................................................ 54
ERISA...................................................................................................... 76
Excluded residual investment............................................................................... 43
Guaranteed residual investment............................................................................. 43
PTCE....................................................................................................... 77
</TABLE>
81
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
RECEIVABLE-BACKED NOTES
NCT FUNDING COMPANY, L.L.C.
DEPOSITOR
[LOGO]
SERVICER
MEMBERS OF THE NEWCOURT GROUP OF COMPANIES
[LOGO]
Until [ ], all dealers effecting transaction in
the notes, whether or not participating in this distribution, may be required to
deliver this prospectus supplement and the accompanying prospectus. Dealers
acting as underwriters also have an obligation to deliver a prospectus
supplement and prospectus with respect to their unsold allotments or
subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Expenses in connection with the offering of the Securities being registered
herein are estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee....................................... $ 973,000
Legal fees and expenses................................................................... $ 325,000
Accounting fees and expenses.............................................................. $ 25,000
Blue sky fees and expenses................................................................ $ 8,000
Rating agency fees........................................................................ $ 350,000
Trustee's fees and expenses............................................................... $ 24,000
Printing.................................................................................. $ 90,000
Miscellaneous............................................................................. $ 60,000
----------
Total................................................................................ $1,855,000
----------
----------
</TABLE>
- ------------
* All amounts except the Securities and Exchange Commission Registration Fee
are estimates of expenses incurred or to be incurred in connection with the
issuance and distribution of a Series of Securities in an aggregate principal
amount assumed for these purposes to be equal to $1,777,838,645 of Securities
registered hereby.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the related trust agreement, the Depositor will agree to indemnify
the Owner Trustee for, 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 incurred without willful misconduct or
negligence on the part of the Owner Trustee, which may at any time be imposed
on, incurred by or asserted against the Owner Trustee in any way relating to or
arising out of the trust agreement, the pooling and servicing agreement, the
indenture and related documents, the Trust's assets, the administration of the
Trust's assets or the action or inaction of the Owner Trustee under the trust
agreement; provided, however, the liability of the Depositor described herein
shall be limited to the assets of the Depositor and any indemnity payments to be
made pursuant to this Section shall not be made from the Trust's assets and such
indemnity payments, if unpaid, do not constitute a general recourse claim
against the Trust.
The Depositor's Limited Liability Company Agreement provides for indemnity
of its directors and officers to the fullest extent permitted by Delaware law.
Pursuant to agreements which the Trusts and the Depositor may enter into
with underwriters (the form of which is included as Exhibit 1.1 to this
Registration Statement), officers and directors of the Depositor may be entitled
to indemnification by such underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, arising from information which has
been or will be furnished to the Depositor by such underwriters that appear in
the Registration Statement or any related prospectus.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1.1 -- Form of Underwriting Agreement***
3.1 -- Certificate of Formation of the Depositor***
3.2 -- Limited Liability Company Agreement of the Depositor***
4.1 -- Form of Trust Agreement (including form of Certificates)***
4.2 -- Form of Pooling and Servicing Agreement***
4.3 -- 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**
23.1 -- Consent of Winston & Strawn (included in Exhibit 5.1)**
23.2 -- Consent of Ernst & Young LLP***
24.1 -- Power of Attorney (included on signature page of original filing)
25.1 -- Statement of Eligibility and Qualification of Indenture Trustee*
99.1 -- Form of Administration Agreement***
</TABLE>
- ------------
* To be filed by amendment
** Previously filed
*** Filed herewith
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the 'Calculation of
Registration Fee' table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that (a)(1)(i) and (a)(1)(ii) will not apply if the
information required to be included in a post-effective amendment thereby is
contained in periodic reports filed pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
II-2
<PAGE>
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement 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.
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 foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than 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.
The undersigned registrant hereby undertakes that:
(1) 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
the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
(2) 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.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this Amendment No. 2 to Form S-3 and has duly
caused this Amendment No. 2 to Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Parsippany, State of New
Jersey, on July 7, 1999.
NCT FUNDING COMPANY, L.L.C.
as Depositor of the Trusts
By /s/ DANIEL A. JAUERNIG*
..................................
NAME: DANIEL A. JAUERNIG
TITLE: PRESIDENT
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 2 to Form S-3 has been signed on behalf of NCT Funding
Company, L.L.C. as Depositor of the Trustees by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ DANIEL A. JAUERNIG* President (Principal Executive Officer, July 7, 1999
......................................... Principal Financial Officer and Principal
Accounting Officer)
/s/ PETER H. SORENSON* Director/Member July 7, 1999
.........................................
</TABLE>
*By: /S/ SCOTT J. MOORE
.........................
ATTORNEY-IN-FACT
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<C> <S>
1.1 -- Form of Underwriting Agreement***
3.1 -- Certificate of Formation of the Depositor***
3.2 -- Limited Liability Company Agreement of the Depositor***
4.1 -- Form of Trust Agreement***
4.2 -- Form of Pooling and Servicing Agreement***
4.3 -- 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**
23.1 -- Consent of Winston & Strawn (included in Exhibit 5.1)**
23.2 -- Consent of Ernst & Young LLP***
24.1 -- Power of Attorney (included on signature page of original filing)
25.1 -- Statement of Eligibility and Qualification of Indenture Trustee*
99.1 -- Form of Administration Agreement***
</TABLE>
- ------------
* To be filed by amendment
** Previously filed
*** Filed herewith
<PAGE>
EXHIBIT 1.1
NCT FUNDING COMPANY, L.L.C. (Trust Depositor)
AT&T CAPITAL CORPORATION (Servicer)
UNDERWRITING AGREEMENT
[__________ __], 1999
[Underwriter name and address]
Ladies and Gentlemen:
NCT Funding Company, L.L.C., a Delaware limited liability
company (the "Trust Depositor"), proposes to cause Newcourt Equipment Trust
Securities 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
____________ 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 Pooling and Servicing Agreement among the Trust Depositor, the
Trust, the Indenture Trustee and AT&T Capital Corporation as Servicer (the
"Servicer") dated as of [_________ __], 1999.
Section 1. Representations and Warranties. The Trust Depositor
and the Servicer represent and warrant to each Underwriter that:
(a) The Trust Depositor has prepared and filed with
the Securities and Exchange Commission (the "Commission") in accordance
with the provisions of the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
"Securities Act"), a registration statement on Form S-3 (registration
number 333-74847), 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
<PAGE>
thereto, if any, was declared effective by the Commission and
"Effective Date" means the date of the Effective Time. The Trust
Depositor has furnished to you, for use by the Underwriters, copies of
one or more preliminary prospectuses (each, a "Preliminary
Prospectus"), relating to the Notes. Except where the context otherwise
requires, the registration statement, as amended at the Effective Time,
including all documents filed as a part thereof, and including any
information contained in a prospectus subsequently filed with the
Commission pursuant to Rule 424(b) under the Act and deemed to be part
of the registration statement as of the Effective Time pursuant to Rule
430A under the Act, is herein called the "Registration Statement", and
the prospectus, in the form filed by the Trust Depositor with the
Commission pursuant to Rule 424(b) under the Act or, if no such filing
is required, the form of final prospectus included in the Registration
Statement at the time it became effective, is hereinafter called the
"Prospectus";
(b) The Registration Statement relating to the Notes,
has been filed with the Commission and such Registration Statement has
become effective. No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of the Trust Depositor
or the Servicer, threatened by the Commission;
(c) The Registration Statement conforms, and any
amendments or supplements thereto and the Prospectus will conform, in
all material respects to the requirements of the Securities Act and the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
and do not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto, as of the applicable
filing date as to the Prospectus and any amendment or supplement
thereto, and as of the Closing Date, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however that this representation and warranty shall not apply
to (i) that part of the Registration Statement which shall constitute
the Statement of Eligibility and Qualification (Form T-1) of the
Indenture Trustee under the Trust Indenture Act or (ii) any
Underwriters' Information as defined in Section 10(b) hereof) contained
therein. The Indenture conforms in all respects to the requirements of
the Trust Indenture Act and the rules and regulations of the Commission
thereunder.
(d) The representations and warranties of the Trust
Depositor in Section [3.01] of the Pooling 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 Pooling and Servicing Agreement will
be true and correct as of the Closing Date.
(f) The Servicer and each of its subsidiaries have
been duly incorporated and are validly existing as corporations in good
standing under the laws of their 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
<PAGE>
or have such power or authority could not have, individually or in the
aggregate, a material adverse effect on the condition (financial or
otherwise), results of operations, business or prospects of the
Servicer and its subsidiaries taken as a whole.
(g) All the outstanding shares of capital stock of
the Trust Depositor have been duly authorized and validly issued, are
fully paid and nonassessable and, except to the extent set forth in the
Registration Statement, are owned by Newcourt Credit Group Inc.
("Newcourt") directly or indirectly through one or more wholly-owned
subsidiaries, free and clear of any claim, lien, encumbrance, security
interest, restriction upon voting or transfer or any other claim of any
third party.
(h) (i) the Pooling 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 Pooling and Servicing Agreement, the Trust Agreement
between the Trust Depositor and __________ and the Purchase and Sale
Agreement between Newcourt Financial USA Inc. as the Seller, and the
Trust Depositor (collectively, the "Transaction Agreements") and the
Notes conform to the descriptions thereof contained in the Prospectus.
(i) The execution, delivery and performance of this
Agreement, the Transaction Agreements to which the Servicer or its
subsidiary, as the case may be, is a party and the issuance and sale of
the Notes, the consummation of the transactions contemplated hereby and
thereby will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Servicer or any of its subsidiaries is a
party or by which the Servicer or any of its subsidiaries is bound or
to which any of the property or assets of the Servicer or any of its
subsidiaries is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Servicer or any of
its subsidiaries or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Servicer or any of its subsidiaries or any of their properties or
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
<PAGE>
performance of this Agreement or the Transaction Agreements, the
issuance and sale of the Notes and the consummation of the transactions
contemplated hereby and thereby.
(j) There are no contracts or other documents which
are required to be described in the Prospectus or filed as exhibits to
the Registration Statement by the Securities Act and which have not
been so described or filed.
(k) There are no legal or governmental proceedings
pending to which the Servicer or any of its subsidiaries is a party or
of which any property or assets of the Servicer or any of its
subsidiaries is the subject which, individually or in the aggregate, if
determined adversely to the Servicer or any of its subsidiaries, are
reasonably likely to have a material adverse effect on the condition
(financial or otherwise), results of operations, business or prospects
of the Servicer and its subsidiaries taken as a whole; and to the best
of the Servicer's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(l) Neither the Servicer nor any of its subsidiaries
(i) is in violation of its charter or by-laws, (ii) is in default in
any material respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained
in any material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is
bound or to which any of its property or assets is subject or (iii) is
in violation in any respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets may be
subject, except any violation or default that could not have a material
adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of the Servicer and its subsidiaries
taken as a whole.
(m) This Agreement has been duly authorized, executed
and delivered by each of the Trust Depositor and the Servicer; and
(n) Neither the Trust nor the Trust Depositor is
required to be registered under the Investment Company Act of 1940, as
amended.
Section 2. Purchase and Sale. Subject to the terms and
conditions and in reliance upon the covenants, representations and warranties
herein set forth, the Trust Depositor agrees to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from the Trust
Depositor, the principal amount of Notes set forth opposite 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
<PAGE>
Day" means any day other than a day on which banks are permitted or required to
be closed in New York City.
Payment for the Notes shall be made against delivery to the
Representative for the respective accounts of the several Underwriters of the
Notes registered in the name of Cede & Co. as nominee of The Depository Trust
Company and in such denominations as the Representative shall request in writing
not later than two full Business Days prior to the Closing Date. The Trust
Depositor shall make the Notes available for inspection by the Representative in
New York, New York not later than one full Business Day prior to the Closing
Date.
Section 4. Offering by Underwriters. It is understood that the
several Underwriters propose to offer the Notes for sale to the public, which
may include selected dealers, as set forth in the Prospectus.
Section 5. Covenants of the Trust Depositor. The Trust
Depositor covenants and agrees with the Underwriters:
(a) To prepare the Prospectus in a form approved by
the Representative and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than the Commission's close of
business on the second business day following the execution and
delivery of this Agreement or, if applicable, such earlier time as may
be required by Rule 430A(a)(3) under the Securities Act.
(b) During the period that a prospectus relating to
the Notes is required to be delivered under the Securities Act in
connection with sales of such Notes (such period being hereinafter
sometimes referred to as the "prospectus delivery period"), before
filing any amendment or supplement to the Registration Statement or the
Prospectus, the Trust Depositor will furnish to the Representative a
copy of the proposed amendment or supplement for review and will not
file any such proposed amendment or supplement to which the
Representative reasonably objects.
(c) During the prospectus delivery period, the Trust
Depositor will advise the Representative promptly after it receives
notice thereof, (i) when any amendment to the Registration Statement
shall have become effective; (ii) of any request by the Commission for
any amendment or supplement to the Registration Statement or the
Prospectus or for any additional information, (iii) of the issuance by
the Commission of 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.
<PAGE>
(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.
(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.
<PAGE>
(j) For a period of 90 days from the date hereof, the
Trust Depositor will not offer for sale, sell, contract to sell or
otherwise dispose of, directly or indirectly, or file a registration
statement for, or announce any offering of, any securities
collateralized by, or evidencing an ownership interest in, any
asset-backed securities of the Trust Depositor or the Trust (other than
the Notes purchased hereunder) without the prior written consent of the
Underwriters.
Section 6. Conditions to the Obligations of the Underwriters.
The respective obligations of the several Underwriters hereunder are subject to
the accuracy, when made and on the Closing Date, of the representations and
warranties of the Trust Depositor and the Servicer contained herein, to the
accuracy of the statements of the Trust Depositor and the Servicer made in any
certificates pursuant to the provisions hereof, to the performance by the Trust
Depositor and the Servicer of their respective obligations hereunder and to each
of the following additional terms and conditions:
(a) The Prospectus shall have been filed with the
Commission pursuant to Rule 424 in the manner and within the applicable
time period prescribed for such filing by the rules and regulations of
the Commission under the Securities Act and in accordance with Section
5(a) of this Agreement; and, prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceedings for such purpose
shall have been initiated or threatened by the Commission; and all
requests for additional information from the Commission with respect to
the Registration Statement shall have been complied with to the
reasonable satisfaction of the Representative.
(b) (i) All corporate proceedings and other legal
matters incident to the authorization, form and validity of this
Agreement, the Transaction Agreements, the Notes, the Registration
Statement, the Preliminary Prospectus and the Prospectus, and all other
legal matters relating to such agreements and the transactions
contemplated hereby and thereby shall be reasonably satisfactory in all
material respects to counsel for the Underwriters, and the Trust
Depositor shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass
upon such matters and (ii) prior to or contemporaneously with the
purchase of Notes hereunder, all transactions contemplated to be
consummated under such Transaction Documents on the Closing Date
(including, without limitation, the issuance and placement of any
subordinated, privately-placed securities) shall have been so
consummated to the reasonable satisfaction of the Underwriters.
(c) Winston & Strawn shall have furnished to the
Representative their written opinion, as U.S. counsel to the Trust
Depositor and the Servicer, addressed to the Underwriters and dated the
Closing Date, in form and substance reasonably satisfactory to the
Underwriters.
(d) (x) [____________] shall have furnished to the
Representative his written
<PAGE>
opinion, as Secretary to the Servicer, addressed to the Underwriters
and dated the Closing Date, in form and substance reasonably
satisfactory to the Underwriters and (y) [____________] shall have
furnished to the Representative his written opinion, as General Counsel
to the Servicer, addressed to the Underwriters and dated the Closing
Date, in form and substance reasonably satisfactory to the
Underwriters.
(e) Winston & Strawn shall have furnished to the
Representative their written opinion, as U.S. counsel to the Trust
Depositor and the Servicer, addressed to the Underwriters and dated the
Closing Date, in form and substance reasonably satisfactory to the
Underwriters, with respect to the characterization of the transfer of
the Assets by the Seller to the Trust Depositor pursuant to the
Purchase and Sale Agreement as a sale and the non-consolidation of the
Trust Depositor and the Servicer.
(f) The Representative shall have received from
__________ 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 their written opinion, as counsel to the Indenture
Trustee, addressed to the Underwriters and dated the Closing Date, in
form and substance reasonably satisfactory to the Underwriters and (ii)
__________ shall have furnished to the Representative their written
opinion, as counsel to the Owner Trustee, addressed to the Underwriters
and dated the Closing Date, in form and substance reasonably
satisfactory to the Underwriters.
(h) Each of the Trust Depositor and the Servicer
shall have furnished to the Representative a certificate, dated the
Closing Date, of any of its Chairman of the Board, President or Vice
President and its chief financial officer stating that (i) such
officers have carefully examined the Registration Statement and the
Prospectus, (ii) the Prospectus does not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading (provided that each of the Trust Depositor and the Servicer
may exclude Underwriters' Information (as defined herein) from such
representation), (iii) the representations and warranties of the
Servicer or the Trust Depositor, as the case may be, contained in this
Agreement and the Transaction Agreements are true and correct in all
material respects on and as of the Closing Date, (iv) the Servicer or
the Trust Depositor, as the case may be, has complied in all material
respects with all agreements and satisfied in all material respects all
conditions on its part to be performed or satisfied hereunder and under
such agreements at or prior to the Closing Date, (v) no stop order
suspending the effectiveness of the Registration Statement has been
issued and is outstanding and no proceedings for that purpose have been
instituted and not terminated or, to the best of his or her knowledge,
are contemplated by the Commission, and (vi) since the date of its most
recent financial statements, there has been no material adverse change
in the financial position or results of operations of the Servicer or
the Trust Depositor, as applicable, or the Trust or any change, or any
development including a prospective change, in or
<PAGE>
affecting the condition (financial or otherwise), results of operations
or business of the Servicer or the Trust Depositor or the Trust except
as set forth in or contemplated by the Registration Statement and the
Prospectus.
(i) Subsequent to the date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or
properties of the Trust Depositor or the Servicer which materially
impairs the investment quality of the Notes; (ii) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange
or the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on either of such exchanges
or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, or
trading in securities of the Trust Depositor or the Servicer on any
exchange or in the over-the-counter market shall have been suspended or
(iii) a general moratorium on commercial banking activities shall have
been declared by Federal or New York State authorities or (iv) an
outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or such a material adverse change
in general economic, political or financial conditions (or the effect
of international conditions on the financial markets in the United
States shall be such) as to make it, in the judgment of the
Representative, impracticable or inadvisable to proceed with the public
offering or the delivery of the Notes on the terms and in the manner
contemplated in the Prospectus.
(j) With respect to the letter of __________
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) confirming in all material respects the conclusions and
findings set forth in its initial letter.
(k) The Underwriters shall receive evidence
satisfactory to them that, on or before the Closing Date, UCC-1
financing statements have been or are being filed in each office in
each jurisdiction in which such financing statements are required to
perfect the first priority security interests created by the Sale and
Servicing Agreement reflecting the interest of the Trust Depositor in
the Receivables and the proceeds thereof.
(l) Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating
accorded the Notes or any of the Trust Depositor's other debt
securities by any "nationally recognized statistical rating
<PAGE>
organization", as that term is defined by the Commission for purposes
of Rule 436(g)(2) of the Securities Act and (ii) no such organization
shall have publicly announced that it has under surveillance or review
(other than an announcement with positive implications of a possible
upgrading), its rating of the Notes or any of the Trust Depositor's
other debt securities.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
Section 7. Termination. The obligations of the Underwriters
hereunder may be terminated by the Representative, in its absolute discretion,
by notice given to and received by the Trust Depositor and the Servicer prior to
delivery of and payment for the Notes if, prior to that time, any of the events
described in Section 6(i) or Section 6(l) shall have occurred.
Section 8. Defaulting Underwriters.
(a) If, on the Closing Date, any Underwriter or
Underwriters default in the performance of its or their obligations
under this Agreement, the Representative may make arrangements for the
purchase of such Notes by other persons satisfactory to the Trust
Depositor and the Representative, including any of the Underwriters,
but if no such arrangements are made by the Closing Date, then each
remaining non-defaulting Underwriter shall be severally obligated to
purchase the Notes which the defaulting Underwriter or Underwriters
agreed but failed to purchase on the Closing Date in the respective
proportions which the principal amount of Notes set forth opposite the
name of each remaining non-defaulting Underwriter in Schedule I hereto
bears to the aggregate principal amount of Notes set forth opposite the
names of all the remaining non-defaulting Underwriters in Schedule I
hereto; provided, however, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Notes on the
Closing Date if the aggregate principal amount of Notes which the
defaulting Underwriter or Underwriters agreed but failed to purchase on
such date exceeds one-eleventh of the aggregate principal amount of the
Notes to be purchased on the Closing Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase in total
more than [____]% of the principal amount of the Notes which it agreed
to purchase on the Closing Date pursuant to the terms of Section 2. If
the foregoing maximums are exceeded and the remaining Underwriters or
other underwriters satisfactory to the Representative and the Trust
Depositor do not elect to purchase the Notes which the defaulting
Underwriter or Underwriters agreed but failed to purchase, this
Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Trust Depositor, except that the
provisions of Sections 9 and 13 shall not terminate and shall remain in
effect. As used in this Agreement, the term "Underwriter" includes, for
all purposes of this Agreement unless the context otherwise requires,
any party not listed in Schedule I hereto who, pursuant to this Section
8, purchases Notes which a defaulting Underwriter agreed but failed to
purchase.
(b) Nothing contained herein shall relieve a
defaulting Underwriter of any liability it may have for damages caused
by its default. If other Underwriters are
<PAGE>
obligated or agree to purchase the Notes of a defaulting Underwriter,
either the Representative or the Trust Depositor may postpone the
Closing Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Trust Depositor or
counsel for the Underwriters may be necessary in the Registration
Statement, the Prospectus or in any other document or arrangement, and
the Trust Depositor agrees to file promptly any amendment or supplement
to the Registration Statement or the Prospectus that effects any such
changes.
Section 9. Reimbursement of Underwriters' Expenses. If (i) the
Trust Depositor shall fail to tender the Notes for delivery to the Underwriters
for any reason permitted under this Agreement or (ii) the Underwriters shall
decline to purchase the Notes for any reason permitted under this Agreement, the
Trust Depositor shall reimburse the Underwriters for the fees and expenses of
their counsel and for such other out-of-pocket expenses as shall have been
reasonably incurred by them in connection with this Agreement and the proposed
purchase of the Notes, and upon demand the Trust Depositor shall pay the full
amount thereof to the Representative. If this Agreement is terminated pursuant
to Section 8 by reason of the default of one or more Underwriters, the Trust
Depositor shall not be obligated to reimburse any defaulting Underwriter on
account of those expenses.
Section 10. Indemnification.
(a) The Servicer, the Trust Depositor and Newcourt
shall, jointly and severally, indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Securities Act (collectively referred to for
the purposes of this Section 10 as the Underwriter) against any loss,
claim, damage or liability, joint or several, or any action in respect
thereof, to which that Underwriter may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement as originally filed or in any amendment
thereof or supplement thereto, or in any Preliminary Prospectus or the
Prospectus or in any amendment thereof or supplement thereto or (ii)
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse each Underwriter for any
legal or other expenses reasonably incurred by that Underwriter
directly in connection with investigating or preparing to defend or
defending against or appearing as a third party witness in connection
with any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that neither the Servicer, the Trust
Depositor nor Newcourt shall be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of or
is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any Registration Statement as
originally filed or in any amendment thereof or supplement thereto, or
in any Preliminary Prospectus or the Prospectus or in any amendment
thereof or supplement thereto in reliance upon and in conformity with
the Underwriters' Information.
<PAGE>
(b) Each Underwriter, severally and not jointly,
shall indemnify and hold harmless each of the Trust Depositor, the
Servicer, Newcourt, and each of their directors, each officer of the
Trust Depositor, the Servicer or Newcourt who signed the Registration
Statement and each person, if any, who controls the Trust Depositor,
the Servicer or Newcourt within the meaning of the Securities Act
(collectively referred to for the purposes of this Section 10 as the
Trust Depositor, the Servicer or Newcourt, as appropriate), against any
loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Trust Depositor, the Servicer and
Newcourt may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of
or is based upon (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement as
originally filed or in any amendment thereof or supplement thereto, or
in any Preliminary Prospectus or the Prospectus or in any amendment
thereof or supplement thereto or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and
in conformity with the written information furnished to the Trust
Depositor, the Servicer and Newcourt through the Representative by or
on behalf of such Underwriter specifically for use therein (the
"Underwriters' Information"), and shall reimburse the Trust Depositor,
the Servicer and Newcourt for any legal or other expenses reasonably
incurred by the Trust Depositor, the Servicer and Newcourt in
connection with investigating or preparing to defend or defending
against or appearing as third party witness in connection with any such
loss, claim, damage or liability (or any action in respect thereof) as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party
under this Section 10 of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under this Section 10, notify
the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have under this Section 10 except to the extent it has been materially
prejudiced by such failure; and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this
Section 10. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not
be liable to the indemnified party under this Section 10 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the Representative shall have
the right to employ counsel to represent jointly the Representative and
the other Underwriters (and their respective controlling persons who
may be subject to liability arising out of any claim in respect of
which indemnity may be sought under this Section 10) if, in the
reasonable judgment of the Representative, it is advisable for the
<PAGE>
Representative and the other Underwriters and controlling persons to be
jointly represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the Trust Depositor,
the Servicer and Newcourt. Each indemnified party, as a condition of
the indemnity agreements contained in Sections 10(a) and 10(b), shall
use all reasonable efforts to cooperate with the indemnifying party in
the defense of any such action or claim. No indemnifying party shall be
liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but
if settled with its written consent or if there be a final judgment of
the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
The obligations of the Servicer, the Trust Depositor, Newcourt and the
Underwriters in this Section 10 are in addition to any other liability which the
Servicer, the Trust Depositor, Newcourt or the Underwriters, as the case may be,
may otherwise have.
Section 11. Contribution. If the indemnification provided for
in this Section 11 is unavailable or insufficient to hold harmless an
indemnified party under Section 10(a) or (b), then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage or liability, or any action in respect thereof, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by the Servicer,
the Trust Depositor and Newcourt on the one hand and the Underwriters on the
other from the offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Servicer, the Trust Depositor and
Newcourt on the one hand and the Underwriters on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or any action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Servicer, the Trust
Depositor and Newcourt on the one hand and the Underwriters on the other with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Notes purchased hereunder (before
deducting expenses) received by the Trust Depositor bear to the total
underwriting discounts and commissions received by the Underwriters with respect
to the Notes purchased hereunder, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Servicer, the Trust Depositor and
Newcourt on the one hand or the Underwriters on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Servicer, the Trust
Depositor, Newcourt and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 11 were to be determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim damage or
liability referred to above in this Section 11 shall be deemed to include, for
purposes of this Section 11,
<PAGE>
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such claim or any action.
Notwithstanding the provisions of this Section 11, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Notes underwritten by it and distributed to the public were
offered to the public less the amount of any damages which such Underwriter has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to indemnify and
contribute as provided in this Section 11 are several in proportion to their
respective underwriting obligations and not joint.
Section 12. Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters,
the Trust Depositor, the Servicer and Newcourt and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriters,
the Trust Depositor, the Servicer and Newcourt and their respective successors
and the controlling persons and officers and directors referred to in Sections
10 and 11 and their heirs and legal representatives, any legal or equitable
light, remedy or claim under or in respect of this Agreement or any provision
contained herein.
Section 13. Expenses. The Trust Depositor and the Servicer,
jointly and severally, agrees with the Underwriters to pay (i) the costs
incident to the authorization, issuance, sale, preparation and delivery of the
Notes and any taxes payable in that connection; (ii) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement and any amendments and exhibits thereto; (iii) the costs of
distributing the Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in each case,
exhibits), any Preliminary Prospectus and the Prospectus, all as provided in
this Agreement; (iv) the costs of reproducing and distributing this Agreement
and any other underwriting and selling group documents by mail, telex or other
means of communications; (v) the fees and expenses of qualifying the Notes under
the securities laws of the several jurisdictions as provided in Section 5(e) and
of preparing, printing and distributing Blue Sky Memoranda and Legal Investment
Surveys (including the related reasonable and documented fees and expenses of
counsel to the Underwriters); (vi) any fees charged by rating agencies for
rating the Notes; (vii) all fees and expenses of the Indenture Trustee and the
Owner Trustee and each of their counsel; (viii) any transfer taxes payable in
connection with its sale of the Notes pursuant to this Agreement; and (ix) all
other costs and expenses incident to the performance of the obligations of the
Trust Depositor and the Servicer under this Agreement; provided that, except as
otherwise provided in this Section 13, the Underwriters shall pay their own
costs and expenses, including, the costs and expenses of their counsel and the
expenses of advertising any offering of the Notes made by the Underwriters.
Section 14. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Trust Depositor,
the Servicer, Newcourt and the Underwriters contained in this Agreement or made
by or on their behalf, respectively, pursuant to this Agreement, shall survive
the delivery of and payment for the Notes and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or
<PAGE>
any investigation made by or on behalf of any of them or any person controlling
any of them.
Section 15. Notices. All communication hereunder shall be in
writing and, (i) if sent to the Underwriters will be mailed, delivered or
telecopied and confirmed to them at First Union Capital Markets, a division of
Wheat First Securities, Inc., Asset Securitization Division, 301 South College
Street, TW-6, Charlotte, North Carolina, 28288-0610, Telecopy Number: (704)
374-3254; provided, however, that any notice to an Underwriter pursuant to
Section 9(c) shall be delivered or sent by mail, delivery or telecopy to such
Underwriter at its address set forth in its acceptance telex to the
Representative, which address will be supplied to any other party hereto by the
Representative upon request; (ii) if sent to the Trust Depositor, will be
mailed, delivered or telecopied and confirmed to them at the address of the
Trust Depositor set forth in the Registration Statement, Attention: Chief
Financial Officer; (iii) if sent to the Servicer, will be mailed, delivered or
telecopied and confirmed to them at the address of the Servicer set forth in the
Registration Statement, Attention: Vice President and Treasurer and (iv) if sent
to Newcourt, will be mailed, delivered or telecopied and confirmed to them at
the address of Newcourt set forth in the Registration Statement, Attention: Vice
President and Treasurer. Any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof. The Trust Depositor, the
Servicer and Newcourt shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Underwriters by the
Representative.
Section 16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 17. Submission to Jurisdiction; Appointment of Agent
for Service; Currency Indemnity.
(a) To the fullest extent permitted by applicable
law, each of the Trust Depositor, the Servicer and Newcourt irrevocably
submits to the jurisdiction of any Federal or State court in the City,
County and State of New York, United States of America, in any suit or
proceeding based on or arising under this Agreement, and irrevocably
agrees that all claims in respect of such suit or proceeding may be
determined in any such court. Each of the Trust Depositor, the Servicer
and Newcourt hereby irrevocably and fully waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. Each
of the Trust Depositor, the Servicer and Newcourt hereby irrevocably
designates and appoints CT Corporation (the "Process Agent"), as its
authorized agent upon whom process may be served in any such suit or
proceeding, it being understood that the designation and appointment of
CT Corporation as such authorized agent shall become effective
immediately without any further action on the part of the Trust
Depositor, the Servicer or Newcourt. Each of the Trust Depositor, the
Servicer and Newcourt represents to each Underwriter that it has
notified the Process Agent of such designation and appointment and that
the Process Agent has accepted the same in writing. Each of the Trust
Depositor, the Servicer and Newcourt hereby irrevocably authorizes and
directs the Process Agent to accept such service. Each of the Trust
Depositor, the Servicer and Newcourt further agrees that service of
process upon the Process Agent and written notice of said service to
the Trust Depositor, the Servicer or Newcourt, as the case may be,
mailed by first class mail or delivered to the Process Agent at its
principal office, shall be deemed in every respect effective service of
process upon the Trust Depositor, the Servicer
<PAGE>
or Newcourt, as the case may be, in any such suit or proceeding.
Nothing herein shall affect the right of any Underwriter or any person
controlling any Underwriter to serve process in any other manner
permitted by law. Each of the Trust Depositor, the Servicer and
Newcourt agrees that a final action in any such suit or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit
on the judgment or in any other lawful manner.
(b) The obligation of the parties to make payments
hereunder is in U.S. dollars (U.S. dollars and such other currencies
referred to above being called the "Obligation Currency") and such
obligation shall not be discharged or satisfied by any tender or
recovery pursuant to any judgment expressed in or converted into any
currency other than the Obligation Currency or any other realization in
such other currency, whether as proceeds of set-off, security,
guarantee, distributions, or otherwise, except to the extent to which
such tender, recovery or realization shall result in the effective
receipt by the party which is to receive such payment of the full
amount of the Obligation Currency expressed to be payable hereunder,
and the party liable to make such payment agrees to indemnify the party
which is to receive such payment (as an additional, separate and
independent cause of action) for the amount (if any) by which such
effective receipt shall fall short of the full amount of the Obligation
Currency expressed to be payable hereunder and such obligation to
indemnify shall not be affected by judgment being obtained for any
other sums due under this Agreement.
Section 18. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same instrument.
Section 19. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
Section 20. Effectiveness. This Agreement shall become
effective upon execution and delivery.
<PAGE>
If you are in agreement with the foregoing, please sign the counterpart hereof
and return it to the Trust Depositor, whereupon this letter and your acceptance
shall become a binding agreement among the Trust Depositor, the Servicer,
Newcourt and the several Underwriters.
Very truly yours,
NCT FUNDING COMPANY, L.L.C.
By:
Name:
Title:
AT&T CAPITAL CORPORATION
By: ______________________________________
Name:
Title:
NEWCOURT CREDIT GROUP INC.
By: ______________________________________
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date hereof.
[Underwriters]
as Representative of the Underwriters
By: ______________________________________
Name:
Title:
<PAGE>
SCHEDULE I
Date of Underwriting Agreement: [_______ __], 1999
Underwriters:
Representative and Address:
Title, Purchase Price and Description of Notes:
Maturity: [________] [____] Payment Date
Redemption
provisions:
Closing Date, Time and Location:
Date: [_________ __], 1999
Time: [9:00 Chicago time]
Location: [Winston & Strawn 35 West Wacker Drive Chicago, Illinois]
<PAGE>
SCHEDULE II
UNDERWRITERS
$[__________] Principal Amount of __________ Notes to be Purchased
Principal Amount
$----------
- -----------
- -----------
- -----------
UNDERWRITERS
$[__________] Principal Amount of __________ Notes to be Purchased
Principal Amount
$----------
- -----------
- -----------
- -----------
UNDERWRITERS
$[__________] Principal Amount of __________ Notes to be Purchased
Principal Amount
$----------
- -----------
- -----------
- -----------
UNDERWRITERS
$[__________] Principal Amount of _________ Notes to be Purchased
Principal Amount
$----------
- -----------
- -----------
- -----------
<PAGE>
UNDERWRITER
$[__________] Principal Amount of _________ Notes to be Purchased
Principal Amount
$----------
- -----------
- -----------
UNDERWRITER
$[__________] Principal Amount of __________ Notes to be Purchased
Principal Amount
$----------
- -----------
- -----------
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF FORMATION
OF
NCT FUNDING COMPANY, L.L.C.
This Certificate of Formation of NCT Funding Company, L.L.C. (the
"Company"), dated February 4, 1999, is being duly executed and filed by Eric
Mandelbaum, as an authorized person, to execute this Certificate under the
Delaware Limited Liability Company Act (6 Del. C. 'SS'. 18-101, et seq.) (the
"Act").
FIRST. The name of the limited liability company formed hereby is "NCT
Funding Company, L.L.C.".
SECOND. The address of the registered office of the Company in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle.
THIRD. The name and address of the registered agent for service of
process on the Company in the State of Delaware is c/o The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle.
FOURTH. The purposes and activities of the Company shall be limited to
the following:
i. to purchase or otherwise acquire from time to time any or all
right, title and interest in, to and under, and to 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, true 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");
ii. to enter into, and perform its obligations under, any agreements
with one or more Affiliates or other Persons relating to or
effecting the transfers and conveyances of Assets as described
above (including issuing promissory notes or incurring other
1
<PAGE>
indebtedness to such Affiliates pursuant to such agreements,
which notes or indebtedness are subordinated to the rights of
holders of Interests or Securities as defined below);
iii. to transfer Assets or interests therein (collectively,
"Interests") (including for the purpose of establishing, forming
or funding one or more trusts ("Trusts")), pursuant to one or
more asset purchase agreements, indentures, pooling agreements,
pooling and servicing agreements, sale agreements, sale and
servicing agreements or other agreements ("Transfer Agreements")
entered into by and among, among others, the Company, any
purchaser of, investor in or holder of an Interest, any trustee
or trustees or collateral agent named therein (a "Trustee"), and
any entity or entities acting as servicer or administrator or
collection agent or in similar capacity for the Assets, and to
perform its obligations under any such Agreements;
iv. to issue, sell, authorize and deliver one or more series and/or
classes of certificates, bonds, notes or other evidences of
indebtedness secured or collateralized by, or otherwise
representing interests in, one or more pools of Assets or
Interests (or to cause one or more Trusts established or funded
by the Company to issue, sell, authorize and deliver the same)
(collectively, any of the foregoing being "Securities"); to hold
and enjoy any and all of the rights and privileges of any
Securities issued by Trusts to the Company under or in connection
with the related Transfer Agreements and to acquire, hold and
enjoy all of the rights and privileges of any class of any series
of Securities, including any class of Securities which may be
subordinate to any other class of Securities and, except to the
extent otherwise provided in any such Securities, or related
Transfer Agreement or other agreement of the Company or
applicable Trust entered into in connection therewith, to sell,
assign, pledge or otherwise transfer any such Security or any
interest therein;
v. to enter into and to perform its obligations under the Transfer
Agreements and other related agreements to which it is a party
pursuant to or in connection with which any Securities are
issued, secured or serviced;
vi. to invest the proceeds derived from the sale or ownership of the
Interests and/or Securities as determined by the Company's Board
of Directors;
vii. to enter into interest rate or basis swap, cap, floor or collar
agreements, currency exchange agreements or similar hedging
arrangements in connection with the purchase or financing of any
Assets;
viii. to own equity interests in the Trusts, or in other limited
liability companies or partnerships whose purposes are restricted
to those set forth in clauses (i) through (vii) above; and
2
<PAGE>
ix. to engage in any activity and to exercise any powers permitted to
limited liability companies 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.
The Company, by or through the Member, or any Director or Officer on
behalf of the Company, may enter into and perform, or authorize and direct a
Trust established by the Company to enter into and perform, as applicable,
Transaction Documents, and all other documents, agreements or financing
statements contemplated thereby or related thereto, all without any further act,
vote, or approval of the Member or any Director or Officer notwithstanding any
other provision of this Agreement, the Act or applicable law, rule or
regulation. The foregoing authorization shall not be deemed a restriction on the
powers of the Member, a Director or an Officer to enter into, or direct a Trust
to enter into, other agreements on behalf of the Company or such Trust, as
applicable, in each case in connection with permitted activities and purposes of
the Company or such Trust.
FIFTH. Subject to Section 10(j) of the Agreement, the business and
affairs of the Company shall be managed by or under the direction of a Board of
one or more Directors. Subject to Section 11 of the Agreement, the Member may
determine at any time in its sole and absolute discretion the number of
Directors to constitute the Board. The authorized number of Directors may be
increased or decreased by the Member at any time in its sole and absolute
discretion, upon notice to all Directors, and subject in all cases to Section 11
of the Agreement. The initial number of Directors shall be three, one of which
shall be an Independent Director as and to the extent required by Section 11 of
the Agreement. Each Director elected, designated or appointed shall hold office
until a successor is elected and qualified or until such Director's earlier
death, resignation, expulsion or removal. Each Director shall execute and
deliver the Management Agreement. Directors need not be a Member. A Director is
hereby designated as a "manager" of the Company within the meaning of Section
18-101(10) of the Act.
Subject to Section 10(j) of the Agreement, the Board of Directors shall
have the power to do any and all acts necessary, convenient or incidental to or
for the furtherance of the purposes described herein, including all powers,
statutory or otherwise. Subject to Section 8 of the Agreement, the Board of
Directors has the authority to bind the Company.
SIXTH. Status as Special Purpose Entity.
i. The Member shall not, so long as an SPE Condition exists, amend,
alter, change or repeal the definition of "Independent Director"
or Sections 8, 9, 10, 11, 17, 20, 21, 22, 23, 24, 25, 26 or 31 or
Schedule A of the Agreement without the unanimous written consent
of the Board (including each Independent Director). Subject to
Section 10(j) of the Agreement, the Member reserves the right to
amend, alter, change or repeal any provisions contained in the
Agreement in accordance with Section 31 of the Agreement.
ii. Notwithstanding any other provision of the Agreement and any
provision of law that otherwise so empowers the Company, the
Member or the Board, neither the Member nor the Board shall be
authorized or empowered, nor shall they permit the Company,
3
<PAGE>
without the prior unanimous written consent of the Member and the
Board (including each Independent Director), to take any Material
Action.
iii. The Board and the Member shall cause the Company to do or cause
to be done all things necessary to preserve and keep in full
force and effect its existence, rights (charter and statutory)
and franchises; provided, however, that the Company shall not be
required to preserve any such right or franchise if: (1) the
Board shall determine that the preservation thereof is no longer
desirable for the conduct of its business and that the loss
thereof is not disadvantageous in any material respect to the
Company and (2) the Rating Agency Condition and/or Holder
Condition, as applicable, is satisfied. The Board also shall
cause the Company to:
(a) maintain its own separate books and records and bank
accounts;
(b) at all times hold itself out to the public and all other
Persons as a legal entity separate from the Member and any
other Person;
(c) have a Board of Directors separate from that of the Member
and any other Person;
(d) file its own tax returns, if any, as may be required under
applicable law, to the extent (1) not part of a consolidated
group filing a consolidated return or returns or (2) not
treated as a division for tax purposes of another taxpayer,
and pay any taxes so required to be paid under applicable
law;
(e) except as contemplated by the Transaction Documents, not
commingle its assets with assets of any other Person;
(f) conduct its business in its own name and strictly comply with
all organizational formalities to maintain its separate
existence;
(g) maintain separate financial statements;
(h) pay its own liabilities only out of its own funds;
(i) maintain an arm's length relationship with its Affiliates and
the Member;
(j) pay the salaries of its own employees, if any;
(k) not hold out its credit or assets as being available to
satisfy the obligations of others;
(l) allocate fairly and reasonably any overhead for shared
office space;
(m) use separate stationery, invoices and checks;
4
<PAGE>
(n) not pledge its assets as security for the obligations of any
other Person;
(o) correct any known misunderstanding regarding its separate
identity;
(p) maintain adequate capital in light of its contemplated
business purpose, transactions and liabilities;
(q) cause its Board of Directors to meet at least annually or
act pursuant to written consent and keep minutes of such
meetings and actions and observe all other Delaware limited
liability company formalities;
(r) not acquire any securities of the Member; and
(s) cause the directors, officers, agents and other
representatives of the Company to act at all times with
respect to the Company consistently and in furtherance of the
foregoing and in the best interests of the Company.
iv. So long as an SPE Condition exists, the Board shall not cause or
permit the Company to:
(a) except as contemplated by the Transaction Documents,
guarantee any obligation of any Person, including any
Affiliate;
(b) engage, directly or indirectly, in any business other than
the actions required or permitted to be performed under
Section 8 of the Agreement or Section 10(j) of the Agreement;
(c) incur, create or assume any indebtedness other than
indebtedness represented by Securities or as otherwise
expressly permitted under Transaction Documents;
(d) make or permit to remain outstanding any loan or advance to,
or own or acquire any stock or securities of, any Person,
except that the Company may invest in those investments
permitted under Transaction Documents and may make any
advance required or expressly permitted to be made pursuant
to any provisions of Transaction Documents and permit the
same to remain outstanding in accordance with such
provisions; or
(e) to the fullest extent permitted by law, engage in any
dissolution, liquidation, consolidation, merger, asset sale
or transfer of ownership interests other than such activities
as are contemplated in Section 8 of the Agreement and related
applicable Transaction Documents.
5
<PAGE>
SEVENTH. As long as an SPE Condition exists, the Member shall cause the
Company at all times to have at least two Independent Directors who will be
appointed by the Member. To the fullest extent permitted by Section 18-1101(c)
of the Act, the Independent Directors shall consider only the interests of the
Company, including its respective creditors, in acting or otherwise voting on
the matters referred to in Section 10(j)(iii) of the Agreement. No resignation
or removal of an Independent Director, and no appointment of a successor
Independent Director, shall be effective until the successor Independent
Director shall have accepted his or her appointment by a written instrument,
which may be a counterpart signature page to the Management Agreement. All
right, power and authority of the Independent Directors shall be limited to the
extent necessary to exercise those rights and perform those duties specifically
set forth in the Agreement. Except as provided in the second sentence of Section
11 of the Agreement, in exercising their rights and performing their duties
under the Agreement, any Independent Director shall have a fiduciary duty of
loyalty and care similar to that of a director of a business corporation
organized under the General Corporation Law of the State of Delaware. No
Independent Director shall at any time serve as trustee in bankruptcy for any
Affiliate of the Company.
EIGHTH. So long as an SPE Condition exists, the Member may not resign,
except as permitted under all applicable Transaction Documents and if the Rating
Agency Condition and/or the Holder Condition, as applicable, is satisfied. If
the Member is permitted to resign pursuant to Section 22 of the Agreement, an
additional member of the Company shall be admitted to the Company, subject to
Section 23 of the Agreement, upon its execution of an instrument signifying its
agreement to be bound by the terms and conditions of the Agreement, which
instrument may be a counterpart signature page to the Agreement. Such admission
shall be deemed effective immediately prior to the resignation and, immediately
following such admission, the resigning Member shall cease to be a member of the
Company.
One or more additional members of the Company may be admitted to the
Company with the written consent of the Member; provided, however, that,
notwithstanding the foregoing, so long as any SPE Condition exists, no
additional Member may be admitted to the Company unless the Rating Agency
Condition and/or the Holder Condition, as applicable, is satisfied.
NINTH. (a) Subject to Section 10(j) of the Agreement, the Company shall
be dissolved, and its affairs shall be wound up upon the first to occur of the
following: (i) the resignation or dissolution of the Member or the occurrence of
any other event which terminates the continued membership of the Member in the
Company unless the business of the Company is continued in a manner permitted by
the Act or (ii) the entry of a decree of judicial dissolution under Section
18-802 of the Act.
(b) The bankruptcy (as defined in Sections 18-101(1) and 18-304 of the
Act) of the Member shall not cause the Member to cease to be a member of the
Company and upon the occurrence of such an event, the business of the Company
shall continue without dissolution.
(c) In the event of dissolution, the Company shall conduct only such
activities as are necessary to wind up its affairs (including the sale of the
assets of the Company in an orderly manner), and the assets of the Company shall
be applied in the manner, and in the order of priority, set forth in Section
18-804 of the Act.
6
<PAGE>
(d) The Company shall terminate when (i) all of the assets of the
Company, after payment of or due provision for all debts, liabilities and
obligations of the Company, shall have been distributed to the Member in the
manner provided for in the Agreement and (ii) the Certificate of Formation shall
have been canceled in the manner required by the Act.
For purposes of this Certificate of Formation, capitalized terms used but not
otherwise defined herein shall have the following definitions:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly Controlling or Controlled by or under direct or indirect
common Control with such Person.
"Agreement" means the Limited Liability Company Agreement of the
Company, together with the schedules attached thereto, as amended, restated or
supplemented or otherwise modified from time to time.
"Control" means the possession, directly or indirectly, or the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities or general partnership or managing
member interests, by contract or otherwise. "Controlling" and "Controlled" shall
have correlative meanings. Without limiting the generality of the foregoing, a
Person shall be deemed to Control any other Person in which it owns, directly or
indirectly, a majority of the ownership interests.
"Holder Condition" means, with respect to any action, that the
requisite holders of (or authorized representative of holders of) Interests
and/or Securities (or outstanding commitments to purchase or otherwise acquire
an interest therein), as described in clause (ii) of the definition of SPE
Condition below (and with the level or amount of such requisite holders or the
authorization of such representative to be determined in accordance with the
relevant Transaction Document[s] establishing, providing for or governing such
purchases, acquisitions or commitments) shall have been given prior notice
thereof and that such requisite holders or authorized representative, as
applicable, shall have notified the Company in writing that such action is
permissible.
"Independent Director" means an individual who for the five-year period
prior to his or her appointment as Independent Director has not been, and during
the continuation of his or her service as Independent Director is not (and is
not affiliated with a company or firm that has been or is): (A) an employee,
director, partner or officer of the Member or any of its Affiliates (other than
his or her service as an Independent Director of the Company or as a similar
"independent director" of other similar special purposes entities which may be
Affiliates of the Member); (B) a significant advisor or consultant to Member or
any of its Affiliates; (C) a significant customer or supplier of Member or any
of its Affiliates; (D) affiliated with a company of which Member or any of its
Affiliates is a significant customer or supplier, (E) a party to a significant
personal services contract(s) with Member or any of its Affiliates; (F)
affiliated with a tax-exempt entity that receives significant contributions from
Member or any of its Affiliates; (G) 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 Member or any
7
<PAGE>
of its Affiliates, the value of which constitutes more than 5% of the
outstanding common stock of Member or such Affiliate; (H) the holder of any
beneficial or economic interest in the Company (other than fees for services as
an Independent Director and indemnification rights contemplated in the
Agreement); and (I) a spouse, parent, sibling or child of any Person described
in clauses (A) through (H).
As used in this definition, the following terms, phrases or concepts
shall have the following meanings:
(i) A person is "affiliated with" a specified person, if the
person directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the
specified person.
(ii) A person shall be deemed to be, or to be affiliated with,
a company or firm that is a "significant advisor or consultant to
Member or any of its Affiliates" if he, she, or it, as the case may be,
received or would receive fees or similar compensation from Member or
such Affiliates in excess of the lesser of (A) 3% of the consolidated
gross revenues which Member and its Affiliates received for the sale of
their products and services during the last fiscal year of Member; (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 Member or any of its
Affiliates" shall mean a customer from which Member and any of
its Affiliates collectively in the last fiscal year of Member received
payments in consideration for the products and services of Member and
its Affiliates which are in excess of 3% of the consolidated gross
revenues of Member and its Affiliates during such fiscal year.
(vii) A "significant supplier of Member or any of Affiliates"
shall mean a supplier to which Member and any of its Affiliates
collectively in the last fiscal year of Member made payments in
consideration for the supplier's products and services in excess of 3%
of the consolidated gross revenues of Member and its Affiliates during
such fiscal year.
(viii) Member or any of its Affiliates shall be deemed a
"significant customer" of a company if Member and any of its 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.
(ix) Member or any of its Affiliates shall be deemed a
"significant supplier" of a company if Member and any of its 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.
8
<PAGE>
(x) A person shall be deemed to have "significant personal
services contract(s) with Member or any of its Affiliates" if the fees
and other compensation received by the person pursuant to personal
services contract(s) with Member and any of its 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 Member or any of its Affiliates if such
tax-exempt entity received during its last fiscal year contributions
from Member and its Affiliates, in the aggregate, in excess of the
lesser of (A) 3% of the consolidated gross revenues of Member and its
Affiliates during such fiscal year and (B) 5% of the contributions
received by the tax-exempt entity during such fiscal year.
"Management Agreement" means the agreement of the Directors in the form
attached to the Agreement as Schedule C.
"Material Action" means to consolidate or merge the Company with or
into any Person, or sell all or substantially all of the assets of the Company,
or to institute proceedings to have the Company be adjudicated bankrupt or
insolvent, or consent to the institution of bankruptcy or insolvency proceedings
against the Company or file a petition seeking, or consent to, reorganization or
relief with respect to the Company 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 the Company or a
substantial part of its property, or make any assignment for the benefit of
creditors of the Company, or admit in writing the Company's inability to pay its
debts generally as they become due, or, to the fullest extent permitted by law,
take action in furtherance of any such action, or dissolve or liquidate the
Company.
"Member" means Newcourt Financial USA Inc., a Delaware corporation, as
the initial member of the Company, and includes any Person admitted as an
additional member of the Company or a substitute member of the Company pursuant
to the provisions of the Agreement.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, limited liability partnership, association, joint
stock company, trust, unincorporated organization, or other organization,
whether or not a legal entity, and any governmental authority.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given ten days prior notice thereof and that each
Rating Agency shall have notified the Company in writing that such action will
not result in a reduction or withdrawal of the then current rating by such
Rating Agency if any.
"SPE Condition" means, as of any time of determination, that any of the
following have occurred and are continuing:
(i) the Company has issued and has outstanding, or any Trust
established or funded by the Company has issued and has outstanding,
any series or class of Securities which is then rated by a Rating
Agency, or
9
<PAGE>
(ii) the Company has otherwise assigned and conveyed
outstanding Interests, or otherwise has issued and has outstanding
(including through a Trust as described in clause (i) above) any series
or class of Securities, in either case with respect to which the holder
or holders thereof (or any party which has an outstanding commitment to
purchase or otherwise acquire such an Interest or Security) have
required (by agreement to such effect and/or as a condition to the
purchase, commitment to purchase or holding of such Interests or
Securities, including by virtue of such an agreement or condition
requiring that the Agreement be executed and/or in effect in the form
of the actual Agreement) that the provisions relating to Independent
Directors or the provisions in Section 10(j) of the Agreement shall be
in effect as to the Company.
"Transaction Documents" means the Agreement, each Transfer Agreement,
each agreement entered into by the Company or by a Trust at the direction of the
Company from time to time in connection with the acquisition of Assets or the
creation, funding or financing of Interests and/or Securities, and all other
documents, instruments and certificates delivered in connection therewith.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Formation in accordance with the Section 118 of the Act as of the
date first above written.
/S/ Eric Mandelbaum
--------------------
Eric Mandelbaum
10
<PAGE>
EXHIBIT 3.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
NCT FUNDING COMPANY, L.L.C.
This Limited Liability Company Agreement (this "Agreement") of NCT
Funding Company, L.L.C. (the "Company"), is entered into by Newcourt Financial
USA Inc., a Delaware corporation, as the sole member (the "Member").
The Member, by execution of this Agreement, hereby agrees as follows:
Section 1. Definitions.
Capitalized terms used and not otherwise defined herein have the
meanings set forth on Schedule A hereto.
Section 2. Formation.
The Member hereby agrees to form a limited liability company under and
pursuant to the terms of the Delaware Limited Liability Company Act (6 Del. C.
'SS' 18-101 et seq.), as amended from time to time (the "Act"); and the rights
and obligations of the Member shall be as provided therein except as otherwise
expressly provided in this Agreement.
Section 3. Name.
The name of the limited liability company formed by this Agreement is
NCT Funding Company, L.L.C.
Section 4. Principal Business Office.
The principal business office of the Company shall be located at 2
Gatehall Drive, Parsippany, New Jersey 07054 or such other location as may
hereafter be determined by the Member.
Section 5. Registered Agent.
The address of the registered agent of the Company for service of
process on the Company in the State of Delaware is c/o The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Delaware. The name of its registered agent
at such address is The Corporation Trust Company.
Section 6. Member.
The mailing address of the Member is set forth on Schedule B.
Section 7. Certificates.
<PAGE>
Eric Mandelbaum is hereby designated as an "authorized person" within
the meaning of the Act, and has executed, delivered and filed the Certificate of
Formation of the Company with the Secretary of the State of Delaware. Upon the
filing of the Certificate of Formation with the Secretary of the State of
Delaware, his powers as an "authorized person" ceased, and the Member thereupon
became the designated "authorized person" and shall continue as the designated
"authorized person" within the meaning of the Act. The Member or an Officer
shall execute, deliver and file any other certificates (and any amendments
and/or restatements thereof) necessary for the Company to qualify to do business
in New Jersey and in any other jurisdiction in which the Company may wish to
conduct business.
Section 8. Purposes.
(a) The purposes and activities of the Company shall be limited to the
following:
(i) to purchase or otherwise acquire from time to time any or all
right, title and interest in, to and under, and to 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, true 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");
(ii) to enter into, and perform its obligations under, any
agreements with one or more Affiliates or other Persons relating to or effecting
the transfers and conveyances of Assets as described above (including issuing
promissory notes or incurring other indebtedness to such Affiliates pursuant to
such agreements, which notes or indebtedness are subordinated to the rights of
holders of Interests or Securities as defined below);
(iii) to transfer Assets or interests therein (collectively,
"Interests") (including for the purpose of establishing, forming or funding one
or more trusts ("Trusts")), pursuant to one or more asset purchase agreements,
indentures, pooling agreements, pooling and servicing agreements, sale
agreements, sale and servicing agreements or other agreements ("Transfer
Agreements") entered into by and among, among others, the Company, any purchaser
of, investor in or holder of an Interest, any trustee or trustees or collateral
agent named therein (a "Trustee"), and any entity or entities acting as servicer
or administrator or collection agent or in similar capacity for the Assets, and
to perform its obligations under any such Agreements;
(iv) to issue, sell, authorize and deliver one or more series
and/or classes of certificates, bonds, notes or other evidences of indebtedness
secured or collateralized by, or otherwise representing interests in, one or
more pools of Assets or Interests (or to cause one or more Trusts established or
funded by the Company to issue, sell, authorize and deliver the same)
(collectively, any of the foregoing being "Securities"); to hold and enjoy any
and all of the rights and privileges of any Securities issued by Trusts to the
Company under or in connection with the related Transfer Agreements and to
acquire, hold and enjoy all of the rights and privileges of
-2-
<PAGE>
any class of any series of Securities, including any class of Securities which
may be subordinate to any other class of Securities and, except to the extent
otherwise provided in any such Securities, or related Transfer Agreement or
other agreement of the Company or applicable Trust entered into in connection
therewith, to sell, assign, pledge or otherwise transfer any such Security or
any interest therein;
(v) to enter into and to perform its obligations under the Transfer
Agreements and other related agreements to which it is a party pursuant to or in
connection with which any Securities are issued, secured or serviced;
(vi) to invest the proceeds derived from the sale or ownership of
the Interests and/or Securities as determined by the Company's Board of
Directors;
(vii) to enter into interest rate or basis swap, cap, floor or
collar agreements, currency exchange agreements or similar hedging arrangements
in connection with the purchase or financing of any Assets;
(viii) to own equity interests in the Trusts, or in other limited
liability companies or partnerships whose purposes are restricted to those set
forth in clauses (i) through (vii) above; and
(ix) to engage in any activity and to exercise any powers permitted
to limited liability companies 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.
(b) The Company, by or through the Member, or any Director or Officer
on behalf of the Company, may enter into and perform, or authorize and direct a
Trust established by the Company to enter into and perform, as applicable,
Transaction Documents, and all other documents, agreements or financing
statements contemplated thereby or related thereto, all without any further act,
vote, or approval of the Member or any Director or Officer notwithstanding any
other provision of this Agreement, the Act or applicable law, rule or
regulation. The foregoing authorization shall not be deemed a restriction on the
powers of the Member, a Director or an Officer to enter into, or direct a Trust
to enter into, other agreements on behalf of the Company or such Trust, as
applicable, in each case in connection with permitted activities and purposes of
the Company or such Trust.
Section 9. Powers.
Subject to Section 10(j), the Company, and the Board of Directors and
the Officers of the Company on behalf of the Company, (i) shall have and
exercise all powers necessary, convenient or incidental to accomplish its
purposes as set forth in Section 8 and (ii) shall have and exercise all of the
powers and rights conferred upon limited liability companies formed pursuant to
the Act.
Section 10. Management.
-3-
<PAGE>
(a) Board of Directors. Subject to Section 10(j), the business and
affairs of the Company shall be managed by or under the direction of a Board of
one or more Directors. Subject to Section 11, the Member may determine at any
time in its sole and absolute discretion the number of Directors to constitute
the Board. The authorized number of Directors may be increased or decreased by
the Member at any time in its sole and absolute discretion, upon notice to all
Directors, and subject in all cases to Section 11. The initial number of
Directors shall be three, two of which shall be Independent Directors as and to
the extent required by Section 11. Each Director elected, designated or
appointed shall hold office until a successor is elected and qualified or until
such Director's earlier death, resignation, expulsion or removal. Each Director
shall execute and deliver the Management Agreement. Directors need not be a
Member. A Director is hereby designated as a "manager" of the Company within the
meaning of Section 18-101(10) of the Act.
(b) Powers. Subject to Section 10(j), the Board of Directors shall have
the power to do any and all acts necessary, convenient or incidental to or for
the furtherance of the purposes described herein, including all powers,
statutory or otherwise. Subject to Section 8, the Board of Directors has the
authority to bind the Company.
(c) Meeting of the Board of Directors. The Board of Directors of the
Company may hold meetings, both regular and special, within or outside the State
of Delaware. Regular meetings of the Board may be held without notice at such
time and at such place as shall from time to time be determined by the Board.
Special meetings of the Board may be called by the President on not less than
one day's notice to each Director by telephone, facsimile, mail, telegram or any
other means of communication, and special meetings shall be called by the
President or Secretary in like manner and with like notice upon the written
request of any one or more of the Directors.
(d) Quorum: Acts of the Board. At all meetings of the Board, a majority
of the Directors shall constitute a quorum for the transaction of business and,
except as otherwise provided in Section 12 (b) or in any other provision of this
Agreement, the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board. If a quorum shall not be
present at any meeting of the Board, the Directors present at such meeting may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present. Any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee, as the case may be.
(e) Electronic Communications. Members of the Board, or any committee
designated by the Board, may participate in meetings of the Board, or any
committee, by means of telephone conference or similar communications equipment
that allows all persons participating in the meeting to hear each other, and
such participation in a meeting shall constitute presence in person at the
meeting. If all the participants are participating by telephone conference or
similar communications equipment, the meeting shall be deemed to be held at the
principal place of business of the Company.
(f) Committees of Directors.
-4-
<PAGE>
(i) Subject to Section 10(j), the Board may, by resolution 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 Company. 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.
(ii) In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such members constitute a quorum, may unanimously appoint
another member of the Board to act at the meeting in the place of any such
absent or disqualified member.
(iii) Any such committee, to the extent provided in the resolution
of the Board and subject to Section 10(j), shall have and may exercise all the
powers and authority of the Board in the management of the business and affairs
of the Company. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the Board. Each
committee shall keep regular minutes of its meetings and report the same to the
Board when required.
(g) Compensation of Directors; Expenses. The Board shall have the
authority to fix the compensation of Directors. The Directors may be paid their
expenses, if any, of attendance at meetings of the Board, which may be a fixed
sum for attendance at each meeting of the Board or a stated salary as Director.
No such payment shall preclude any Director from serving the Company in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
(h) Removal of Directors. Unless otherwise restricted by law, any
Director or the entire Board of Directors may be removed or expelled, with or
without cause, at any time by the Member, and, subject to Section 11, any
vacancy caused by any such removal or expulsion may be filled by action of the
Member.
(i) Directors as Agents. To the extent of their powers set forth in
this Agreement and subject to Section 10(j), the Directors are agents of the
Company for the purpose of the Company's business, and the actions of the
Directors taken in accordance with such powers set forth in this Agreement shall
bind the Company.
(j) Limitations on the Company's Activities.
(i) This Section 10(j) is being adopted in order to comply with
certain provisions required in order to qualify the Company as a "special
purpose entity."
(ii) The Member shall not, so long as an SPE Condition exists,
amend, alter, change or repeal the definition of "Independent Director" or
Sections 8, 9, 10, 11, 17, 20, 21, 22, 23, 24, 25, 26 or 31 or Schedule A of
this Agreement without the unanimous written consent of the Board (including
each Independent Director). Subject to this Section 10(j), the Member reserves
the right to amend, alter, change or repeal any provisions contained in this
Agreement in accordance with Section 31.
-5-
<PAGE>
(iii) Notwithstanding any other provision of this Agreement and any
provision of law that otherwise so empowers the Company, the Member or the
Board, neither the Member nor the Board shall be authorized or empowered, nor
shall they permit the Company, without the prior unanimous written consent of
the Member and the Board (including each Independent Director), to take any
Material Action.
(iv) The Board and the Member shall cause the Company to do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence, rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve any such right or
franchise if: (1) the Board shall determine that the preservation thereof is no
longer desirable for the conduct of its business and that the loss thereof is
not disadvantageous in any material respect to the Company and (2) the Rating
Agency Condition and/or Holder Condition, as applicable, is satisfied. The Board
also shall cause the Company to:
(1) maintain its own separate books and records and bank
accounts;
(2) at all times hold itself out to the public and all other
Persons as a legal entity separate from the Member and
any other Person;
(3) have a Board of Directors separate from that of the
Member and any other Person;
(4) file its own tax returns, if any, as may be required
under applicable law, to the extent (1) not part of a
consolidated group filing a consolidated return or
returns or (2) not treated as a division for tax purposes
of another taxpayer, and pay any taxes so required to be
paid under applicable law;
(5) except as contemplated by the Transaction Documents, not
commingle its assets with assets of any other Person;
(6) conduct its business in its own name and strictly comply
with all organizational formalities to maintain its
separate existence;
(7) maintain separate financial statements;
(8) pay its own liabilities only out of its own funds;
(9) maintain an arm's length relationship with its Affiliates
and the Member;
(10) pay the salaries of its own employees, if any;
(11) not hold out its credit or assets as being available to
satisfy the obligations of others;
-6-
<PAGE>
(12) allocate fairly and reasonably any overhead for shared
office space;
(13) use separate stationery, invoices and checks;
(14) not pledge its assets as security for the obligations of
any other Person;
(15) correct any known misunderstanding regarding its separate
identity;
(16) maintain adequate capital in light of its contemplated
business purpose, transactions and liabilities;
(17) cause its Board of Directors to meet at least annually or
act pursuant to written consent and keep minutes of such
meetings and actions and observe all other Delaware
limited liability company formalities;
(18) not acquire any securities of the Member; and
(19) cause the directors, officers, agents and other
representatives of the Company to act at all times with
respect to the Company consistently and in furtherance of
the foregoing and in the best interests of the Company.
(v) So long as an SPE Condition exists, the Board shall not cause
or permit the Company to:
(1) except as contemplated by the Transaction Documents,
guarantee any obligation of any Person, including any
Affiliate;
(2) engage, directly or indirectly, in any business other
than the actions required or permitted to be performed
under Section 8 or this Section 10(j);
(3) incur, create or assume any indebtedness other than
indebtedness represented by Securities or as otherwise
expressly permitted under Transaction Documents;
(4) make or permit to remain outstanding any loan or advance
to, or own or acquire any stock or securities of, any
Person, except that the Company may invest in those
investments permitted under Transaction Documents and may
make any advance required or expressly permitted to be
made pursuant to any provisions of Transaction Documents
and permit the same to remain outstanding in accordance
with such provisions; or
-7-
<PAGE>
(5) to the fullest extent permitted by law, engage in any
dissolution, liquidation, consolidation, merger, asset
sale or transfer of ownership interests other than such
activities as are contemplated in Section 8 and related
applicable Transaction Documents.
Section 11. Independent Director.
As long as an SPE Condition exists, the Member shall cause the Company
at all times to have at least two Independent Directors who will be appointed by
the Member. To the fullest extent permitted by Section 18-1101(c) of the Act,
the Independent Directors shall consider only the interests of the Company,
including its respective creditors, in acting or otherwise voting on the matters
referred to in Section 10(j)(iii). No resignation or removal of an Independent
Director, and no appointment of a successor Independent Director, shall be
effective until the successor Independent Director shall have accepted his or
her appointment by a written instrument, which may be a counterpart signature
page to the Management Agreement. All right, power and authority of the
Independent Directors shall be limited to the extent necessary to exercise those
rights and perform those duties specifically set forth in this Agreement. Except
as provided in the second sentence of this Section 11, in exercising their
rights and performing their duties under this Agreement, any Independent
Director shall have a fiduciary duty of loyalty and care similar to that of a
director of a business corporation organized under the General Corporation Law
of the State of Delaware. No Independent Director shall at any time serve as
trustee in bankruptcy for any Affiliate of the Company.
Section 12. Officers.
(a) Officers. The Officers of the Company shall be chosen by the Board
and shall consist of at least a President, a Secretary and a Treasurer. The
Board of Directors may also choose one or more Vice Presidents, Assistant Vice
Presidents, Assistant Secretaries and Assistant Treasurers. Any number of
offices may be held by the same person. The Board shall choose a President, a
Secretary and a Treasurer. The Board may appoint such other Officers and agents
as it shall deem necessary or advisable who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board. The salaries of all Officers and
agents of the Company shall be fixed by or in the manner prescribed by the
Board. The Officers of the Company shall hold office until their successors are
chosen and qualified. Any Officer elected or appointed by the Board may be
removed at any time, with or without cause, by the affirmative vote of a
majority of the Board. Any vacancy occurring in any office of the Company shall
be filled by the Board.
(b) President. The President shall be the chief executive officer of
the Company, shall preside at all meetings of the Board, shall be responsible
for the general and active management of the business of the Company and shall
see that all orders and resolutions of the Board are carried into effect. The
President or any other Officer authorized by the President or the Board shall
execute all bonds, mortgages and other contracts, except: (i) where required or
permitted by law or this Agreement to be otherwise signed and executed,
including Section 8(b); (ii) where signing and execution thereof shall be
expressly delegated by the Board to some other Officer or agent of the Company;
and (iii) as otherwise permitted in Section 12(c).
-8-
<PAGE>
(c) Vice President and Assistant Vice President. In the absence of the
President or in the event of the President's inability to act, the Vice
President, if any (or in the event there be more than one Vice President, the
Vice Presidents in the order designated by the Directors, or in the absence of
any designation, then in the order of their election), shall perform the duties
of the President, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. The Vice Presidents, if any,
shall perform such other duties and have such other powers as the Board may from
time to time prescribe. The Assistant Vice President, or if there be more than
one, the Assistant Vice Presidents in the order determined by the Board (or if
there be no such determination, then in order of their election), shall, in the
absence of the Vice President or in the event of the Vice President's inability
to act, perform the duties and exercise the powers of the Vice President and
shall perform such other duties and have such other powers as the Board may from
time to time prescribe.
(d) Secretary and Assistant Secretary. The Secretary shall be
responsible for filing legal documents and maintaining records for the Company.
The Secretary shall attend all meetings of the Board and record all the
proceedings of the meetings of the Company and of the Board in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. The Secretary shall give, or shall cause to be given, notice of all
meetings of the Member, if any, and special meetings of the Board, and shall
perform such other duties as may be prescribed by the Board or the President,
under whose supervision the Secretary shall serve. The Assistant Secretary, or
if there be more than one, the Assistant Secretaries in the order determined by
the Board (or if there be no such determination, then in order of their
election), shall, in the absence of the Secretary or in the event of the
Secretary's inability to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board may from time to time prescribe.
(e) Treasurer and Assistant Treasurer. The Treasurer shall have the
custody of the Company funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Company and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Company in such depositories as may be designated by the Board.
The Treasurer shall disburse the funds of the Company as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall render to the
President and to the Board, at its regular meetings or when the Board so
requires, an account of all of the Treasurer's transactions and of the financial
condition of the Company. The Assistant Treasurer, or if there shall be more
than one, the Assistant Treasurers in the order determined by the Board (or if
there be no such determination, then in the order of their election), shall, in
the absence of the Treasurer or in the event of the Treasurer's inability to
act, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Board may from time
to time prescribe.
(f) Officers as Agents. The Officers, to the extent of their powers set
forth in this Agreement or otherwise vested in them by action of the Board not
inconsistent with this Agreement, are agents of the Company for the purpose of
the Company's business and, subject to Section 10(j), the actions of the
Officers taken in accordance with such powers shall bind the Company.
-9-
<PAGE>
(g) Duties of Board and Officers. Except to the extent otherwise
provided herein, each Director and Officer shall have a fiduciary duty of
loyalty and care similar to that of directors and officers of business
corporations organized under the General Corporation Law of the State of
Delaware.
Section 13. Limited Liability.
Except as otherwise expressly provided by the Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be the debts, obligations and liabilities solely of the
Company, and neither the Member nor any Director or Officer shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Member or Director or Officer of the Company.
Section 14. Capital Contributions and Capital Accounts.
(a) The Member has contributed to the Company property of an agreed
value as listed on Schedule B attached hereto. The Member, in its discretion,
may transfer additional cash or property to the Company from time to time, as
contributions to the capital of the Company. Except as provided in this Section
14, the Member shall not be required to make any additional contributions to the
capital of the Company.
(b) Except as specifically provided in this Agreement, the Member shall
not be entitled to the return of its capital contribution to the Company.
(c) The Company shall not pay interest on capital contributions or
undistributed profits.
Section 15. Additional Contributions.
The Member is not required to make any additional capital contribution
to the Company. However, the Member may make additional capital contributions to
the Company at any time upon the written consent of such Member. To the extent
that the Member makes an additional capital contribution to the Company, the
Member shall revise Schedule B of this Agreement. The provisions of this
Agreement, including this Section 15, are intended solely to benefit the Member
and, to the fullest extent permitted by law, shall not be construed as
conferring any benefit upon any creditor of the Company (and no such creditor of
the Company shall be a third-party beneficiary of this Agreement) and the Member
shall not have any duty or obligation to any creditor of the Company to make any
contribution to the Company or to issue any call for capital pursuant to this
Agreement.
Section 16. Allocation of Profits and Losses.
(a) All Profits and Losses (including all items of income and expense
entering into the determination of such Profits and Losses), shall be allocated
entirely to the Member. For so long as the Member is the sole member of the
Company, the Company shall be characterized as a sole proprietorship conducted
by the Member for federal income tax purposes and, to the extent consistent with
applicable law, for all applicable state and local income tax purposes.
-10-
<PAGE>
(b) Unless otherwise required by the Code, any tax credits of the
Company shall be allocated entirely to the Member.
Section 17. Distributions.
Distributions shall be made to the Member at the times and in the
aggregate amounts determined by the Board. Notwithstanding any provision to the
contrary contained in this Agreement, the Company shall not be required to make
a distribution to the Member on account of its interest in the Company if such
distribution would violate Section 18-607 of the Act or any other applicable law
or any Transaction Document.
Section 18. Books and Records.
The Board shall keep or cause to be kept complete and accurate books of
account and records with respect to the Company's business. The books of the
Company shall at all times be maintained by the Board. The Member and its duly
authorized representatives shall have the right to examine the Company books,
records and documents during normal business hours. The Company, and the Board
on behalf of the Company, shall not have the right to keep confidential from the
Member any information that the Board would otherwise be permitted to keep
confidential from the Member pursuant to Section 18-305(c) of the Act. The
Company's books of account shall be kept using the method of accounting
determined by the Member. The Company's independent auditor, if any, shall be an
independent public accounting firm selected by the Member.
Section 19. Other Business.
The Member and any Affiliate of the Member may engage in or possess an
interest in other business ventures (unconnected with the Company) of every kind
and description, independently or with others. The Company shall not have any
rights in or to such independent ventures or the income or profits therefrom by
virtue of this Agreement.
Section 20. Exculpation and Indemnification.
(a) Neither the Member nor any Officer, Director, employee or agent of
the Company and no employee, representative, agent or Affiliate of the Member
(collectively, the "Covered Persons") shall be liable to the Company or any
other Person who has an interest in or claim against the Company for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Covered Person in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of the authority conferred on such
Covered Person by this Agreement, except that a Covered Person shall be liable
for any such loss, damage or claim incurred by reason of such Covered Person's
gross negligence or willful misconduct.
(b) To the fullest extent permitted by applicable law, a Covered Person
shall be entitled to indemnification from the Company for any loss, damage or
claim incurred by such Covered Person by reason of any act or omission performed
or omitted by such Covered Person in good faith on behalf of the Company and in
a manner reasonably believed to be within the scope of the authority conferred
on such Covered Person by this Agreement, except that no Covered Person shall be
entitled to be indemnified in respect of any loss, damage or claim
-11-
<PAGE>
incurred by such Covered Person by reason of such Covered Person's gross
negligence or willful misconduct with respect to such acts or omissions;
provided, however, that any indemnity under this Section 20 by the Company shall
be provided out of and to the extent of Company assets only, and the Member
shall not have personal liability on account thereof; and provided further, that
no indemnity payment from funds of the Company (as distinct from funds from
other sources, such as insurance) in respect of any indemnity under this Section
20 shall be payable from amounts allocable to any other Person pursuant to an
applicable Transaction Document.
(c) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Covered Person defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the Company
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Company of an undertaking by or on behalf of the Covered
Person to repay such amount if it shall be determined that the Covered Person is
not entitled to be indemnified as authorized in this Section 20.
(d) A Covered Person shall be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters the Covered
Person 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
Company, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, or any other facts pertinent to the
existence and amount of assets from which distributions to the Member might
properly be paid.
(e) To the extent that, at law or in equity, a Covered Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Company or to any other Covered Person, a Covered Person acting under this
Agreement shall not be liable to the Company or to any other Covered Person for
its good faith reliance on the provisions of this Agreement or any approval or
authorization granted by the Company or any other Covered Person. The provisions
of this Agreement, to the extent that they restrict the duties and liabilities
of a Covered Person otherwise existing at law or in equity, are agreed by the
Member to replace such other duties and liabilities of such Covered Person.
(f) The foregoing provisions of this Section 20 shall survive any
termination of this Agreement.
Section 21. Assignments.
Subject to Section 23, the Member may assign in whole or in part its
limited liability company interest in the Company. If the Member transfers all
of its limited liability company interest in the Company pursuant to this
Section 21, the transferee shall be admitted to the Company as a member of the
Company upon its execution of an instrument signifying its agreement to be bound
by the terms and conditions of this Agreement, which instrument may be a
counterpart signature page to this Agreement. Such admission shall be deemed
effective immediately prior to the transfer and, immediately following such
admission, the transferor Member shall cease to be a member of the Company.
Notwithstanding anything in this Agreement to the contrary, any successor to the
Member by merger or consolidation in compliance with applicable Transaction
Documents shall, without further act, be the Member
-12-
<PAGE>
hereunder, and such merger or consolidation shall not constitute an assignment
for purposes of this Agreement.
Section 22. Resignation.
So long as any Obligation is outstanding, the Member may not resign,
except as permitted under all applicable Transaction Documents and if the Rating
Agency Condition and/or the Holder Condition, as applicable, is satisfied. If
the Member is permitted to resign pursuant to this Section 22, an additional
member of the Company shall be admitted to the Company, subject to Section 23,
upon its execution of an instrument signifying its agreement to be bound by the
terms and conditions of this Agreement, which instrument may be a counterpart
signature page to this Agreement. Such admission shall be deemed effective
immediately prior to the resignation and, immediately following such admission,
the resigning Member shall cease to be a member of the Company.
Section 23. Admission of Additional Members.
One or more additional members of the Company may be admitted to the
Company with the written consent of the Member; provided, however, that,
notwithstanding the foregoing, so long as any SPE Condition exists, no
additional Member may be admitted to the Company unless the Rating Agency
Condition and/or the Holder Condition, as applicable, is satisfied.
Section 24. Dissolution.
(a) Subject to Section 10(j), the Company shall be dissolved, and its
affairs shall be wound up upon the first to occur of the following: (i) the
resignation or dissolution of the Member or the occurrence of any other event
which terminates the continued membership of the Member in the Company unless
the business of the Company is continued in a manner permitted by the Act or
(ii) the entry of a decree of judicial dissolution under Section 18-802 of the
Act.
(b) The bankruptcy (as defined in Sections 18-101(1) and 18-304 of the
Act) of the Member shall not cause the Member to cease to be a member of the
Company and upon the occurrence of such an event, the business of the Company
shall continue without dissolution.
(c) In the event of dissolution, the Company shall conduct only such
activities as are necessary to wind up its affairs (including the sale of the
assets of the Company in an orderly manner), and the assets of the Company shall
be applied in the manner, and in the order of priority, set forth in Section
18-804 of the Act.
(d) The Company shall terminate when (i) all of the assets of the
Company, after payment of or due provision for all debts, liabilities and
obligations of the Company, shall have been distributed to the Member in the
manner provided for in this Agreement and (ii) the Certificate of Formation
shall have been canceled in the manner required by the Act.
Section 25. Waiver of Partition; Nature of Interest.
Except as otherwise expressly provided in this Agreement, to the
fullest extent permitted by law, the Member hereby irrevocably waives any right
or power that the Member might have
-13-
<PAGE>
to cause the Company or any of its assets to be partitioned, to cause the
appointment of a receiver for all or any portion of the assets of the Company,
to compel any sale of all or any portion of the assets of the Company pursuant
to any applicable law or to file a complaint or to institute any proceeding at
law or in equity to cause the dissolution, liquidation, winding up or
termination of the Company. The Member shall not have any interest in any
specific assets of the Company, and the Member shall not have the status of a
creditor with respect to any distribution pursuant to Section 17 hereof. The
interest of the Member in the Company is personal property.
Section 26. Benefits of Agreement; No Third-Party Rights.
None of the provisions of this Agreement shall be for the benefit of or
enforceable by any creditor of the Company or by any creditor of the Member.
Nothing in this Agreement shall be deemed to create any right in any Person
(other than Covered Persons) not a party hereto, and this Agreement shall not be
construed in any respect to be a contract in whole or in part for the benefit of
any third Person.
Section 27. Severability of Provisions.
Each provision of this Agreement shall be considered severable and if
for any reason any provision or provisions herein are determined to be invalid,
unenforceable or illegal under any existing or future law, such invalidity,
unenforceability or illegality shall not impair the operation of or affect those
portions of this Agreement which are valid, enforceable and legal.
Section 28. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof.
Section 29. Binding Agreement.
Notwithstanding any other provision of this Agreement, the Member
agrees that this Agreement, including, without limitation, Sections 8, 9, 10,
11, 20, 21, 22, 23, 24, 26 and 31, constitutes a legal, valid and binding
agreement of the Member, and is enforceable against the Member by the
Independent Directors, in accordance with its terms.
Section 30. Governing Law.
This Agreement shall be governed by and construed under the laws of the
State of Delaware (without regard to conflict of laws principles), all rights
and remedies being governed by said laws.
Section 31. Amendments.
Subject to Section 10(j), this Agreement may not be modified, altered,
supplemented or amended except pursuant to a written agreement executed and
delivered by the Member. Notwithstanding anything to the contrary in this
Agreement, so long as an SPE Condition exists, this Agreement may not be
modified, altered, supplemented or amended unless the Rating
-14-
<PAGE>
Agency Condition and/or the Holder Condition, as applicable, is satisfied
except: (i) to cure any ambiguity or (ii) to convert or supplement any provision
in a manner consistent with the intent of this Agreement and the other existing
Transaction Documents.
Section 32. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original of this Agreement and all of which together
shall constitute one and the same instrument.
Section 33. Notices.
Any notices required to be delivered hereunder shall be in writing and
personally delivered, mailed or sent by telecopy, electronic mail or other
similar form of rapid transmission, and shall be deemed to have been duly given
upon receipt (a) in the case of the Company, to the Company at its address in
Section 4, (b) in the case of the Member, to the Member at its address as listed
on Schedule B attached hereto and (c) in the case of either of the foregoing, at
such other address as may be designated by written notice to the other party.
Section 34. Effectiveness.
Pursuant to Section 18-201(d) of the Act, this Agreement shall be
effective as of the time of the filing of the Certificate of Formation with the
Office of the Delaware Secretary of State on February 5, 1999.
[signature page follows]
-15-
<PAGE>
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, has duly executed this Limited Liability Company Agreement as of the 5th
day of February, 1999.
MEMBER:
NEWCOURT FINANCIAL USA INC.
By: /S/ Glenn A. Votek
Title: Executive Vice President
& Treasurer
-16-
<PAGE>
SCHEDULE A
Definitions
A. Definitions
When used in this Agreement, the following terms not otherwise defined
herein have the following meanings:
"Act" has the meaning set forth in Section 2 of this Agreement.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly Controlling or Controlled by or under direct or indirect
common Control with such Person.
"Agreement" means this Limited Liability Company Agreement of the
Company, together with the schedules attached hereto, as amended, restated or
supplemented or otherwise modified from time to time.
"Assets" has the meaning set forth in Section 8(a)(i) of this
Agreement.
"Board" or "Board of Directors" means the Board of Directors of the
Company.
"Certificate of Formation" means the Certificate of Formation of the
Company filed with the Secretary of State of the State of Delaware on February
5, 1999, as amended or amended and restated from time to time.
"Company" means NCT Funding Company, L.L.C., a Delaware limited
liability company.
"Control" means the possession, directly or indirectly, or the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities or general partnership or managing
member interests, by contract or otherwise. "Controlling" and "Controlled" shall
have correlative meanings. Without limiting the generality of the foregoing, a
Person shall be deemed to Control any other Person in which it owns, directly or
indirectly, a majority of the ownership interests.
"Covered Persons" has the meaning set forth in Section 20(a).
"Directors" means the directors elected to the Board of Directors from
time to time by the Member, including any Independent Director.
"Holder Condition" means, with respect to any action, that the
requisite holders of (or authorized representative of holders of) Interests
and/or Securities (or outstanding commitments to purchase or otherwise acquire
an interest therein), as described in clause (ii) of the definition
-17-
<PAGE>
of SPE Condition below (and with the level or amount of such requisite holders
or the authorization of such representative to be determined in accordance with
the relevant Transaction Document[s] establishing, providing for or governing
such purchases, acquisitions or commitments) shall have been given prior notice
thereof and that such requisite holders or authorized representative, as
applicable, shall have notified the Company in writing that such action is
permissible.
"Independent Director" means an individual who for the five-year period
prior to his or her appointment as Independent Director has not been, and during
the continuation of his or her service as Independent Director is not (and is
not affiliated with a company or firm that has been or is): (A) an employee,
director, partner or officer of the Member or any of its Affiliates (other than
his or her service as an Independent Director of the Company or as a similar
"independent director" of other similar special purposes entities which may be
Affiliates of the Member); (B) a significant advisor or consultant to Member or
any of its Affiliates; (C) a significant customer or supplier of Member or any
of its Affiliates; (D) affiliated with a company of which Member or any of its
Affiliates is a significant customer or supplier, (E) a party to a significant
personal services contract(s) with Member or any of its Affiliates; (F)
affiliated with a tax-exempt entity that receives significant contributions from
Member or any of its Affiliates; (G) 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 Member or any of its Affiliates, the value of which
constitutes more than 5% of the outstanding common stock of Member or such
Affiliate; (H) the holder of any beneficial or economic interest in the Company
(other than fees for services as an Independent Director and indemnification
rights contemplated herein); and (I) a spouse, parent, sibling or child of any
Person described in clauses (A) through (H).
As used in this defintion, the following terms, phrases or concepts
shall have the following meanings:
(i) A person is "affiliated with" a specified person, if the
person directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the
specified person.
(ii) A person shall be deemed to be, or to be affiliated with,
a company or firm that is a "significant advisor or consultant to
Member or any of its Affiliates" if he, she, or it, as the case may be,
received or would receive fees or similar compensation from Member or
such Affiliates in excess of the lesser of (A) 3% of the consolidated
gross revenues which Member and its Affiliates received for the sale of
their products and services during the last fiscal year of Member; (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.
-18-
<PAGE>
(vi) A "significant customer of Member or any of its
Affiliates" shall mean a customer from which Member and any of
itsAffiliates collectively in the last fiscal year of Member received
payments in consideration for the products and services of Member and
its Affiliates which are in excess of 3% of the consolidated gross
revenues of Member and its Affiliates during such fiscal year.
(vii) A "significant supplier of Member or any of Affiliates"
shall mean a supplier to which Member and any of its Affiliates
collectively in the last fiscal year of Member made payments in
consideration for the supplier's products and services in excess of 3%
of the consolidated gross revenues of Member and its Affiliates during
such fiscal year.
(viii) Member or any of itsAffiliates shall be deemed a
"significant customer" of a company if Member and any of its 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.
(ix) Member or any of itsAffiliates shall be deemed a
"significant supplier" of a company if Member and any of its 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) with Member or any of its Affiliates" if the fees
and other compensation received by the person pursuant to personal
services contract(s) with Member and any of its 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 Member or any of its Affiliates if such
tax-exempt entity received during its last fiscal year contributions
from Member and its Affiliates, in the aggregate, in excess of the
lesser of (A) 3% of the consolidated gross revenues of Member and its
Affiliates during such fiscal year and (B) 5% of the contributions
received by the tax-exempt entity during such fiscal year.
"Interests" has the meaning set forth in Section 8(a)(iii) of this
Agreement.
"Management Agreement" means the agreement of the Directors in the form
attached hereto as Schedule C.
"Material Action" means to consolidate or merge the Company with or
into any Person, or sell all or substantially all of the assets of the Company,
or to institute proceedings to have the Company be adjudicated bankrupt or
insolvent, or consent to the institution of bankruptcy or insolvency proceedings
against the Company or file a petition seeking, or consent to,
-19-
<PAGE>
reorganization or relief with respect to the Company 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 the Company or a substantial part of its property, or make any
assignment for the benefit of creditors of the Company, or admit in writing the
Company's inability to pay its debts generally as they become due, or, to the
fullest extent permitted by law, take action in furtherance of any such action,
or dissolve or liquidate the Company.
"Member" means Newcourt Financial USA Inc., a Delaware corporation, as
the initial member of the Company, and includes any Person admitted as an
additional member of the Company or a substitute member of the Company pursuant
to the provisions of this Agreement.
"Officer" means an officer of the Company described in Section 12.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, limited liability partnership, association, joint
stock company, trust, unincorporated organization, or other organization,
whether or not a legal entity, and any governmental authority.
"Profits and Losses" means the net income or loss of the Company for
federal income tax purposes as finally determined by the Company for each fiscal
year of the Company, as well as, where the context requires, related federal tax
items such as tax preferences and credits, in each case, appropriately adjusted
with respect to final determination of any of the foregoing for federal income
tax purposes.
"Rating Agency" means any nationally recognized rating agency which has
issued and is maintaining a rating with respect to an outstanding Security.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given ten days prior notice thereof and that each
Rating Agency shall have notified the Company in writing that such action will
not result in a reduction or withdrawal of the then current rating by such
Rating Agency if any.
"Securities" has the meaning set forth in Section 8(a)(iv) of this
Agreement.
"SPE Condition" means, as of any time of determination, that any of the
following have occurred and are continuing:
(i) the Company has issued and has outstanding, or any Trust
established or funded by the Company has issued and has outstanding,
any series or class of Securities which is then rated by a Rating
Agency, or
(ii) the Company has otherwise assigned and conveyed
outstanding Interests, or otherwise has issued and has outstanding
(including through a Trust as described in clause (i) above) any series
or class of Securities, in either case
-20-
<PAGE>
with respect to which the holder or holders thereof (or any party which
has an outstanding commitment to purchase or otherwise acquire such an
Interest or Security) have required (by agreement to such effect and/or
as a condition to the purchase, commitment to purchase or holding of
such Interests or Securities, including by virtue of such an agreement
or condition requiring that this Agreement be executed and/or in effect
in this form) that the provisions relating to Independent Directors or
the provisions in Section 10(j) set forth herein shall be in effect as
to the Company.
"Transaction Documents" means this Agreement, each Transfer Agreement,
each agreement entered into by the Company or by a Trust at the direction of the
Company from time to time in connection with the acquisition of Assets or the
creation, funding or financing of Interests and/or Securities, and all other
documents, instruments and certificates delivered in connection therewith.
"Transfer Agreements" has the meaning set forth in Section 8(a)(iii) of
this Agreement.
"Trustee" has the meaning set forth in Section 8(a)(iii) of this
Agreement.
"Trusts" has the meaning set forth in Section 8(a)(iii) of this
Agreement.
B. Rules of Construction
Definitions in this Agreement apply equally to both the singular and
plural forms of the defined terms. The words "include" and "including" shall be
deemed to be followed by the phrase "without limitation." The terms "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Section, paragraph or
subdivision. The Section titles appear as a matter of convenience only and shall
not affect the interpretation of this Agreement. All Section, paragraph, clause,
Exhibit or Schedule references not attributed to a particular document shall be
references to such parts of this Agreement.
-21-
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
Member
Name Mailing Address Agreed Value of Membership
- ---- --------------- Capital Contribution Interest
-------------------- ----------
<S> <C> <C> <C>
Newcourt Financial USA Inc. 2 Gatehall Drive $[__________] 100%
Parsippany, NJ 07054
</TABLE>
-22-
<PAGE>
SCHEDULE C
MANAGEMENT AGREEMENT
February 25, 1999
NCT Funding Company, L.L.C.
2 Gatehall Drive
Parsippany, New Jersey 07054
Re: Management Agreement -- NCT Funding Company, L.L.C.
Ladies and Gentlemen:
For good and valuable consideration, each of the undersigned persons,
who have been designated as managers of NCT Funding Company, L.L.C., a Delaware
limited liability company (the "Company"), in accordance with the Limited
Liability Company Agreement of the Company, dated as of February 5, 1999, as it
may be amended or restated from time to time (the "LLC Agreement"), hereby agree
as follows:
1. Each of the undersigned accepts such person's rights and authority
as a Director (as defined in the LLC Agreement) under the LLC Agreement and
agrees to perform and discharge such person's duties and obligations as a
Director under the LLC Agreement, and further agrees that such rights,
authorities, duties and obligations under the LLC Agreement shall continue until
such person's successor as a Director is designated or until such person's
resignation or removal as a Director in accordance with the LLC Agreement. Each
of the undersigned agrees and acknowledges that it has been designated as a
"manager" of the Company within the meaning of the Delaware Limited Liability
Company Act.
2. Until the date which is both (i) one year and one day after the date
on which no Security or Interest (as defined in the LLC Agreement) remains
outstanding, and (ii) a date on which no commitment to purchase or increase
funding in respect of the same under any Transaction Document remains
outstanding, each of the undersigned agrees, solely in its capacity as a
creditor of the Company on account of any indemnification or other payment owing
to the undersigned by the Company, (A) not to acquiesce, petition or otherwise
invoke or cause the Company to invoke the process of any court or governmental
authority for the purpose of commencing or sustaining a case against the Company
under any federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Company or any substantial part of the property of the
Company, or ordering the winding up or liquidation of the affairs of the
Company, and (B) not to join with or cooperate or encourage any other Person to
do any of the foregoing.
-23-
<PAGE>
3. THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND REMEDIES
SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
This Management Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this Management
Agreement and all of which together shall constitute one and the same
instrument.
[signature page follows]
-24-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Management
Agreement as of the day and year first above written.
By:_______________________________
Name:
By:_______________________________
Name:
By:_______________________________
Name:
-25-
<PAGE>
EXHIBIT 4.1
TRUST AGREEMENT
by and between
NCT FUNDING COMPANY, L.L.C.
as Trust Depositor,
and
----------------------------
as Owner Trustee
Dated as of June __, 1999
NEWCOURT EQUIPMENT SECURITIES 1999-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I.........................................................................................................5
DEFINITIONS....................................................................................................5
Section 1.01. Defined Terms Generally.........................................................................5
Section 1.02. Specific Defined Terms..........................................................................5
Section 1.03. Usage of Terms..................................................................................7
Section 1.04. Section References..............................................................................7
Section 1.05. Accounting Terms................................................................................7
ARTICLE II........................................................................................................7
ORGANIZATION AND ESTABISHMENT OF TRUST.........................................................................7
Section 2.01. Establishment of Trust; Name....................................................................7
Section 2.02. Office..........................................................................................7
Section 2.03. Purposes and Powers.............................................................................7
Section 2.04. Appointment of Owner Trustee....................................................................8
Section 2.05. Initial Capital Contribution; Organizational Expenses...........................................8
Section 2.06. Declaration of Trust............................................................................8
Section 2.07. Liability of Trust Depositor....................................................................9
Section 2.08. Title to Trust Property.........................................................................9
Section 2.09. Situs of Trust..................................................................................9
Section 2.10. Representations and Warranties of the Trust Depositor...........................................9
Section 2.11. Federal Income Tax Treatment...................................................................10
ARTICLE III......................................................................................................11
EQUITY CERTIFICATES AND TRANSFERS OF INTEREST THEREIN.........................................................11
Section 3.01. Initial Ownership..............................................................................11
Section 3.02. The Equity Certificate.........................................................................11
Section 3.03. Authentication and Delivery of Equity Certificate..............................................11
Section 3.04. Registration of Transfer and Exchange of the Equity Certificates...............................11
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust Equity Certificate..................................12
Section 3.06. Persons Deemed Owners..........................................................................12
Section 3.07. Access to List of Equity Certificateholder's Name and Addresses................................12
Section 3.08. Maintenance of Office or Agency................................................................12
Section 3.09. Ownership by Trust Depositor of Equity Certificate.............................................13
ARTICLE IV.......................................................................................................14
ACTIONS BY OWNER TRUSTEE......................................................................................14
Section 4.01. Prior Notice to Equity Certificateholder with Respect to Certain Matters.......................14
Section 4.02. Action by Owner with Respect to Certain Matters................................................14
Section 4.03. Action by Owner with Respect to Bankruptcy.....................................................14
Section 4.04. Restrictions on Owner's Power..................................................................14
ARTICLE V........................................................................................................15
APPLICATION AND DISTRIBUTION OF TRUST FUNDS; CERTAIN DUTIES.....................................................15
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Section 5.01. Collection Account.............................................................................15
Section 5.02. Distributions From Collection Account.........................................................15
Section 5.03. Reports........................................................................................15
Section 5.04. Taxes..........................................................................................15
Section 5.05. Method of Payment..............................................................................16
Section 5.06. No Segregation of Moneys; No Interest..........................................................16
Section 5.07. Accounting and Reports to the Equity Certificateholder, the Internal Revenue Service and
Others.......................................................................................16
Section 5.08. Signature on Returns; Tax Matters Partner......................................................16
ARTICLE VI.......................................................................................................17
AUTHORITY AND DUTIES OF OWNER TRUSTEE.........................................................................17
Section 6.01. General Authority..............................................................................17
Section 6.02. General Duties.................................................................................17
Section 6.03. Action Upon Instruction........................................................................17
Section 6.04. No Duties Except as Specified in This Agreement or in Instructions.............................18
Section 6.05. No Action Except Under Specified Documents or Instructions.....................................18
Section 6.06. Restrictions...................................................................................18
Section 6.07. Administration Agreement.......................................................................18
ARTICLE VII......................................................................................................19
CONCERNING THE OWNER TRUSTEE..................................................................................19
Section 7.01. Acceptance of Trusts and Duties................................................................19
Section 7.02. Furnishing of Documents........................................................................20
Section 7.03. Representations and Warranties.................................................................20
Section 7.04. Reliance; Advice of Counsel....................................................................20
Section 7.05. Not Acting in Individual Capacity..............................................................21
Section 7.06. Owner Trustee Not Liable for Notes, Equity Certificate or Contracts............................21
Section 7.07. Owner Trustee May Own Notes....................................................................21
ARTICLE VIII.....................................................................................................22
COMPENSATION OF OWNER TRUSTEE.................................................................................22
Section 8.01. Owner Trustee's Fees and Expenses..............................................................22
Section 8.02. Indemnification................................................................................22
Section 8.03. Non-recourse Obligations.......................................................................22
ARTICLE IX.......................................................................................................22
TERMINATION OF TRUST .........................................................................................22
Section 9.01. Termination of Trust...........................................................................22
Section 9.02. Dissolution upon Bankruptcy of Trust Depositor.................................................23
ARTICLE X........................................................................................................23
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES........................................................24
Section 10.01. Eligibility Requirements for Owner Trustee....................................................24
Section 10.02. Resignation or Removal of Owner Trustee.......................................................24
Section 10.03. Successor Owner Trustee.......................................................................24
Section 10.04. Merger or Consolidation of Owner Trustee......................................................25
Section 10.05. Appointment of Co-Trustee or Separate Trustee.................................................25
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
ARTICLE XI.......................................................................................................26
MISCELLANEOUS.................................................................................................26
Section 11.01. Supplements and Amendments....................................................................26
Section 11.02. Limitations on Rights of Others...............................................................27
Section 11.03. Notices.......................................................................................27
Section 11.04. Severability of Provisions....................................................................28
Section 11.05. Counterparts..................................................................................28
Section 11.06. Successors and Assigns........................................................................28
Section 11.07. No Petition...................................................................................28
Section 11.08. No Recourse...................................................................................29
Section 11.09. Headings......................................................................................29
Section 11.10. Governing Law.................................................................................29
Section 11.11. Certain Servicer Payment Obligations..........................................................29
Section 11.12. JURISDICTION..................................................................................29
Section 11.13. WAIVER OF JURY TRIAL..........................................................................29
EXHIBITS
Exhibit A -- Form of Certificate of Trust..................................................................A-1
Exhibit B -- Form of Equity Certificate....................................................................B-1
</TABLE>
4
<PAGE>
This TRUST AGREEMENT dated as of June __, 1999, is made by and between
NCT Funding Company, L.L.C., a Delaware limited liability company, as Trust
Depositor (the "Trust Depositor"), and The Bank _____________, as owner trustee
(the "Owner Trustee").
In consideration of the mutual agreements herein contained, and for
other good and valuable consideration, the receipt and adequacy of which are
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms Generally. Capitalized terms used that are
not otherwise specifically defined herein shall have the same meaning given to
such terms when used in the Pooling Agreement (as defined in Section 1.02
below).
Section 1.02. Specific Defined Terms. Whenever used in this Agreement,
the following words and phrases, unless otherwise specified or 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 TCC, as Administrator.
"Administrator" has the meaning given such term in the Administration
Agreement.
"Agreement" means this Trust Agreement, as the same may be amended,
supplemented or restated from time to time.
"Benefit Plan" means (i) an employee benefit plan (as such term is
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code 'SS' 3801 et seq., as the same may be amended from time
to time.
"Certificate Balance" means $_______________.
"Certificate of Trust" means the Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Business Trust Statute, substantially
in the form of Exhibit A hereto.
"Certificate Register" and "Certificate Registrar" mean the register
maintained and the registrar (or any successor thereto) appointed pursuant to
Section 3.04.
"Closing Date" means June __, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Equity Certificate" means the trust certificate evidencing the
beneficial equity interest of the Owner in the Trust and Trust Assets,
substantially in the form of Exhibit C hereto.
"Equity Certificateholder" means the Person in whose name the Equity
Certificate is registered in the Certificate Register.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
5
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Event of Termination" has the meaning given such term in Section 8.01.
"Expenses" shall have the meaning assigned to such term in Section
9.02.
"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.
"Holder" means a Noteholder or an Equity Certificateholder, as
applicable.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 9.02.
"Indenture" means the Indenture dated as of the date of between the
Trust and _________________ Bank, as Indenture Trustee.
"NFUSA" means Newcourt Financial USA Inc., a Delaware corporation.
"Note Depository Agreement" means the Agreement dated as of the Closing
Date among the Trust, the Indenture Trustee, the Administrator and DTC, as the
Clearing Agency, relating to the Notes, as the same may be amended and
supplemented from time to time.
"Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class A-5 Notes, the Class B Notes, the Class C
Notes, and the Class D Notes in each case issued pursuant to the Indenture.
"Noteholders" means each Person in whose name a Notes is registered in
the Note Register maintained by the Owner Trustee.
"Owner" means the Equity Certificateholder.
"Owner Trustee" means The _________________ Bank, not in its individual
capacity but solely as owner trustee under this Agreement, and any successor
Owner Trustee hereunder.
"Owner Trustee Corporate Trust Office" means the office of the Owner
Trustee at which its corporate trust business shall be administered, which
initially shall be The ____________ Bank, __________, ___________, or such other
office at such other address in the State of _________ as the Owner Trustee may
designate from time to time by notice to the Equity Certificateholder, the
Servicer, the Indenture Trustee and the Trust Depositor.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, limited liability company, joint stock company, trust
(including any beneficiary thereof) unincorporated organization or government or
any agency or political subdivision thereof.
"Pooling Agreement" means the Pooling and Servicing Agreement, dated as
of June __, 1999, among the Trust, the Trust Depositor, NFUSA, and TCC, in its
individual capacity and as Servicer thereunder, as the same may be amended,
supplemented or restated from time to time.
"Required Holders" has the meaning given such term in the Pooling
Agreement.
6
<PAGE>
"Secretary of State" means the Secretary of State of the State of
Delaware.
"TCC" means AT&T Capital Corporation, a Delaware corporation.
"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, the estate of
which consists of the Trust Assets.
"Trust Assets" means the property and proceeds of every description
conveyed from time to time pursuant to Section 2.01 and 2.04 of the Pooling
Agreement, together with the Trust Accounts (including all investments therein
and proceeds and income therefrom), but not including any of such property which
has been released and reconveyed from the Trust in accordance with and pursuant
to the Pooling Agreement.
"Trust Depositor" means NCT Funding Company, L.L.C. in its capacity as
Trust Depositor hereunder, and its successors.
"Trust Estate" means all right, title and interest of the Trust in and
to the property and rights assigned to the Trust pursuant to Article Two of the
Pooling and Servicing Agreement, all funds on deposit from time to time in the
Trust Accounts and all other property of the Trust from time to time, including
any rights of the Owner Trustee and the Trust pursuant to the Pooling and
Servicing Agreement and the Administration Agreement.
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 one gender include the other gender; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation".
Section 1.04. Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
ARTICLE II
ORGANIZATION AND ESTABLISHMENT OF TRUST
Section 2.01. Establishment of Trust; Name. There is hereby formed and
established pursuant to the Business Trust Statute a Delaware business trust
which shall be known as "Newcourt Equipment Trust Securities 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 on
behalf of the Trust.
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 as the Owner Trustee may designate by written notice to the Noteholders
and the Trust Depositor.
Section 2.03. Purposes and Powers.
7
<PAGE>
(a) The sole purpose of the Trust is to manage the Trust Assets, and
collect and disburse the periodic income therefrom for the use and benefit of
the Equity Certificateholder, and in furtherance of such purpose to engage in
the following ministerial activities:
(i) to issue the Notes pursuant to the Indenture and the Equity
Certificate pursuant to this Agreement;
(ii) with the proceeds of the sale of the Notes and the Trust
Certificate, to purchase the Contracts and other Trust
Assets, organizational, start-up and transactional expenses
of the Trust (to the extent not paid by the Trust Depositor
or the Servicer or Administrator); and to pay the balance to
the Owner from time to time pursuant to the Pooling
Agreement;
(iii) to acquire, hold, manage, distribute, dispose of, release or
convey, to or at the direction of the Owner pursuant to the
Pooling Agreement, any portion of the Trust Assets in the
manner described in and pursuant to the Pooling Agreement;
(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 Assets and the
making of distributions to the Owner and the Noteholders.
(b) The Owner Trustee is hereby authorized to engage in the foregoing
activities on behalf of the Trust. The Trust shall not engage in any activities
other than in connection with the foregoing. Nothing contained herein shall be
deemed to authorize the Owner Trustee to engage in any business operations or
any activities other than those set forth in this Section 2.03. Specifically,
the Owner Trustee shall have no authority to engage in any business operations,
or acquire any assets other than those specifically included in the Trust
Assets, or otherwise vary the assets held by the Trust. Similarly, the Owner
Trustee shall have no discretionary duties other than performing those
ministerial acts set forth above necessary to accomplish the purpose of this
Trust as set forth in this Section 2.03.
Section 2.04. Appointment of Owner Trustee. The Trust Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein and in the
Business Trust Statute, and the Owner Trustee hereby accepts such appointment.
Section 2.05. Initial Capital Contribution; Organizational Expenses.
The Trust Depositor hereby sells, assigns, transfers, conveys and sets over to
the Owner Trustee on behalf of the Trust, as of the date hereof, the sum of $10,
which shall constitute the initial contribution of the Trust Depositor in
respect of the establishment and formation of the Trust. The Owner Trustee
hereby acknowledges receipt in trust from the Trust Depositor, as of the date
hereof, of the foregoing contribution. The Trust Depositor shall pay or provide
for the payment of further organizational expenses of the Trust as they may
arise or shall, upon the request of the Owner Trustee, promptly reimburse or
provide for the reimbursement of 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 Assets in trust upon and subject to the conditions
set forth herein for the sole purpose of conserving the Trust Assets and
8
<PAGE>
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. Effective as of the
date hereof, the Owner Trustee shall have all rights, powers and duties set
forth herein and in the Business Trust Statute for the sole purpose and to the
extent necessary to accomplish the purposes of this Trust as set forth in
Section 2.03.
Section 2.07. Liability of Trust Depositor.
(a) Pursuant to Section 3803(a) of the Business Trust Statute, the
Trust Depositor as Owner 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 Owner
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;
provided, however, that the Owner shall not be liable for any losses incurred by
the Equity Certificateholder in the capacity of an investor in the Trust
Certificate or a Noteholder in the capacity of an investor in the Notes; and
provided further, that the Owner shall not be so liable to any injured party or
other creditor if such party has agreed that its recourse against the Trust for
any obligation or liability of the Trust to such party shall be limited to the
assets of the Trust. 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 Owner shall not be liable) shall be deemed third party
beneficiaries of this paragraph.
(b) No Equity Certificateholder, other than to the extent set forth in
Section 2.07(a), shall have any personal liability for any liability or
obligation of the Trust or by reason of any action taken by the parties to this
Agreement pursuant to any provisions of this Agreement or any other Transaction
Document.
Section 2.08. Title to Trust Property.
(a) Legal title to the Trust Assets 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 Assets 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.
(b) The Holders shall not have legal title to any part of the Trust
Assets. The Holders shall be entitled to receive distributions from the Trust.
Section 2.09. Situs of Trust. The Trust will be located and
administered in the State of _______or the State of New York. All bank accounts
maintained by the Owner Trustee on behalf of the Trust shall be located in the
State of New York or the State of _________. The Trust shall not have any
employees in any state other than__________; provided, however, that nothing
herein shall restrict or prohibit the Owner Trustee, TCC or any agent of the
Trust from having employees within or without the State of _________. Payments
will be received by the Trust only in _________ or New York and payments will be
made by the Trust only from _________ or New York. The only office of the Trust
will be at the Owner Trustee Corporate Trust Office.
Section 2.10. Representations and Warranties of the Trust Depositor.
The Trust Depositor hereby represents and warrants to the Owner
Trustee, that:
(i) The Trust Depositor is duly organized and validly existing as a
limited liability company 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
9
<PAGE>
has, power, authority and legal right to acquire and own the
assets conveyed and to be conveyed by it to the Trust from time
to time.
(ii) The Trust Depositor is duly qualified to do business as a foreign
limited liability company 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 from time to time to and
deposited with the Owner Trustee on behalf of the Trust as part
of the Trust Assets and has or will have duly authorized such
sale and assignment and deposit with the Owner Trustee on behalf
of the Trust by all necessary entity action; the execution,
delivery and performance of this Agreement have been duly
authorized by the Trust Depositor by all necessary entity action;
and this Agreement constitutes the legal, valid and binding
obligation of the Trust Depositor, enforceable in accordance with
its terms, except as such enforcement may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally and by the availability of
equitable remedies.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of,
nor constitute (with or without notice or lapse of time) a
default under, the certificate of formation or limited liability
company agreement 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 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 Transaction Documents or, (B) seeking to prevent the
issuance of the Equity Certificate or the consummation of any of
the transactions contemplated by this Agreement or 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, the Equity Certificate or any
other Transaction Document, 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 Equity Certificate.
Section 2.11. Federal Income Tax Treatment. 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 Equity
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 Owner; provided, that this sentence shall not limit or
otherwise affect the provisions of the Transaction Documents pertaining to
distributions of Trust Assets or proceeds thereof to Persons other than the
Trust Depositor.
10
<PAGE>
ARTICLE III
EQUITY CERTIFICATE AND TRANSFERS OF INTERESTS THEREIN
Section 3.01. Initial 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 Equity
Certificate, the Trust Depositor shall be the sole beneficiary of the Trust. The
Equity Certificate must at all times be held by either the Trust Depositor or
its transferee (to the extent permitted under Section 3.01(b) and Section
2.12(a)) as sole owner.
(b) No transfer of the Equity Certificate shall be made unless such
transfer is made in a transaction which does not require registration or
qualification under the Securities Act 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 Equity
Certificate unless, prior to such transfer the Owner Trustee shall have received
(i) a Tax Opinion, and (ii) a certificate from the proposed transferee
certifying that (A) following such transfer, there would be no more than one
holder of the Equity Certificate and the holder of the Equity Certificate would
not be a Foreign Person, a partnership, Subchapter S corporation or grantor
trust and (B) such transfer does not violate any state securities or Blue Sky
laws or the Securities Act.
Section 3.02. The Equity Certificate.
(a) On the Closing Date, the Equity Certificate shall be issued to the
Trust Depositor, substantially in the form of Exhibit B hereto. The Equity
Certificate shall be issued with an original Certificate balance equal to the
Certificate Balance. The Equity Certificate shall be executed by the Owner
Trustee on behalf of the Trust by manual or facsimile signature of an authorized
officer of the Owner Trustee and, upon authentication pursuant to Section 3.03,
shall be deemed to have been validly issued when so executed and authenticated.
The Equity 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 Certificate or did
not hold such offices at the date of the authentication and delivery of the
Equity Certificate. The Equity Certificate shall be dated the date of its
authentication.
Section 3.03. Authentication and Delivery of Equity Certificate. The
Equity Certificate shall not entitle its holder to any benefit under this
Agreement, or be valid for any purpose, unless there shall appear on such Equity
Certificate a certificate of authentication substantially in the form set forth
in Exhibit B executed by the Owner Trustee or its authenticating agent, by
manual or facsimile signature; such authentication shall constitute conclusive
evidence that the Equity Certificate shall have been duly authenticated and
delivered hereunder. The Equity Bank is hereby initially appointed
Authentication Agent.
Section 3.04. Registration of Transfer and Exchange of the Equity
Certificates.
(a) The Certificate Registrar shall maintain or cause to be maintained,
at the office or agency maintained pursuant to Section 3.08, a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
it shall provide for the registration of the Equity Certificate and of transfers
and exchanges of the Equity Certificate as provided in this Agreement. The
_________ Bank is hereby initially appointed Certificate Registrar for the
purpose of registering the Equity Certificate and transfers and exchanges of the
Equity Certificate as provided in this Agreement. In the event that the Owner
Trustee notifies the Servicer that The _________ Bank is unable to act as
Certificate Registrar, the Servicer shall appoint another bank or trust company,
having an office or agency located in The City of New York, agreeing to act in
accordance with the provisions of this Agreement applicable to it, and otherwise
acceptable to the Owner Trustee and the Administrative Agent, to act as
successor Certificate Registrar hereunder.
11
<PAGE>
(b) Upon surrender for registration of transfer of the Equity
Certificate otherwise permitted to be transferred in accordance herewith at the
office or agency maintained pursuant to Section 3.08, the Owner Trustee shall
(subject to Section 3.01(b) execute, authenticate and deliver (or shall cause
its authenticating agent to authenticate and deliver), in the name of the
designated transferee, one new Trust Certificate having the same aggregate
principal amount.
(c) Every Equity 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 Equity Certificate, but the Owner Trustee or Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer of the
Equity Certificate.
(e) All Equity Certificates surrendered for registration of transfer or
exchange shall be canceled and subsequently destroyed by the Owner Trustee or
Certificate Registrar in accordance with its customary practice.
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust Equity
Certificate. If (a) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Equity Certificate, and (b) 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 Equity Certificate has been acquired by a bona fide
purchaser, the Owner Trustee on behalf of the Trust shall execute and the Owner
Trustee or the Authenticating Agent shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Equity
Certificate, a new Equity Certificate of like tenor. In connection with the
issuance of any new Equity Certificate under this Section, the Owner Trustee or
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the reasonable fees and expenses of the Owner Trustee
and the Certificate Registrar) connected therewith. Any duplicate Equity
Certificate issued pursuant to this Section shall constitute conclusive evidence
of beneficial ownership in the Trust, as if originally issued, whether or not
the lost, stolen or destroyed Equity Certificate shall be found at any time.
Section 3.06. Persons Deemed Owners. Prior to due presentation of a
Equity Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar and any of their respective agents may treat the Person in
whose name the Equity Certificate is registered as the owner of the Equity
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 or any of their respective agents shall be affected by any
notice of the contrary.
Section 3.07. Access to List of Equity Certificateholder's Name and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer, the Indenture Trustee and the Trust Depositor within 15 days after
receipt by the Owner Trustee of a written request therefor from the Servicer,
the Indenture Trustee or the Trust Depositor, name and address of the Equity
Certificateholder as of the most recent Record Date in such form as the
Servicer, the Indenture Trustee or the Trust Depositor may reasonably require.
The Equity Certificateholder, by receiving and holding the Equity Certificate,
agrees that neither the Servicer, the Trust Depositor nor the Owner Trustee, nor
any agent thereof, shall be held accountable by reason of the disclosure of any
such information as to the name and address of the Equity Certificateholder
hereunder, regardless of the source from which such information was derived.
Section 3.08. Maintenance of Office or Agency. The Owner Trustee shall
maintain in The City of New York an office or offices or agency or agencies
where Equity 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 Equity Certificate and any Transaction Documents may be served. The Owner
Trustee initially designates the corporate trust office of The ____________
Bank, Attention: ________, as its office for such purposes. The Owner Trustee
12
<PAGE>
shall give prompt written notice to the Trust Depositor, the Servicer, the
Administrative Agent and the Equity Certificateholder of any change in the
location of the Certificate Register or any such office or agency.
Section 3.09. Ownership by Trust Depositor of Equity Certificate. Trust
Depositor shall on the Closing Date purchase from the Trust the Equity
Certificate representing the Certificate Balance.
[remainder of page intentionally left blank]
13
<PAGE>
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice to Equity Certificateholder with Respect to
Certain Matters. Subject to the provisions and limitations 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 Equity 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 Equity Certificateholder shall not have notified the Owner
Trustee in writing prior to the 30th day after such notice is given that such
Equity 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 Trust Assets) 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
Trust Assets);
(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); or
(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 effect
the interest 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 Article VIII of the Pooling Agreement, (d)
except as expressly provided in the relevant Transaction Documents, release or
convey from the Trust any Trust Assets, (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
applicable restrictions or conditions thereon contained in a Transaction
Document) or (g) amend the Certificate of Trust. The Owner Trustee shall take
the actions referred to in the preceding sentence upon (and only upon) written
instructions signed by the Owner.
Section 4.03. Action by Owner with Respect to Bankruptcy. The Owner
Trustee shall not have the power to commence a voluntary proceeding in a
bankruptcy relating to the Trust without the prior approval of the Owner and the
delivery to the Owner Trustee by such Owner of a certificate certifying that
such Owner reasonably believes that the Trust is no longer Solvent.
Section 4.04. Restrictions on Owner's Power. Neither the Administrator
nor the Owner shall direct the Owner Trustee to take or to refrain from taking
any action if such action or inaction would be contrary to any obligation of the
Trust or the Owner Trustee under this Agreement or any of the other Transaction
Documents, or
14
<PAGE>
would be contrary to the purpose of this Trust as set forth in Section 2.03, nor
shall the Owner Trustee be obligated to follow any such direction, if given.
ARTICLE V
APPLICATION AND DISTRIBUTION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01. Collection Account. The Owner Trustee shall establish (or
direct the Servicer to establish on its behalf) the Collection Account with a
Qualified Institution pursuant to and in accordance with Article VII of the
Pooling Agreement.
Section 5.02. Distributions From Collection Account. On each Payment
Date the Owner Trustee (based solely on the information contained in the
Servicer's monthly payment instructions referred to in Sections 7.05(a) or (b),
as applicable, of the Pooling Agreement) shall make the distributions and
payments from the Available Amounts on deposit in the Collection Account to the
parties, for the purposes and in the order of priorities specified in such
Sections 7.05(a) or (b) of the Pooling Agreement, as applicable.
Section 5.03. Reports. On each Payment Date, the Owner Trustee shall
send or cause to be sent to the Equity Certificateholder, the Administrative
Agent and each Managing Agent, a statement (to be prepared by the Servicer or
the Administrator) based on information in the Servicer's Monthly Report
delivered on the related Determination Date pursuant to Section 9.01 of the
Pooling Agreement, setting forth for the Accrual Period or Collection Period, as
applicable, relating to such Payment Date the following information:
(i) the amount of such distribution allocable to principal;
(ii) the amount of such distribution allocable to interest;
(iii) the principal balance of each Class of Notes and the Equity
Certificate Balance (after giving effect to distributions
made on such Payment Date);
(iv) the aggregate remaining shortfalls (after giving effect to
distributions on such Payment Date), if any, referred to in
the allocation provisions of Section 7.05 of the Pooling
Agreement with respect to allocations previously required
to be made but not made due to insufficiency of Available
Amounts therefor, as well as the change in such amounts
from the preceding statement; and
(v) the amount of fees and expenses, and payments in respect of
Hedging Agreements and in respect of the TCC Hedged Amount
(if applicable), paid from the Trust Assets with respect to
such Collection Period.]
Section 5.04. Taxes. In the event that any withholding tax is imposed
on the Trust's payment (or allocation of income) to the Equity
Certificateholder, such tax shall reduce the amount otherwise distributable to
the Equity Certificateholder in accordance with this Section. The Owner Trustee
is hereby authorized and directed to retain from amounts otherwise distributable
to the Equity Certificateholder 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
Equity Certificateholder shall be treated as cash distributed to such Equity
Certificateholder at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax is
payable with respect to a distribution the Owner Trustee may in its sole
discretion withhold such amounts in accordance with this Section. In the event
that the Equity Certificateholder wishes to apply for a refund of any such
withholding tax, the Owner Trustee shall
15
<PAGE>
reasonably cooperate with the Equity Certificateholder in making such claim so
long as the Equity Certificateholder agrees to reimburse the Owner Trustee for
any out-of-pocket expenses incurred.
Section 5.05. Method of Payment. Subject to Section 10.01(c),
distributions required to be made to the Equity Certificateholder on any Payment
Date shall be made to the Equity Certificateholder of record on the preceding
Record Date by wire transfer, in immediately available funds, to the account of
the Equity Certificateholder at a bank or other entity having appropriate
facilities therefor, which the Equity Certificateholder shall have designated to
the Certificate Registrar, with appropriate written wire transfer instructions,
at least three Business Days prior to such Payment Date. In the absence of such
designation, such distributions shall be made by check mailed to such the Equity
Certificateholder at the address of such Holder appearing in the Certificate
Register.
Section 5.06. 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 any
applicable Transaction Document, 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 5.07. Accounting and Reports to the Equity Certificateholder,
the Internal Revenue Service and Others. The Owner Trustee shall (a) maintain
(or cause to be maintained) the books of the Trust on a calendar year basis and
the accrual method of accounting, (b) deliver or cause to be delivered to the
Equity Certificateholder, as may be required by the Code and applicable Treasury
Regulations, such information as may be required (including Form 1099 or
Schedule K-1) to enable the Equity Certificateholder to prepare its federal and
state income tax returns, (c) file or cause to be filed such tax returns
relating to the Trust and make such elections as from time to time may be
required or appropriate under any applicable state or federal statute or any
rule or regulation thereunder so as to maintain the federal income tax treatment
for the Trust as set forth in Section 2.11, (d) cause such tax returns to be
signed in the manner required by law and (e) collect or cause to be collected
any withholding tax as described in and in accordance with Section 5.04 with
respect to income or distributions to the Equity Certificateholder. The Owner
Trustee shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to Contracts becoming
part of the Contract Pool. If applicable, the Owner Trustee shall not make the
election provided under Section 754 or Section 761 of the Code.
Section 5.08. Signature on Returns; Tax Matters Partner.
(a) The Owner shall sign on behalf of the Trust the tax returns of the
Trust, if any.
(b) If Subchapter K of the Code should be applicable to the Trust, the
Owner shall be designated the "tax matters partner" of the Trust pursuant to
Section 6231(a)(7)(A) of the Code and applicable Treasury Regulations.
[remainder of page intentionally left blank]
16
<PAGE>
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority. Subject to the provisions and
limitations of Sections 2.03 and 2.06, the Owner Trustee is authorized and
directed to execute and deliver on behalf of the Trust from time to time 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 such Transaction
Documents to which the Trust is to be a party and any amendment or other
agreement relating thereto (in each case, in such form as is approved by the
Trust Depositor), as evidenced conclusively by the Owner Trustee's execution
thereof. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Trust pursuant to
the Transaction Documents. The Owner Trustee is further authorized from time to
time to take such action as the Administrator directs or recommends in writing
with respect to the Transaction Documents, subject to the terms of the
Transaction Documents.
Section 6.02. General Duties. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged through the Administrator or such other
agents as shall be appointed) 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 Equity Certificateholder,
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 a
Financing Originator or TCC in connection with any claims-paying procedure as
part of a proceeding in respect of an Insolvency Event involving such Financing
Originator or TCC. Notwithstanding the foregoing, the Owner Trustee shall be
deemed to have discharged its duties and responsibilities hereunder and under
the other Transaction Documents to the extent the Administrator has agreed in
the Administration Agreement to perform any act or to discharge any duty of the
Owner Trustee or the Trust hereunder or under any such 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 IV, and in all events subject to the terms of
the applicable Transaction Documents, the Equity Certificateholder may be
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 applicable 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 Equity
Certificateholder 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 received from the Equity Certificateholder, 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 Equity Certificateholder, 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
17
<PAGE>
appears to be, in conflict with any other applicable provision, or in the event
that this Agreement permits any determination by the Owner Trustee or is silent
or incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Equity Certificateholder 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 from the Equity Certificateholder, 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 Equity Certificateholder, and shall have
no liability to any Person for such action or inaction.
(e) Notwithstanding anything contained herein to the contrary, the
Owner Trustee shall not be required to take any action in any jurisdiction other
than in the State of Delaware if the taking of such action will (i) require the
registration with, licensing by or the taking of any other similar action in
respect of, any state or other governmental authority or agency of any
jurisdiction other than the State of Delaware by or with respect to the Owner
Trustee; (ii) result in any fee, tax or other governmental charge under the laws
of any jurisdiction or any political subdivisions thereof in existence on the
date hereof other than the State of Delaware being payable by the Owner Trustee;
or (iii) subject the Owner Trustee to personal jurisdiction in any jurisdiction
other than the State of Delaware for causes of action arising from acts
unrelated to the consummation of the transactions by the Owner Trustee
contemplated in this Agreement. In the event that the Owner Trustee has
determined that any action set forth in clauses (i)-(iii) will result in the
consequences stated therein, the Administrator and the Owner Trustee shall
appoint one or more Persons to act as co-trustee pursuant to Section 11.05.
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 Assets, 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 (including Section 6.02) or any document or written
instruction received by the Owner Trustee pursuant to Article IV or 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 securities law 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 Assets that
result from actions by, or claims against, the Owner Trustee, in its individual
capacity, that are not related to the ownership or the administration of the
Trust Assets.
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 Assets 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 Transaction Documents,
and (iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Article IV or Section 6.03.
Section 6.06. Restrictions. The Owner Trustee shall not take any action
(i) that is inconsistent with the purposes of the Trust set forth in Section
2.03 or (ii) that, to the actual knowledge of the Owner Trustee, would result in
the Trust's becoming taxable as a corporation for federal or state income tax
purposes. Neither the Administrator nor the Equity Certificateholder shall
direct the Owner Trustee to take actions that would violate the provisions of
this Section.
Section 6.07. Administration Agreement.
18
<PAGE>
(a) The Administrator is authorized to execute on behalf of the Trust
all documents, reports, filings, instruments, Equity Certificate and opinions as
it shall be the duty of the Trust to prepare, file or deliver pursuant to the
Transaction Documents. Upon written request, the Owner Trustee shall execute and
deliver to the Administrator a power of attorney appointing the Administrator
its agent and attorney-in-fact to execute all such documents, reports, filings,
instruments, Equity Certificate and opinions.
(b) If the Administrator shall resign or be removed pursuant to the
terms of the Administration Agreement, the Owner Trustee may, at the written
direction of the Required Holders, appoint or consent to the appointment of a
successor Administrator pursuant to the Administration Agreement.
(c) If the Administration Agreement is terminated, the Owner Trustee
may, and is hereby authorized and empowered to, at the written direction of the
Equity Certificateholder, appoint or consent to the appointment of a Person to
perform substantially the same duties as are assigned to the Administrator in
the Administration Agreement pursuant to an agreement containing substantially
the same provisions as are contained in the Administration Agreement.
(d) The Owner Trustee shall promptly notify the Equity
Certificateholder of any default by or misconduct of the Administrator under the
Administration Agreement of which the Owner Trustee has received written notice
or of which a Responsible Officer of the Owner Trustee has actual knowledge.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.01. Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Trust Assets 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, (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.03 expressly made by the Owner
Trustee in its individual capacity, (iii) for liabilities arising from the
failure of the Owner Trustee to perform obligations expressly undertaken by it
in the last sentence of Section 6.04 hereof, (iv) for any investments issued by
the Owner Trustee or any branch or affiliate thereof in its commercial capacity,
or (v) for taxes, fees or other charges on, based on or measured by, any fees,
commissions or compensation received by the Owner Trustee in connection with any
of the transactions contemplated by this Agreement or any other Transaction
Document. 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 in good faith by a Responsible Officer of the Owner Trustee which did not
result from negligence on the part of such Responsible Officer;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Administrator or the Equity Certificateholder (so long as not contrary to the
express terms of the Transaction Documents);
(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 other 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;
19
<PAGE>
(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 Assets, or for or in respect of the validity or
sufficiency of any Transaction Documents, other than its signature on behalf of
the Trust on, and the certificate of authentication on, the Equity Certificate,
and the Owner Trustee shall in no event assume or incur any liability, duty, or
obligation to any Noteholder or to the Equity Certificateholder, 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 by the Servicer or the Trust Depositor under any
other Transaction Document; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any other Transaction Document, at the request, order or direction
of the Equity Certificateholder, unless the Equity Certificateholder has offered
to the Owner Trustee security or indemnity satisfactory to it against the costs,
expenses and liabilities that may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary act
enumerated in this Agreement or in any other Transaction Document shall not be
construed as a duty, and the Owner Trustee shall not be answerable for other
than its negligence or willful misconduct in the performance of any such act.
Section 7.02. Furnishing of Documents. The Owner Trustee shall furnish
to the Equity Certificateholder promptly upon receipt of a written request
therefor from an Equity Certificateholder, duplicates or copies of all reports,
notices, requests, demands, Equity Certificate, 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 Equity Certificateholder
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 and to execute and deliver on behalf of the Trust each
other Transaction Document to which the Trust is a party ("Related Documents").
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement and, on behalf of the Trust, the
Related Documents, and this Agreement and each Related Document will be executed
and delivered by one of its officers who is duly authorized to execute and
deliver the same on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement or,
on behalf of the Trust, any Related Document, 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 Assets resulting from actions by or claims against the Owner Trustee
individually which are unrelated to this Agreement or the other Transaction
Documents.
20
<PAGE>
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 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, provided that such actions do not conflict with the
express terms of the Transaction Documents.
Section 7.05. Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created, The _________ Bank
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 Assets for payment or satisfaction thereof.
Section 7.06. Owner Trustee Not Liable for Notes, Equity Certificate or
Contracts. The recitals contained herein and in the Equity Certificate (other
than the signature of the Owner Trustee on behalf of the Trust on, and the
certificate of authentication on, the Equity 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 Equity Certificate (other than the signature of the
Owner Trustee and the certificate of authentication on the Equity Certificates,
or of any Contract or related documents or assets. 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 related Equipment or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Trust Assets or its ability to generate the payments to be
distributed to the Equity 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, applicable Financing Originator , TCC 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 Notes. The Owner Trustee in its
individual or any other capacity may become the owner or pledgee of Notes or the
Equity Certificate and may deal with the Trust Depositor, the Administrator, the
Indenture Trustee, Servicer and Affiliates thereof in banking transactions with
the same rights as it would have if it were not Owner Trustee.
21
<PAGE>
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have been
separately agreed upon between the Owner Trustee and the Servicer and which
shall be paid consistent with Section 5.19 of the Pooling 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; provided, however, that the Owner Trustee shall only be entitled to
reimbursement for expenses hereunder to the extent such expenses (i) are fees of
outside counsel engaged by the Owner Trustee in respect of the performance of
its obligations hereunder, or (ii) relate to the performance of its obligations
pursuant to Section 5.02.
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, any other Transaction Document, the Trust
Assets, the administration of the Trust Assets or the action or inaction of the
Owner Trustee hereunder; provided, however, the Trust Depositor shall not be
liable for or required to indemnify an Indemnified Party from and against
Expenses arising or resulting from any of the matters described in the third
sentence of Section 7.01; provided, further, that the liability of the Trust
Depositor under this Section shall be limited to the assets of the Trust
Depositor and any indemnity payments to be made pursuant to this Section shall
not be made from the Trust Assets and such indemnity payments, if unpaid, do not
constitute a general recourse claim against the Trust. The indemnities contained
in this Section shall survive the resignation or termination of the Owner
Trustee or the termination of this Agreement. In the event of any claim, action
or proceeding for which indemnity will be sought pursuant to this Section, the
Owner Trustee's choice of legal counsel shall be subject to the approval of the
Trust Depositor, which approval shall not be unreasonably withheld. The
indemnities contained in this Section shall be in addition to the indemnities
provided by the Servicer pursuant to the Pooling Agreement and the Administrator
pursuant to the Administration Agreement.
Section 8.03. Non-recourse Obligations. Notwithstanding anything in
this Agreement or any other Transaction Document, the Owner Trustee agrees in
its individual capacity and in its capacity as Owner Trustee for the Trust that
all obligations of the Trust to the Owner Trustee individually or as Owner
Trustee for the Trust shall be recourse to the Trust Assets only and
specifically shall not be recourse to the assets of the Equity
Certificateholder.
ARTICLE IX
TERMINATION OF TRUST
Section 9.01. Termination of Trust.
(a) The respective obligations and responsibilities of the Trust
Depositor and the Owner Trustee created by this Agreement and the Trust created
by this Agreement shall terminate upon the earliest of (i) the maturity or other
liquidation of the last Contract and related Transferred Assets, and the
subsequent distribution of amounts in respect of such Transferred Assets as
provided in the Transaction Documents, or (ii) the payment to the Noteholders
and any other party entitled thereto of the entire outstanding principal balance
of the Notes, together with accrued interest thereon to the date of repayment,
and all other amounts required to be paid to such parties or to which such
parties are entitled pursuant to this Agreement, the Pooling Agreement and the
other Transaction Documents, or (iii) at the time provided in Section 9.02
below; provided, however, that in no event shall the trust
22
<PAGE>
created by this Agreement continue beyond the expiration of 21 years from the
death of the last survivor of the descendants living on the date of this
Agreement of Rose Kennedy of the Commonwealth of Massachusetts; and provided,
further, that the rights to indemnification under Section 8.02 shall survive the
termination of the Trust. The Servicer shall promptly notify the Owner Trustee
and the Administrative Agent of any prospective termination pursuant to this
Section 9.01. Except as provided in Section 9.02, the bankruptcy, liquidation,
dissolution, termination, resignation, expulsion, withdrawal, death or
incapacity of the Equity Certificateholder, shall not (x) operate to terminate
this Agreement or the Trust, nor (y) entitle such Equity Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Trust Assets, nor (z) 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 the Equity Certificateholder shall be entitled to revoke or terminate the
Trust.
(c) Promptly upon receipt of notice of final distribution on the Equity
Certificate from the Servicer given pursuant to Section 10.01 of the Pooling
Agreement, the Owner Trustee shall mail written notice to the Equity
Certificateholder specifying (i) the Payment Date upon which final payment of
the Equity Certificate shall be made upon presentation and surrender of Equity
Certificate at the office of the Owner Trustee as therein specified, (ii) the
amount of any such final payment, and (iii) that the Record Date otherwise
applicable to such Payment Date is not applicable, payments being made only upon
presentation and surrender of the Equity Certificate at the office of the Owner
Trustee 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 Equity Certificateholder. Upon presentation and
surrender of the Equity Certificate, the Owner Trustee shall cause to be
distributed to Equity Certificateholder amounts distributable on such Payment
Date pursuant to Section 5.02.
(d) In the event that the Equity Certificateholder shall not surrender
the Equity Certificate for cancellation within six months after the date
specified in the above-mentioned written notice, the Owner Trustee shall give a
second written notice to the Equity Certificateholder to surrender the Equity
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice the Equity 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 Equity Certificateholder concerning surrender of the Equity Certificate, and
the cost thereof shall be paid out of the funds and other assets that remain
subject to this Agreement. Any funds which are payable to the Equity
Certificateholder remaining in the Trust after exhaustion of such remedies shall
be distributed by the Owner Trustee to the Trust Depositor.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
Section 9.02. Dissolution upon Bankruptcy of Trust Depositor. In the
event that an Insolvency Event shall occur with respect to the Trust Depositor,
then 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 an
Insolvency Event with respect to the Trust Depositor (i) 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 sell the Trust Assets in a commercially
reasonable manner and on commercially reasonable terms. The proceeds of such a
sale shall be treated, allocated and distributed as Collections in accordance
with the Pooling Agreement.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
23
<PAGE>
Section 10.01. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation (i) satisfying the provisions of
Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authorities; (iv) having (or having a parent which has) a rating of at least
Baa3 by Moody's or BBB by Standard & Poor's; (v) which is not an Affiliate of
the Issuer, the Trust Depositor, or any Financing Originator, and (vi) does not
offer or provide credit or credit enhancement to the Issuer or the Trust
Depositor. 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 Trust Depositor and the Servicer at
least 30 days before the date specified in such instrument. Upon receiving such
notice of resignation, the Administrator shall promptly appoint a successor
Owner Trustee meeting the qualifications set forth in Section 10.01 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 Trust Depositor shall promptly
appoint a successor Owner Trustee meeting the qualification requirements of
Section 10.01 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 together with payment of 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 all fees and expenses, including any indemnity
payments, due to the outgoing Owner Trustee have been paid and until acceptance
of appointment by the successor Owner Trustee pursuant to Section 10.03.
Section 10.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Trust Depositor 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 deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement; and the
Trust Depositor and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.
24
<PAGE>
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to the Equity
Certificateholder, the Indenture Trustee, the Noteholders and each Rating
Agency. If the Administrator shall fail to mail such notice within 10 days after
acceptance of appointment by the successor Owner Trustee, the successor Owner
Trustee shall cause such notice to be mailed at the expense of the Trust
Depositor.
Any successor Owner Trustee appointed pursuant to this Section 10.03
shall file an amendment to the Certificate of Trust with the Delaware Secretary
of State identifying the name and principal place of business of such successor
in the State of Delaware.
Section 10.04. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section
11.01, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto. Notwithstanding anything contained herein
to the contrary, the successor Owner Trustee under this Section 10.04 shall file
an amendment to the Certificate of Trust with the Delaware Secretary of State
identifying the name and principal place of business of such successor in the
State of Delaware.
Section 10.05. 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 Assets may at the time be located, the Owner Trustee shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Owner Trustee to act as co-trustee, jointly with the
Owner Trustee, or separate trustee or separate trustees, of all or any part of
the Trust Assets, and to vest in such Person, in such capacity, such title to
the Trust Assets, or any part thereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the Owner
Trustee may consider necessary or desirable. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 10.01 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 10.01.
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 Assets 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 Owner Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
25
<PAGE>
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.
Any separate trustee or co-trustee may at any time appoint the Owner
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 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 trustee.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Supplements and Amendments.
(a) This Agreement may be amended by the Trust Depositor and the Owner
Trustee, without the consent of any of the Noteholders or the Equity
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 interest of any Noteholder or the Equity Certificateholder.
(b) This Agreement may also be amended from time to time by the Trust
Depositor and the Owner Trustee, with the consent of the Required Holders and
the Equity Certificateholder, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
or of modifying in any manner the rights of the Noteholders or the Equity
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 Equity Certificateholder, or
(ii) eliminate the Equity 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 Equity Certificates.
(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 and the
Administrator.
(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 the Equity Certificateholder. It shall not be necessary
for the consent of the Equity 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 Equity Certificateholder provided for in this Agreement or in
any other Transaction Document) and of evidencing the authorization of the
execution thereof by the Equity 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 or supplement 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
26
<PAGE>
of such amendment is authorized or permitted by this Agreement and the other
Transaction Documents, and that all conditions precedent to the execution and
delivery of such amendment as set forth in the applicable Transaction Documents
have been satisfied. The Owner Trustee may, but shall not be obligated to, enter
into any such amendment that affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 11.02. Limitations on Rights of Others. Except for Section
2.07, the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Trust Depositor, the Owner, the Administrator and, to the extent
expressly provided herein, the Indenture Trustee, the Noteholders and the Equity
Certificateholder, 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 Assets or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
Section 11.03. Notices. All notices, demands, Equity Certificate,
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 telefax transmission with a confirmation of
receipt, in all cases addressed to the recipient as follows:
(i) If to the initial Servicer/Administrator:
AT&T Capital Corporation
2 Gatehall Drive
Parsippany, New Jersey 07054
Attention: Treasurer
Fax No.: (973) 355-7019
Telephone No.: (973) 355-7014
with a copy to:
AT&T Capital Corporation
2 Gatehall Drive
Parsippany, New Jersey 07054
Attention: General Counsel
Fax No.: (973) 355-7058
Telephone No.: (973) 606-3500
(ii) If to the Trust Depositor:
NCT Funding Company, L.L.C.
c/o Newcourt Credit Group USA
2 Gatehall Drive
Parsippany, New Jersey 07054
Attention: Treasurer
Fax No.: (973) 355-7019
Telephone No.: (973) 355-7014
27
<PAGE>
(iii) If to the Owner Trustee:
The ________________Bank
Attention: Corporate Trust Administration
Fax No.:
Telephone No.:
with a copy to:
___________________Bank
Attention:
Fax No.: (212) 815-5544
Telephone No.: (212) 815-5826
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 11.04. 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 the Certificate or
the rights of the Equity Certificateholder thereof.
Section 11.05. 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 11.06. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
Trust Depositor, and the Owner Trustee and their respective successors and
permitted assigns and the Owner and its successors and permitted assigns, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by the Owner shall bind the successors and assigns of such
Owner.
Section 11.07. No Petition.
(a) The Trust Depositor will not at any time institute against (or
solicit or cooperate with or encourage any Person to institute against) the
Trust any bankruptcy proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Equity Certificate, the Notes, this Agreement or any of the other Transaction
Documents existing from time to time.
(b) The Owner Trustee, by entering into this Agreement, and the Equity
Certificateholder, by accepting the Equity 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 (or solicit
or cooperate with or encourage any Person to institute against) the Trust
Depositor or the Trust, or join in any institution against the Trust Depositor
or the Trust of, any bankruptcy proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Equity Certificate, the Notes, this Agreement or any of the other
Transaction Documents existing from time to time.
28
<PAGE>
Section 11.08. No Recourse. The Equity Certificateholder by accepting
the Equity Certificate acknowledges that the Equity Certificateholder's Equity
Certificate represents beneficial interests in the Trust only and does not
represent interests in or obligations of the Trust Depositor, the Servicer, any
Financing Originator, the Administrator, 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 may be expressly set forth or
contemplated in this Agreement, the Equity Certificate or the other applicable
Transaction Documents.
Section 11.09. 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 11.10. 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 11.11. Certain Servicer Payment Obligations. It is understood
that the Servicer 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, consistent with the provisions of Section
5.19 of the Pooling Agreement. The parties hereto agree that any such payments,
if unpaid, do not constitute a general recourse claim against the Trust or the
Trust Assets.
Section 11.12. JURISDICTION. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY AGREES TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT HAVING JURISDICTION TO
REVIEW THE JUDGMENTS THEREOF. EACH OF THE PARTIES HEREBY WAIVES ANY OBJECTION
BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS.
Section 11.13. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT
WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE PARTIES HERETO EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OF THIS AGREEMENT OR A TRANSACTION DOCUMENT OR ANY PROVISION HEREOF
OR THEROF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, AMENDMENTS AND
RESTATEMENTS, OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT.
[remainder of this page intentionally left blank]
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.
NCT FUNDING COMPANY, L.L.C.
as Trust Depositor
By: ____________________________________
Printed Name:__________________________
Title:__________________________________
THE ________________________________BANK
as Owner Trustee
By: ____________________________________
Printed Name:__________________________
Title:__________________________________
30
<PAGE>
EXHIBIT A
Form of Delaware Certificate of Trust
CERTIFICATE OF TRUST OF
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
This Certificate of Trust of Newcourt Equipment Trust Securities 1999-1
(the "Trust"), dated [ ], 1999, is being duly executed and filed by The
_________ Bank, as Owner Trustee, to form a business trust under the Delaware
Business Trust Act (12 Del. Code, 'SS' 3801 et seq.).
1. Name. The name of the business trust formed hereby is Newcourt
Equipment Trust Securities 1999-1.
2. Delaware Trustee. The name and business address of the Owner Trustee
of the Trust in the State of Delaware is The _________ Bank of __________,
_________.
3. Effective Date. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned, being the sole Owner Trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.
THE ________________________________BANK
not in its individual capacity but
solely as Owner Trustee
By: ____________________________________
Printed Name:__________________________
Title:__________________________________
A-1
<PAGE>
EXHIBIT B
Form of Equity Certificate
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO NOTES TO THE EXTENT
DESCRIBED IN THE TRUST AGREEMENT AND THE POOLING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN NCT
FUNDING COMPANY, L.L.C., NEWCOURT CREDIT GROUP USA INC., AT&T CAPITAL
CORPORATION OR ANY AFFILIATE THEREOF, OTHER THAN THE NEWCOURT EQUIPMENT TRUST
SECURITIES 1999-1. THIS 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 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 CERTIFICATE MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM.
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
EQUITY CERTIFICATE
NO. 1 Equity Certificate
THIS CERTIFIES THAT NCT Funding Company, L.L.C. is the registered owner
of a beneficial interest in the Newcourt Equipment Trust Securities 1999-1 (the
"Trust") formed by NCT Funding Company, L.L.C., a Delaware limited liability
company (the "Trust Depositor").
The Trust was created pursuant to a Trust Agreement dated as of
________, 1999 (as amended, restated, supplemented and/or otherwise modified
from time to time, the "Trust Agreement"), between NCT Funding Company, L.L.C.,
as Trust Depositor (the "Trust Depositor"), and The ________ Bank, as owner
trustee (the "Owner Trustee"), a summary of certain of the pertinent provisions
of which is set forth below. In the event of any conflict or inconsistency
between this Certificate and the Trust Agreement (or the Pooling Agreement, as
the case may be), the Trust Agreement (or the Pooling Agreement, as the case may
be) shall govern. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings which would be given to them if used in the
Trust Agreement.
This Certificate is the duly authorized Equity Certificate issued under
and is subject to the terms, provisions and conditions of the Trust Agreement,
to which Trust Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound. The Trust has also
issued Notes, in right of payment to which this Equity Certificate is
subordinate. The property of the Trust includes, among other things, all the
right, title and interest of the Trust Depositor in and to the Transferred
Assets identified in one or more related Transfer Agreements delivered from time
to time on related Transfer Dates.
The amount to be distributed to the Holder of this Certificate on each
Payment Date will be determined pursuant to the Pooling Agreement.
B-1
<PAGE>
The Holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of Noteholders to the extent described in the Trust Agreement and the
Pooling Agreement.
It is the intent of each Financing Originator, the Servicer, the
Administrator, the Trust Depositor, the Owner Trustee, and the Equity
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 Equity Certificateholder. The Trust Depositor and the Equity
Certificateholder, by acceptance of this Certificate, agrees to treat, and to
take no action inconsistent with such treatment of, the Trust for federal income
tax purposes.
The Equity Certificateholder, by its acceptance of this Certificate or
a beneficial interest in this Certificate, covenants and agrees that such Equity
Certificateholder will not at any time institute against (or solicit or
cooperate with or encourage any Person to 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
Certificate, any Senior Certificate, the Trust Agreement or any of the other
Transaction Documents in existence from time to time.
Distributions on this Certificate from or in respect of Trust Assets
will be made as provided in the Trust Agreement and the Pooling Agreement, by
the Owner Trustee or its agent by wire transfer or check mailed to the Equity
Certificateholder of record in the Certificate Register without the presentation
or surrender of this 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 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 Certificate at the office or agency maintained for that
purpose by the Owner Trustee.
Reference is hereby made to the further provisions of this 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 Certificate shall not entitle the holder hereof to any benefit under the
Trust Agreement or any other Transaction Document or be valid for any purpose.
THIS 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.
B-2
<PAGE>
[REVERSE OF CERTIFICATE]
The Equity Certificate does not represent an obligation of, or an
interest in, the Trust Depositor, AT&T Capital Corporation, Newcourt Credit
Group USA Inc., any Financing Originator, the Owner Trustee, or any of their
respective Affiliates (other than the Trust) 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 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 Trust Assets and certain other amounts, in each
case as more specifically set forth in the Trust Agreement and in the Pooling
Agreement. A copy of each of the Pooling Agreement and the Trust Agreement may
be examined by any Equity 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 Equity Certificateholder under the Trust
Agreement at any time by the Trust Depositor and the Owner Trustee, with the
consent of the parties described therein. Any such consent shall be conclusive
and binding on the Equity Certificateholder and on all future Equity
Certificateholder of this Certificate and of any Certificate issued upon the
registration of transfer hereof or in exchange therefor or in lieu hereof,
whether or not notation of such consent is made upon this Certificate.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in The City of New York, accompanied by a written instrument
of transfer in form satisfactory to the Owner Trustee and the Certificate
Registrar executed by the Equity Certificateholder hereof or such Equity
Certificateholder's attorney duly authorized in writing, and thereupon a new
Certificate evidencing the same beneficial interest in the Trust will be issued
to the designated transferee. The initial Certificate Registrar appointed under
the Trust Agreement is the Bank of New York (Delaware).
Except as provided in the Trust Agreement, this Certificate is issuable
only as a registered Equity Certificate without coupons. No service charge will
be made for any registration of transfer of this 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 Certificate is
registered as the owner hereof for all purposes, and none of the Owner Trustee,
the Certificate Registrar or any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to the Equity
Certificateholder of all amounts required to be paid to such Equity
Certificateholder pursuant to the Trust Agreement and the Pooling Agreement and
the disposition in accordance with any applicable Transaction Document of all
property held as part of the Trust Assets.
This Trust Certificate may not be acquired by a Benefit Plan. By
accepting and holding this Certificate, the Holder hereof shall be deemed to
have represented and warranted that it is not a Benefit Plan and is not
acquiring this Certificate for the account of such an entity.
B-3
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Certificate to be duly executed.
Dated: ___________ __, 1999 NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
By: The ___________________________Bank, not
in its individual capacity but solely
as Owner Trustee
By: __________________________________________
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Equity Certificate referred to in the within-mentioned
Trust Agreement.
THE _____________________BANK not in its
individual capacity but solely as Owner
Trustee
By:_____________________________________
Authorized Signatory
B-4
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________________________________
to transfer said Certificate on the books of the Certificate Registrar, will
full power of substitution in the premises.
Dated:_________________________
Signature Guaranteed:
________________________________________________________________________________
<TABLE>
<S> <C>
____________________________________ _______________________________________
NOTICE: Signature(s) must be NOTICE: The signature to this
guaranteed by an eligible guarantor assignment must correspond with the
institution. name of the registered owner as it
appears on the face of the within
Certificate in every particular,
without alteration or enlargement or
any change whatever.
</TABLE>
B-5
<PAGE>
EXHIBIT 4.2
================================================================================
POOLING AND SERVICING AGREEMENT
among
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
as Issuer,
NCT FUNDING COMPANY, L.L.C.,
as Depositor,
NEWCOURT FINANCIAL USA INC.,
in its individual capacity
and
-------------------------------------------------------,
in its individual capacity and as Servicer
Dated as of _________, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS.......................................................................................................1
Section 1.01. Definitions.....................................................................................1
Section 1.02. Usage of Terms.................................................................................32
Section 1.03. Section References.............................................................................32
Section 1.04. Accounting Terms...............................................................................32
ARTICLE II
FUNDINGS OF TRUST; TRANSFERS OF CONTRACTS........................................................................33
Section 2.01. Creation and Funding of Trust; Transfer of Transferred Assets to Trust.........................33
Section 2.02. Conditions to Transfers........................................................................34
Section 2.03. Acceptance by Trust............................................................................35
Section 2.04. Conveyance of Substitute Contracts.............................................................35
Section 2.05. Release of Excluded Amounts....................................................................37
ARTICLE III
REPRESENTATIONS AND WARRANTIES...................................................................................37
Section 3.01. Representations and Warranties Regarding the Trust Depositor...................................37
Section 3.02. Representations and Warranties of the Servicer................................................39
ARTICLE IV
PERFECTION OF TRANSFERS AND PROTECTION OF SECURITY INTERESTS.....................................................41
Section 4.01. Custody of Contracts...........................................................................41
Section 4.02. Filings........................................................................................42
Section 4.03. Name Change or Relocation......................................................................42
ARTICLE V
SERVICING OF CONTRACTS...........................................................................................43
Section 5.01. Initial Servicer's Appointment and Acceptance; Responsibility for Contract Administration......43
Section 5.02. General Duties.................................................................................43
Section 5.03. Assignment or Replacement......................................................................43
Section 5.04. Disposition Upon Termination of Contract.......................................................43
Section 5.05. Subservicers...................................................................................44
Section 5.06. Further Assurance..............................................................................44
Section 5.07. Notice to Obligors.............................................................................44
Section 5.08. Collection Efforts; Modification of Contracts..................................................44
Section 5.09. Prepayments of Certain Contracts...............................................................45
Section 5.10. Certain Extensions; Acceleration...............................................................45
Section 5.11. Taxes and Other Amounts........................................................................45
Section 5.12. Suits by Servicer..............................................................................46
Section 5.13. Remittances....................................................................................46
Section 5.14. Servicer Advances..............................................................................46
Section 5.15. Realization Upon Defaulted Contract............................................................46
Section 5.16. Maintenance of Insurance Policies..............................................................46
Section 5.17. Certain Other Duties With Respect to Trust.....................................................46
Section 5.18. Servicing Compensation.........................................................................47
Section 5.19. Payment of Certain Expenses by Servicer........................................................47
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 5.20. Records........................................................................................47
Section 5.21. Inspection.....................................................................................47
Section 5.22. Trust To Cooperate in Releases.................................................................47
Section 5.23. Servicer's Year 2000Compatibility..............................................................48
Section 5.24. Separate Entity Existence......................................................................48
ARTICLE VI
COVENANTS OF THE TRUST DEPOSITOR.................................................................................48
Section 6.01. LLC Existence..................................................................................48
Section 6.02. Contracts Not to be Evidenced by Promissory Notes..............................................48
Section 6.03. Security Interests.............................................................................48
Section 6.04. Delivery of Collections........................................................................48
Section 6.05. Regulatory Filings.............................................................................48
Section 6.06. Compliance With Law............................................................................48
Section 6.07. Activities.....................................................................................49
Section 6.08. Indebtedness...................................................................................49
Section 6.09. Guarantees.....................................................................................49
Section 6.10. Investments....................................................................................49
Section 6.11. Merger; Transfers..............................................................................49
Section 6.12. Payments.......................................................................................49
Section 6.13. Other Agreements...............................................................................49
Section 6.14. Separate Entity Existence......................................................................50
Section 6.15. Location; Records..............................................................................50
Section 6.16. Liability of Trust Depositor; Indemnities......................................................50
Section 6.17. Bankruptcy Limitations.........................................................................52
Section 6.18. Limitation on Liability of Trust Depositor and Others..........................................52
Section 6.19. Chief Executive Office.........................................................................52
ARTICLE VII
ESTABLISHMENT OF ACCOUNTS; PAYMENTS..............................................................................53
Section 7.01. Trust Accounts; Collections....................................................................53
Section 7.02. Cash Collateral Account........................................................................53
Section 7.03. Trust Account Procedures.......................................................................53
Section 7.04. Securityholder Payments........................................................................54
Section 7.05. Allocations and Payments.......................................................................54
Section 7.06. Repurchases of, or Substitution for, Contracts for Breach of Representations and Warranties...60
Section 7.07. Reassignment of Repurchased or Substituted Contracts...........................................60
Section 7.08. NFUSA's and Trust Depositor's Repurchase Option................................................61
ARTICLE VIII
SERVICER DEFAULTS; SERVICING TRANSFER............................................................................62
Section 8.01. Servicer Default...............................................................................62
Section 8.02. Servicing Transfer.............................................................................62
Section 8.03. Appointment of Successor Servicer; Reconveyance; Successor Servicer to Act.....................63
Section 8.04. (a) Notifications to Noteholders and the Equity Certificateholders............................64
Section 8.05. Effect of Transfer.............................................................................64
Section 8.06. Database File..................................................................................64
Section 8.07. Successor Servicer Indemnification.............................................................64
Section 8.08. Responsibilities of the Successor Servicer.....................................................65
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE IX
SERVICER REPORTING...............................................................................................66
Section 9.01. Monthly Reports................................................................................66
Section 9.02. Officer's Certificate..........................................................................66
Section 9.03. Other Data.....................................................................................66
Section 9.04. Annual Reporting; Evidence as to Compliance....................................................66
Section 9.05. Annual Statement of Compliance from Servicer...................................................66
ARTICLE X
TERMINATION......................................................................................................67
Section 10.01. Sale of Trust Assets..........................................................................67
ARTICLE XI
MISCELLANEOUS....................................................................................................68
Section 11.01. Amendments....................................................................................68
Section 11.02. [Reserved]....................................................................................69
Section 11.03. Governing Law.................................................................................69
Section 11.04. Notices.......................................................................................70
Section 11.05. Severability of Provisions....................................................................71
Section 11.06. Third Party Beneficiaries.....................................................................71
Section 11.07. Counterparts..................................................................................72
Section 11.08. Headings......................................................................................72
Section 11.09. No Bankruptcy Petition; Disclaimer and Subordination..........................................72
Section 11.10. Jurisdiction..................................................................................72
Section 11.11. Tax Characterization..........................................................................73
Section 11.12. Servicer Indemnity............................................................................73
Section 11.13. Limitation of Liability of Owner Trustee......................................................73
Section 11.14. WAIVER OF JURY TRIAL..........................................................................73
Section 11.15. Third Party Beneficiary.......................................................................73
EXHIBITS
Exhibit A Form of Transfer Agreement ..........................................................................A-1
Exhibit B [Reserved]...........................................................................................B-1
Exhibit C Initial Schedule of Contracts........................................................................C-1
Exhibit D Form of Servicer's Monthly Report....................................................................D-1
Exhibit E Form of Substitution Transfer Agreement..............................................................E-1
Exhibit F Hedging Requirements.................................................................................F-1
Exhibit G Schedule of Representations and Warranties...........................................................G-1
Exhibit H Certain Concentration Criteria.......................................................................H-1
Exhibit I [Reserved]...........................................................................................I-1
Exhibit J Minimum Value Filing Exceptions......................................................................J-1
</TABLE>
iii
<PAGE>
This POOLING AND SERVICING AGREEMENT, dated as of _________, 1999, is among
Newcourt Equipment Trust Securities 1999-1, a Delaware business trust (together
with its successors and assigns, the "Issuer" or the "Trust"), NCT Funding
Company, L.L.C., a Delaware limited liability company (together with its
successors and assigns, the "Depositor"),_________, a Delaware corporation
(together with its successors and assigns, "___" and, in its capacity as the
Servicer, the "Servicer") and Newcourt Financial USA Inc. (together with its
successors and assigns, "NFUSA").
WHEREAS the Depositor desires to fund the Trust by selling, conveying and
assigning from time to time, pursuant hereto or Substitution Transfer Agreements
hereunder, designated Contracts or pools of Contracts together with certain
related security therefor and other related rights and property as further
described herein, which Contracts were originated by one or more Financing
Originators, or acquired by purchase and assignment by a Financing Originator
from the prior owner thereof, and subsequently conveyed (i) by certain Financing
Originators to NFUSA pursuant to the Conveyancing Agreement (as defined herein),
and (ii) by NFUSA to the Depositor, with respect to Contracts and related assets
both originated or acquired directly by NFUSA as a Financing Originator, and
acquired by NFUSA from the other Financing Originators as described in clause
(i) above, pursuant to the Purchase and Sale Agreement (as defined herein); and
WHEREAS the Trust is willing to purchase and accept assignment of such
Contracts and related assets, including, without limitation such Contracts and
other assets as the Depositor has previously conveyed to the Newcourt Equipment
Trust - VFC Series and which the Newcourt Equipment Trust - VFC Series has
assigned back to the Depositor from the Depositor pursuant to the terms hereof;
and
WHEREAS the Servicer is willing to service such Contracts and related
assets for the benefit and account of the Trust and the Holders 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 I
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:
"Accounting Date" means, with respect to a Payment Date, the last day of
the preceding calendar month.
"Accrual Period" means, with respect to any Payment Date, the period from
and including the immediately preceding Payment Date to but excluding such
Payment Date, provided, that the initial Accrual Period following the Closing
Date shall be the period from and including the Closing Date to but excluding
the first Payment Date following the Closing Date.
"Addition Notice" means, with respect to any transfer of Subsequent
Contracts to the Trust pursuant to Section 2.04 (and the Depositor's
corresponding prior purchase of such Contracts from NFUSA), a notice, which
shall be given at least five days prior to the related Subsequent Transfer Date,
identifying the Subsequent Contracts to be transferred, the Contract Principal
Balance of such Subsequent Contracts and the related Substitution Event (with
respect to an identified Contract or Contracts then in the Contracts Pool) to
which such Subsequent Contract relates, with such notice to be signed both by
the Depositor and the NFUSA.
"Additional Principal" means, with respect to any Payment Date, an amount
equal to (a) the Total Principal Payment Amount, less (b) the sum of the Class
A-1 Principal Payment Amount, the Class A-2 Principal
<PAGE>
Payment Amount, the Class A-3 Principal Payment Amount, the Class A-4 Principal
Payment Amount, the Class A-5 Principal Payment Amount, the Class B Principal
Payment Amount, the Class C Principal Payment Amount and the Class D Principal
Payment Amount.
"Administration Agreement" means the Administration Agreement dated as of
_________, 1999 by and among the Trust, ___ , the Depositor and the Indenture
Trustee.
"Affiliate" of any specified Person means any other Person controlling or
controlled by, or under common control with, such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Pooling and Servicing Agreement, as amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms hereof.
"Aggregate Principal Amount" means, with respect to any group of Notes, at
any date of determination, the sum of the Principal Amounts of such Notes on
such date of determination.
"Allocation Criteria" means, with respect to the allocation of Insurance
Proceeds or Liquidation Proceeds between the Trust (for inclusion as Pledged
Revenues) and the Depositor, as contemplated in the definition of Available
Pledged Revenues, that Insurance Proceeds or Liquidation Proceeds with respect
to the Contracts consisting of Leases are allocable pro rata between inclusion
as Available Pledged Revenues in respect of the Contract Pool, on the one hand,
and directly to the Depositor, on the other, based upon (i) for allocation to
Available Pledged Revenues, the Required Payoff Amount for such Lease
(determined as of the beginning of the Collection Period during which such Lease
became a Defaulted Contract), and (ii) for allocation to the Depositor, the Book
Value of the related Equipment; provided, that in the event the Insurance
Proceeds or Liquidation Proceeds in respect of a particular Lease exceed the sum
of such Required Payoff Amount for such Lease plus the Book Value of the related
Equipment, any such excess shall be allocated solely to the Depositor.
"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 Agreement" means each Assignment Agreement, substantially in
the form of Exhibit A-1 attached hereto, in the case of the VFC Assignment, and
in the form of Exhibit A to the Purchase and Sale Agreement, in the case of the
Assignment Agreement executed by NFUSA, relating to an assignment, transfer and
conveyance of Contracts and related assets by the VFC Trust or NFUSA to the
Depositor, as the case may be.
"Amount Available" means, with respect to any Payment Date, the sum of (i)
the Available Pledged Revenues for such Payment Date, and (ii) that portion of
the balance in the Cash Collateral Account available for withdrawal by the
Trustee in accordance with Section 7.05(c).
"Available Cash Collateral" means, with respect to a Payment Date, the
amount of funds equal to the lesser of (i) the amount on deposit in the Cash
Collateral Account (determined (a) exclusive of any net investment earnings,
thereon and (b) before giving effect to any deposit to be made or withdrawals
from the Cash Collateral Account with respect to such Payment Date), and (ii)
the Requisite Cash Collateral Amount.
"Available Pledged Revenues" means, as to any Payment Date, the sum of (i)
the Related Collection Period Pledged Revenues for such Payment Date, (ii) all
Purchase Amounts (other than any portion thereof attributable to the Book Value
of the Leased Equipment) on deposit in the Collection Account as of the
immediately preceding Deposit Date, (iii) the amount paid by the Depositor to
purchase the Contracts pursuant to Section __ of the Pooling and Servicing
Agreement on deposit in the Collection Account as of the immediately preceding
Deposit
2
<PAGE>
Date, (iv) all net income from investments of funds in the Collection Account
and the Note Distribution Account during the related Collection Period, and (v)
to the extent necessary to pay the Note Interest Distributable Amount for such
Payment Date, the Current Collection Period Pledged Revenues for such Payment
Date.
"Book Value" means, with respect to any Equipment subject to a Lease, the
value of such Equipment as shown on the accounting books and records of the
applicable Financing Originator (or the Depositor, in the case of Equipment
relating to Contracts being transferred pursuant to the VFC Assignment), as of
the Cutoff Date for the related Lease (it being understood that, Book Value
constitutes a measure of the lessor's residual interest in the Equipment as
shown on its books and records as of such date, net of the financial asset shown
on such books and records represented by the discounted Scheduled Payments owing
on the Lease).
"Business Day" means any day which is neither a Saturday or a Sunday, nor
another day on which banking institutions in the cities of ______________ or New
York, New York are authorized or obligated by law, executive order, or
governmental decree to be closed.
"Business Trust Statute" has the meaning specified in the Trust Agreement.
"Cash Collateral Account" means the Cash Collateral Account established and
maintained pursuant to Section 7.01 hereof
"Cash Collateral Account Agreement" means the Loan Agreement dated as of
June 1, 1999, among the Depositor, the Trust, the Indenture Trustee, the Cash
Collateral Account Lenders and the Cash Collateral Account Lenders' Agent, as
the same may be amended, supplemented or otherwise modified in accordance with
the terms thereof.
"Cash Collateral Account Lenders" means the parties identified as lenders
in the Cash Collateral Account Agreement.
"Cash Collateral Account Lenders' Agent" means the party identified as
agent for the Cash Collateral Account Lenders in the Cash Collateral Account
Agreement.
"Cash Collateral Initial Balance" means $_________, which is equal to ___%
of the Initial Contract Pool Principal Balance.
"Casualty Loss" means, with respect to any item of Equipment, the loss,
theft, damage beyond repair or governmental condemnation or seizure of such item
of Equipment.
"Certificate Register" has the meaning specified in the Trust Agreement.
"Certificateholder" has the meaning specified in the Trust Agreement.
"Class" means any of the group of Notes or the Equity 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 A-5 Notes, the Class B
Notes, the Class C Notes, the Class D Notes, or the Equity Certificate.
"Class A Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes and the Class A-5 Notes.
"Class A Percentage" means [ ]%
"Class A Principal Payment Amount" means:
3
<PAGE>
(A) (i) with respect to any Payment Date on or prior to the
Payment Date on which the Class A-1 Principal Balance is
reduced to zero, the Total Principal Payment Amount;
provided that if, the distribution of the Total Principal
Payment Amount in accordance with Section ________ would
result in the Class A-1 Principal Balance equaling zero, the
Class A Principal Payment Amount with respect to such
Payment Date will be an amount equal to (x) the Class A-1
Principal Balance plus (y) the greater of (1) [ ]% of the
Total Principal Payment Amount or (2) the remainder of (I)
the sum of the Class A-2 Principal Balance, the Class A-3
Principal Balance, the Class A-4 Principal Balance and the
Class A-5 Principal Balance minus (II) the Class A Target
Principal Amount; and
(ii) with respect to any Payment Date thereafter, the
remainder of (a) the sum of the Class A-2 Principal Balance,
the Class A-3 Principal Balance, the Class A-4 Principal
Balance and the Class A-5 Principal Balance minus (b) the
Class A Target Principal Amount; plus
(B) with respect to any Payment Date, any Class A Principal Shortfall
Amount;
provided, however, that in no event will the Class A Principal Payment
Amount exceed the Class A Principal Balance.
"Class A Principal Shortfall Amount" means, with respect to any Payment
Date that is the Stated Maturity Date for a Class of Class A Notes, and any
Payment Date thereafter, the amount, if any, by which (i) the sum of (a) the
Principal Balance of such Class, plus (b) until the Class A-4 Principal Balance
has been reduced to zero, ___% of the Total Principal Payment Amount, exceeds
(ii) the Total Principal Payment Amount.
"Class A Target Principal Amount" means, with respect to any Payment Date,
the product of (i) the Class A Percentage and (ii) the Contract Pool Principal
Balance as of the related Accounting Date.
"Class A-1 Interest Carryover Shortfall" means, with respect to any Payment
Date, the excess, if any, of the Class A-1 Interest Distributable Amount for the
preceding Payment Date over the amount that was actually distributed in respect
of interest on the Class A-1 Notes on such preceding Payment Date, plus, to the
extent permitted by law, an amount equal to the product of (i) the Class A-1
Interest Rate, (ii) such excess, and (iii) a fraction equal to the number of
days in the related Interest Period divided by 360.
"Class A-1 Interest Distributable Amount" means, with respect to any
Payment Date, the sum of the Class A-1 Monthly Interest Distributable Amount and
the Class A-1 Interest Carryover Shortfall for such Payment Date.
"Class A-1 Interest Rate" means [ ]% per annum.
"Class A-1 Interest Distributable Amount" means, with respect to any
Account Period and the related Payment Date, an amount equal to the product of
(i) the Class A-1 Interest Rate, (ii) the Principal Balance of the Class A-1
Notes on the immediately preceding Payment Date, after giving effect to all
payments of principal to Class A-1 Noteholders on or prior to such immediately
preceding Payment Date (or, in the case of the first Payment Date, the Initial
Principal Amount of the Class A-1 Notes), and (iii) a fraction equal to the
number of days in such Interest Period divided by 360.
"Class A-1 Notes" means the $_________ aggregate principal amount of [ ]%
Receivable-Backed Notes, Class A-1, issued pursuant to the Indenture.
4
<PAGE>
"Class A-1 Maturity Date" means [ ] (or, if such day is not a
Business Day, the next preceding Business Day).
"Class A-2 Interest Carryover Shortfall" means, with respect to any Payment
Date, the excess, if any, of the Class A-2 Interest Distributable Amount for the
preceding Payment Date over the amount that was actually distributed in respect
of interest on the Class A-2 Notes on such preceding Payment Date, plus, to the
extent permitted by law, an amount equal to the product of (i) the Class A-2
Interest Rate, (ii) such excess, and (iii) a fraction equal to one-twelfth.
"Class A-2 Interest Distributable Amount" means, with respect to any
Payment Date, the sum of the Class A-2 Monthly Interest Distributable Amount and
the Class A-2 Interest Carryover Shortfall for such Payment Date.
"Class A-2 Interest Rate" means [ ]% per annum.
"Class A-2 Interest Distributable Amount" means (a) with respect to the
first Interest Period and the related Payment Date, an amount equal to the
product of (i) the Class A-2 Interest Rate, (ii) the Initial Principal Amount of
the Class A-2 Notes, and (iii) a fraction equal to 28 divided by 360, and (b)
with respect to each subsequent Accrual Period and the related Payment Date, an
amount equal to the product of (i) the Class A-2 Interest Rate, (ii) the
Principal Balance of the Class A-2 Notes on the immediately preceding Payment
Date, after giving effect to all payments of principal to Class A-2 Noteholders
on or prior to such immediately preceding Payment Date, and (iii) a fraction
equal to one-twelfth.
"Class A-2 Notes" means the $______ aggregate principal amount of [ ]%
Receivable-Backed Notes, Class A-2, issued pursuant to the Indenture.
"Class A-2 Maturity Date" means [ ] (or, if such day is not a
Business Day, the next succeeding Business Day thereafter).
"Class A-3 Interest Carryover Shortfall" means, with respect to any Payment
Date, the excess, if any, of the Class A-3 Interest Distributable Amount for the
preceding Payment Date over the amount that was actually distributed in respect
of interest on the Class A-3 Notes on such preceding Payment Date, plus, to the
extent permitted by law, an amount equal to the product of (i) the Class A-3
Interest Rate, (ii) such excess, and (iii) a fraction equal to one-twelfth.
"Class A-3 Interest Distributable Amount" means, with respect to any
Payment Date, the sum of the Class A-3 Monthly Interest Distributable Amount and
the Class A-3 Interest Carryover Shortfall for such Payment Date.
"Class A-3 Interest Rate" means [ ]% per annum.
"Class A-3 Monthly Interest Distributable Amount" means (a) with respect to
the first Accrual Period and the related Payment Date, an amount equal to the
product of (i) the Class A-3 Interest Rate, (ii) the Initial Principal Amount of
the Class A-3 Notes, and (iii) a fraction equal to 28 divided by 360, and (b)
with respect to each subsequent Accrual Period and the related Payment Date, an
amount equal to the product of (i) the Class A-3 Interest Rate, (ii) the
Principal Balance of the Class A-3 Notes on the immediately preceding Payment
Date, after giving effect to all payments of principal to Class A-3 Noteholders
on or prior to such immediately preceding Payment Date, and (iii) a fraction
equal to one-twelfth.
"Class A-3 Notes" means the $______ aggregate principal amount of [ ]%
Receivable-Backed Notes, Class A-3, issued pursuant to the Indenture.
"Class A-3 Maturity Date" means [ ] (or, if such day is not a
Business Day, the next succeeding Business Day thereafter).
5
<PAGE>
"Class A-4 Interest Carryover Shortfall" means, with respect to any Payment
Date, the excess, if any, of the Class A-4 Interest Distributable Amount for the
preceding Payment Date over the amount that was actually distributed in respect
of interest on the Class A-4 Notes on such preceding Payment Date, plus, to the
extent permitted by law, an amount equal to the product of (i) the Class A-4
Interest Rate, (ii) such excess, and (iii) a fraction equal to one-twelfth.
"Class A-4 Interest Distributable Amount" means, with respect to any
Payment Date, the sum of the Class A-4 Monthly Interest Distributable Amount and
the Class A-4 Interest Carryover Shortfall for such Payment Date.
"Class A-4 Interest Rate" means [ ]% per annum.
"Class A-4 Monthly Interest Distributable Amount" means (a) with respect to
the first Accrual Period and the related Payment Date, an amount equal to the
product of (i) the Class A-4 Interest Rate, (ii) the Initial Principal Amount of
the Class A-4 Notes, and (iii) a fraction equal to 28 divided by 360, and (b)
with respect to each subsequent Accrual Period and the related Payment Date, an
amount equal to the product of (i) the Class A-4 Interest Rate, (ii) the
Principal Balance of the Class A-4 Notes on the immediately preceding Payment
Date, after giving effect to all payments of principal to Class A-4 Noteholders
on or prior to such immediately preceding Payment Date, and (iii) a fraction
equal to one-twelfth.
"Class A-4 Notes" means the $______ aggregate principal amount of [ ]%
Receivable-Backed Notes, Class A-4, issued pursuant to the Indenture.
"Class A-4 Maturity Date" means [ ] (or, if such day is not a
Business Day, the next succeeding Business Day thereafter).
"Class A-5 Interest Carryover Shortfall" means, with respect to any Payment
Date, the excess, if any, of the Class A-5 Interest Distributable Amount for the
preceding Payment Date over the amount that was actually distributed in respect
of interest on the Class A-5 Notes on such preceding Payment Date, plus, to the
extent permitted by law, an amount equal to the product of (i) the Class A-5
Interest Rate, (ii) such excess, and (iii) a fraction equal to one-twelfth.
"Class A-5 Interest Distributable Amount" means, with respect to any
Payment Date, the sum of the Class A-5 Monthly Interest Distributable Amount and
the Class A-5 Interest Carryover Shortfall for such Payment Date.
"Class A-5 Interest Rate" means [ ]%.
"Class A-5 Monthly Interest Distributable Amount" means (a) with respect to
the first Accrual Period and the related Payment Date, an amount equal to the
product of (i) the Class A-5 Interest Rate, (ii) the Initial Principal Amount of
the Class A-5 Notes, and (iii) a fraction equal to 28 divided by 360, and (b)
with respect to each subsequent Accrual Period and the related Payment Date, an
amount equal to the product of (i) the Class A-5 Interest Rate, (ii) the
Principal Balance of the Class A-5 Notes on the immediately preceding Payment
Date, after giving effect to all payments of principal to Class A-5 Noteholders
on or prior to such immediately preceding Payment Date, and (iii) a fraction
equal to one-twelfth.
"Class A-5 Notes" means the $______ aggregate principal amount of [ ]%
Receivable-Backed Notes, Class A-5, issued pursuant to the Indenture.
"Class A-5 Maturity Date" means [ ] (or, if such day is not a
Business Day, the next succeeding Business Day thereafter).
"Class B Floor" means, with respect to any Payment Date, (i) [ ]% of the
Contract Pool Principal Balance as of the Initial Cutoff Date, plus (ii) the
Principal Differential, if any, for such Payment Date, minus (iii)
6
<PAGE>
the sum of the Class C Principal Balance and the Class D Principal Balance
(prior to giving effect to any payments of principal on the Class C or Class D
Notes on such Payment Date) and the amount on deposit in the Cash Collateral
Account (after giving effect to withdrawals to be made on such Payment Date);
provided, however, that in no event will the Class B Floor be greater than the
Class B Principal Balance immediately prior to such Payment Date nor less than
zero.
"Class B Interest Carryover Shortfall" means, with respect to any Payment
Date, the excess, if any, of the Class B Interest Distributable Amount for the
preceding Payment Date over the amount that was actually distributed in respect
of interest on the Class B Notes on such preceding Payment Date, plus, to the
extent permitted by law, an amount equal to the product of (i) the Class B
Interest Rate, (ii) such excess, and (iii) a fraction equal to one-twelfth.
"Class B Interest Distributable Amount" means, with respect to any Payment
Date, the sum of the Class B Monthly Interest Distributable Amount and the Class
B Interest Carryover Shortfall for such Payment Date.
"Class B Interest Rate" means [ ]% per annum.
"Class B Monthly Interest Distributable Amount" means (a) with respect to
the first Accrual Period and the related Payment Date, an amount equal to the
product of (i) the Class B Interest Rate, (ii) the Initial Principal Balance of
the Class B Notes, and (iii) a fraction equal to 28 divided by 360, and (b) with
respect to each subsequent Accrual Period and the related Payment Date Payment
Date, an amount equal to the product of (i) the Class B Interest Rate, (ii) the
Principal Balance of the Class B Notes on the immediately preceding Payment
Date, after giving effect to all payments of principal to Class B Noteholders on
or prior to such immediately preceding Payment Date, and (iii) a fraction equal
to one-twelfth.
"Class B Notes" means the $______ aggregate principal amount of [ ]%
Receivable-Backed Notes, Class B, issued pursuant to the Indenture.
"Class B Percentage" means [ ]%.
"Class B Principal Payment Amount" means (i) zero with respect to any
Payment Date prior to the Payment Date on which the Class A-1 Principal Balance
is reduced to zero, and (ii) with respect to any Payment Date thereafter, the
excess, if any, of (a) the Class B Principal Balance over (b) the greater of (1)
the Class B Target Principal Amount and (2) the Class B Floor, if any; provided,
however, that in no event will the Class B Principal Payment Amount exceed the
Class B Principal Balance.
"Class B Maturity Date" means [ ] (or, if such day is not a
Business Day, the next succeeding Business Day thereafter).
"Class B Target Principal Amount " means, with respect to any Payment Date,
the product of (i) the Class B Percentage and (ii) the Contract Pool Principal
Balance as of the related Accounting Date.
"Class C Floor" means, with respect to any Payment Date, (i) [ ]% of the
Contract Pool Principal Balance as of the Initial Cutoff Date, plus (ii) the
Principal Differential, if any, for such Payment Date, minus (iii) the sum of
the Class D Principal Balance (prior to giving effect to any payments of
principal on the Class D Notes on such Payment Date) and the amount on deposit
in the Cash Collateral Account (after giving effect to withdrawals to be made on
such Payment Date); provided, however, that in no event will the Class C Floor
be greater than the Class C Principal Balance immediately prior to such Payment
Date nor less than zero. Furthermore, if the Class B Principal Balance
immediately prior to any Payment Date is less than or equal to the Class B Floor
for such Payment Date, the Class C Floor with respect to such Payment Date will
equal the Class C Principal Balance immediately prior to such Payment Date.
7
<PAGE>
"Class C Interest Carryover Shortfall" means, with respect to any Payment
Date, the excess, if any, of the Class C Interest Distributable Amount for the
preceding Payment Date over the amount that was actually distributed in respect
of interest on the Class C Notes on such preceding Payment Date, plus, to the
extent permitted by law, an amount equal to the product of (i) the Class C
Interest Rate, (ii) such excess, and (iii) a fraction equal to one-twelfth.
"Class C Interest Distributable Amount" means, with respect to any Payment
Date, the sum of the Class C Monthly Interest Distributable Amount and the Class
C Interest Carryover Shortfall for such Payment Date.
"Class C Interest Rate" means [ ]% per annum.
"Class C Monthly Interest Distributable Amount" means (a) with respect to
the first Accrual Period and the related Payment Date, an amount equal to the
product of (i) the Class C Interest Rate, (ii) the Initial Principal Amount of
the Class C Notes, and (iii) a fraction equal to 28 divided by 360, and (b) with
respect to each subsequent Accrual Period and the related Payment Date, an
amount equal to the product of (i) the Class C Interest Rate, (ii) the Principal
Balance of the Class C Notes on the immediately preceding Payment Date, after
giving effect to all payments of principal to Class C Noteholders on or prior to
such immediately preceding Payment Date, and (iii) a fraction equal to
one-twelfth.
"Class C Notes" means the $______ aggregate principal amount of [ ]%
Receivable-Backed Notes, Class C, issued pursuant to the Indenture.
"Class C Percentage" means [ ]%.
"Class C Principal Payment Amount" means (i) zero with respect to any
Payment Date prior to the Payment Date on which the Class A-1 Principal Balance
is reduced to zero, and (ii) with respect to any Payment Date thereafter, the
excess, if any, of (a) the Class C Principal Balance over (b) the greater of (1)
the Class C Target Principal Amount and (2) the Class C Floor, if any; provided,
however, that in no event will the Class C Principal Payment Amount exceed the
Class C Principal Balance.
"Class C Maturity Date" means [ ] (or, if such day is not a
Business Day, the next succeeding Business Day thereafter).
"Class C Target Principal Amount" means, with respect to any Payment Date,
the product of (i) the Class C Percentage and (ii) the Contract Pool Principal
Balance as of the related Accounting Date.
"Class D Floor" means, with respect to any Payment Date, (i) [ ]% of the
Contract Pool Principal Balance as of the Initial Cutoff Date, plus (ii) the
Principal Differential, if any, for such Payment Date, minus (iii) the amount on
deposit in the Cash Collateral Account (after giving effect to withdrawals to be
made on such Payment Date); provided, however, that in no event will the Class D
Floor be greater than the Class D Principal Balance immediately prior to such
Payment Date nor less than zero. Furthermore, if the Class C Principal Balance
immediately prior to any Payment Date is less than or equal to the Class C Floor
for such Payment Date, the Class D Floor with respect to such Payment Date will
equal the Class D Principal Balance immediately prior to such Payment Date.
"Class D Interest Carryover Shortfall" means, with respect to any Payment
Date, the excess, if any, of the Class D Interest Distributable Amount for the
preceding Payment Date over the amount that was actually distributed in respect
of interest on the Class D Notes on such preceding Payment Date, plus, to the
extent permitted by law, an amount equal to the product of (i) the Class D
Interest Rate, (ii) such excess, and (iii) a fraction equal to one-twelfth.
8
<PAGE>
"Class D Interest Distributable Amount" means, with respect to any Payment
Date, the sum of the Class D Monthly Interest Distributable Amount and the Class
D Interest Carryover Shortfall for such Payment Date.
"Class D Interest Rate" means [ ]% per annum.
"Class D Monthly Interest Distributable Amount" means (a) with respect to
the first Accrual Period and the related Payment Date, an amount equal to the
product of (i) the Class D Interest Rate, (ii) the Initial Principal Amount of
the Class D Notes, and (iii) a fraction equal to 28 divided by 360, and (b) with
respect to each subsequent Accrual Period and the related Payment Date Payment
Date, an amount equal to the product of (i) the Class D Interest Rate, (ii) the
Principal Balance of the Class D Notes on the immediately preceding Payment
Date, after giving effect to all payments of principal to Class D Noteholders on
or prior to such immediately preceding Payment Date, and (iii) a fraction equal
to one-twelfth.
"Class D Notes" means the $______ aggregate principal amount of [ ]%
Receivable-Backed Notes, Class D, issued pursuant to the Indenture.
"Class D Percentage" means [ ] %.
"Class D Principal Payment Amount" means (i) zero with respect to any
Payment Date prior to the Payment Date on which the Class A-1 Principal Balance
is reduced to zero, and (ii) with respect to any Payment Date thereafter, the
excess, if any, of (a) the Class D Principal Balance over (b) the greater of (1)
the Class D Target Principal Amount and (2) the Class D Floor, if any; provided,
however, that in no event will the Class D Principal Payment Amount exceed the
Class D Principal Balance.
"Class D Maturity Date" means [ ] (or, if such day is not a
Business Day, the next succeeding Business Day thereafter).
"Class D Target Principal Amount" means, with respect to any Payment Date,
the product of (i) the Class D Percentage and (ii) the Contract Pool Principal
Balance as of the related Accounting Date.
"Certificate of Formation" means the limited liability company Certificate
of Formation of the Depositor.
"Certificate of Trust" has the meaning given such term in the Trust
Agreement.
"Certificate Register" has the meaning specified in the Trust Agreement.
"Closing Date" means ____ __, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Account" means the account so designated established pursuant
to Section 7.01.
"Collection Account Property" means the Collection Account, all amounts and
investments held from time to time in the Collection Account (whether in the
form of deposit accounts, physical property, book-entry securities,
uncertificated securities or otherwise), and all proceeds of the foregoing.
"Collection Period" means a period beginning on the first day of a calendar
month and ending on, but not including, the first day of the next calendar
month, provided that the first Collection Period shall be the period beginning
on the Initial Cutoff Date and ending on, but not including, the first day of
the calendar month immediately following the calendar month in which the Closing
Date occurs.
"Commission" means the United States Securities and Exchange Commission.
9
<PAGE>
"Computer Disk" means the computer disk generated by the Servicer (or
applicable Financing Originator acting as subservicer as described in Section
5.05), which provides information relating to Contracts in the Contract Pool and
which was used by such party in selecting the related Contracts for conveyance
and inclusion in such Contract Pool, and includes the master file and the
history file as well as servicing information with respect to such Contracts.
"Contract" means each End-User Contract and each Vendor Loan listed on any
Schedule of Contracts but, unless otherwise specified herein, shall not refer to
any Secondary Contract.
"Contract Assets" means, with respect to any Contracts (including
Substitute Contracts) and related assets conveyed or being conveyed to the
Depositor pursuant to the Purchase and Sale Agreement, a Substitution Assignment
Agreement executed thereunder or the VFC Assignment, and concurrently conveyed
or being conveyed by the Depositor to the Trust pursuant to this Pooling
Agreement or a Substitution Transfer Agreement, all right, title and interest of
NFUSA or the VFC Trust, as the case may be, in, to and under:
(i) such Contracts, and all monies due or to become due in payment of
such Contracts on and after the relevant Cutoff Date, and including
Scheduled Payments due but not yet received prior to the relevant Cutoff
Date and all other Scheduled Payments (including in respect of any
Guaranteed Residual Investment) due or becoming due on or after the
relevant Cutoff Date, any Prepayments, any payments in respect of a
casualty or early termination, any Liquidation Proceeds received with
respect thereto, but excluding any Scheduled Payments both due and actually
received prior to the related Cutoff Date and any Excluded Amounts;
(ii) the Financed Items 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 Financed Items (but subject to the
exclusion and release herein of Excluded Amounts) and any Guaranteed
Residual Investment;
(iii) the related Contract Files;
(iv) all payments made or to be made in the future with respect to
such Contracts or the Obligor thereunder under any Vendor Agreements with
the relevant Financing 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) the Conveyancing Agreement (but solely with respect to TCC
Contract Assets conveyed to NFUSA thereunder constituting Contract Assets),
including (A) all rights of NFUSA to receive moneys due and to become due
under or in respect of such Contract Assets pursuant to the Conveyancing
Agreement, (B) all rights of NFUSA to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to TCC Contract Assets
conveyed to NFUSA thereunder constituting Contract Assets, (C) all claims
of NFUSA for damages arising out of or for breach of or default under the
Conveyancing Agreement to the extent relating to TCC Contract Assets
conveyed to NFUSA thereunder constituting Contract Assets, and (iv) the
right of NFUSA to amend, waive or terminate the Conveyancing Agreement, to
compel performance and otherwise exercise remedies and rights thereunder,
in each case with respect to or as applicable to TCC Contract Assets
conveyed thereunder constituting Contract Assets; and
(vii) all income from and proceeds of the foregoing.
"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 or electronic entries,
if any, that the Servicer (or
10
<PAGE>
applicable Financing Originator) keeps on file in accordance with Customary
Policies and Procedures evidencing ownership of such Equipment (if applicable),
and all other documents originally delivered to the Financing Originator or held
by the Servicer (or subservicer under Section 5.05) with respect to any
Contract.
"Contract Pool" means, as of any date of determination, the aggregate of
the Contracts which have been conveyed to the Trust and which constitute as of
such date Trust Assets under the terms and provisions hereof.
"Contract Pool Principal Balance" means with respect to any Payment Date,
the sum of the Contract Principal Balances (computed as of the related
Accounting Date) for all Contracts.
"Contract Principal Balance" means as of any Accounting Date, with respect
to any Contract the present value of the unpaid Scheduled Payments due on such
Contract after such Accounting Date (excluding all Scheduled Payments due on or
prior to, but not received as of, such Accounting Date, as well as any Scheduled
Payments due after, but received as of, such Accounting Date), after giving
effect to any Prepayments received on or prior to such Accounting Date,
discounted monthly at the Discount Rate (assuming, for purposes of such
calculation, that each Scheduled Payment is due on the last day of the
applicable Collection Period); provided that, for purposes of computing the
Total Principal Payment Amount or the Required Cash Collateral Amount for a
given Payment Date (as well as all Payment Dates thereafter), the Contract
Principal Balance of any Contract which became a Defaulted Contract during the
related Collection Period or was required to be purchased by NFUSA as of the
last day of the related Collection Period in accordance with Section 5.01 of the
Purchase and Sale Agreement, will be deemed to be zero on and after the last day
of such Collection Period.
"Controlled Group" means all members of a controlled group of corporations
or other business entities and all trades or businesses (whether or not
incorporated) under common control which, together with the Servicer or any of
its Subsidiaries, are treated as a single employer under Section 414 of the
Code.
"Conveyancing Agreement" means the Conveyancing Agreement dated as of
______, 1999 among the TCC Financing Originators and NFUSA, as the same may be
amended, supplemented, restated or otherwise modified from time to time.
"Corporate Trust Office" means the office of the Owner Trustee at which its
corporate trust business shall be administered, which initially shall be
_________, or such other office at such other address in the State of _________
as the Owner Trustee may designate from time to time by notice to the
Certificateholder, the Servicer, the Administrative Agent and the Depositor.
"CPR" means a conditional prepayment rate which assumes that a fraction of
the outstanding Contract Pool is prepaid on each Payment Date and also assumes
that all Contracts have the same initial principal balance and amortize at the
same rate.
"CSA" means each conditional sales agreement, including, as applicable,
schedules, subschedules, supplements and amendments to a master conditional
sales agreement, pursuant to which specified assets were conditionally sold to
an Obligor at specified monthly, quarterly, semi-annual or annual payments.
"Current Collection Period Pledged Revenues" means, with respect to any
Payment Date, the amount of Pledged Revenues in the Collection Account as of the
immediately preceding Deposit Date which were received by the Servicer after the
end of the related Collection Period, including all Liquidation Proceeds so
received but excluding any Purchase Amount.
"Customary Policies and Procedures" means, with respect to any Contract
Assets, the customary standards, policies and procedures of the relevant
Financing Originator with respect to such Contract Assets in effect at the time
of the Cutoff Date with respect thereto, as the same may be changed from time to
time (provided that any
11
<PAGE>
such change does not materially impair (i) the collectibility of the related
Contract, or (ii) the Servicer's ability to perform its obligations under this
Agreement with respect thereto).
"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 Pledged
Revenue, the date on which such transaction or Pledged Revenue is first recorded
(and, in the case of a transaction or Pledged Revenue related to a particular
Contract, identified as to such particular Contract) on the related Financing
Originator's or the Servicer's computer master file of Contracts (without regard
to the effective date of such recordation).
"Defaulted Contract" means a Contract in the Contract 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 (constituting at least ten percent
(10%) of such Scheduled Payment due) is more than 180 days delinquent from its
original due date (or, with respect to a Contract for which there exists
available payment recourse to a Vendor to satisfy the amount in default, and
which recourse was not yet available (pursuant to the contractual terms thereof)
or had not yet been paid by the Vendor prior to the end of such 180 day period,
then at such time thereafter as the Vendor shall have failed to pay such
defaulted amount in accordance with the provisions of the Program Agreement,
Vendor Assignment or other agreement with the Vendor providing such recourse),
(ii) the Servicer has determined in its sole discretion, in accordance with
Customary Policies and Procedures (and taking into account any available Vendor
recourse), that such Contract is not collectible; or (iii) the End-User under
such Contract (or applicable Vendor, if such Contract is a Vendor Loan) becomes
the subject of an Insolvency Event.
"Delinquent Contract" means any Contract as to which all or a portion of a
Scheduled Payment (constituting at least ten percent (10%) of such Scheduled
Payment due) is more than 60 days delinquent from its original due date.
"Deposit Date" means the Business Day immediately preceding each Payment
Date.
"Depositor" means the "Depositor" as defined in the preamble hereto, or any
successor entity thereto.
"Determination Date" means, with respect to any Payment Date, the second
Business Day prior to such Payment Date.
"Discount Rate" means [ ]%.
"Dollar" and "$" means lawful currency of the United States of America.
"Duff & Phelps" means Duff & Phelps Credit Rating Co. or any successor
thereto.
"Eligible Contract" means each Contract owned (prior to its conveyance by a
TCC Financing Originator to NFUSA under the Conveyancing Agreement if a TCC
Contract, prior to its conveyance by NFUSA to the Depositor under the Purchase
and Sale Agreement if an NFUSA Contract, and prior to its conveyance by the VFC
Trust to the Depositor pursuant to the VFC Assignment, if a VFC Contract) by an
Eligible Originator or the VFC Trust, and with respect to which each of the
following is true (to the extent applicable to such type of Contract) at the
time of its conveyance to the Trust on the Closing Date (or Substitution
Transfer Date, as applicable):
(a) the information with respect to the Contract, any Secondary
Contract securing the obligations under such Contract, and the Financed
Items related to the Contract, delivered to the Administrative Agent by or
at the direction of NFUSA under the Purchase and Sale Agreement or by or at
the direction of the VFC Trust pursuant to the VFC Assignment is true and
correct in all material respects;
12
<PAGE>
(b) immediately prior to the transfer of such Contract and any related
Equipment (or security interest therein) or Applicable Security to the
Depositor (and the Depositor's concurrent transfer thereof to the Trust),
such Contract was owned by NFUSA or the VFC Trust (and by the Depositor
following the transfer by NFUSA or the VFC Trust) free and clear of any
adverse claim, other than Permitted Liens; and immediately prior to the
transfer of such Contract (if a TCC Contract) and any related Equipment (or
security interest therein) or Applicable Security by the applicable TCC
Financing Originator to NFUSA, such Contract was owned by the applicable
TCC Financing Originator free and clear of any adverse claim, other than
with respect to Permitted Liens;
(c) the Contract is neither a Defaulted Contract nor a Delinquent
Contract;
(d) no provision of the Contract has been waived, altered or modified
in any material respect, except as indicated in the Contract File;
(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 subject to litigation, or to rights of
rescission, setoff, counterclaim or defense and, to NFUSA's or the
Servicer's knowledge, no such rights have been asserted or threatened with
respect to the Contract;
(g) the Contract, at the time it was made, had been originated in
compliance (in all material respects) with applicable law, and did not
violate the laws of the United States or any state in any material respect;
(h) (i) the Contract and any related Financed Item or interest therein
(other than Excluded Residual Investments) have not been sold, transferred,
assigned or pledged by the relevant Financing Originator, NFUSA (in respect
of TCC Contracts) or the VFC Trust to any other Person (other than (a) the
sale of Contracts and any related financed or interest therein to NFUSA or
to the Depositor and then the VFC Trust and (b) the financed sale of
Equipment to an End-User effected through an End-User Contract), and (ii)
if such Contract finances Equipment, either (A) such Contract is secured by
a fully perfected lien or ownership interest in favor of the relevant
Financing Originator or, in the case of Equipment relating to the VFC
Contracts, the Depositor, on or in respect of the related Equipment (other
than as contemplated by the Minimum Value Filing Exception), or, if the
Contract is a Vendor Loan, the Vendor Loan is secured by a fully perfected
lien or ownership interest in favor of the relevant Financing Originator or
the VFC Trust in the related Applicable Security, or (B) in the case of
such a Contract secured by a Vehicle, within 90 calendar days of the
origination or acquisition of such Contract by the relevant Financing
Originator all applicable state registration or recording procedures were
initiated, and the Financing Originator's interest in such Vehicle will be
so noted or recorded within 180 days of such acquisition or origination, or
a certificate of title or similar evidence of recordation on which the
Financing Originator's interest has been noted has been obtained;
(i) if the Contract constitutes an "instrument" or "chattel paper" for
purposes of the UCC, there is not more than one "secured party's original"
counterpart of the Contract and such original counterpart is in the
Contract File;
(j) all filings (including filings of UCC financing statements)
necessary (i) in respect of Contracts consisting of TCC Contracts, to
evidence or perfect the conveyance or transfer of the relevant TCC
Financing Originator's ownership interest in the TCC Contract, and the TCC
Financing Originator's corresponding interest in the related Equipment or
Applicable Security, as applicable, to NFUSA, and (ii) in respect of all
Contracts (i.e., Contracts consisting of either TCC Contracts, NFUSA
Contracts or VFC Contracts), to evidence or perfect the conveyance or
transfer of NFUSA's or VFC Trust's ownership
13
<PAGE>
interest in the Contract, and NFUSA's corresponding interest in the related
Equipment or Applicable Security, as applicable, to the Depositor (as well
as the concurrent conveyance of such property hereunder, other than
ownership interests in Equipment, from the Depositor to the Trust), have
been made in all appropriate jurisdictions; provided, that UCC financing
statement filings with respect to Equipment or Applicable Security which
name the Financing Originator as secured party have not been amended to
indicate either NFUSA (with respect to TCC Contracts), the Depositor or the
Trust as an assignee (although separate UCC filings were made against the
relevant Financing Originator's interest in Applicable Security in each
jurisdiction where a related Vendor is located); and provided further, that
only filings in the States of New Jersey and _________ have been made in
favor of the Trust as secured party against the Depositor as debtor
describing as collateral (among other things) the Depositor's ownership
interest in Equipment, in respect of the security interest in Equipment
owned by the Depositor which has been granted to the Trust pursuant to
Section 2.01 hereof.
(k) the Obligor is not, to NFUSA's knowledge, subject to bankruptcy or
other insolvency proceedings;
(l) the Obligor's billing address is in the United States or Puerto
Rico, and the Contract is a U.S. dollar-denominated obligation;
(m) the Contract does not require the prior written notification to or
consent of an Obligor or contain any other restriction on the transfer or
assignment of the Contract, other than (i) certain Contracts the Contract
Pool Principal Balance of which, in proportion to the Contract Pool
Principal Balance of all Contracts in the Contract Pool at the time of
conveyance, is not material, that require notifications of the assignment
to the Obligor, which notification will be given by the Servicer not more
than 10 days following the Closing Date (or Substitution Transfer Date in
the case of a Substitution Contract) (it being understood that if such
notifications are not so timely obtained, the affected Contract shall be
deemed and treated for all purposes of this Pooling Agreement and the other
Transaction Documents as not having complied with this criteria for an
Eligible Contract as of the Closing Date or Substitution Transfer Date, as
the case may be), and (ii) certain Contracts that require the consent of
the related Obligor, which consent shall have been obtained by the Servicer
not later than 10 days following the Closing Date or Substitution Transfer
Date, as the case may be;
(n) either (x) the obligations of the related Obligor under such
Contract are irrevocable and unconditional and non-cancelable (it being
understood that Contracts which are prepayable in accordance with their
terms shall not, by virtue of that fact alone, be deemed revocable,
conditional or cancelable) or, if not irrevocable and unconditional, have
the benefit of a Vendor Guarantee or (y) with respect to certain Leases
with Lessees that are governmental entities or municipalities, if such
Lease is canceled in accordance with its terms, either (1) the Vendor that
assigned such Lease to the applicable Financing Originator is
unconditionally obligated to repurchase such lease from the Financing
Originator for a purchase price not less than the Contract Principal
Balance of such Lease (as of the date of cancellation), or (2) pursuant to
the Purchase and Sale Agreement, NFUSA has indemnified the Depositor
against such cancellation in an amount at least equal to the Contract
Principal Balance of such Lease (as of the date of cancellation), less any
amounts paid by the Vendor pursuant to clause (1);
(o) no selection procedure adverse to the interests of the Trust or
the Equity Certificateholder was used in selecting the Contract for the
Contract Pool;
(p) the Obligor under the Contract is required to maintain casualty
insurance or to self-insure with respect to the related Equipment in
accordance with Customary Policies and Procedures;
(q) the Contract constitutes chattel paper, an account, an instrument
or a general intangible, in each case as defined under the UCC;
14
<PAGE>
(r) the Contract is not a "consumer lease" as defined in Section
2A-103(1)(e) of the UCC;
(s) if such Contract is a Lease, to the best knowledge of the relevant
Financing Originator, the Lessee thereunder has accepted and has had
reasonable opportunity to inspect the related Equipment;
(t) except as provided in clause (n) above, the Contract is not
subject to any guarantee by the Financing Originator, nor has the Financing
Originator established any specific credit reserve with respect to the
related Obligor;
(u) if such Contract is a Lease, such Lease is a "triple net lease"
under which the Obligor is responsible for the maintenance, taxes and
insurance with respect to the related Equipment in accordance with general
industry standards applicable to such item of Equipment;
(v) 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 (determined as of the relevant
Cutoff Date for such Vendor Loan) not less than the outstanding principal
amount of such Vendor Loan (assuming the interest rate specified in such
Vendor Loan is the "Sale Discount Rate" for purposes of calculating such
Discounted Contract Balance);
(w) such Contract is not an obligation of the United States of America
or an agency, department, or instrumentality of the United States of
America;
(x) such Contract contains provisions customary to similar financing
agreements for Financed Items, which provisions are sufficient and
enforceable (except as may be limited by applicable Insolvency Laws and the
availability of equitable remedies) to enable the relevant Financing
Originator (or its assignees, including the VFC Trust, the Depositor and
the Trust) to realize against the Financed Items related thereto (to the
extent such Financed Items secure or support the payment of the Contract);
(y) if the Obligor in respect of such Contract is a state or local
governmental entity or municipality, the conveyance of such a Contract
under and pursuant to the Transaction Documents does not violate applicable
state or municipal laws or regulations (if any) restricting or prohibiting
the assignment of claims against or obligations of such Obligor.
"Eligible Investments" means negotiable instruments or securities or other
investments (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 the ownership of
which is represented by book entries by a Clearing Agency or by a Federal
Reserve Bank in favor of depository institutions eligible to have an account
with such Federal Reserve Bank who hold such investments on behalf of their
customers, (b) which, as of any date of determination, mature by their terms on
or prior to the Payment Date immediately following such date of determination
(or mature on such other Business Day as the Rating Agencies may approve), and
(c) which evidence:
(i) direct obligations of, and obligations fully guaranteed as to full
and timely payment by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and
credit of the United States of America);
(ii) demand deposits, time deposits or certificates of deposit of
depository institutions or trust companies incorporated under the laws of
the United States of America or any state thereof and subject to
supervision and examination by federal or state banking or depository
institution authorities; provided, however, that at the time of the Trust's
investment or contractual commitment to invest therein, the commercial
paper, if any, and short-term unsecured debt obligations (other than such
obligation whose rating is based on the credit of a Person other than such
institution or trust company) of such depository institution or trust
company shall have a credit rating from each of Standard & Poor's and
Moody's (and
15
<PAGE>
Duff & Phelps, but only if Duff & Phelps has issued a rating thereon) in
the Highest Required Investment Category granted by such Rating Agency;
(iii) commercial paper, or other short term obligations, having, at
the time of the Trust's investment or contractual commitment to invest
therein, a rating in the Highest Required Investment Category granted by
each of Standard & Poor's and Moody's (and Duff & Phelps, but only if Duff
& Phelps has issued a rating thereon);
(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 of Standard & Poor's and
Moody's (and Duff & Phelps, but only if Duff & Phelps has issued a rating
thereon) or having otherwise been approved in writing by each Rating
Agency;
(vii) time deposits with 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 of Standard & Poor's and Moody's (and Duff & Phelps, but only if Duff
& Phelps has issued a rating thereon);
(viii) Eligible Repurchase Obligations; and
(ix) any other negotiable instruments or securities or other
investments in which the investment by the Trust therein has been approved
in writing by each Rating Agency.
"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 Financing Originator of the Contract) and (w) thereof, and except that
the term "Obligor" shall mean "End-User" in all such criteria;
(ii) with respect to which Secondary Contract and the proceeds thereof
the relevant Financing Originator (or, in the case of VFC Contracts, the
VFC Trust, as assignee) has a duly perfected first priority lien; and
(iii) with respect to which (A) if such Secondary Contract secures a
Vendor Loan constituting a TCC Contract, the transfer of the TCC Financing
Originator's security interest in such Secondary Contract and the proceeds
thereof to NFUSA, the transfer of NFUSA's interest so acquired to the
Depositor, and, if applicable, the Depositor's transfer of its interest
therein to the VFC Trust and the VFC Trust's transfer of such interest back
to the Depositor, is effective to create in favor of the Depositor a lien
therein and such lien has been duly perfected, or (B) if the Secondary
Contract instead secures a Vendor Loan constituting an NFUSA Contract, then
the transfer of NFUSA's security interest in such Secondary
16
<PAGE>
Contract and the proceeds thereof to the Depositor, and if applicable, the
Depositor's transfer of its interest therein to the VFC Trust and the VFC
Trust's transfer of such interest back to the Depositor, is effective to
create in favor of the Depositor a lien therein and such lien has been duly
perfected.
"End-User" shall mean any party that uses the Financed Items 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 by an Originator.
"Equipment" means with respect to any Contract, the tangible assets
constituting "goods" within the meaning of the UCC, in each case financed or
leased by an Obligor pursuant to a Contract, or which otherwise provide security
for the payment of amounts payable thereunder.
"Equity Certificate" has the meaning specified in the Trust Agreement.
"Equity Certificateholder" means the Person in whose name the Equity
Certificate is registered in the Certificate Register.
"Event of Default" has the meaning specified in the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"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 Contract
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, (iii) collections relating to
security deposits, and (iv) collections representing Late Charges, documentation
fees, administrative charges or extension fees on any Contract, or maintenance
premiums in respect of related Equipment.
"Excluded Residual Investments" means Residual Investments, other than
Guaranteed Residual Investments.
"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
Customary Policies and Procedures of the applicable Financing Originator.
"Financing Agreement" means each financing agreement covering Financed
Items, other than a CSA, a Secured Note, a Lease or an IPA.
"Financing Originator" means any of the following as of the Closing Date:
Newcourt Commercial Finance Corporation (f.k.a. AT&T Commercial Finance
Corporation); Newcourt Leasing Corporation (f.k.a. AT&T Capital Leasing
Services, Inc.); Newcourt Communications Finance Corporation; and NFUSA.
"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.
17
<PAGE>
"Guaranteed Residual Investment" means each Residual Investment with
respect to which the Financing Originator may look to either the Vendor or to
the related Obligor on an End-User Contract constituting a Lease, and not just
the value of the related Equipment itself, to recover its full Residual
Investment.
"Highest Required Investment Category" means (i) with respect to ratings
assigned by S&P, A-1+ for short-term instruments and AAA for long-term
instruments, (ii) with respect to ratings assigned by Moody's, A2 or P-1 for one
month instruments, A1 or P-1 for three month instruments, Aa3 or P-1 for six
month instruments and Aaa or P-1 for instruments with a term in excess of six
months and (iii) with respect to ratings assigned by Duff & Phelps, D-1+P-1 P-1
for short-term instruments and Aaa for long-term instruments.
"Holder" has the meaning specified in the Indenture.
"Indebtedness" means, with respect to any Person at any date, without
duplication, (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 or letters of credit
issued or created for the account of such Person, (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, and (e) obligations
of such Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (d) above.
"Indenture" means the Indenture, dated as of the date hereof, between the
Issuer and the Indenture Trustee, as amended, supplemented or otherwise modified
from time to time.
"Indenture Trustee" means the Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"Independent", when used with respect to any specified Person, means such a
Person who (i) is in fact independent of the Issuer, the Depositor or the
Servicer, (ii) is not a director, officer or employee of any Affiliate of the
Issuer, the Depositor or the Servicer, (iii) is not a person related to any
officer or director of the Issuer, the Depositor or the Servicer or any of their
respective Affiliates, (iv) is not a holder (directly or indirectly) of more
than 10% of any voting securities of the Issuer, the Depositor or the Servicer
or any of their respective Affiliates, and (v) is not connected with the Issuer,
the Depositor or the Servicer as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
"Ineligible Contract" has the meaning specified in Section 7.06.
"Initial Class A-1 Principal Amount" means $__________.
"Initial Class A-2 Principal Amount" means $__________.
"Initial Class A-3 Principal Amount" means $__________.
"Initial Class A-4 Principal Amount" means $__________.
"Initial Class A-5 Principal Amount" means $__________.
"Initial Class B Principal Amount" means $_________.
"Initial Class C Principal Amount" means $__________.
18
<PAGE>
"Initial Class D Principal Amount" means $_________.
"Initial Contract Assets" has the meaning assigned in Section 2.01 of the
Purchase and Sale Agreement.
"Initial Contract Pool Principal Balance" is $[ ].
"Initial Contracts" means those Contracts conveyed to the Trust on the
Closing Date.
"Initial Cutoff Date" means _________, 1999.
"Initial Principal Amount" means, when used in the context of a reference
to an individual Class of Notes, the initial principal amount applicable to such
Class as defined above.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Insolvency Law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable Insolvency Law now or hereafter in effect, or the consent
by such Person to the entry of an order for relief in an involuntary case under
such law, taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of its property; or (c) or the making by such Person of any general
assignment for the benefit of creditors; or (d) the failure by such Person
generally to pay its debts as such debts become due; or (e) the admission by
such Person in writing of its inability generally to pay its debts when the same
become due; or (f) 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 (or applicable Financing Originator) 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, Note
Distribution Account and the Cash Collateral Account.
"IPA" means each installment payment agreement, including as applicable,
schedules, subschedules, supplements and amendments, pursuant to which the
relevant Originator financed the purchase or acquisition of specified assets by
an Obligor for specified monthly, quarterly, semiannual or annual payments.
"Issuer" is defined in the preamble hereto.
"Late Charges" means any late payment fees paid by Obligors on Contracts.
19
<PAGE>
"Lease" means each agreement constituting a "lease" within the meaning of
Section 2A-103 of the UCC, and including, as applicable, schedules,
subschedules, supplements and amendments to a master lease, pursuant to which
the Originator, as lessor, leased specified assets to a Lessee at a specified
monthly, quarterly, semiannual or annual rental.
"Lessee" means, with respect to any Lease, the Obligor with respect to such
Lease.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), equity
interest, participation interest, preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional transfer or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing.
"Liquidation Expenses" means, with respect to any Defaulted Contract, the
aggregate amount of all out-of-pocket expenses reasonably incurred by the
Servicer (including amounts paid to or expenses incurred by any subservicer,
other than subservicing fees, if any) in accordance with Customary Policies and
Procedures in connection with the repossession, refurbishing and disposition of
any related Equipment, and other out-of-pocket costs related to the liquidation
of any such Equipment, including reasonable attorneys fees incurred in the
attempted collection of any amount owing pursuant to such Defaulted Contract,
and including amounts determined by the Servicer in its reasonable discretion as
payable in respect of any sales, use, personal property or other taxes assessed
or to be assessed on repossessed or liquidated Equipment.
"Liquidation Proceeds" means, with respect to a Defaulted Contract,
proceeds from the transfer, lease or re-lease of the related Financed Items,
Insurance Proceeds, and any other recoveries with respect to such Defaulted
Contract and the related Financed Items (including, without limitation, amounts
received pursuant to a Program Agreement), but net of Liquidation Expenses, Late
Charges, amounts payable to a Vendor in respect of (and in amounts not
exceeding) amounts previously paid by such Vendor in respect of such Contract
under Vendor recourse provisions, and amounts, if any, so received that are
required to be refunded to the Obligor on such Contract.
"Material Adverse Effect" means, with respect to any event or circumstance,
a material adverse effect on:
(i) the ability of TCC, NFUSA any Financing Originator, the VFC Trust,
the Depositor, the Trust or the Servicer to perform in all material
respects its obligations under this Agreement or any other Transaction
Document;
(ii) the validity or enforceability of this Agreement, any other
Transaction Document, or the Contracts, or the collectibility of the
Contracts; or
(iii) the status, existence, perfection, priority or enforceability of
the Trust's interest in the Contracts and the other Trust Assets.
"Material Modification" means a termination or release (including pursuant
to prepayment), or an amendment, modification or waiver, or equivalent similar
undertaking or agreement, by the Servicer with respect to a Contract which would
not otherwise be permitted under the standards and criteria set forth in
Sections 5.08, 5.09 and/or 5.10 hereof.
"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 A-5
Maturity Date, Class B Maturity Date, Class C Maturity Date, or Class D Maturity
Date.
20
<PAGE>
"Minimum Value Filing Exception" means the variation from the relevant
Financing Originator's normal policies and practices with respect to filing UCC
financing statements against an Obligor describing Equipment which is the
subject of a Contract, in each case as set forth in Exhibit J hereto.
"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.
"Noteholder" means any registered holder of a Note.
"NCT" means Newcourt Credit Group, Inc., an Ontario corporation, and its
successors.
"NFUSA" means Newcourt Financial USA Inc., a Delaware corporation.
"NFUSA Contract" means a Contract originated or acquired by NFUSA
(including without limitation any Contract originated or acquired by NFUSA and
transferred to the Depositor and by the Depositor to the VFC Trust prior to the
Closing Date) but which is not a TCC Contract.
"NFUSA Contract Assets" means Contract Assets relating to NFUSA Contracts.
"NFUSA Representations and Warranties" means the representations and
warranties set forth in Sections 3.02, of the Purchase and Sale Agreement.
"Obligor" means, with respect to any Contract, the Person or Persons
obligated to make payments with respect to such Contract, including any
guarantor thereof (and including, with respect to a Contract consisting of a
Vendor Loan, the Vendor obligated in respect of such Vendor Loan).
"Officer's Certificate" means, with respect to any Person, a certificate
signed by an authorized officer of such Person and delivered to the party
entitled to receipt thereof under any applicable Transaction Document.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
(including internal counsel) for the Depositor or the Servicer and who shall be
reasonably acceptable to the Owner Trustee.
"Originator" means, with respect to each Contract, the party that is the
original lessor or financing party thereunder.
"Owner Trustee" means _________Bank, 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.
"Payment Date" shall mean the twentieth (20th) day of each calendar month
or, if such twentieth (20th) day is not a Business Day, the next succeeding
Business Day, with the first such Payment Date hereunder being ________, 1999.
"Paying Agent" means any Person described as such in Section 7.04(b).
21
<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Permitted Liens" means
(a) with respect to Contracts in the Contract Pool:
(i) Liens for state, municipal or other local taxes if such taxes
shall not at the time be due and payable or if the 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 NFUSA created by a TCC Financing
Originator pursuant to the Conveyancing Agreement, or Liens in favor
of the Depositor created pursuant to the Purchase and Sale Agreement
or Liens in favor of the VFC Trust created pursuant to the VFC Pooling
Agreement, in each case 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 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 NFUSA created by a TCC Financing
Originator pursuant to the Conveyancing Agreement, or Liens in favor
of the Depositor created pursuant to the Purchase and Sale Agreement,
in each case transferred to the Trust pursuant hereto or Liens in
favor of the Depositor created pursuant to the VFC Purchase and Sale
Agreement;
(iv) Liens in favor of the Trust created pursuant to this
Agreement;
(v) Liens in favor of an Originator which have been transferred
to the applicable Financing Originator and pursuant to the Purchase
and Sale Agreement by such Financing Originator to the Depositor
(through NFUSA and the Conveyancing Agreement in the case of TCC
Financing Originators, and through NFUSA, the Depositor and the VFC
Trust and the VFC Assignment in the case of the VFC Contracts) and in
each case transferred to the Trust pursuant hereto;
(vi) Liens in favor of the Indenture Trustee crated pursuant to
the Indenture and/or this Agreement;
(vii) (A) interests in favor of Dell Financial Services, L.P.
("DFS") which are subject to the prior payment of all Obligor
obligations in respect of Scheduled Payments on the related Contract
and which have been transferred by DFS along with the related Contract
to its limited purpose affiliate, DFS--SPV, L.P., and (B) interests in
favor of a Vendor which are subject to the prior payment of all
Obligor obligations in respect of Scheduled Payments on the related
Contract; and
22
<PAGE>
(viii) Liens granted by the End-Users which are subordinated to
the interest of the Trust in such Equipment.
"Person" means any individual, corporation, estate, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Servicer or any member of the Controlled Group may have any
liability.
"Pledged Revenues" means (i) all Scheduled Payments on the Contracts
received on or after the Cut-Off Date (excluding the Excluded Amounts); (ii) any
Prepayments received on the Contracts on or after the Cut-Off Date (other than
(a) in the case of a Lease, any portion thereof allocated to the Depositor, or
(b) in the case of a Prepaid Contract for which a substitution has been made in
accordance with Section ___ of the Pooling and Servicing Agreement, that portion
thereof to which the Depositor is entitled pursuant to Section ___); (iii) the
Purchase Amount of any Contracts purchased by NFUSA in accordance with Section
___ of the Pooling and Servicing Agreement (other than any portion thereof
attributable in the case of a Lease to the Excluded Residual Investment of the
related Equipment); (iv) the amount paid by the Depositor to purchase the
Contracts pursuant to Section ___ of the Pooling and Servicing Agreement; (v)
that portion of the Liquidation Proceeds received in respect of any Contracts
and the disposition of the related Equipment on or after the Cut-Off Date and
allocated to the Trust; and (vi) any earnings on the investment of amounts
credited to the Trust Accounts. Pledged Revenues shall not include any amounts
received with respect to any Excluded Residual Investment.
"Pooling Agreement" means this Pooling and Servicing Agreement, as amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms hereof.
"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" means with respect to any Collection Period for any Contract,
a partial or full prepayment of amounts due and owing under such Contract.
"Principal Amount" means, with respect to a Class of Notes, the aggregate
Initial Principal Amount thereof reduced by (i) the aggregate amount of any
payments applied in reduction of such principal amount and (ii) the aggregate
amount of any payments then on deposit in the Note Distribution Account, if any,
for such Class of Notes established in accordance with the Indenture and to be
applied in reduction of such principal amount in accordance with such Indenture.
"Principal Differential" means, with respect to any Payment Date, the
excess, if any, of (i) the remainder, if any, of (a) the Aggregate Principal
Amount of the Notes (prior to giving effect to the payment of principal on the
Notes on such Payment Date) minus (b) the lesser of (1) the Contract Pool
Principal Balance as of the related Accounting Date for the preceding Payment
Date, minus the Contract Pool Principal Balance as of the related Accounting
Date for such Payment Date, or (2) the Related Collection Period Pledged Revenue
remaining after the payment of amounts owing to the Servicer and the payment of
all interest due on the Notes on such Payment Date, over (ii) the aggregate of
the Required Payoff Amounts for all Contracts as of the related Accounting Date.
"Principal Deficiency Amount" means, with respect to any Payment Date, the
lesser of (a) the Current Realized Losses for the related Collection Period or
(b) the excess, if any, of (i) the Principal Amount of the Notes (after giving
effect to all distributions of principal from the Available Pledged Revenues
(determined without regard to the last sentence of the definition thereof) on
such Payment Date), over (ii) the aggregate of the Required Payoff Amounts for
all Contracts as of the last day of the related Collection Period.
23
<PAGE>
"Program Agreement" means each vendor finance program agreement pursuant to
which End-User Contracts originated by a Vendor are assigned to the applicable
Financing Originator.
"Prospectus" has the meaning given such term in the Underwriting Agreement.
"Purchase Amount" means, with respect to Ineligible Contracts, on any date
of determination, the aggregate Required Payoff Amount for such Ineligible
Contracts as of the related Accounting Date.
"Purchase and Sale Agreement" means the Purchase and Sale Agreement dated
as of ________, 1999 among NFUSA, _________ and the Depositor, as the same may
be amended, supplemented, restated or otherwise modified from time to time.
"Purchase Price" means, with respect to any Contract conveyed on the
Closing Date (or any Subsequent Transfer Date, as applicable), an amount equal
to the Contract Principal Balance of such Contract as of the applicable Cutoff
Date.
"Qualified Eligible Investments" means Eligible Investments acquired by the
Indenture Trustee in its name and in its capacity as Indenture Trustee, which
are held by the Indenture Trustee in the Trust Accounts and with respect to
which (a) the Indenture Trustee has noted its interest therein on its books and
records, and (b) the Indenture Trustee has purchased such investments for value
without notice of any adverse claim thereto (and, if such investments are
securities or other financial assets or interests therein, within the meaning of
Section 8-102 of the UCC as enacted in the State of New York, without acting in
collusion with a securities intermediary in violating such securities
intermediary's obligations to entitlement holders in such assets, under Section
8-504 of such UCC, to maintain a sufficient quantity of such assets in favor of
such entitlement holders), and (c) either (i) such investments are in the
possession of the Indenture Trustee, or (ii) such investments, (A) if
certificated securities and in bearer form, have been delivered to the Indenture
Trustee, or in registered form, have been delivered to the Indenture Trustee and
either registered by the issuer in the name of the Indenture Trustee or endorsed
by effective endorsement to the Indenture Trustee or in blank; (B) if
uncertificated securities, the ownership of which has been registered to the
Indenture Trustee on the books of the issuer thereof (or another person, other
than a securities intermediary, either becomes the registered owner of the
uncertified security on behalf of the Indenture Trustee or, having previously
become the registered owner, acknowledges that it holds for the Indenture
Trustee); or (C) if securities entitlements (within the meaning of Section 8-102
of the UCC as enacted in the State of New York) representing interests in
securities or other financial assets (or interests therein) held by a securities
intermediary (within the meaning of said Section 8-102), a securities
intermediary indicates by book entry that a security or other financial asset
has been credited to the Indenture Trustee's securities account with such
securities intermediary. Any such Qualified Eligible Investment may be purchased
by or through the Indenture Trustee or any of its Affiliates.
"Qualified Institution" means (a) the corporate trust department of the
Indenture Trustee or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), (i) (A) which has (or 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 (B) which is
otherwise acceptable to the Rating Agencies and (ii) whose deposits are insured
by the FDIC.
"Rating Agency" means each of S&P, Moody's, and Duff & Phelps, so long as
such Persons maintain a rating on the Notes; and if none of S&P, Moody's, or
Duff & Phelps no longer maintains a rating on the Notes; such other nationally
recognized statistical rating organization selected by the 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 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.
24
<PAGE>
"Ratings Effect" means, with respect to any action or series of related
actions or proposed transaction or series of related proposed transactions, a
reduction or withdrawal of the rating of any outstanding Class with respect to
which a Rating Agency has previously issued a rating as a result of such action
or series of related actions or the consummation of such proposed transaction or
series of related transactions.
"Record Date" means, with respect to any Payment Date, the calendar day
immediately preceding such Payment Date.
"Related Collection Period Pledged Revenues" means, with respect to any
Payment Date, the amount of Pledged Revenues in the Collection Account as of the
Deposit Date which were received by the Servicer during the related Collection
Period, including all Liquidation Proceeds [(other than in respect of Excluded
Residual Investment)] so received by excluding any Purchase Amounts.
"Replaced Assets" has the meaning assigned such term in Section 2.04.
"Replaced Contracts" has the meaning assigned such term in Section 2.04.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"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, Class A-4 Noteholders and/or Class A-5 Noteholders holding Class
A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and/or Class A-5
Notes evidencing more than 66 2/3% of the Aggregate Principal Amount of all
Class A Notes Outstanding, (ii) from and after the payment in full of the Class
A Notes Outstanding, Holders of Class B Notes holding Class B Notes evidencing
more than 66 2/3% of the Aggregate Principal Amount of all Class B Notes
Outstanding, (iii) from and after the payment in full of the Class B Notes
Outstanding, Holders of Class C Notes holding Class C Notes evidencing more than
66 2/3% of the Aggregate Principal Amount of all Class C Notes Outstanding, and
(iv) from and after the payment in full of the Class C Notes Outstanding,
Holders of Class D Notes holding Class D Notes evidencing more than 66 2/3% of
the Aggregate Principal Amount of all Class D Notes Outstanding.
"Required Payoff Amount" means, with respect to any Collection Period for a
Contract, the sum of (i) the Scheduled Payment due in such Collection Period,
together with any Scheduled Payments due in prior Collection Periods but not yet
received, plus (ii) the Contract Principal Balance of such Contract (after
taking into account the Scheduled Payment due in such Collection Period whether
or not received).
"Requirements of Law" for any Person means the certificate of incorporation
or articles of association and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or order or
determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without limitation, usury laws, the
Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of
Governors of the Federal Reserve System).
"Required Cash Collateral Amount" means, (i) with respect to any Payment
Date on or prior to the Payment Date occurring in [ ], an amount equal
to $[ ], and (ii) with respect to any Payment Date thereafter, an amount
equal to the greater of (a) the sum of (1) [ ]% of the Contract Pool
Principal Balance for such Payment Date, plus (2) the excess, if any of (A) the
Aggregate Principal Amount of the Notes (after giving effect to all
distributions of principal on such Payment Date) over (B) the Contract
Pool Principal Balance for such Payment
25
<PAGE>
Date, and (b) $[ ]; provided, that in no event will the Required Cash
Collateral Amount exceed the Aggregate Principal Amount of the Notes.
"Residual Investment" means, with respect to certain Leases, any funds that
the Financing 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) customarily performing functions similar to those
performed by persons who at the time shall be such officers, respectively, or to
whom a corporate trust matter is referred because of knowledge of, familiarity
with, and authority to act with respect to a particular matter.
"Scheduled Payment" means, with respect to any Contract, the monthly or
quarterly or semi-annual or annual rent or financing (whether principal or
principal and interest) payment or other payment scheduled to be made by the
related Obligor under the terms of such Contract (or, if applicable, from a
Vendor or Obligor with respect to any Guaranteed Residual Investment); it being
understood that Scheduled Payments do not include any Excluded Amount or
Excluded Residual Investment but does not include Guaranteed Residual
Investment.
"Schedule of Contracts" means the schedule of Contracts which are conveyed
to the Trust pursuant to the related Assignment Agreement, executed and
delivered on of the Closing Date, which schedule shall identify by any
reasonable means or designation the applicable Financing Originator with respect
to each Contract identified in such Schedule, and which shall otherwise be
substantially in the form attached hereto as Exhibit C. Such Schedule shall be
supplemented from time to time (a) by each subsequent Substitution Schedule of
Contracts with respect to each Substitution Transfer Agreement and related
Substitution Transfer, which Schedules of Contracts shall be deemed incorporated
and made a part of the original Schedule of Contracts on Exhibit C hereto; and
(b) by the Servicer from time to time to reflect the release by and removal from
the Trust Assets of (i) Contracts released in connection with (A) in respect of
a Contract becoming a Prepaid Contract in accordance herewith or having its
final Scheduled Payment paid in full in accordance with the Contract, or (B) in
respect of a repurchase from the Trust through payment of a Purchase Amount, and
(ii) Replaced Contracts. The comprehensive Schedule of Contracts is to be
maintained by the Servicer (with copies thereof, as the same shall be
supplemented or amended as described above, to be provided promptly to the Owner
Trustee). With respect to the Closing Date Transfer Agreement (or Substitution
Transfer Agreement, as applicable), "Schedule of Contracts" shall mean the
schedule attached thereto identifying the Contracts being conveyed thereby.
"Schedule of Representations" means the Schedule of Representations and
Warranties set forth on Exhibit G hereto.
"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 an Obligor or End-User 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.
26
<PAGE>
"Servicer" means initially _____, until any Successor Servicer is appointed
pursuant to Article VIII hereof, and thereafter, means the Successor Servicer so
appointed.
"Servicer Advance" means, with respect to any Payment Date, the amounts, if
any, deposited by the Servicer in the Collection Account for such Payment Date
in respect of Scheduled Payments pursuant to Section 5.14 hereof.
"Servicer Default" has the meaning given such term 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 hereof.
"Servicing Fee Percentage" means 0.75%.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts.
"Servicing Standard" means, with respect to the servicing and collection
activities of the Servicer concerning the Contract Assets, the conduct of such
activities with reasonable care, using that degree of skill and attention that
the relevant Financing Originator for such Contract Assets exercises with
respect to all comparable contracts and related assets that it services for
itself or others, and in accordance with Customary Policies and Procedures and
applicable law.
"Servicing Transfer" is defined in Section 8.02(b).
"Software" means the computer software programs financed or leased by an
Obligor pursuant to a Contract.
"Solvent" means, as to any Person at any time, that (a) the fair value of
the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value of the
Property of such Person in an orderly liquidation of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person is able
to realize upon its Property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature; and (e) such Person is not engaged in
business or a transaction, and is not about to engage in a business or a
transaction, for which such Person's property would constitute unreasonably
small capital.
"S&P" means Standard & Poor's Ratings Service, a division of The McGraw
Hill Companies, or any successor thereto.
"Subsidiary" means with respect to a Person, any corporation or other
entity of which securities or other ownership interests (whether directly or
indirectly in connection with contract rights) having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Substitute Contract" means any Contract conveyed, assigned and transferred
by the Depositor or NFUSA to the Trust pursuant to Section 2.04.
27
<PAGE>
"Substitute Contract Assets" means Contract Assets relating to Substitute
Contracts.
"Substitute Contract Qualification Conditions" means, with respect to any
Substitute Contract being transferred to the Trust pursuant to Section 2.04,
each of the following:
(1) the accuracy of each of the following statements as of the related
Cutoff Date for such Contract:
(a) the Contract Principal Balance of such Substitute Contract is
not less than that of the related Replaced Contract[s];
(b) no adverse selection procedure shall have been employed in
the selection of such Substitute Contract from the Financing
Originator's portfolio;
(c) each such Substitute Contract satisfied the criteria set
forth in the definition of Eligible Contract herein; and
(d) if the Replaced Contract for which such Substitute Contract
is being substituted was a TCC Contract, then such Substitute Contract
is itself a TCC Contract, and if such Replaced Contract is an NFUSA
Contract, then such Substitute Contract is itself an NFUSA Contract;
and
(2) with respect to any such Substitute Contract which is replacing a
Replaced Contract of the type described in clause (a) of the definition of
Substitution Event (a "Type"), the condition that after giving effect to
such transfer, the Contract Pool Principal Balance of all Substitute
Contracts transferred to the Trust since the Closing Date in respect of
Replaced Contracts of the same Type shall not exceed 10% of the Contract
Pool Principal Balance as of the Initial Cutoff Date.
"Substitute Transferred Assets" has the meaning assigned such term in
Section 2.04.
"Substitution Assignment Agreement" means, with respect to any Substitute
Contracts, the agreement between NFUSA and the Depositor pursuant to which NFUSA
transfers the identified Substitute Contracts to the Depositor, the form of
which is attached to the Purchase and Sale Agreement as Exhibit B.
"Substitution Cutoff Date" means the date specified as such for the
relevant Substitute Contracts, in the related Substitution Transfer Agreement.
"Substitution Event" means, with respect to any transfer of a related
Substitute Contract to the Trust under Section 2.04, the occurrence of any of
the following: (a) one or more Contracts identified in the related Substitution
Notice as being an intended Replaced Contract with respect to such Substitute
Contract, has become a Defaulted Contract, (b) one or more Contracts identified
in the related Substitution Notice as being an intended Replaced Contract with
respect to such Substitute Contract, has been subjected to a Material
Modification, (c) one or more Contracts identified in the related Substitution
Notice as being an intended Replaced Contract with respect to such Substitute
Contract, has become an Ineligible Contract, or (d) one or more Contracts
identified in the related Substitution Notice as being an intended Replaced
Contract with respect to such Substitute Contract, has become a Prepaid Contract
and the Trust has not yet received the related Prepayment.
"Substitution Notice" means, with respect to any transfer of Substitute
Contracts to the Trust pursuant to Section 2.04 (and the applicable Financing
Originator's corresponding conveyance and assignment of such Substitute
Contracts), a notice, which shall be given at least five days prior to the
related Substitution Transfer Date, identifying the Substitute Contracts to be
transferred, the Contract Principal Balance of such Substitute Contracts and the
related Substitution Event (with respect to an identified Contract or Contracts
then in the Contracts Pool, which will upon such substitution become a Replaced
Contract) to which such Substitute Contract relates, with such notice to be
signed both by the Depositor and the applicable Financing Originator[s].
28
<PAGE>
"Substitution Schedule of Contracts" means a schedule or list,
substantially in the form of the initial Schedule of Contracts delivered on the
Closing Date, but listing each Substitute Contract being transferred to the
Trust pursuant to a related Substitution Transfer Agreement, as well as the
related Replaced Contracts being removed from the existing Contract Pool by
virtue of such substitution.
"Substitution Transfer Agreement" means the agreement identified as such in
Section 2.04 hereof.
"Substitution Transfer Date" means any date on which Substitute Contracts
are transferred to the Trust.
"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 Depositor, and (iii) such action will
not affect the tax characterization as debt of Notes of any outstanding Class
issued by the Trust for which an Opinion of Counsel has been provided that such
Notes are debt.
"Total Principal Payment Amount" means, with respect to any Payment Date,
the difference between (a) the aggregate outstanding principal of all Classes of
Notes and (b) the Contract Pool Principal Balance as of the last day of the
Collection Period immediately preceding such Payment Date; provided, that the
amount referred to in clause (b) shall be deemed to be zero on any Payment Date
on which the Contract Pool Principal Balance is less than $1,000,000.
"______" has the meaning assigned in the preamble hereto.
"TCC Assignment" has the meaning given such term in the Conveyancing
Agreement.
"TCC Assignment Date" has the meaning given such term in the Conveyancing
Agreement.
"TCC Contract" has the meaning given such term in the Conveyancing
Agreement.
"TCC Contract Assets" has the meaning given such term in the Conveyancing
Agreement.
"TCC Contract File" has the meaning given such term in the Conveyancing
Agreement.
"TCC Financing Originator" means the Financing Originators (other than
NFUSA) in each case in the capacity of a TCC Financing Originator party to the
Conveyancing Agreement with NFUSA.
"Transaction Documents" means this Agreement, the Transfer Agreement, any
Substitution Transfer Agreement, the Conveyancing Agreement, any TCC Assignment,
the Purchase and Sale Agreement, any Assignment Agreement, the Trust Agreement,
the Administration Agreement, the Indenture, the Cash Collateral Account
Agreement and the Underwriting.
"Transfer Agreement" means, the Transfer Agreement dated the Closing Date
between the Depositor and the Trust pursuant to which the Depositor conveys and
assigns the Contract and other related Transferred Assets to the Trust, in the
form attached hereto as Exhibit A.
"Transferred Assets" means with respect to any Contracts (including
Substitute Contracts) conveyed or being conveyed to the Trust pursuant to this
Agreement, all right and interest of the Depositor in, to and under the
following:
(i) such Contracts and other related Contract Assets (subject to the
proviso below);
29
<PAGE>
(ii) related rights of the Depositor under the Purchase and Sale
Agreement and related Assignment Agreement (or Substitution Assignment
Agreement, as applicable) and the VFC Assignment, including, without
limitation, in respect of the obligation of NFUSA to repurchase or
substitute for such Contracts under certain circumstances as specified
therein; and
(iii) rights under the Transfer Agreement and each Substitution
Transfer Agreement; and
(iv) all income from and proceeds of the foregoing;
provided, that Transferred Assets shall not include any title to or
ownership interest in the Equipment related to such Contracts (although security
interests in such Equipment established pursuant to the related Contract, and
proceeds thereof, shall constitute Transferred Assets), and provided further,
that the security interest granted by the Depositor pursuant to Section 2.01
hereof in related Equipment owned by it, shall constitute part of Transferred
Assets.
"Trust" means the trust created by the Trust Agreement, the assets and
property of which consists of the Trust Assets.
"Trust Accounts" means, collectively, the Collection Account, the Cash
Collateral Account 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), and all proceeds of the foregoing.
"Trust Agreement" means the Trust Agreement, dated as of _________, 1999,
between the Depositor and the Owner Trustee, as amended, restated, supplemented
or otherwise modified from time to time.
"Trust Assets" has the meaning given to such term in the Trust Agreement.
"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 New York; 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 New York, 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 New Jersey and _________ and
each other State in which the Servicer maintains the Contract Files related to
Contracts in the Contracts Pool (as of the Closing Date, the State of _________,
and each State in which a Vendor which is an Obligor on a Vendor Loan is located
(as defined in the UCC in such State)).
"Uncollectible Advance" means with respect to any Determination Date and
any Contract, the amount, if any, advanced by the Servicer pursuant to Section
5.14 which the Servicer has as of such Determination Date determined in good
faith will not be ultimately recoverable by the Servicer.
30
<PAGE>
"Underwriting Agreement" means the Underwriting Agreement, dated ________,
1999 among ________ (as an underwriter thereunder and as representative of the
underwriters) and the Depositor.
"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 Section 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 the Owner Trustee (which certification may take the form of an entry
on a Monthly Report identifying Unreimbursed Servicer Advances).
"United States" means the United States of America.
"Vehicle" means any motor vehicle, the transfer of interests in which is
governed by a state certificate of title or registry system.
"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 by such Vendor
to the Financing Originator.
"Vendor Guarantee" means the irrevocable obligation of a Vendor to pay to
the Financing Originator the aggregate outstanding principal amount of a
Contract which has been canceled by the related Obligor pursuant to the terms of
such Contract.
"Vendor Loan" means a limited recourse loan agreement payable by a Vendor
and secured by the Vendor's interest in Secondary Contracts and by the
Equipment, if any, related thereto.
"VFC Assignment" means the Release and Assignment instrument dated
________, 1999, in the form attached hereto as Exhibit A-1, executed by the VFC
Trust conveying, assigning and releasing the VFC Contract Assets to the
Depositor.
"VFC Contract Assets" means the Contract Assets pertaining to the VFC
Contracts.
"VFC Contracts" means Contracts conveyed by the VFC Trust to the Depositor
pursuant to the VFC Assignment, as listed in the Schedule of Contracts attached
to the VFC Assignment.
"VFC Trust" means the Newcourt Equipment Trust -- VFC Series created and
existing pursuant to the Trust Agreement dated as of February 25, 1999 by and
between the Depositor and the Bank of New York (Delaware) as Owner Trustee.
"VFC Pooling Agreement" means the Pooling and Contribution Agreement dated
as of March 2, 1999 by and among the VFC Trust, the Depositor, and AT&T Capital
Corporation.
"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.
"Voting Power" means, with respect to any outstanding membership interest
of the Depositor, the power (expressed as a percentage) represented by such
membership interest of the aggregate voting power of all outstanding membership
interests of the Depositor having ordinary voting power, including the power to
vote for
31
<PAGE>
election of members of the Board of Directors (and, if any class thereof has
power to designate members of the Board of Directors or any special committee
thereof, the power so to designate).
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. 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.
[remainder of this page intentionally left blank]
32
<PAGE>
ARTICLE II
FUNDINGS OF TRUST; TRANSFERS OF CONTRACTS
Section 2.01. Creation and Funding of Trust; Transfer of Transferred Assets
to Trust. (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 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, the Administration Agreement and the Trust Agreement for the benefit
of the Noteholder and the Equity Certificateholder. Each of the Owner Trustee
and the Administrator (as defined in the Administration Agreement) is hereby
specifically recognized by the parties hereto as empowered to conduct business
dealings on behalf of the Trust in accordance with the terms hereof and of the
Trust Agreement and Administration Agreement.
(b) Subject to the terms and conditions set forth herein, on the Closing
Date, the Depositor shall, transfer, assign, set over and otherwise convey to
the Trust by execution of the Transfer Agreement, without recourse (other than
as expressly provided herein), (i) all the right and interest of the Depositor
in and to the Contracts and related Transferred Assets identified in such
Transfer Agreement, (ii) the remittances, deposits and payments made into the
Collection Account from time to time and amounts in the Collection Account from
time to time (and any investments of such amounts), and (iii) all proceeds and
products of the foregoing.
(c) The parties hereto hereby agree and acknowledge that title to or
ownership of any related Equipment shall not be transferred to the Trust upon
such conveyance and that the Depositor shall retain its ownership interest (to
the extent the same has been so conveyed to the Depositor pursuant to the
Purchase and Sale Agreement and Assignment Agreements) in such Equipment
(provided, that the parties agree and intend that any mere security interest, as
opposed to title or ownership interest, in the related Equipment which secures
the Contract pursuant to the terms thereof, is being assigned and conveyed as
part of the Transferred Assets in accordance with the definition thereof). The
Depositor and the Trust further intend and agree that, except as described in
the preceding sentence with respect to ownership interests in related Equipment,
any such transfer is intended to be a conveyance and transfer of ownership of
the related Transferred Assets (or Substitute Transferred Assets conveyed as
described in Section 2.04 below) and that such Transferred Assets shall not be
part of the Depositor's estate in the event of the filing of a bankruptcy
petition by or against the Depositor under any bankruptcy law. In the event,
however, that notwithstanding such intent and agreement, a transfer and
assignment contemplated hereby and in the Transfer Agreement (or Substitution
Transfer Agreement, as applicable) is determined not to be a conveyance of
ownership, this Agreement and the Transfer Agreement (or Substitution Transfer
Agreement, as applicable) shall be deemed to constitute the Depositor's grant to
the Trust of a perfected first priority security interest in such Transferred
Assets, and this Agreement and the Transfer Agreement (or Substitution Transfer
Agreement, as applicable), collectively, shall constitute a security agreement
under applicable law, securing the related obligations of the Trust to the
Noteholder and the Equity Certificateholder, in the order and priorities, and
subject to the other terms and conditions of, this Agreement and the other
Transaction Documents, together with such other obligations or interests as may
arise hereunder and thereunder with respect to such Transferred Assets in favor
of the parties thereto.
(d) In furtherance of and not in limitation of any of the foregoing, the
Depositor with respect to each item of Equipment owned by it as described above,
by execution and delivery of this Agreement and the Transfer Agreement (or
Substitution Transfer Agreement, as applicable), hereby and thereby on and as of
the Closing Date (or Substitution Transfer Date, as applicable) grants to the
Trust a security interest in such item of owned Equipment, securing in each case
an amount payable by the Trust in respect of the Notes corresponding to the
Contract Principal Balance from time to time of the related Contract; it being
understood, however, that (i) recourse to such Equipment in realization of the
benefits of such security interest shall only occur if the related Contract has
become a Defaulted Contract, and (ii) the application of Liquidation Proceeds
realized therefrom shall be governed in accordance with the provisions hereof
generally applicable to such Pledged Revenue and allocation in accordance with
the Allocation Criteria.
33
<PAGE>
Section 2.02. Conditions to Transfers. The Depositor shall transfer to the
Trust the Contracts and other Transferred Assets described in Section 2.01 above
only upon the satisfaction of each of the following conditions on or prior to
the Closing Date and shall be deemed to have represented in respect of the
Closing Date that all such conditions are satisfied upon the Depositor's
delivery of the Transfer Agreement:
(a) the Depositor shall have delivered to the Owner Trustee on behalf
of the Trust the duly executed Transfer Agreement, which shall include a
Schedule of Contracts listing the Contracts being transferred on the
Closing Date;
(b) NFUSA shall have delivered and the VFC Trust shall have delivered
to the Depositor and the Owner Trustee on behalf of the Trust a duly
executed Assignment Agreement (in the case of NFUSA) and the VFC Assignment
(in the case of the VFC Trust) with respect to the Contracts being conveyed
by them, respectively, on the Closing Date;
(c) A letter from Ernst & Young LLP, or another nationally recognized
accounting firm, addressed to the Depositor and stating that such firm has
reviewed a sample of the Initial Contracts and performed specific
procedures for such sample with respect to certain contract terms and which
identifies those Initial Contracts which do not conform;
(d) Copies of resolutions of the Board of Directors of NFUSA, the
Servicer and the Depositor or of the Executive Committee of the Board of
Directors of NFUSA, the Servicer and the 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 NFUSA, the Servicer and the
Depositor;
(e) Officially certified, recent evidence of due incorporation or
formation, as the case may be and good standing of each of NFUSA and the
Depositor under the laws of Delaware;
(f) Evidence of proper filing with appropriate officers in the UCC
Filing Locations of UCC financing statements executed by NFUSA, as debtor,
naming the Depositor as secured party (and the Owner Trustee as assignee)
and identifying the Contract Assets as collateral; evidence of proper
filing with appropriate officer in the UCC Filing Locations of a UCC
partial release identifying the VFC Contracts as collateral being released,
executed by the VFC Trust; and evidence of proper filing with appropriate
officer in the UCC Filing Locations of UCC financing statements executed by
the 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 Trust
Assets, as collateral;
(g) Evidence of deposit in the Collection Account of all Pledged
Revenues received with respect to the Initial Contracts after the Initial
Cutoff Date through and including the date which is two days preceding the
Closing Date, together with an Officer's Certificate from the Servicer to
the effect that such amount is materially correct;
(h) Evidence of deposit in the Cash Collateral Account of the initial
Required Cash Collateral Amount;
(i) A fully executed Purchase and Sale Agreement, together with the
Assignment Agreement executed by NFUSA pursuant thereto;
(j) A fully executed VFC Assignment;
(k) A fully executed Trust Agreement;
34
<PAGE>
(l) A fully executed Administration Agreement;
(m) A fully executed Indenture;
(n) an opinion of Winston & Strawn to the effect that for federal
income tax purposes, the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes, Class A-5 Notes, Class B Notes, Class C Notes and Class D
Notes will be characterized as debt and the Trust will not be characterized
as an association (or publicly traded partnership) taxable as a
corporation;,
(o) each of the representations and warranties made by NFUSA pursuant
to Article III of the Purchase and Sale Agreement shall be true and correct
as of the Closing Date (including the representation made thereunder as to
compliance with the UCC filing criteria as set forth in clause (j) of the
definition of Eligible Contract), and NFUSA shall have performed in all
material respects all obligations to be performed by it under the Purchase
and Sale on or prior to the Closing Date;
(p) each of the representations and warranties made by the Trust, the
Depositor and the Servicer pursuant to Article III hereof shall be true and
correct as of the Closing Date;
(q) the Depositor shall, at its own expense, on or prior to the
Closing Date indicate in its computer files that the Transferred Assets
identified in the Transfer Agreement have been conveyed to the Trust
pursuant to this Agreement and the Transfer Agreement;
(r) no event has occurred and is continuing, or would result from the
conveyance on the Closing Date that constitutes a Servicer Default; and
(s) the Depositor or the Servicer shall have provided the Owner
Trustee on behalf of the Trust a statement or computer disk listing the
Contract Pool Principal Balance on the Closing Date of the contracts being
transferred on the Closing Date.
The failure to satisfy any of the foregoing conditions to transfer or to
obtain a waiver thereof shall not be deemed to adversely affect the validity of
any such transfer.
Section 2.03. Acceptance by Trust. On the Closing Date, if all the
conditions specified in Section 2.02 above have been satisfied, the Owner
Trustee shall issue on behalf of the Trust to, or upon the order of the
Depositor the Equity Certificate representing ownership of a beneficial interest
in 100% of the Trust and the Owner Trustee shall issue, and the Indenture
Trustee shall authenticate, to, or upon the order of, the Depositor the Notes
secured by the Collateral. The Owner Trustee hereby acknowledges its acceptance,
on behalf of the Trust, of the Trust Assets, and declares that it shall maintain
such right and interest in the Trust Assets in accordance with the terms of this
Agreement and the Trust Agreement on the trust herein and therein set forth.
Section 2.04. Conveyance of Substitute Contracts. (a) Subject to the
limitations set forth in (and the other terms and conditions of) this Section
2.04, the Depositor may substitute other Contracts and related assets for
Contracts and related Transferred Assets previously conveyed to the Trust and in
the Contract Pool, by conveying such other Contracts and related assets to the
Trust pursuant to the procedures and documentation specified below. Upon the
effectiveness of such substitution, such other Contracts and related Transferred
Assets (such Contracts, "Substitute Contracts", and collectively, "Substitute
Transferred Assets") shall, for all purposes of this Agreement and the Trust
Agreement, constitute and be considered as part of the Trust Assets, and the
Contracts already in the Contract Pool and related Transferred Assets for which
the Substitute Assets have been substituted (such Contracts, "Replaced
Contracts", and collectively, "Replaced Assets") shall no longer constitute
Trust Assets. Upon consummation of such substitution, the Trust shall be deemed
to have assigned to the Depositor all of the Trust's right, title and interest
in and to the Replaced Assets, without recourse, representation or warranty.
35
<PAGE>
In addition, the parties hereto intend and agree that any conveyance
described in this Section 2.04 is made with the intent and effect described in
subsection (c) of Section 2.01 above.
(b) Subject to the conditions set forth in this subsection (b) below, and
pursuant to one or more related Substitution Transfer Agreements, the Depositor
shall transfer, assign, set over and otherwise convey to the Trust, without
recourse (other than as expressly provided herein), (i) all the right and
interest of the Depositor in and to the Substitute Contracts listed on the
related Substitution Schedule of Contracts, and (ii) all other rights and
property interests consisting of Transferred Assets related to such Substitute
Contracts. The Depositor shall effect such transfers only upon the satisfaction
of each of the following conditions on or prior to the related Substitution
Transfer Date (and the delivery of a related Substitution Notice by the
Depositor shall be deemed a representation and warranty by the Depositor that
such conditions have been or will be, as of the related Substitution Transfer
Date, satisfied):
(i) At least five days prior to the related Substitution Transfer
Date, the Depositor shall have provided the Owner Trustee on behalf of the
Trust and the Indenture Trustee with a Substitution 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
intended Replaced Contracts then constituting Contracts in the Contract
Pool;
(iii) the Substitute Contract(s) being conveyed to the Trust, satisfy
the Substitute Contract Qualification Conditions;
(iv) the Depositor shall have delivered to the Owner Trustee on behalf
of the Trust a duly executed written assignment agreement in substantially
the form of Exhibit E hereto (a "Substitution Transfer Agreement"), which
shall include a Substitution Schedule of Contracts identifying the
Substitute Contracts and the related Replaced Contracts;
(v) NFUSA shall have delivered to the Depositor and the Owner Trustee
on behalf of the Trust a duly executed Substitution Assignment Agreement
with respect to such conveyance;
(vi) the Depositor shall have deposited or caused to be deposited in
the Collection Account all Pledged Revenue received with respect to the
Substitute Contracts after the applicable Substitution Cutoff Date and
through and including the date which is two Business Days preceding the
related Substitution Transfer Date;
(vii) no selection procedures adverse to the interests of either the
Trust or the Noteholders or Certificateholder shall have been utilized in
selecting the Substitute Contracts;
(viii) each of the representations and warranties made by NFUSA
pursuant to Article III of the Purchase and Sale Agreement shall be true
and correct as of the related Substitution Transfer Date (including the
representation made as to compliance with the UCC filing criteria set forth
in clause (j) of the definition of Eligible Contract), and NFUSA shall have
performed in all material respects all obligations to be performed by it
under the Purchase and Sale Agreement on or prior to such Substitution
Transfer Date; and
(ix) the Servicer and NFUSA shall, at their own expense, on or prior
to the Substitution Transfer Date, have indicated in their respective
computer files that the Substitute Contracts identified on the Substitution
Schedule of Contracts attached to the related Substitution Transfer
Agreement have been assigned and conveyed to the Trust through the
Depositor pursuant to this Pooling Agreement and the Purchase and Sale
Agreement.
36
<PAGE>
The failure to satisfy any of the foregoing conditions to transfer or to
obtain a waiver thereof shall not be deemed to adversely affect the validity of
any such transfer.
Section 2.05. Release of Excluded Amounts. The Trust hereby agrees to
release to the Servicer, an amount equal to the Excluded Amounts immediately
upon identification thereof, which release shall be automatic and shall require
no further act by the Trust, provided that the Trust shall execute and deliver
such instruments of release and assignment, or otherwise confirm the foregoing
release, as may reasonably be requested in writing by the Servicer. Upon such
release, such Excluded Amounts shall not constitute and shall not be included in
the Trust Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
NFUSA under the Purchase and Sale Agreement has made, and upon execution of
each Substitution Assignment Agreement is deemed to remake with respect to the
relevant Contract Assets conveyed thereby, each of the representations and
warranties set forth in the Schedule of Representations, and has consented to
the assignment by the Depositor to the Trust of the Depositor's rights with
respect thereto. Such representations speak as of the Closing Date in the case
of the Initial Contracts, and as of the applicable Substitution Transfer Date in
the case of the Substitute Contracts, but shall survive the transfer and
assignment of the related Contracts to the Trust. Pursuant to Section 2.01 of
this Agreement, the Depositor has sold, assigned, transferred and conveyed to
the Trust as part of the Transferred Assets its rights under the Purchase and
Sale Agreement, including without limitation, the representations and warranties
of NFUSA therein as set forth in the Schedule of Representations, together with
all rights of the Depositor with respect to any breach thereof including any
right to require NFUSA to repurchase or substitute for any Contract in
accordance with the Purchase and Sale Agreement. It is understood and agreed
that the representations and warranties set forth or referred to in this Section
shall survive delivery of the Contract Files to the Owner Trustee or any
custodian.
The Depositor hereby confirms to the Trust that it has entered into the
Purchase and Sale Agreement with NFUSA, that NFUSA has made the representations
and warranties in the Schedule of Representations, that such representations and
warranties run to and are for the benefit of the Depositor, and that pursuant to
Section 2.01 of this Agreement the Depositor has transferred and assigned to the
Trust all rights of the Depositor to cause NFUSA under the Purchase and Sale
Agreement to repurchase or substitute for Contracts conveyed thereunder in the
event of a breach of such representations and warranties applicable to such
Contract.
Section 3.01. Representations and Warranties Regarding the Depositor. By
its execution of this Agreement, and each Substitution Transfer Agreement, the
Depositor represents and warrants to the Trust, the Owner Trustee, the Indenture
Trustee, the Noteholders and the Equity Certificateholder that, as of the date
of the Closing Date and Substitution Transfer Date (and, with respect to the
representation set forth in subsection (l) of this Section 3.01 below, as of the
date the certificate, written report or written statement referred to in such
subsection is furnished):
(a) Organization and Good Standing. The Depositor is a limited
liability company duly organized, validly existing and in good standing
under the laws of Delaware and has the requisite power to own its assets
and to transact the business in which it is currently engaged. The
Depositor is duly qualified to do business 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
Depositor or the Trust.
(b) Authorization; Valid Transfer; Binding Obligations. The Depositor
has the power and authority to make, execute, deliver and perform this
Agreement and the other Transaction
37
<PAGE>
Documents to which it is a party and all of the transactions contemplated
under this Agreement and the other Transaction Documents to which it is a
party, and to create the Trust and cause it to make, execute, deliver and
perform its obligations under this Agreement and the other Transaction
Documents to which it is a party and has taken all necessary corporate
action to authorize the due execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and to
cause the Trust to be created. This Agreement and the Transfer Agreement
and any Substitution Transfer Agreement shall effect a valid transfer and
assignment of the relevant Transferred Assets, enforceable against the
Depositor and creditors of and purchasers from the Depositor. This
Agreement and the other Transaction Documents to which the Depositor is a
party have been duly executed and delivered by the Depositor and constitute
the legal, valid and binding obligation of the 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.
(c) No Consent Required. The Depositor is not required to obtain the
consent of any other Person 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.
(d) No Violations. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party by the
Depositor, and the consummation of the transactions contemplated hereby and
thereby, will not violate any Requirements of Law applicable to the
Depositor, or constitute a material breach of any mortgage, indenture,
contract or other agreement to which the Depositor is a party or by which
the Depositor or any of the 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.
(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 Depositor threatened, against the Depositor or any of
its properties or with respect to this Agreement or the other Transaction
Documents to which it is a party (1) which, if adversely determined, would
in the reasonable judgment of the Depositor have a material adverse effect
on the business, properties, assets or condition (financial or otherwise)
of the Depositor or the Trust or the transactions contemplated by this
Agreement or the other Transaction Documents to which the Depositor is a
party or (2) seeking to adversely affect the federal income tax or other
federal, state or local tax attributes of the Notes.
(f) Taxes. The Depositor has filed or caused to be filed all material
tax returns which, to its knowledge, are required to be filed and has paid
all taxes shown to be due and payable on such returns or on any material
assessments made against it or any of its property and all other material
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 Depositor); no
tax lien has been filed and, to the Depositor's knowledge, no claim is
being asserted, with respect to any such tax, fee or other charge.
(g) Schedule of Representations. The representations and warranties
set forth on the Schedule of Representations are true and correct as of the
Closing Date (or Substitution Transfer Date, as applicable) with respect to
the Transferred Assets being conveyed to the Trust on such date.
(h) Solvency. The Depositor, at the time of and after giving effect to
each conveyance made hereunder, is Solvent on and as of the date thereof.
(i) Place of Business; Name Changes. The location of the Depositor's
sole place of business or chief executive office (within the meaning of
Article 9 of the UCC) is as set forth in Section
38
<PAGE>
11.04 below, and such location has not been changed within the four months
preceding any Transfer Date (or if so changed, all necessary actions in
connection with such change have been or are being timely taken in
accordance with Section 4.03 hereof). The Depositor has not changed its
name, whether by amendment of its certificate of formation, by
reorganization or otherwise, within the four months preceding any Transfer
Date (or if so changed, all necessary actions in connection with such
change have been or are being timely taken in accordance with Section 4.03
hereof).
(j) Not an Investment Company. The Depositor is not an "investment
company" (and does not control, and is not under the control of, an
investment company) within the meaning of the Investment Company Act of
1940, as amended (or the Depositor is exempt from all provisions of such
Act).
Such representations (except to the extent expressly stated by their terms to
speak as of a different date or time) speak as of the Closing Date and each
Transfer Date and Substitution Transfer Date, if any, but shall survive the
transfer and assignment of the Contracts to the Trust.
Section 3.02. Representations and Warranties of the Servicer. The Servicer
represents and warrants to the Trust, the Owner Trustee, the Indenture Trustee,
the Noteholders and the Equity Certificateholder that, as of the date of the
execution and delivery of this Agreement and as of the Closing Date and each
Substitution Transfer Date (and, with respect to the representations set forth
in subsection (h) of this Section 3.02 below, as of the date the certificate,
written report or written statement or financial statement referred to in such
subsection is furnished):
(a) Organization and Good Standing. The Servicer is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation 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 (or any permitted
subservicer hereunder with respect to affected Contracts, if the Servicer
is not so licensed) is properly licensed in each jurisdiction to the extent
required by the laws of such jurisdiction to service the Contracts in
accordance with the terms hereof.
(b) Authorization; Binding Obligations. The Servicer has the power and
authority to make, execute, deliver and perform this Agreement and the
other Transaction Documents to which the Servicer is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which the Servicer is a party, and has taken all necessary
corporate action to authorize the due execution, delivery and performance
of this Agreement and the other Transaction Documents to which the Servicer
is a party. This Agreement and the other Transaction Documents to which the
Servicer is a party have been duly executed and delivered by the Servicer
and 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 Person 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,
39
<PAGE>
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.
(f) No Servicer Default. No event has occurred and is continuing and
no condition exists which constitutes a Servicer Default.
[remainder of this page intentionally left blank]
40
<PAGE>
ARTICLE IV
PERFECTION OF TRANSFERS 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 (including through any subservicer contemplated under
Section 5.05), for the benefit of, and as agent for, the Noteholders, the Equity
Certificateholder, the Indenture Trustee and the Issuer, as well as the Trust as
the owner thereof.
(b) The Servicer agrees to maintain the Contract Files at its offices where
they are currently maintained, or at such other offices of the Servicer (or a
subservicer contemplated under Section 5.05) as shall from time to time be
established by the Servicer or such subservicer (or in certain instances at
offsite storage facilities in the same general geographic area as an office of
the Servicer or subservicer, pursuant to contractual agreement between the
Servicer or subservicer and the Person owning or maintaining such offsite
facility). The Servicer may temporarily move individual Contract Files or any
portion thereof without notice or other such compliance, as necessary to conduct
collection and other servicing activities in accordance with the Servicing
Standard; provided, however, that the Servicer will take all action necessary to
maintain the perfection of the Trust's interest in the Trust Assets 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 Trust and the Owner Trustee
for the benefit of the Trust 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 Noteholder and the Equity
Certificateholder and the Trust; maintain accurate records pertaining to
each Contract to enable it to comply with the terms and conditions of this
Agreement; and maintain a current inventory thereof;
(ii) maintain and comply with Customary Policies and Procedures with
respect to Persons authorized to have access to the Contract Files;
(iii) attend to all details in connection with maintaining custody of
the Contract Files on behalf of the Noteholder and the Equity
Certificateholder and the Trust; and
(iv) indicate in the appropriate computer records that the Contracts
as of the Closing Date (or Substitution Transfer Date, as the case may be)
have been conveyed to the Trust.
(d) In performing its duties under this Section 4.01, the Servicer agrees
to act in accordance with the applicable Servicing Standard. 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.
(e) The Servicer agrees to indemnify the Noteholder and the Equity
Certificateholder, the Owner Trustee, the Indenture Trustee and the Trust 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 any of such parties as the result of any act or omission by the Servicer
relating to the maintenance and custody of the Contract Files or any other
breach or noncompliance of the Servicer in the performance of its duties and
obligations as Servicer hereunder; provided, however, that the Servicer will not
be liable to any such party for any portion of any such amount resulting from
the gross negligence or willful misconduct of such party.
41
<PAGE>
Section 4.02. Filings. On or prior to the Closing Date, the Servicer shall
cause UCC financing statement(s) to be filed, and from time to time the Servicer
shall take and cause to be taken such other actions and execute such other
documents as are necessary to perfect or further perfect and protect the Trust's
first priority interest in the Trust Assets against all other Persons. Such
additional actions may include 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
records or documents of title.
Section 4.03. Name Change or Relocation. (a) During the term of this
Agreement, neither the Servicer nor the Depositor shall change, nor shall the
Servicer permit any Financing Originator to change, its name, identity or
structure or relocate its chief executive office without first giving at least
30 days' prior written notice to the Servicer, the Owner Trustee, and and the
Indenture Trustee.
(b) If any change in either the Servicer's, a Financing Originator's or the
Depositor's name, identity or structure or other action would make any financing
or continuation statement or notice of lien seriously misleading within the
meaning of applicable provisions of the UCC or any title statute, the Servicer,
no later than thirty 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 Financing
Originator, the Servicer nor the Depositor shall change its place of business
(within the meaning of Article 9 of the UCC), from the locations specified in
Section 11.04 hereof unless it has first taken such action as is necessary to
preserve and protect the Trust's interest in the Trust Assets.
Promptly after taking any of the foregoing actions, the Servicer shall
deliver to the Owner Trustee and the Indenture Trustee an Opinion of Counsel
reasonably acceptable to the Owner Trustee and the Indenture Trustee stating
that, in the opinion of such counsel, all financing statements or amendments
necessary to preserve and protect the interests of the Trust and Indenture
Trustee in the Trust Assets have been filed, and reciting the details of such
filing.
[remainder of this page intentionally left blank]
42
<PAGE>
ARTICLE V
SERVICING OF CONTRACTS
Section 5.01. Initial Servicer's Appointment and Acceptance; Responsibility
for Contract Administration. ______ shall be and is hereby appointed as the
Servicer and custodian (as contemplated in Article IV hereof) pursuant to this
Agreement with respect to the Contract Assets in the Contract Pool. ______
accepts the appointment and agrees to act as the Servicer and custodian pursuant
to this Agreement.
Except to the extent otherwise specified herein or as contemplated in
Section 5.05, 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 Originator of the
Contracts to the Obligor. The Trust, at the written request of a Servicing
Officer, shall furnish the Servicer with any powers of attorney or other
documents necessary or appropriate in the opinion of the Servicer to enable the
Servicer to carry out its servicing and administrative duties hereunder. The
Servicer is hereby appointed the Servicer hereunder until such time as any
Servicing Transfer may be effected pursuant to Article VIII hereof.
Section 5.02. General Duties. The Servicer will service, administer and
enforce the Contracts in the Contract 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 or any other Transaction
Document. The Servicer will manage, service, administer, and make collections on
the Contracts in the Contract Pool in accordance with the Servicing Standard.
The Servicer's duties will include collection and posting of all payments,
responding to inquiries of Obligors regarding the Contracts in the Contract
Pool, investigating delinquencies, accounting for collections, furnishing
reports with respect to collections and payments as contemplated in Article IX
hereof, making Servicer Advances in its discretion, and using its best efforts
to maintain the perfected first priority interest of the Trust in the Trust
Assets. The Servicer 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 Contract Pool, the Trust
will be deemed to have automatically assigned such Contract to the Servicer
solely for purposes of, and to the extent necessary for, commencing or
participating in any such proceeding as a party or claimant (but in all cases
subject to the continuing interest of the Trust and its assignees in the
proceeds and recoveries from such proceedings, as and to the extent provided in
the Transaction Documents), and the Servicer is authorized and empowered by the
Trust, pursuant to this Section 5.02, to execute and deliver, on behalf of
itself and the Trust, any and all instruments of satisfaction or cancellation,
or partial or full release or discharge, and all other notices, demands, claims,
complaints, responses, affidavits or other documents or instruments in
connection with any such proceedings. If in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, then the Owner Trustee will, at the Servicer's expense and written
direction, take steps on behalf of the Trust to enforce the Contract, including
bringing suit in the Trust's name.
Section 5.03. Assignment or Replacement. At the request of an Obligor, the
Servicer may in its sole discretion consent to the assignment by such Obligor of
its rights under a Contract in the Contract Pool or the sublease of a unit of
the Equipment relating to such a Contract, so long as such Obligor remains
liable for all of its obligations under such Contract; provided, that the
Servicer may release such Obligor from its obligations if the Obligor's assignee
is determined by the Servicer to be of at least equivalent credit risk, all in
accordance with Customary Policies and Procedures. 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 Contract Pool as a result of a default
by the Obligor thereunder, and upon any such Contract becoming a
43
<PAGE>
Defaulted Contract, the Servicer will use commercially reasonable efforts to
dispose of any related Equipment. Without limiting the generality of the
foregoing, if the Servicer disposes of any such Equipment by purchasing such
Equipment or by selling such Equipment to any of its Affiliates, such
disposition shall be for a purchase price equal to the fair market value thereof
(as determined by the Servicer in its reasonable discretion). The Servicer will
deposit any Prepayments and any Liquidation Proceeds derived from any such
disposition in accordance with Article VII hereof.
Section 5.05. Subservicers. The Servicer may enter into servicing
agreements with one or more subservicers (including the Financing Originators or
any other 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 Contract 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 any Noteholder or Equity Certificateholder will
have any responsibility therefor. All actions of a subservicer taken pursuant to
such a subservicing 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 Trust will execute and deliver to the
Servicer, and the Servicer will prepare and furnish any subservicer with, any
powers of attorney and other documents necessary or appropriate to enable the
Servicer or a subservicer, as applicable, to carry out its servicing and
administrative duties under this Agreement and the other Transaction Documents.
Section 5.07. Notice to Obligors. Except as contemplated in clause (m) of
the definition of Eligible Contract, 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 transferred, assigned, and
conveyed pursuant to the Conveyancing Agreement, the Purchase and Sale Agreement
or pursuant to this Agreement; provided that, in the event that the Servicer
resigns or is replaced, then if the place for payment pursuant to any Contract
is changed, the Successor Servicer must give each related Obligor prompt written
notice of the appointment of the Successor Servicer and the place to which such
Obligor should make payments pursuant to each such Contract.
Section 5.08. Collection Efforts; Modification of Contracts. (a) The
Servicer will make reasonable efforts to collect all payments called for under
the terms and provisions of the Contracts in the Contract Pool as and when the
same become due, in accordance with the Servicing Standard. The Servicer is
authorized in its discretion to waive any Late Charges, or other administrative
fees, expenses and charges collectible in respect of a Contract in the Contract
Pool, including late payment interest, documentation fees, insurance
administration charges, and extension fees.
(b) The Servicer also may, subject to Sections 5.09 and 5.10, at the
request of an Obligor and at the Servicer's option, waive, amend, modify or
otherwise vary any other provision of a Contract in accordance with Customary
Policies and Procedures (it being understood that any modification or amendment
of a Contract resulting from an Insolvency Event with respect to the related
Obligor will not be deemed to have been granted by the Servicer hereunder),
including without limitation:
(i) in order to (A) change the Obligor's regular due date to a date
within the Collection Period in which such due date occurs, or (B)
re-amortize (over the remainder of the original Contract term) the
Scheduled Payments on a Contract following a partial Prepayment (provided,
that the sum of such partial Prepayment and the Contract Principal Balance
of the affected Contract after re-amortization is at least equal to the
Contract Principal Balance for such Contract prior to giving effect to the
partial Prepayment), or
(ii) for any other purpose; provided, that no such modification or
amendment shall:
44
<PAGE>
(A) change the amount or the due date of any Scheduled Payment
(except as provided in clauses (i)(A) and (B) above, Section 5.09 and
Section 5.10 below);
(B) release the related Equipment from the Contract, unless (1)
the release complies with Section 5.03 above, or (2) the release is
pursuant to a partial Prepayment (which, in the case of a partial
Prepayment on a Lease, meets the requirements of Section 5.09 below)
and the ratio of the fair market value (determined by the Servicer in
its reasonable discretion) of the related Equipment to the Contract
Principal Balance of the affected Contract after giving effect to such
Prepayment and release, is at least equal to such ratio existing prior
to such event;
(C) except as provided in clause (ii)(A) above, result in the
Contract Principal Balance of the Contract being less than it would
have been absent such modification or amendment; or
(D) if such modification or amendment had been in effect on the
relevant Transfer Date with respect to the Contract, cause or have
caused the Contract not to constitute an Eligible Contract.
Section 5.09. Prepayments of Certain Contracts. The Servicer may, at its
option and in accordance with Customary Policies and Procedures, agree to permit
a Contract in the Contract Pool that is not otherwise contractually prepayable
by its terms and is not a Defaulted Contract, to become a Prepaid Contract
through a voluntary Prepayment by the Obligor (which shall not be deemed to
include prepayment due to a Casualty Loss); provided, that the Servicer will not
permit the voluntary full or partial Prepayment of such a Contract unless the
amount of such Prepayment (or, in the case of a partial Prepayment, the sum of
such Prepayment and the remaining Contract Principal Balance of the Contract
after application of such Prepayment), together with such additional amounts as
are (i) otherwise available to or supplied by the Servicer for the purpose of
prepaying such Contract, and (ii) deposited in the Collection Account
contemporaneously with the deposit therein of such Prepayment, is at least equal
to the Required Payoff Amount for such Contract determined as of the beginning
of the current Collection Period.
Section 5.10. Certain Extensions; Acceleration. (a) The Servicer may
(subject to subsection (b) below) grant payment extensions on a Contract in the
Contract Pool, consistent with Customary Policies and Procedures (it being
understood that any extensions on a Contract resulting from an Insolvency Event
with respect to the related Obligor will not be deemed to have been granted by
the Servicer hereunder) if the Servicer believes in good faith that such
extension is necessary to avoid a termination and liquidation of such Contract
and will maximize the amount to be received by the Trust with respect to such
Contract; provided, however, that the aggregate period of all extensions granted
on a Contract shall not exceed six months. Nothing in this Section 5.10 shall be
deemed to prevent the Servicer from extending or renewing, or otherwise
accepting the continued performance by the Obligor under, a Contract after
expiration of its stated term.
(b) The Servicer also, consistent with Customary Policies and Procedures,
may accelerate (or elect not to accelerate) the maturity of all or any Scheduled
Payments under any Contract in the Contract 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 Contract Pool (and take other
action in accordance with applicable Customary Policies and Procedures,
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 Contract Pool, the Servicer will make reasonable efforts
consistent with the applicable Servicing Standard to collect (or cause to be
collected) all payments with respect to amounts due for taxes, assessments and
insurance premiums relating to
45
<PAGE>
such Contract or the related Equipment and remit such amounts to the appropriate
Governmental Authority or insurer on or prior to the date such payments are due.
Section 5.12. Suits by Servicer. Notwithstanding anything herein to the
contrary, the Servicer does not have any obligation pursuant to this Agreement
to appear in, prosecute or defend any legal action which is not incidental to
its servicing duties under this Agreement.
Section 5.13. Remittances. The Servicer will service all Collections in
accordance with Article VII hereof.
Section 5.14. Servicer Advances. For any Collection Period, if the Servicer
determines that any Scheduled Payment (or portion thereof) which was due and
payable pursuant to a Contract in the Contract Pool during such Collection
Period was not received prior to the end of such Collection Period, the Servicer
may make a Servicer Advance in an amount up to the amount of such delinquent
Scheduled Payment (or portion thereof), to the extent that in its sole
discretion it determines that it can recover such amount from subsequent
Collections under the related Contract. The Servicer will deposit any Servicer
Advances into the Collection Account on or prior to 11:00 a.m. (New York time)
on the Deposit Date, in immediately available funds. The Servicer will be
entitled to be reimbursed for Servicer Advances pursuant to Article VII hereof.
Section 5.15. Realization Upon Defaulted Contract. The Servicer will use
its best efforts consistent with the applicable Servicing Standard to repossess
or otherwise comparably convert the ownership of any Equipment relating to a
Defaulted Contract and will act as transfer and processing agent for Equipment
or Applicable Security which it repossesses. The Servicer will follow such other
practices and procedures, consistent with the Servicing Standard, 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 (determined by
the Servicer in its reasonable discretion). In any case in which any such
Equipment or Applicable Security has suffered damage, the Servicer will not
expend funds in connection with any repair or toward the repossession of such
Equipment or Applicable Security unless it determines in its discretion that
such repair and/or repossession will increase the Liquidation Proceeds by an
amount greater than the amount of such expenses. The Servicer will remit to the
Collection Account the Liquidation Proceeds received in connection with the
transfer or disposition of Equipment or Applicable Security relating to a
Defaulted Contract in accordance with Article VII hereof.
Section 5.16. Maintenance of Insurance Policies. The Servicer will use
reasonable efforts, consistent with the Servicing Standard, to ensure that each
Obligor complies with applicable insurance requirements set forth in the related
Contract; provided that the Servicer, in accordance with Customary Policies and
Procedures, may allow Obligors to self-insure. If an Obligor fails to maintain
property damage insurance to the extent required under its Contract, the
Servicer may, consistent with Customary Policies and Procedures, purchase and
maintain such insurance on behalf of, and at the expense of (if the applicable
Contract so provides), the Obligor. In connection with its activities as
Servicer of Contracts in the Contract Pool, the Servicer agrees to present, on
behalf of itself, the Trust and the Noteholders or Equity Certificateholders,
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.
Section 5.17. Certain Other Duties With Respect to Trust. The Servicer
shall, and hereby agrees that it will, monitor the Trust's compliance with all
applicable provisions of state and federal securities laws, notify the Trust and
the Administrator of any actions to be taken by the Trust necessary for
compliance with such laws and prepare on behalf of the Trust and the
Administrator all notices, filings or other documents or instruments required to
be filed under such laws.
46
<PAGE>
Section 5.18. Servicing Compensation. As compensation for its servicing
activities with respect to the Contract Pool, and also in consideration of its
expenses as set forth in Section 5.19, the Servicer shall be entitled to receive
a servicing fee in respect of any Collection Period (or portion thereof) (with
respect to each Collection Period, the "Servicing Fee"), equal to the sum of (i)
one-twelfth of the product of (A) the Servicing Fee Percentage and (B) the
Contract Pool Principal Balance as of the first day of such Collection Period
and (ii) any amount described in the clause (iv) of the definition of "Excluded
Accounts."
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 to be for the account of the Trust or the Depositor, but excluding
Liquidation Expenses incurred as a result of activities contemplated by Section
5.15 (which may be netted from Liquidation Proceeds). 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 Collection
Account. 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, payable from Collections as provided herein.
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
Trust or the Administrative Agent to determine the status of each Contract in
the Contract Pool.
Section 5.21. Inspection. (a) The Servicer shall afford the Owner Trustee
and the Indenture Trustee and their respective authorize agents not more
frequently than once during each calendar year at the Servicer's expense, not to
exceed $1,000 in expenses and upon reasonable prior written request, reasonable
access during normal business hours to the Servicer's records relating to the
Contracts in the Contract Pool, and will cause its personnel to assist in any
examination of such records by any such Person, 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, such examining party may, using generally accepted
audit procedures, verify the status of each such Contract and review the
Computer Disk and records relating thereto for conformity to reports prepared by
the Servicer pursuant to Article IX hereof, and compliance with the standards
represented to exist as to each such Contract in this Agreement and the other
Transaction Documents.
(b) At all times during the term hereof, the Servicer shall keep available
a copy of the Schedule of Contracts at its principal executive office for
inspection by any such party referred to in subsection (a) of this Section 5.21.
Section 5.22. Trust To Cooperate in Releases. At the same time as (i) any
Lease in the Contract Pool terminates and the Equipment related to such Lease is
sold, (ii) any Contract in the Contract Pool becomes a Prepaid Contract and in
connection therewith the Equipment related to such Prepaid Contract is sold,
(iii) the final Scheduled Payment is made in full on a Contract in the Contract
Pool, (iv) a Contract previously in the Contract Pool becomes a Replaced
Contract in accordance with Section 2.04, or is repurchased by deposit of a
Purchase Amount as provided herein, or (v) the Servicer substitutes or replaces
any unit of Equipment as contemplated in Section 5.03, the Trust shall to the
extent requested by the Servicer release the Trust's interest in the Equipment
relating to such affected 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 Equipment the subject of a Contract still in
the Contract Pool (other than with respect to Equipment that is replaced
pursuant to Section 5.03). In connection with any transfer of such Equipment,
the Trust and the Indenture Trustee shall 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 Trust nor the Indenture Trustee shall be
deemed to make any representation or warranty, express or implied, with respect
to any such Equipment in
47
<PAGE>
connection with such transfer and assignment. Nothing in this Section 5.22 shall
diminish the Servicer's obligations pursuant to Article VII with respect to the
proceeds of any such transfer.
Section 5.23. Servicer's Year 2000 Compatibility. The Servicer shall take
all reasonable action necessary to assure that its computer based systems are
able to operate and effectively process data including dates on or after January
1, 2000.
Section 5.24. Separate Entity Existence. The Servicer agrees to take or
refrain from taking or engaging in with respect to the Depositor, as applicable,
each of the actions or activities specified in the "nonsubstantive
consolidation" opinion of Winston & Strawn (or in any related Certificate of
NFUSA) delivered on the Closing Date, upon which the conclusions expressed
therein are based.
ARTICLE VI
COVENANTS OF THE DEPOSITOR
Section 6.01. LLC Existence. During the term of this Agreement, the
Depositor will keep in full force and effect its existence, rights and
franchises as a limited liability company under the laws of the jurisdiction of
its formation 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 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
Depositor will take no action to cause any Contract not originally consisting of
or evidenced by an instrument (except to the extent part of chattel paper) (as
such terms are defined in the UCC), to be evidenced by an instrument, except in
connection with the enforcement or collection of such Contract.
Section 6.03. Security Interests. The 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 Contract Pool or on any other
Trust Asset or on any related Equipment, whether now existing or hereafter
transferred to the Trust, or any interest therein (except for Permitted Liens).
The Depositor will immediately notify the Trust and the Indenture Trustee of the
existence of any Lien (other than Permitted Liens) on any Contract in the
Contract Pool or on any other Trust Assets or on any related Equipment; and the
Depositor shall defend the right and interest of the Trust in, to and under the
Contracts in the Contract 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 (i) the Depositor from suffering to exist
Permitted Liens upon any of the Contracts in the Contract Pool or any related
Equipment, or (ii) repurchases or substitutions by NFUSA pursuant to the
Purchase and Sale Agreement.
Section 6.04. Delivery of Collections. The Depositor agrees to pay to the
Servicer promptly any misdirected Collections received by the Depositor in
respect of the Contracts in the Contract Pool, for application in accordance
with Article VII.
Section 6.05. Regulatory Filings. The Depositor shall make any filings,
reports, notices, applications and registrations with, and seek any consents or
authorizations from, the United States Securities and Exchange Commission and
any state securities authority on behalf of the Trust as may be necessary or
that the Depositor deems advisable to comply with any federal or state
securities or reporting requirements or laws.
Section 6.06. Compliance With Law. Depositor hereby agrees to comply in all
material respects with all Requirements of Law applicable to Depositor.
48
<PAGE>
Section 6.07. Activities. The 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
Depositor may purchase and sell (or grant Liens in respect of) contracts and/or
other related assets similar to the Contracts to other Persons in securitization
or other non-recourse financing transactions involving ____, NFUSA or any of
their Affiliates on terms and conditions (with respect to the liabilities
imposed upon the Depositor by virtue of such transactions, as well as in respect
of agreements or restrictions concerning activities of the Depositor and its
relations or interactions with TCC or a Financing Originator or other applicable
Affiliate relevant to "bankruptcy remoteness" or "substantive consolidation"
analysis), in each case substantially similar to such terms and conditions
applicable to the Depositor hereunder and under the other Transaction Documents.
Section 6.08. Indebtedness. The Depositor shall not create, incur, assume
or suffer to exist any Indebtedness or other liability whatsoever, except (i)
obligations incurred under this Agreement or other Transaction Documents, or
incidental thereto, or (ii) liabilities incident to the maintenance of its
corporate existence in good standing, or (iii) obligations in connection with
transactions described in the proviso to Section 6.07, as limited thereby.
Section 6.09. Guarantees. The 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 as contemplated hereby and in connection with
transactions described in Section 6.07, as limited thereby.
Section 6.10. Investments. The 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 or other acquisitions of
Contracts and related Contract Assets pursuant to the Purchase and Sale
Agreement or purchases or other acquisitions of similar contracts and related
assets permitted by Section 6.07, or (ii) the holding of ownership interests in
Equipment contemplated herein or in transactions permitted by Section 6.07, or
(iii) for investments in Eligible Investments in accordance with the terms of
this Agreement.
Section 6.11. Merger; Transfers. The 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. Payments. The Depositor shall not declare or pay, directly or
indirectly, any dividend or make any other payment (whether in cash or other
property) with respect to the profits, assets or capital of the Depositor or any
Person's interest therein, or purchase, redeem or otherwise acquire for value
any of its equity ownership interests now or hereafter outstanding, except that
the Depositor may effect payments of its earnings in respect of Trust Assets to
its members in each case so long as it would continue to be Solvent after giving
effect thereto, and otherwise in accordance with the Transaction Documents.
Section 6.13. Other Agreements. The 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
Formation or Limited Liability Company Agreement except in accordance with
the Transaction Documents and with the consent of the Required Holders, or issue
any power of attorney except to the Owner Trustee, the Indenture Trustee or
the Servicer pursuant to the Transaction Documents (or other similar powers
of attorney in connection with transactions permitted by the proviso to
Section 6.07).
49
<PAGE>
Section 6.14. Separate Entity Existence. The Depositor shall:
(i) Maintain its own deposit account or accounts, separate from
those of any Affiliate, with commercial banking institutions. The
funds of the Depositor will not be diverted to any other Person or for
other than authorized uses of the Depositor.
(ii) Ensure that, to the extent that it shares the same officers
or other employees as any of its members 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 members 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
Depositor contracts or does business with vendors or service providers
when the goods and services provided are partially for the benefit of
any other Person, the costs incurred in so doing shall be fairly
allocated to or among such entities for whose benefit the goods and
services are provided, and each such entity shall bear its fair share
of such costs. All material transactions between Depositor and any of
its Affiliates shall be only on an arm's length basis.
(iv) To the extent that the Depositor and any of its members 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 Limited
Liability Company Agreement and its Certificate of Formation, and
observe all necessary, appropriate and customary limited liability
company formalities, including, but not limited to, holding all
regular and special members' and manager/directors' meetings
appropriate to authorize all entity action, keeping separate and
accurate records of such meetings and its actions, 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 or engaging in, as applicable,
each of the actions or activities specified in the "true sale" and
"nonsubstantive consolidation" opinions of Winston & Strawn delivered
on the Closing Date (or in any related certificate delivered in
connection therewith), upon which the conclusions expressed therein
are based.
Section 6.15. Location; Records. The Depositor shall not move outside the
State of New Jersey, the location of its chief executive office, without thirty
(30) days' prior written notice to the Trust, the Indenture Trustee and the
Servicer, and 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 Trust Assets. The Depositor will
give the Indenture Trustee, Trust and the Servicer prompt notice of a change
within the State of New Jersey of the location of its chief executive office.
Section 6.16. Liability of Depositor; Indemnities. The Depositor shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Depositor under this Agreement.
The Depositor shall indemnify, defend and hold harmless the Trust, the
Owner Trustee, the Indenture Trustee and the Servicer (and any of their
respective officers, directors, employees or agents) from and against any taxes
that may at any time be asserted against any such Person with respect to the
transactions contemplated herein
50
<PAGE>
and in the other Transaction Documents, including any sales, gross receipts,
general corporation, tangible personal property, 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 transfer of Contracts
to the Trust or the issuance and original sale of Senior Certificates, or
asserted with respect to ownership of Contract Assets, or federal or other
income taxes arising out of payments from Collections on the Trust Assets) and
costs and expenses in defending against the same.
The Depositor shall indemnify, defend and hold harmless the Trust, the
Owner Trustee, the Indenture Trustee and the Servicer (and any of their
respective officers, directors, employees or agents) and the Securityholders
from and against any loss, liability or expense incurred by reason of the
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 Depositor shall indemnify, defend and hold harmless the Trust, the
Owner Trustee, the Indenture Trustee and the Servicer (and any of their
respective officers, directors, employees or agents) and any Senior
Certificateholder from and against all costs, expenses, losses, claims, damages
and liabilities arising out of or incurred in connection with the acceptance or
performance (or failure of performance) of the trusts and duties herein and, in
the case of the Owner Trustee, in the Trust Agreement and, in the case of the
Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability in the case of (i) the Owner Trustee;
shall be due to the willful misfeasance, bad faith or negligence of the Owner
Trustee, or shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust Agreement,
or (ii) the Indenture Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Indenture Trustee.
The 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 Depositor would be
liable if the Trust were a partnership under the Delaware Revised Uniform
Limited Partnership Act in which the Depositor were a general partner; provided,
however, that the Depositor shall not be liable for any losses incurred by the
Equity Certificateholder in the capacity of an investor in the Equity
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
Depositor shall not be liable) shall be deemed third party beneficiaries of this
paragraph. The obligation of the Depositor under this paragraph shall be
evidenced by the Equity Certificate.
The 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 Depositor's or Trust's violation of federal or state
securities laws in connection with the offering and sale of the Notes and the
Certificate.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation; provided,
however, that the indemnification under this Section, notwithstanding anything
to the contrary, is limited to the assets of the Depositor (including its rights
under Article VI of the Purchase and Sale Agreement); provided, further, any
indemnity payments to be made pursuant to this Section shall not be made from
the Trust Assets (except to the extent any of the same have been distributed to
the Depositor free and clear of any interest of the Trust therein and except to
the extent NFUSA as co-obligor is obligated to make such payment pursuant to
Article VI of the Purchase and Sale Agreement), and such indemnity payments, if
unpaid, shall not constitute a claim against the Trust or the Trust Assets
(except in respect of rights against NFUSA in respect of such Article VI). If
the Depositor (or NFUSA pursuant to such Article VI) 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 Depositor (or
NFUSA, as applicable), without interest.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee or the Indenture Trustee, as the case may be, and the
termination of this Agreement.
51
<PAGE>
Section 6.17. Bankruptcy Limitations. The Depositor shall not, without the
affirmative vote of each of the manager/directors of the Depositor (which must
include the affirmative vote of at least one duly appointed Independent Director
as defined in the Certificate of Formation and the Limited Liability Company
Agreement of the Depositor) (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 Depositor 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 entity
action in furtherance of the actions set forth in clauses (A) through (F) above;
provided, however, that no manager/director may be required by any member of the
Depositor to consent to the institution of bankruptcy or insolvency proceedings
against the Depositor so long as it is Solvent.
Section 6.18. Limitation on Liability of Depositor and Others. The
Depositor and any director or officer or employee or agent of the 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
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 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.
[remainder of this page intentionally left blank]
52
<PAGE>
ARTICLE VII
ESTABLISHMENT OF ACCOUNTS; PAYMENTS
Section 7.01. Trust Accounts; Collections. (a) On or before the Closing
Date, the Trust Deposits or (or the Servicer on its behalf) shall establish the
Collection Account, Note Distribution Account and Cash Collateral Account, each
in the name of the Indenture Trustee for the benefit of the Noteholders and the
Certificateholder. The Servicer and Indenture Trustee are hereby required to
ensure that each of the Trust Accounts is established and maintained as a
segregated corporate trust account with a Qualified Institution. If any
institution with which any of the accounts established pursuant to this Section
7.01(a) ceases to be a Qualified Institution, the Servicer shall within 30 days
after notice of such event establish a replacement account at a Qualified
Institution, and effect (or cause to be effected) a concurrent transfer of all
amounts in the current non-qualifying account to the replacement account.
(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), all Pledged
Revenues on deposit with the Servicer in the form of available funds, and all
Pledged Revenues otherwise received by the Servicer (and all Investment Earnings
from investments of the Collection Account).
(c) Notwithstanding Section 7.01(b), the Servicer shall deposit or
cause to be deposited, on the Closing Date and on each Substitution Transfer
Date, in immediately available funds into the Collection Account, all Pledged
Revenues received after the applicable Cutoff Date and through and including the
date which is two Business Days preceding the Closing Date or Substitution
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), if (i) the Servicer makes
a deposit into the Collection Account in respect of Pledged Revenues of a
Contract in the Contract Pool and such Pledged Revenues were 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 Pledged Revenues 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 Pledged Revenues 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. Cash Collateral Account.
(a) On the Closing Date, the Depositor shall deposit the sum of
$_______ into the Cash Collateral Account from the net proceeds of the sale of
the Notes and the Indenture Trustee shall deposit into the Cash Collateral
Account proceeds of loans made by the Cash Collateral Account Lenders equal to
$_________.
(b) If on any Payment Date, the amounts on deposit in the Cash
Collateral Account (after giving effect to all deposits thereto or withdrawals
therefrom on such Payment Date) is greater than the Required Cash Collateral
Amount, the Indenture Trustee shall distribute the excess of the amount on
deposit in the Cash Collateral Account over the Required Cash Collateral Amount
as provided in the Cash Collateral Account Agreement. Amounts properly
distributed pursuant to the prior sentence shall be deemed released from the
Trust Estate and the security interest herein granted to the Trustee, and the
Trust shall in no event be required to refund such distributed amounts.
Section 7.03. Trust Account Procedures. If the Servicer so directs, in
writing (with a copy to the Owner Trustee), the Qualified Institution
maintaining any Trust Account may invest the amounts therein in Eligible
Investments of the type specified in such written direction that mature not
later than one Business Day prior to the next succeeding Payment Date (or that
mature on such other Business Day as the Rating Agencies shall aprove). Once
such funds are invested, the Servicer shall not change or permit a change in the
investment of such funds. Subject to the other provisions hereof, the Indenture
Trustee shall have sole control over each such investment and
53
<PAGE>
the income thereon, and any certificate or other instrument evidencing any such
investment, if any, shall be delivered directly to the Indenture Trustee or its
agent, together with each document of transfer, if any, necessary to transfer
title to such investment to the Indenture Trustee in a manner which complies
with this Section 7.03. All Investment Earnings on investments of funds in the
Collection Account and Note Distribution Account shall be deposited in or
maintained within the Collection Account pursuant to Section 7.01 and
distributed on the next Payment Date pursuant to Section 7.05. All Investment
Earnings in the Cash Collateral Account shall be distributed in accordance with
the Cash Collateral Account Agreement. The Servicer, the Depositor and the Trust
agree and acknowledge that the Indenture Trustee is to have "control" (within
the meaning of Section 8-102 of the UCC as enacted in New York) of collateral
consisting of "Investment Property" (within the meaning of Section 9-115 of the
UCC as enacted in New York) for all purposes of this Agreement. In the absence
of timely written direction from the Servicer, the Indenture Trustee shall
invest or cause to be invested amounts in the Trust Accounts in Eligible
Investments of the type specified in clause (vi) of the definition of Eligible
Investments herein.
Section 7.04. Securityholder Payments. (a) On each Payment Date, each
Noteholder and the Equity Certificateholder as of the related Record Date shall
be paid amounts payable on such date pursuant to Section 7.05 below by check
mailed to such Noteholder or the Equity Certificateholder at the address for
such Noteholder or the Equity Certificateholder appearing on the Note Register
or the Certificate Register, or by wire transfer if such Noteholder or the
Equity Certificateholder has provided written instructions for such payment
method to the Indenture Trustee and Owner Trustee, respectively, at least ten
days prior to such Payment Date.
(b) The Indenture Trustee shall serve as the Paying Agent hereunder and
shall make the payments to the Noteholders and the Equity 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 Payments.
(a) Distributions. On each Payment Date, the Trustee shall (based
solely on the information contained in thee Servicer's Certificate delivered on
the related Determination Date, upon which the Trustee may conclusively rely)
distribute the following amounts and in the order of priority specified below.
Within each order of priority, amounts shall be deemed withdrawn first from
Available Pledged Revenues, and second (but only as to amounts described in
clauses (ii) and (iii) below) from amounts deposited in the Collection Account
pursuant to Section 7.02.
(i) first, from the Available Pledged Revenues then on deposit
in the Collection Account, to the Servicer,, the Sevicing Fee and
Servicer Advances for the related Collection Period (less that portion
thereof to be applied by the Trustee in accordance with the Cash
Collateral Account Agreement) and any amounts specified in Section 2.05
hereof, to the extent the Servicer has not reimbursed itself in respect
of such amounts;
(ii) second, from the Amount Available then remaining on
deposit in the Collection Account, to the Note Distribution Account an
amount equal to the Note Interest Distributable Amount for such Payment
Date.
(iii) third, from the Amount Available then remaining on
deposit in the Collection Account, to the Note Distribution Account, an
amount equal to the Note Principal Distributable Amount for such
Payment Date;
(iv) fourth, from the Amount Available then remaining on
deposit in the Collection Account, to the Cash Collateral Account, the
amount, if any, necessary to increase the balance therein to the
Requisite Cash Collateral Amount;
54
<PAGE>
(v) fifth, from the Amount Available then remaining on deposit
in the Collection Account, to the parties entitled thereto in
accordance with the Cash Collateral Account Agreement, any amounts due
and unpaid thereunder; and
(vi) sixth, any remaining Amount Available to the Owner
Trustee for distribution to the Equity Certificateholder.
In the event the Servicer's Certificate shows that, as of any
Determination Date, there are amounts on deposit in the Collection
Account which do not constitute Pledged Revenues due to the clause
(ii)(b) of the definition thereof and to which the Depositor is
entitled pursuant to Section 2.04 hereof, the Trustee shall forthwith
pay such amount to or upon the order of the Depositor.
(b) Allocations and Payments Prior to an Event of Default. On each
Payment Date and Redemption 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 transfer, and on the succeeding
Payment Date the Indenture Trustee acting in accordance with such written
instructions shall withdraw and transfer, the amounts required to be withdrawn
from the Note Distribution Account in order to make the following payments or
allocations from the Amount Available for the related Payment Date (in each
case, such payment or transfer to be made only to the extent funds remain
available therefor after all prior payments and transfers for such Payment Date
have been made), in the following order of priority:
(i) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders an amount equal to the Class A-1 Interest Distributable
Amount; provided that if the Amount Available remaining to be allocated
pursuant to this clause are less than the full amount required to be so
allocated, such remaining Amount Available shall be allocated to the
Holders of Class A-1 Notes pro rata based upon their respective
entitlement pursuant to this clause;
(ii) pay to the Indenture Trustee on behalf of the Class A-2
Noteholders an amount equal to the Class A-2 Interest Distributable
Amount ; provided that if the Amount Available remaining to be
allocated pursuant to this clause are less than the full amount
required to be so allocated, such remaining Amount Available shall be
allocated to the Holders of Class A-2 Notes pro rata based upon their
respective entitlement pursuant to this clause;
(iii) pay to the Indenture Trustee on behalf of the Class A-3
Noteholders an amount equal to the Class A-3 Interest Distributable
Amounts provided that if the Amount Available remaining to be allocated
pursuant to this clause are less than the full amount required to be so
allocated, such remaining Amount Available shall be allocated to the
Holders of Class A-3 Notes pro rata based upon their respective
entitlement pursuant to this clause;
(iv) pay to the Indenture Trustee on behalf of the Class A-4
Noteholders an amount equal to the Class A-4 Interest Distributable
Amount; provided that if the Amount Available remaining to be allocated
pursuant to this clause are less than the full amount required to be so
allocated, such remaining Amount Available shall be allocated to the
Holders of Class A-4 Notes pro rata based upon their respective
entitlement pursuant to this clause;
(v) pay to the Indenture Trustee on behalf of the Class A-5
Noteholders an amount equal to the Class A-5 Interest Distributable
Amount; provided that if the Amount Available remaining to be allocated
pursuant to this clause are less than its full amount required to be so
allocated, such remaining Amount Available shall be allocated to its
Holders of Class A-5 Notes pro rata based upon their respective
entitlement pursuant to this clause;
55
<PAGE>
(vi) pay to the Indenture Trustee on behalf of the Class B
Noteholders an amount equal to the Class B Interest Distributable
Amount; provided, that if the Amount Available remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Amount Available shall be paid
to the Holders of Class B Notes pro rata based on their respective
entitlement pursuant to this clause;
(vii) pay to the Indenture Trustee on behalf of the Class C
Noteholders, an amount equal to the Class C Interest Distributable
Amount; provided, that if the Amount Available remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Amount Available shall be paid
to the Holders of Class C Notes pro rata based on their respective
entitlement pursuant to this clause;
(viii) pay to the Indenture Trustee on behalf of the Class D
Noteholders an amount equal to the Class D Interest Distributable
Amount; provided, that if the Amount Available remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Amount Available shall be paid
to the Holders of Class D Notes pro rata based on their respective
entitlement pursuant to this clause;
(ix) prior to the Payment Date on which the Class A-1
Principal Balance has been reduced to zero, pay to the Indenture
Trustee, on behalf of the Class A-1 and Class A-5 Noteholders, the
Class A Principal Payment Amount, _____% of which shall be distributed
to the Class A-1 Noteholders and _____% of which shall be distributed
to the Class A-5 Noteholders; provided that if the amount available to
make such payments is not sufficient to pay the full Class A Principal
Payment Amount, such amount available shall be allocated (1) if such
Payment Date is the Class A-1 Stated Maturity Date (or any Payment Date
thereafter until the Class A-1 Principal Balance has been reduced to
zero), first, to the Class A-1 Noteholders to the extent necessary to
reduce the Class A-1 Principal Balance to zero, and, thereafter, to the
Class A-5 Noteholders, and (2) for any other Payment Date, between the
Class A-1 Noteholders and the Class A-5 Noteholders in the respective
percentages specified above in this clause;
(x) on the Payment Date on which the Class A-1 Principal
Balance shall be reduced to zero, pay to the Indenture Trustee, on
behalf of the Class A Noteholders, the Class A Principal Payment
Amount, allocated as follows:
(1) to the Class A-1 Noteholders, the remaining Class
A-1 Principal Balance;
(2) to the Class A-5 Noteholders, an amount equal to
_____% of the Total Principal Payment Amount; and
(3) the remaining Class A Principal Payment Amount,
if any, to the Class A-2 Noteholders until the
Class A-2 Principal Balance has been reduced to
zero, then to the Class A-3 Noteholders until the
Class A-3 Principal Balance has been reduced to
zero, then to the Class A-4 Noteholders until the
Class A-4 Principal Balance has been reduced to
zero and then to the Class A-5 Noteholders until
the Class A-5 Principal Balance has been reduced
to zero;
provided that if the amount available to make such payments is not
sufficient to pay the full Class A Principal Payment Amount, such
amount available shall be allocated, first, to the Class A-1 Notes and
the Class A-5 Notes as provided in clauses (1) and (2) above (and, if
such amount available is not sufficient to pay the full amounts so
provided for, such amount available shall be allocated (I) if such
Payment Date is the Class A-1 Stated Maturity Date (or any Payment Date
thereafter until the Class A-1 Principal Balance has been reduced to
zero), first, to the Class A-1 Noteholders to the extent necessary to
reduce the Class A-1 Principal Balance to zero, and, thereafter, to the
Class A-5 Noteholders, and (II) for any other Payment Date, between the
Class A-1 Notes and the Class A-5 Notes pro rata based upon the amounts
otherwise
56
<PAGE>
payable pursuant to such clauses (1) and (2)), and, thereafter, to the
Class A-2, Class A-3, Class A-4 and Class A-5 Notes as provided in
clause (3) above;
(xi) after the Payment Date on which the Class A-1 Principal
Balance has been reduced to zero, pay to the Indenture Trustee, on
behalf of the Class A Noteholders, the Class A Principal Payment
Amount, allocated as follows::
(1) on and prior to the Payment Date on which the
Class A-4 Principal Balance has been reduced to
zero:
(I) to the Class A-5 Noteholders, an amount
equal to _____% of the Total Principal
Payment Amount; and
(II) the remaining Class A Principal Payment
Amount to the Class A-2 Noteholders until
the Class A-2 Principal Balance has been
reduced to zero, then to the Class A-3
Noteholders until the Class A-3 Principal
Balance has been reduced to zero, then to
the Class A-4 Noteholders until the Class
A-4 Principal Balance has been reduced to
zero and then to the Class A-5 Noteholders
until the Class A-5 Principal Balance has
been reduced to zero;
provided that if the amount available to make
such payments is not sufficient to pay the full
Class A Principal Payment Amount, such amount
available shall be allocated (x) if such Payment
Date is the Stated Maturity Date of the Class
A-2, A-3 or A-4 Notes (or any Payment Date
thereafter until the Principal Balance of such
Class has been reduced to zero), first, to the
Noteholders of such Class to the extent necessary
to reduce the Principal Balance of such Class to
zero, and, thereafter, to the Class A-5
Noteholders, and (y) for any other Payment Date,
between the Class A-5 Notes, on the one hand, and
the Class A-2, Class A-3 and Class A-4 Notes, on
the other, pro rata based upon the amounts
otherwise payable pursuant to clauses (I) and
(II) above; and
(2) after the Payment Date on which the Class A-4
Principal Balance has been reduced to zero, to
the Class A-5 Notes until the Class A-5 Principal
Balance has been reduced to zero;
(xii) pay to the Indenture Trustee on behalf of the Class B
Noteholders, the Class B Principal Payment Amount;
(xiii) pay to the Indenture Trustee on behalf of the Class C
Noteholders, the Class C Principal Payment Amount;
(xiv) pay to the Indenture Trustee on behalf of the Class D
Noteholders, the Class D Principal Payment Amount; and
(xv) the Additional Principal, if any, to the Indenture
Trustee for the benefit, sequentially, of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class B, Class C, and Class D
Noteholders.
(c) Allocations and Payments after an Event of Default. On each
Determination Date after the occurrence of an Event of Default, the Servicer,
pursuant to monthly payment instructions and notification, shall instruct the
Indenture Trustee to withdraw and transfer, and on the succeeding Payment Date
the Indenture Trustee acting in accordance with such instructions shall withdraw
and transfer, the amounts required to be withdrawn from
57
<PAGE>
the Note Payment Account in order to make the following payments or allocations
from the Amount Available for the related Payment Date (in each case, such
payment or transfer to be made only to the extent funds remain available
therefor after all prior payments and transfers for such Payment Date have been
made), in the following order of priority:
(i) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders, Class A-2 Noteholders; Class A-3 Noteholders, the Class
A-4 Noteholders and the Class A-5 Noteholders, an amount equal to
interest accrued in respect of the related Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, class A-4 Notes and Class A-5 Notes at the
respective Class A-1 Interest rate, Class A-2 Interest Rate, class A-3
Interest Rate, Class A-4 Interest Rate and Class A-5 Interest Rate for
the Accrual Period immediately preceding such Payment Date, together
with any such amounts that accrued in respect of prior Accrual Periods
for which no allocation was previously made; provided that if the
Amount Available remaining to be allocated pursuant to this clause are
less than the full amount required to be so allocated, such remaining
Amount Available shall be allocable to the Holders of the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class A-5
Notes pro rata based upon the then-outstanding Principal Amount
thereof;
(ii) 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
Payment Date, together with any amounts that accrued in respect of
prior Accrual Periods for which no allocation was previously made;
provided, that if the Amount Available remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Amount Available shall be paid to the Holder of
each Class B Note pro rata based on the outstanding Principal Amount
thereof;
(iii) 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
Payment Date, together with any such amounts that accrued in respect of
prior Accrual Periods for which no allocation was previously made;
provided, that if the Amount Available remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Amount Available shall be paid to the Holder of
each Class C Note pro rata based on the outstanding Principal Amount
thereof;
(iv) 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
Payment Date, together with any such amounts that accrued in respect of
prior Accrual Periods for which no allocation was previously made;
provided, that if the Amount Available remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Amount Available shall be paid to the Holder of
each Class D Note pro rata based on the outstanding principal amount
thereof;
(v) pay to the Indenture Trustee, on behalf of the Class A-1
Noteholders, the Class A-1 Principal Payment Amount for such Payment
Date; provided (i) that if the Amount Available remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Amount Available shall be
allocated to each Class A-1 Note pro rata based on the outstanding
principal amount thereof and (ii) if the amount to be allocated
pursuant to this clause exceeds the amount needed to repay outstanding
Class A-1 Note principal in full, then such excess shall be applied in
repayment of principal on Class A-2 Notes;
(vi) pay to the Indenture Trustee, on behalf of the Class A-2
Noteholders, the Class A-2 Principal Payment Amount for such Payment
Date; provided (i) that if the Amount Available remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Amount Available shall be
allocated to each Class A-2 Note pro rata based on the outstanding
principal amount thereof, and (ii) if the amount to be allocated
pursuant to this clause exceeds the amount needed to
58
<PAGE>
repay outstanding Class A-2 Note principal in full, then such excess
shall be applied in repayment of principal on the Class A-3 Notes;
(vii) pay to the Indenture Trustee, on behalf of the Class A-3
Noteholders, the Class A-3 Principal Payment Amount for such Payment
Date; provided (i) that if the Amount Available remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Amount Available shall be
allocated to each Class A-3 Note pro rata based on the outstanding
principal amount thereof, and (ii) if the amount to be allocated
pursuant to this clause exceeds the amount needed to repay outstanding
Class A-3 Note principal in full, then such excess shall be applied in
repayment of principal on the Class A-4 Notes;
(viii) pay to the Indenture Trustee, on behalf of the Class
A-4 Noteholders, the Class A-4 Principal Payment Amount for such
Payment Date; provided (i) that if the Amount Available remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Amount Available shall be
allocated to each Class A-4 Note pro rata based on the outstanding
principal amount thereof, and (ii) if the amount to be allocated
pursuant to this clause exceeds the amount needed to repay outstanding
Class A-4 Note principal in full, then such excess shall be applied in
repayment of principal on the Class A-5 Notes;
(ix) pay to the Indenture Trustee, on behalf of the Class A-5
Noteholder, the Class A-5 Principal Payment Amount for such Payment
Date, provided, that if the Amount Available remaining to be allocated
pursuant to this clause are less than the full amount required to be
paid such remaining Amount Available shall be allocated to each Class
A-5 Note pro rata based on the outstanding principal amount thereof,
and (ii) if the amount to be allocated pursuant to this clause exceeds
the amount needed to repay outstanding class A-5 Notes principal in
full, then such excess shall be applied in repayment of principal on
the Class B Notes;
(x) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, the Class B Principal Payment Amount for such Payment
Date; provided (i) that if the Amount Available remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Amount Available 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;
(xi) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, the Class C Principal Payment Amount for such Payment
Date; provided (i) that if the Amount Available remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Amount Available 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;
(xii) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, the Class D Principal Payment Amount for such Payment
Date; provided that if the Amount Available remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Amount Available shall be allocated to each Class
D Note pro rata based on the outstanding principal amount thereof;
(d) On the last Business Day preceding each Payment Date, the Indenture
Trustee shall, in accordance with directions from the Servicer, withdraw from
amounts on deposit in the Cash Collateral Account, and deposit into the
Collection Account, an amount equal to the lesser of the Available Cash
Collateral Amount for such Payment Date and the sum of the following amounts, if
any:
59
<PAGE>
(i) the amount, if any, by which the Available Pledged
Revenues with respect to such Payment Date, is less than the amount
specified in clauses (b)(i)-(viii) of this Section 7.05 (or in the case
of a payment after an Event of Default in clauses (c) (i) - (iv) of
this Section 7.05; plus
(ii) the Principal Deficiency Amount, if any, for such Payment
Date, plus
(iii) with respect to the Stated Maturity Date for any Class
of Notes or on the first Payment Date on which the Contract Pool
Principal Balance is less than $1,000,000, the amount, if any, by which
the Available Pledged Revenues, after payment of all amounts specified
in clauses (b)(i) through (b)(viii) (or in the event of a payment after
an Event of Default clauses (c) (i) - (b) (iv) of Section 7.05, is less
than (A) in the case of the Stated Maturity Date for a Class of Notes,
the remaining Principal Balance of such Class of Notes, and (B) in the
case of the first Payment Date on which the Contract Pool Analysis
Principal is less than $1,000,000 the Principal Amount of all
outstanding Notes.
In the event that the Available Pledged Revenues for any Payment Date are less
than the total amount, if any, specified above for such Payment Date, the amount
actually withdrawn by the Trustee shall be applied in the order of priority
specified above, and, within each clause specified above, in the order of
priority specified in Section 7.05(b). The Servicer shall give the Trustee and
the Cash Collateral Account Lenders' Agent notice, at least three Business Days
prior to each Payment Date, of the amounts, if any, specified in clauses (i)
through (iii) above for such Payment Date.
Section 7.06. Repurchases of, or Substitution for, Contracts for Breach
of Representations and Warranties. Upon a discovery by the Servicer of an
inaccuracy or breach of a representation or warranty set forth in the Schedule
of Representations which has been made or deemed made with respect to a Contract
in the Contract Pool, which inaccuracy or breach materially adversely affects
the Trust's or any Noteholder's or the Equity Certificateholder's interest in
such Contract (without regard to the benefits of Cash Collateral Account, any
reserve fund, over collateralization or other similar enhancement) or the
collectibility thereof (an "Ineligible Contract"), the Servicer shall promptly
notify NFUSA thereof. As provided in the Purchase and Sale Agreement and in
accordance with this Section 7.06, NFUSA is obligated to repurchase each such
Ineligible Contract, at a repurchase price equal to the Purchase Amount
(determined as of the date such repurchase is to be funded), not later than the
second Deposit Date following the date the Servicer becomes aware of any such
breach or inaccuracy and which breach or inaccuracy has not otherwise been
cured; provided, however, that if NFUSA is able to effect a substitution for any
such Ineligible Contract in compliance with Section 2.04, NFUSA may, in lieu of
repurchasing such Ineligible Contract, effect a substitution for such Ineligible
Contract with a Substitute Contract not later than the date a repurchase of such
Ineligible Contract would be required hereunder; and provided further, that with
respect to a breach or inaccuracy of any such representations or warranties
relating to the Contract Pool (or all Contracts conveyed on the Closing Date or
Substitution Transfer Date, as the case may be) in the aggregate and not to any
particular Contract, NFUSA (or the Servicer acting on its behalf) may select
Contracts (without adverse selection) to repurchase (or substitute for) such
that had such Contracts not been included as part of the related Transferred
Assets (and, in the case of a substitution, had such Substitute Contract been
included as part of the related Transferred Assets instead of the selected
Ineligible Contract) there would have been no breach or inaccuracy of such
representation or warranty. Notwithstanding any other provision of this
Agreement, the obligation of NFUSA under the Purchase and Sale Agreement and
described in this Section 7.06 shall not terminate or be deemed released by any
party hereto upon a Servicing Transfer pursuant to Article VIII. The right to
enforce the repurchase or substitution obligation described in this Section
shall constitute the sole remedy of the Trust, the Indenture Trustee, the
Depositor and the Holders with respect to the inaccuracy or breach related to
such Ineligible Contract. The Purchase Amount shall be allocated in accordance
with the Allocation Criteria.
Section 7.07. Reassignment of Repurchased or Substituted Contracts.
Upon deposit into the Collection Account of the Purchase Amount with respect to
an Ineligible Contract as described in Section 7.06 (or upon the Substitution
Transfer Date related to a Substitute Contract described in Section 7.06), or of
the repurchase price set forth in Section 7.08, the Indenture Trustee shall
release and reassign to NFUSA all of the Trust's right and interest in the
repurchased or substituted Contract and related Transferred Assets without
recourse, representation or
60
<PAGE>
warranty, and such reassigned Contract shall no longer thereafter be included in
any calculations of Contract Principal Balances required to be made hereunder or
otherwise be deemed a part of the Trust Assets.
Section 7.08. NFUSA's and Depositor's Repurchase Option. As provided in
the Purchase and Sale Agreement, on written notice to the Indenture Trustee at
least twenty (20) days prior to a Payment Date, and provided that the aggregate
Principal Amount of Notes outstanding is then less than 10% of the Initial
Contract Pool Principal Balance, NFUSA, through the Depositor, may (but is not
required to) repurchase from the Trust on that Payment Date all outstanding
Contracts in the Contract Pool at a price equal to the sum of (a) the aggregate
outstanding Principal Amount of the Notes (other than the Equity Certificate)
plus accrued unpaid interest thereon as of the current Payment Date, and (b) the
amount of unreimbursed Servicer Advances (if any) as well as accrued and unpaid
monthly Servicing Fees to the date of such repurchase plus (c) any other amounts
that would otherwise be payable from Pledged Revenues on such Payment Date
(assuming sufficient Pledged Revenues were available to effect such payments)
pursuant to Article VII, minus (d) Pledged Revenues and other Available Pledged
Revenues on deposit in the Collection Account and available to make such
payments on such Payment Date. Such price is to be deposited in the Collection
Account not later than the Deposit Date preceding such Payment Date, against the
Indenture Trustee's and Depositor's release of the Contract Assets and the
related Contract Files to NFUSA.
61
<PAGE>
ARTICLE VIII
SERVICER DEFAULTS; SERVICING TRANSFER
Section 8.01. Servicer Default. "Servicer Default" means the occurrence
of any of the following:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or notice to the Owner Trustee or
the Indenture Trustee to make any payment, transfer or deposit, or to
deliver the Monthly Report pursuant to this Agreement, which failure
continues unremedied for a period of five (5) Business Days after the
first to occur of (i) written notice from the Owner Trustee or the
Indenture Trustee of such failure shall have been given to the
Servicer, or (ii) the date the Servicer becomes aware thereof; or
(b) failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in
this Agreement which has a material adverse effect on the Noteholders
or the Equity Certificateholder, which continues unremedied for a
period of thirty (30) days after the first to occur of (i) the date on
which written notice of such failure requiring the same to be remedied
shall have been given to the Servicer by and the Indenture Trustee or
to the Servicer and the Indenture Trustee by the Noteholders or the
Equity 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 the Noteholders or the Equity
Certificateholders for such period; or
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant
hereto shall prove to have been incorrect when made, which has a
material adverse effect on the Noteholders or Equity Certificateholder
and which continues to be incorrect in any material respect for a
period of thirty (30) days after the first to occur of (i) the date on
which written notice of such incorrectness requiring the same to be
remedied shall have been given to the Servicer and the Owner Trustee by
the Indenture Trustee, or to the Servicer, the Owner Trustee and the
Indenture Trustee by Noteholders or the Equity Certificateholders 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 the
Noteholders or Equity Certificateholders for such period; or
(d) an Insolvency Event shall occur with respect to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (a) above for a period of five (5) Business Days or
referred to under clause (b) or (c) for a period of sixty (60) days (in addition
to any period provided in (a), (b) or (c)) shall not constitute a Servicer
Default until the expiration of such additional five (5) Business Days or sixty
(60) days, respectively, if such delay or failure could not be prevented by the
exercise of reasonable diligence by the Servicer and such delay or failure was
caused by an act of God or other similar occurrences. Upon the occurrence of any
such event the Servicer shall not be relieved from using its best efforts to
perform its obligations in a timely manner in accordance with the terms of this
Pooling Agreement and the Servicer shall provide the Owner Trustee, the
Indenture Trustee and the 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 promptly notify the Indenture Trustee in writing of any
Servicer Default.
Section 8.02. Servicing Transfer. (a) If a Servicer Default has
occurred and is continuing, the Required Holders, or (y) the Indenture Trustee
may, by written notice (a "Termination Notice") delivered to the parties hereto,
terminate all (but not less than all) of the Servicer's rights and obligations
under this Pooling Agreement with respect to the Trust Assets.
62
<PAGE>
(b) Upon delivery of the Termination Notice (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
"Servicing Transfer"), all rights, benefits, fees, indemnities, authority and
power of the Servicer under this Pooling Agreement, whether with respect to the
Contracts in the Contract Pool, 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 under this Pooling Agreement, 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 in the Contract Pool. The Servicer shall transfer to
the Successor Servicer (i) all records held by the Servicer relating to such
Contracts in such electronic form as the Successor Servicer may reasonably
request and (ii) any related 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
Servicing 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 Termination Notice (or, if
later, on a date designated therein), the Servicer shall continue to perform all
servicing functions under this Pooling 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 and by delivery of an opinion of counsel to
the Successor Servicer relating to corporate matters and enforceability, in each
case in a form acceptable to the Indenture Trustee and the Owner Trustee. In
effecting such appointment, the Indenture Trustee shall seek bids from potential
servicers which are established financial institutions each having a net worth
of at least $50,000,000 and whose regular business includes the servicing of
contracts similar to the Contracts in the Contract Pool.
In the event that a Successor Servicer has not been appointed and has
not accepted its appointment within 60 days of the delivery of a Termination
Notice, then the Indenture Trustee shall offer the Depositor, and the Depositor
shall offer the NFUSA, the right to accept retransfer of all the Trust Assets,
and such party may accept retransfer of such Trust Assets in consideration of
the Depositor's delivery to the Collection Account on or prior to the next
upcoming Payment Date of a sum equal to the Aggregate Principal Amount of all
Notes then outstanding, together with accrued and unpaid interest thereon
through such date of deposit; provided, that the Indenture Trustee, if so
directed by, the Required Holders, need not accept and effect such reconveyance
in the absence of evidence (which may include valuations of an investment bank
or similar entity) reasonably acceptable to such Indenture Trustee or Required
Holders that such retransfer would not constitute a fraudulent conveyance of the
Depositor or NFUSA; provided, further, NFUSA may not accept such retransfer
unless it shall have delivered to each Rating Agency an Opinion of Counsel that
such retransfer would not constitute a fraudulent conveyance of the Depositor or
the Seller or that such retransfer would not constitute a preferential payment
by the Depositor or NFUSA.
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 in the Contract Pool as the Successor Servicer hereunder. On or after
a Servicing Transfer, the Successor Servicer shall be the successor in all
respects to the Servicer in its capacity as servicer under this Pooling
Agreement, and the transactions set forth or provided for in this Pooling
Agreement, 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
63
<PAGE>
after such Servicing Transfer; provided, however, that the Successor Servicer
shall not be liable for any acts or omissions of the departing Servicer
occurring prior to such Servicer Servicing Transfer or for any breach by the
departing Servicer of any of its representations and warranties contained in
this Pooling Agreement or in any related or Transaction Document or other
agreement. As compensation therefor, the Successor Servicer shall be entitled to
receive the Servicing Fee. The Trust, the Noteholders and the Equity
Certificateholders, the Indenture Trustee and such successor shall take such
action, consistent with this Pooling Agreement, as shall be necessary to
effectuate any such succession. To the extent the terminated Servicer has made
Servicer Advances, it shall be entitled to reimbursement of the same
notwithstanding its termination hereunder, to the same extent as if it had
continued to service the Trust Assets 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 Pledged Revenues 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. (a) Notifications to Noteholders and the Equity
Certificateholders. Promptly following the occurrence of any Servicer Default,
the Servicer shall give written notice thereof to the Trustees, the Depositor
and each Rating Agency at the addresses described in Section 11.04 and to the
Noteholders and Equity Certificateholder at their respective addresses appearing
on the Note Register and the Certificate Register, respectively.
(b) Within ten (10) days following any termination or appointment of a
Successor Servicer pursuant to this Article VIII, the Indenture Trustee shall
give written notice thereof to each Rating Agency and the Depositor at the
addresses described in Section 11.04, and to the Noteholders and the Equity
Certificateholder at their respective addresses appearing on the Note Register
and the Certificate Register, respectively.
Section 8.05. Effect of Transfer. (a) After a Servicing Transfer, the
terminated Servicer shall have no further rights or obligations under this
Pooling Agreement, including, without limitation, with respect to the
management, administration, servicing, custody or collection of the Trust
Assets, 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 or items
(properly endorsed where required for the Successor Servicer to collect them)
received as payments upon or otherwise in connection with the Contracts in the
Contract Pool.
(b) A Servicing Transfer shall not affect the rights and duties of the
parties to this Pooling Agreement (including but not limited to the indemnities
of the departing Servicer) other than those relating to the management,
administration, servicing, custody or collection of the Contracts in the
Contract Pool and related Transferred Assets.
Section 8.06. Database File. The Servicer will provide the Successor
Servicer with a magnetic tape containing the database file for each Contract in
the Contract Pool 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 departing
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, reasonable
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 departing
Servicer or (ii) a breach of any representations of the departing Servicer in
Section 3.02. The indemnification provided by this Section 8.07 shall survive
(a) a Servicing Transfer and/or (b) the termination of this Agreement.
64
<PAGE>
Section 8.08. Responsibilities of the Successor Servicer. The Successor
Servicer will not be responsible for delays attributable to the departing
Servicer's failure to deliver information, defects in the information supplied
by the departing Servicer or other circumstances beyond the control of the
Successor Servicer.
The Successor Servicer will make arrangements with the departing
Servicer for the prompt and safe transfer of, and the departing 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 Pool information. The departing
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 Pooling 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 departing Servicer, the 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 or unenforceability of any Contract under applicable law or the
breach or the inaccuracy of any representation or warranty made with respect to
any Contract.
Any Successor Servicer which assumes the role of Successor Servicer
hereunder shall be entitled to the benefits of (and subject to the provisions
of) Section 5.05 concerning delegation of duties to subservicers.
[remainder of this page intentionally left blank]
65
<PAGE>
ARTICLE IX
SERVICER REPORTING
Section 9.01. Monthly Reports. With respect to each Payment Date and
the related Collection Period, the Servicer will provide to each Trustee, and
each Rating Agency, on the related Determination Date, a monthly statement (a
"Monthly Report") substantially in the form of Exhibit D hereto. On each Payment
Date, the Indenture Trustee will forward to each Noteholder a copy of the
Monthly Report for the related Collection Period. The parties hereto acknowledge
that the Indenture Trustee has no obligation to verify the accuracy of the
Monthly Report.
Section 9.02. Officer's Certificate. Each Monthly Report delivered
pursuant to Section 9.01 shall be accompanied by a certificate of a Servicing
Officer certifying the accuracy of the Monthly Report.
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 Managing Agent such underlying data used to
generate a Monthly Report as may be reasonably requested.
Section 9.04. Annual Reporting; Evidence as to Compliance. The Servicer
shall cause a firm of nationally recognized independent accountants (the
"Independent Accountants"), who may also render other services to the Servicer
or its Affiliates, to deliver to the Trustees and each Rating agency, on or
before March 31 (or ninety (90) days after the end of the Servicer's fiscal
year, if other than December 31) of each year, beginning on March 31, 2000, with
respect to the twelve months ended the immediately preceding December 31 or
other applicable date), a report addressed to the Board of Directors of the
Servicer and to the Trustees (the "Accountant's Report") to the effect that such
Independent Accountants have, at the request of the Servicers, (i) audited the
financial statements of the Servicer (or, if the Servicer is a wholly-owned
subsidiary of another entity, the financial statements of such parent entity)
and issued an opinion thereon and that such audit was made in accordance with
generally accepted auditing standards as in effect in the jurisdiction of the
entity being audited, which require that such Independent Accountants plan and
perform the audit to obtain reasonable assurance as to whether the financial
statements of the Servicer (or its parent, as applicable) are free of material
misstatement, and (ii) with respect to the immediately prior year's public
securitization transactions involving similar contracts and assets, examined
management's assertion that the Servicer maintained effective control over the
servicing of such assets, in accordance with established or stated criteria, and
providing a report thereon, as well as confirming that such examination was
performed in accordance with standards established by the American Institute of
Certified Public Accountants. A copy of the Accountant's Report may be obtained
by any Securityholder by a request in writing to the Indenture Trustee, in the
case of a Noteholder, or in the case of a Certificateholder, addressed to its
respective Corporate Trust Office.
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 March 31 of each year commencing March 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 the Pooling Agreement was made under
the supervision of the officer signing such certificate and (b) to such
officer's knowledge, based on such review, the Servicer has fully performed or
cause to be performed in all material respects all its obligations under the
Pooling 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 Noteholder or the
Equity Certificateholder by a request in writing to the Indenture Trustee, with
respect to any Noteholder, or the Owner Trustee, with respect to the Equity
Certificateholder.
66
<PAGE>
ARTICLE X
TERMINATION
Section 10.01. Sale of Trust Assets.
(a) Upon any transfer of Trust Assets pursuant to Section 10.02 of the
Trust Agreement, the Servicer shall instruct the Indenture Trustee to deposit
the proceeds from such transfer after all payments and reserves therefrom have
been made (the "Insolvency Proceeds") into the Collection Account. On the
Payment Date on which the Insolvency Proceeds are deposited in such Collection
Account (or, if such proceeds are not so deposited on a Payment Date, on the
Payment Date immediately following such deposit), the Servicer shall instruct
the Indenture Trustee to allocate and apply the Insolvency Proceeds as if (and
in the same order of priority as) the Insolvency Proceeds were Pledged Revenues
being allocated and distributed on such date pursuant to this Pooling Agreement.
(b) 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 Equity
Certificateholder will succeed to the rights of the Noteholders hereunder.
[remainder of this page intentionally left blank]
67
<PAGE>
ARTICLE XI
MISCELLANEOUS
Section 11.01. Amendments.
(a) This Pooling Agreement may be amended by the parties signatory
hereto, with the consent of the Required Holders, to cure any ambiguity, to
correct or supplement any provisions in this Agreement which are inconsistent
with other 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 thereof.
(b) This Pooling Agreement may also be amended from time to time by the
parties signatory hereto, 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 thereof or of modifying in any manner the rights of the
Noteholders or the Equity 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 Pledged Revenues of payments on the Trust
Assets or payments that shall be required to be made on any Note or the Equity
Certificate (including by way of amendment of related definitions), or (B) the
manner in which the Cash Collateral Account is applied; or (ii) change in any
manner (including through amendment of related definitions), the Noteholders and
the Equity Certificateholders which are required to consent to any such
amendment; or (iii) make any Note or the Equity Certificate payable in money
other than Dollars, without the consent of the Noteholders and the Equity
Certificateholders of all Notes of the relevant affected Class then outstanding
and the Equity Certificateholder, if affected; or (iv) change in any manner the
duties of the Indenture Trustee under this Agreement without its written
consent, (in any such case).
(c) Prior to the execution of any such amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent, together with a copy thereof, to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Indenture Trustee, shall furnish written notification of the substance of such
amendment or consent to each Noteholder and the Equity Certificateholder,
respectively. It shall not be necessary for the consent of Noteholders and the
Equity Certificateholder pursuant to Section 11.01(b) to approve the particular
form of any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization by Noteholders and the Equity
Certificateholder of the execution thereof shall be subject to such reasonable
requirements as the Indenture Trustee may prescribe.
(e) Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment on behalf of the Trust is
authorized or permitted by this Pooling Agreement, and that all conditions
precedent to such execution as set forth herein have been satisfied. The
Trustees may, but shall not be obligated to, enter into any such amendment which
affects the Trustees' own rights, duties or immunities under this Pooling
Agreement or otherwise.
(f) Notwithstanding anything to the contrary in the foregoing
provisions of this Section 11.01, (a) the Depositor or the Servicer, acting on
behalf of the Depositor, may request each rating agency to approve a formula for
determining the Required Cash Collateral 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 Required Cash
Collateral amount or the manner by which such Cash Collateral Account 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 Required Cash Collateral 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 Noteholder and the Equity Certificateholder.
68
<PAGE>
Section 11.02. [Reserved].
Section 11.03. Governing Law. This Pooling Agreement shall be construed
in accordance with the laws of the State of New York and the obligations,
rights, and remedies of the parties under this Pooling 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.
[remainder of page intentionally blank]
69
<PAGE>
Section 11.04. Notices. All notices, demands, certificates, requests
and communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt to
be effective the date of delivery indicated on the return receipt, or (b) one
(1) Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an authorized officer of the party to which sent, or (d)
on the date transmitted by legible telefax transmission with a confirmation of
receipt, in all cases addressed to the recipient as follows:
(i) If to the Servicer:
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
Fax No.:
Telephone No.:
with a copy to:
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
Fax No.:
Telephone No.:
(ii) If to the Depositor:
NCT Funding Company, L.L.C.
c/o Newcourt Credit Group USA
2 Gatehall Drive
Parsippany, New Jersey 07054
Attention: Securitization Treasury
Fax No.: (973) 355-7019
Telephone No.: (973) 355-7014
(iii) If to the Indenture Trustee:
-----------------------------------------
-----------------------------------------
Attention: Indenture Trust Administration
Fax No.:
Telephone No.:
(iv) If to a Financing Originator:
At the address, telephone and fax information
70
<PAGE>
set forth for such Financing Originator in the
Conveyancing Agreement (for TCC Financing
Originators) or the Purchase and Sale Agreement
(for NFUSA)
(v) If to NFUSA:
Newcourt Financing USA, Inc.
2 Gatehall Drive
Parsippany, New Jersey 07054
Attention: Securitization - Treasury
Fax No.: (973) 355-7019
Telephone No.: (973) 355-7014
(vi) If to the Owner Trustee:
The ___________ Bank
Attention: Corporate Trust Administration
Fax No.:
Telephone No.:
with a copy to:
______________ Bank
Attention:
Fax No.:
Telephone No.:
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 11.05. Severability of Provisions. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
Equity Certificateholders or the rights of the holders thereof.
Section 11.06. Third Party Beneficiaries. Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent
that no third party shall be deemed a third party beneficiary of this Agreement,
and specifically that Obligors are not third party beneficiaries of this
Agreement; provided, that the Owner Trustee shall be a third party beneficiary
of this Agreement for purposes of the fee and indemnification provisions hereof.
71
<PAGE>
Section 11.07. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
Section 11.08. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.09. No Bankruptcy Petition; Disclaimer and Subordination.
(a) Each of the Servicer, the Owner Trustee and each
Noteholder and the Equity Certificateholder (by acceptance of the applicable
Notes or the Equity Certificate) covenants and agrees that it will not institute
against the Depositor, or the Trust, or solicit or join in or cooperate with or
encourage any other Person in instituting against the 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.
(b) Consistent with the provisions in Section 1.07 of the
Trust Agreement and Section 6.16 hereof, the Trust, as well as each Noteholder
and the Equity Certificateholder by accepting a Note or the Equity Certificate,
acknowledges and agrees that such Note or the Equity Certificate represents a
beneficial interest in the Trust and Trust Assets only and does not represent an
interest in any assets (other than the Trust Assets) of the 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 the Depositor enters
into other securitization transactions as contemplated in Section 6.07, the
Trust as well as each Noteholder and the Equity Certificateholder by accepting a
Note or Certificate acknowledges and agrees that it shall have no right, title
or interest in or to any assets (or interests therein) (other than Trust Assets)
conveyed or purported to be conveyed by the Depositor to another securitization
trust (i.e., other than the Issuer) or other Person or Persons in connection
therewith (whether by way of a sale, capital contribution or by virtue of the
granting of a Lien) ("Other Assets"). To the extent that, notwithstanding the
agreements and provisions contained in the preceding sentences of this
subsection, the Trust, or any Noteholder and the Equity Certificateholder,
either (i) asserts an interest in or claim to, or benefit from, Other Assets,
whether asserted against or through the Depositor or any other Person owned by
the Depositor, or (ii) is deemed to have any such interest, claim or benefit in
or from Other Assets, whether by operation of law, legal process, pursuant to
applicable provisions of Insolvency Laws or otherwise (including without
limitation by virtue of Section 1111(b) of the federal Bankruptcy Code or any
successor provision having similar effect under the Bankruptcy Code), and
whether deemed asserted against or through the Depositor or any other Person
owned by the Depositor, then the Trust and each Noteholder and the Equity
Certificateholder by accepting a Note or the Equity Certificate further
acknowledges and agrees that any such interest, claim or benefit in or from
Other Assets is and shall be expressly subordinated to the indefeasible payment
in full of all obligations and liabilities of the Depositor which, under the
terms of the relevant documents relating to the securitization of such 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 payment or
application under applicable law, including Insolvency Laws, and whether
asserted against the Depositor or any other Person owned by the Depositor),
including, without limitation, the payment of post-petition interest on such
other obligations and liabilities. This subordination agreement shall be deemed
a subordination agreement within the meaning of Section 510(a) of the Bankruptcy
Code. Each Noteholder and the Equity Certificateholder further acknowledges and
agrees that no adequate remedy at law exists for a breach of this Section 11.09
and that the terms and provisions of this Section 11.09 may be enforced by an
action for specific performance.
(c) The provisions of this Section 11.09 shall be for the
third party benefit of those entitled to rely thereon and shall survive the
termination of this Agreement.
Section 11.10. Jurisdiction. Any legal action or proceeding with
respect to this Agreement may be brought in the courts of the United States for
the Southern District of New York, and by execution and delivery of this
Agreement, each party hereto consents, for itself and in respect of its
property, to the non-exclusive jurisdiction
72
<PAGE>
of those courts. Each such party irrevocably waives any objection, including any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any action or
proceeding in such jurisdiction in respect of this Agreement or any document
related hereto.
Section 11.11. Tax Characterization. Notwithstanding the provisions of
Section 2.01 and Section 2.04 hereof, the 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 Depositor for federal income tax
purposes.
Section 11.12. Servicer Indemnity. The Servicer will indemnify the
Depositor, the Trust, the Securityholders and the Indenture Trustees, and any of
their officers, directors, employees or agents (each an "Indemnified Party")
from and against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments and any other costs, fees and expenses
that any Indemnified Party may sustain in connection with claims asserted by
third parties against such Indemnified Party which result from any act or
omission on the part of the Servicer with respect to the Trust Assets or its
duties and obligations under this Pooling Agreement, except where such claims
arise out of any willful misconduct, gross negligence or bad faith on the part
of such Indemnified Party. Indemnification under this Section shall survive the
resignation or removal of the Owner Trustee or Indenture Trustee, as the case
may be, and the termination of the Trust Agreement or this Pooling Agreement.
Section 11.13. Limitation of Liability of Owner Trustee.
Notwithstanding anything contained herein to the contrary, the
Agreement has been executed by The _____ Bank, not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event shall
The ______ Bank 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 VI, VII and VIII of the Trust Agreement.
Section 11.14. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT
WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE PARTIES HERETO EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OF THIS AGREEMENT OR A TRANSACTION DOCUMENT OR ANY PROVISION HEREOF
OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, AMENDMENTS AND
RESTATEMENTS, OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT.
Section 11.15. Third Party Beneficiary. The Owner Trustee shall be a
third party beneficiary of this Agreement.
[remainder of page intentionally blank]
73
<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.
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
By: The ____________________ Bank, not
in its individual capacity but
solely as Owner Trustee on behalf
of the Trust
By: _____________________________
Printed Name:_____________________
Title:____________________________
NCT FUNDING COMPANY, L.L.C., as Depositor
By: ___________________________________
Printed Name: _____________________
Title: ____________________________
NEWCOURT FINANCIAL USA INC.
By: ___________________________________
Printed Name: _____________________
Title: ____________________________
____________________________________________,
in its individual capacity and as __Servicer
By: ___________________________________
Printed Name: _____________________
Title: ____________________________
74
<PAGE>
EXHIBIT A
Form of Transfer Agreement
TRANSFER AGREEMENT
This TRANSFER AGREEMENT, dated _____________ ___, _______, is by and
between NCT Funding Company, L.L.C., as Depositor and transferor, and Newcourt
Equipment Trust Securities 1999-1, as transferee with respect to the conveyances
evidenced hereby.
WHEREAS, the parties named above are each parties to the Pooling and
Servicing Agreement dated as of June 1, 1999 (as from time to time amended,
supplemented or otherwise modified, the "PSA"); and
WHEREAS, pursuant to the PSA, the Depositor wishes to effect
conveyances of Transferred Assets (including the Contracts identified on the
Schedule of Contracts attached hereto), in each case in the manner and to the
effect described in Article II of the PSA;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein and in the PSA, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. All terms defined in the PSA (whether directly or by
reference to other documents) shall have such defined meanings when used herein,
unless such terms are otherwise defined herein.
2. Specification of Cutoff Date and Transfer Date.
(a) The "Cutoff Date" applicable to the Contracts conveyed
hereby is ____________ ___, _______.
(b) The "Transfer Date" with respect to the conveyances
effected hereby is ____________ ___, _______.
3. Conveyances. Subject to the terms and conditions provided for in the
PSA, the Depositor hereby make the assignments and conveyances specified in
Article II of the PSA as being effected by execution and delivery of this
Transfer Agreement, in each case (i) with respect to the Transferred Assets
related to and consisting in part of the Contracts and related Contract Assets
identified on the Schedule of Contracts attached hereto, and (ii) in the manner
and to the effect described in Article II of the PSA.
4. Incorporation of PSA. This Transfer Agreement is made pursuant to
and upon the representations, warranties and agreements on the part of the
parties hereto contained in the PSA and shall be governed in all respects by the
PSA.
5. Ratification of PSA. As supplemented by this Transfer Agreement, the
PSA is in all respects ratified and confirmed by the parties hereto.
6. Counterparts. This Transfer Agreement may be executed in two or more
counterparts including by telefax transmission thereof (and by different parties
on separate counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument.
7. Governing Law. This Transfer Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of New
York.
A-1
<PAGE>
8. Reaffirmation. As provided in Section 2.02 of the PSA, by delivery
of this Transfer Agreement the Depositor confirms that the conditions to
transfer set forth in Section 2.02 have been satisfied or otherwise waived as
described therein.
[signatures follow]
A-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Transfer
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first written above.
NCT FUNDING COMPANY, L.L.C., NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
as Depositor
By: The ________ Bank, not in its individual
capacity but solely as Owner Trustee on
behalf of the Trust
By:____________________________ By:_________________________________________
Printed Name:__________________ Printed Name:_______________________________
Title:_________________________ Title:______________________________________
A-3
<PAGE>
EXHIBIT B
[Reserved]
B-1
<PAGE>
EXHIBIT C
Initial Schedule of Contracts
C-1
<PAGE>
EXHIBIT D
Form of Servicer's Monthly Report
D-1
<PAGE>
EXHIBIT E
Form of Substitution Transfer Agreement
SUBSTITUTION TRANSFER AGREEMENT
This SUBSTITUTION TRANSFER AGREEMENT, dated _____________ ___, _______,
is by and between NCT Funding Company, L.L.C., as Depositor and transferor, and
Newcourt Equipment Trust Securities 1999-1, as transferee with respect to the
conveyances evidenced hereby.
WHEREAS, the parties named above are each parties to the Pooling and
Servicing Agreement dated as of June 1, 1999 (as from time to time amended,
supplemented or otherwise modified, the "PSA"); and
WHEREAS, pursuant to the PSA, the Depositor wishes to effect
conveyances of the Substitute Contracts (together with related Substitute
Transferred Assets), identified on the Substitution Schedule of Contracts
attached hereto, in each case in the manner and to the effect described in
Article II of the PSA; and
WHEREAS, the Servicer has delivered or caused to be delivered a
Substitution Notice with respect to such conveyance as required in the Pooling
Agreement referred to in Section 2 below;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein and in the PSA, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. All terms defined in the PSA (whether directly or by
reference to other documents) shall have such defined meanings when used herein,
unless such terms are otherwise defined herein.
2. Specification of Cutoff Date and Transfer Date.
(a) The "Substitution Cutoff Date" applicable to the
Substitute Contracts conveyed hereby is ____________ ___, _______.
(b) The "Substitution Transfer Date" with respect to the
conveyances effected hereby is ____________ ___, _______.
3. Conveyances. Subject to the terms and conditions provided for in the
PSA, the Depositor hereby makes the assignments and conveyances specified in
Article II of the PSA as being effected by execution and delivery of this
Substitution Transfer Agreement, in each case (i) with respect to the Substitute
Contracts (together with related Substitute Transferred Assets) identified on
the Substitution Schedule of Contracts attached hereto, and (ii) in the manner
and to the effect described in Article II of the PSA.
4. Incorporation of PSA. This Substitution Transfer Agreement is made
pursuant to and upon the representations, warranties and agreements on the part
of the parties hereto contained in the PSA and shall be governed in all respects
by the PSA.
5. Ratification of PSA. As supplemented by this Substitution Transfer
Agreement, the PSA is in all respects ratified and confirmed by the parties
hereto.
6. Counterparts. This Substitution Transfer Agreement may be executed
in two or more counterparts including by telefax transmission thereof (and by
different parties on separate counterparts), each of which shall be an original,
but all of which together shall constitute one and the same instrument.
E-1
<PAGE>
7. Governing Law. This Substitution Transfer Agreement shall be
governed by, and construed and enforced in accordance with, the internal laws of
the State of New York.
8. Reaffirmation. As provided in Section 2.04(b) of the SCA, by
delivery of this Assignment Agreement the Depositor confirms that the conditions
to transfer set forth in Section 2.02 have been satisfied or otherwise waived as
described therein.
[signatures follow]
E-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Substitution
Transfer Agreement to be executed by their respective officers thereunto duly
authorized as of the date first written above.
NCT FUNDING COMPANY, L.L.C., NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
as Depositor
By: The ________ Bank, not in its individual
capacity but solely as Owner Trustee on
behalf of the Trust
By:____________________________ By:_________________________________________
Printed Name:__________________ Printed Name:_______________________________
Title:_________________________ Title:______________________________________
E-3
<PAGE>
EXHIBIT F
[RESERVED]
F-1
<PAGE>
EXHIBIT G
Schedule of Representations and Warranties
(a) List of Contracts. The information set forth in the
Schedule of Contracts (as the same may be amended or deemed amended in
respect of a conveyance of Substitute Contracts on a Substitution
Transfer Date) is true, complete and correct as of the Closing Date (or
Substitution Transfer Date, as applicable).
(b) Eligible Contract. As of its applicable Cutoff Date, each
Contract satisfied the criteria for the definition of Eligible Contract
set forth in the Pooling Agreement, and each Secondary Contract
securing a Vendor Loan constituting a Contract satisfied, as of its
applicable Cutoff Date, the definition of Eligible Secondary Contract
set forth in the Pooling Agreement.
(c) Contracts Secured by Vehicles. None of the Contracts
relating to Equipment constituting Vehicles are "true leases."
(d) Contract Files. As of the Closing Date (or as of the
Substitution Transfer Date, with respect to Substitute Contracts), (i)
immediately prior to such date, NFUSA (or the applicable Financing
Originator as custodian for NFUSA, with respect to TCC Contracts) 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 (other than offsite storage arrangements described in Section
4.01(b)); (ii) each of such documents which is required to be signed by
the Obligor has been signed by the Obligor in the appropriate spaces;
and (iii) the complete Contract File for each Contract is in the
possession of the Servicer.
(e) No Material Obligation. No Financing Originator has a
material performance obligation in respect of any Contract in favor of
an Obligor or End-User (it being understood that covenants of quiet
enjoyment, purchase options, obligations to accept return of the
property at end of lease term, and like obligations of a lessor typical
of a "triple net" lease, shall not be deemed "material performance
obligations" for purposes of this representation).
G-1
<PAGE>
EXHIBIT H
[Reserved]
H-1
<PAGE>
EXHIBIT I
[Reserved]
I-1
<PAGE>
EXHIBIT J
Minimum Value Filing Exceptions
With respect to the TCC Financing Originators, no financing statements
are filed against an Obligor located in a particular State describing Equipment
which is the subject of a particular Contract of such TCC Financing Originator,
unless the fair market value of the Equipment (determined in accordance with
Customary Policies and Procedures) related to such particular Contract is at
least $20,000 (or, in the alternative, at least $50,000 if such Contract is a
Lease with a "fair market value" purchase option).
With respect to the NFUSA Financing Originator, no financing statements
are filed against an Obligor located in a particular State describing Equipment
which is the subject of a particular Contract of such Financing Originator,
unless the fair market value of the Equipment (determined in accordance with
Customary Policies and Procedures) related to such particular Contract is at
least $25,000.
J-1
<PAGE>
EXHIBIT 4.3
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1,
as Issuer,
and
___________________________ BANK,
not in its individual capacity but solely in its capacity
as Indenture Trustee
-----------------------------------
INDENTURE
Dated as of __________, 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 A-5 Receivable-Backed Notes
$_____________ Class B Receivable-Backed Notes
$_____________ Class C Receivable-Backed Notes
$_____________ Class D Receivable-Backed Notes
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE One
DEFINITIONS AND INCORPORATION BY REFERENCE...................................................1
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....................................................................................8
Section 2.01 Form.........................................................................8
Section 2.02 Execution, Authentication and Delivery.......................................8
Section 2.03 Temporary Notes..............................................................8
Section 2.04 Registration; Registration of Transfer and Exchange; Transfer Restriction....9
Section 2.05 Mutilated, Destroyed, Lost or Stolen Notes..................................10
Section 2.06 Persons Deemed Owner........................................................10
Section 2.07 Payment of Principal and Interest; Defaulted Interest.......................10
Section 2.08 Cancellation................................................................11
Section 2.09 Book-Entry Notes............................................................11
Section 2.10 Notices to Clearing Agency..................................................12
Section 2.11 Definitive Notes............................................................12
Section 2.12 Release of Collateral.......................................................12
Section 2.13 Tax Treatment...............................................................12
ARTICLE Three
COVENANTS; REPRESENTATIONS AND WARRANTIES...................................................13
Section 3.01 Payment of Principal and Interest...........................................13
Section 3.02 Maintenance of Office or Agency.............................................13
Section 3.03 Money for Payments to be Held in Trust......................................13
Section 3.04 Existence...................................................................14
Section 3.05 Protection of Collateral....................................................14
Section 3.06 [Reserved]..................................................................15
Section 3.07 Performance of Obligations; Servicing of Contracts..........................15
Section 3.08 Negative Covenants..........................................................16
Section 3.09 Issuer May Consolidate, etc. Only on Certain Terms..........................16
Section 3.10 Successor or Transferee.....................................................17
Section 3.11 No Other Business...........................................................18
Section 3.12 No Borrowing................................................................18
Section 3.13 Notice of Events of Default.................................................18
Section 3.14 Further Instruments and Acts................................................18
Section 3.15 Compliance with Laws........................................................18
Section 3.16 Amendments of Trust Agreement...............................................18
Section 3.17 Removal of Administrator....................................................18
Section 3.18 Representations and Warranties of Issuer....................................18
ARTICLE Four
SATISFACTION AND DISCHARGE..................................................................20
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 4.01 Satisfaction and Discharge of Indenture.....................................20
Section 4.02 Application of Trust Money..................................................21
Section 4.03 Repayment of Moneys Held by Paying Agent....................................21
Section 4.04 Release of Collateral.......................................................21
ARTICLE Five
REMEDIES....................................................................................22
Section 5.01 "Events of Default."........................................................22
Section 5.02 Rights Upon Event of Default; Notice........................................23
Section 5.03 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee;
Authority of Indenture Trustee............................................................23
Section 5.04 Remedies....................................................................25
Section 5.05 Optional Preservation of the Contracts......................................26
Section 5.06 Priorities..................................................................26
Section 5.07 Limitation of Suits.........................................................26
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..............................................27
Section 5.12 Control by Noteholders......................................................27
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.............................................................28
Section 5.17 Performance and Enforcement of Certain Obligations..........................28
ARTICLE Six
THE INDENTURE TRUSTEE.......................................................................30
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...........34
Section 6.11 Eligibility.................................................................35
Section 6.12 Preferential Collection of Claims Against Issuer............................35
Section 6.13 Representations and Warranties of Indenture Trustee.........................35
Section 6.14 Execution of Transaction Documents..........................................36
ARTICLE Seven
NOTEHOLDERS'LISTS AND REPORTS...............................................................37
Section 7.01 Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders......37
Section 7.02 Preservation of Information: Communication to Noteholders...................37
Section 7.03 Reports by Issuer...........................................................37
Section 7.04 Reports by Indenture Trustee................................................38
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE Eight
ACCOUNTS, DISBURSEMENTS AND RELEASES........................................................39
Section 8.01 Collection of Money.........................................................39
Section 8.02 Trust Accounts..............................................................39
Section 8.03 General Provisions Regarding Accounts.......................................39
Section 8.04 Release of Collateral.......................................................40
Section 8.05 Opinion of Counsel..........................................................40
ARTICLE Nine
SUPPLEMENTAL INDENTURES.....................................................................41
Section 9.01 Supplemental Indentures Without Consent of Noteholders......................41
Section 9.02 Supplemental Indentures With Consent of Noteholders.........................41
Section 9.03 Execution of Supplemental Indentures........................................43
Section 9.04 Effect of Supplemental Indenture............................................43
Section 9.05 Conformity With Trust Indenture Act.........................................43
Section 9.06 Reference in Notes to Supplemental Indentures...............................43
ARTICLE Ten
REDEMPTION OF NOTES.........................................................................44
Section 10.01 Redemption.................................................................44
Section 10.02 Form of Redemption Notice..................................................44
Section 10.03 Notes Payable on Redemption Date...........................................44
Section 10.04 Optional Purchase of Class A-5 Notes by Depositor..........................44
Section 10.05 Form of Purchase Note......................................................45
Section 10.06 Class A-5 Notes to be Purchased on Purchase Date...........................45
ARTICLE Eleven
MISCELLANEOUS...............................................................................47
Section 11.01 Compliance Certificates and Opinions, etc..................................47
Section 11.02 Form of Documents Delivered to Indenture Trustee...........................48
Section 11.03 Acts of Noteholders........................................................49
Section 11.04 Notices....................................................................49
Section 11.05 Notices to Noteholders; Waiver.............................................49
Section 11.06 Alternate Payment and Notice Provisions....................................50
Section 11.07 Effect of Headings and Table of Contents...................................50
Section 11.08 Successors and Assigns.....................................................50
Section 11.09 Separability...............................................................50
Section 11.10 Benefits of Indenture......................................................50
Section 11.11 Legal Holidays.............................................................50
Section 11.12 Governing Law..............................................................50
Section 11.13 Counterparts...............................................................50
Section 11.14 Recording of Indenture.....................................................50
Section 11.15 Trust Obligation...........................................................50
Section 11.16 No Petition................................................................51
Section 11.17 Inspection.................................................................51
Section 11.18 Conflict with Trust Indenture Act..........................................51
Section 11.19 Communication by Noteholders With Other Noteholders........................51
</TABLE>
iii
<PAGE>
iv
<PAGE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A-1 Form of Class A-1 Note....................................................A-1-1
Exhibit A-2 Form of Class A-2 Note....................................................A-1-1
Exhibit A-3 Form of Class A-3 Note....................................................A-3-1
Exhibit A-4 Form of Class A-4 Note....................................................A-4-1
Exhibit A-5 Form of Class A-5 Note....................................................A-5-1
Exhibit B Form of Class B Note........................................................B-1
Exhibit C Form of Class C Note........................................................C-1
Exhibit D Form of Class D Note........................................................D-1
Exhibit E RESERVED....................................................................E-1
Exhibit F Form of Note Depository Agreement...........................................F-1
Exhibit G Form of Note Assignment.................................................... G-1
</TABLE>
v
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Trust Indenture
Act of 1939 Indenture
Section Section
- ------- -------
<S> <C>
310(a)....................................................................................6.11
310(b)....................................................................................6.11
310(c)....................................................................................N.A.
311(a)....................................................................................6.12
311(b)....................................................................................6.12
311(c)....................................................................................N.A.
312(a)..............................................................................7.01, 7.02
312(b)....................................................................................7.02
312(c)....................................................................................7.02
313(a)....................................................................................7.04
313(b)....................................................................................7.04
313(c)....................................................................................7.04
314(a)....................................................................................7.03
314(b)..............................................................................3.05, 7.03
314(c)...................................................................................11.01
314(d)...................................................................................11.01
314(e)...................................................................................11.01
314(f)....................................................................................N.A.
315(a)....................................................................................6.01
315(b)....................................................................................6.05
315(c)....................................................................................6.01
315(d)....................................................................................6.01
315(e)....................................................................................5.14
316(a)..............................................................................2.07, 5.04
316(b)....................................................................................9.02
316(c)....................................................................................N.A.
317(a)....................................................................................5.03
317(b)....................................................................................3.03
318(a)...................................................................................11.18
</TABLE>
vi
<PAGE>
This Indenture, dated as of __________, 1999 (this "Indenture"), is
between Newcourt Equipment Trust Securities 1999-1, a Delaware business trust
(the "Issuer") and ________________ Bank, in its capacity as indenture trustee
(the "Indenture Trustee") and not in its individual capacity.
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Issuer's ______% Class
A-1 Receivable-Backed Notes (the "Class A-1 Notes"), _____% Class A-2
Receivable-Backed Notes (the "Class A-2 Notes"), 5.240% Class A-3
Receivable-Backed Notes (the "Class A-3 Notes"), _______% Class A-4
Receivable-Backed Notes (the "Class A-4 Notes"), _______% Class A-5
Receivable-Backed Notes (the "Class A-5 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 A-5 Notes, Class B Notes, Class C Notes and
Class D Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby grants, transfers, assigns and otherwise conveys to
the Indenture Trustee on the Closing Date, on behalf of and for the benefit of
the Holders of the Notes, without recourse, all of the Issuer's right, title and
interest in, to and under the Transferred Assets as may be held from time to
time by the Issuer (as each such defined term is defined in Section 1.01)
(collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction and all other
sums owing by the Issuer hereunder or under any other Transaction Document, and
to secure compliance with the provisions of this Indenture, all as provided in
this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders of
the Notes, acknowledges such Grant, accepts the trust under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that the
interests of the Holders of the Notes may be adequately and effectively
protected.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
(a) Except as otherwise specified herein or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture.
"Act" shall have the meaning specified in Section 11.03(a).
"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 __________ 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
1
<PAGE>
relating to the Issuer and to be acted upon by the Administrator pursuant to the
Administration Agreement and who is identified on the list of Authorized
Officers delivered by the Administrator to the Indenture Trustee on the Closing
Date (as such list may be modified or supplemented from time to time
thereafter).
"Book Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.09.
"Business Day" means any day other than a Saturday, Sunday or other day
on which banking institutions in the cities of ______, _____________, or New
York, New York are authorized or obligated by law, executive order or
governmental decree to be closed.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Collateral" means the Collateral Granted to the Indenture Trustee under
this Indenture, including all proceeds thereof.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered which office at date of the execution of this Indenture is located
at _______________________________; 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.
"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
United 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.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning specified in Section 5.01.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
2
<PAGE>
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder" means, with respect to a Book-Entry Note, the Person who is the
owner of such Book-Entry Note, as reflected on the books of the Clearing Agency,
or on the books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency participant or as an indirect participant, in
each case in accordance with the rules of such Clearing Agency) and with respect
to a Definitive Note the Person in whose name a Note is registered on the Note
Register.
"Indenture Securities" means the Notes.
"Indenture Security Holder" means a Noteholder.
"Indenture Trustee" means __________________ Bank, as Indenture Trustee
under this Indenture, or any successor Indenture Trustee under this Indenture.
"Independent" means, when used with respect to any specified Person,
that the Person (i) is in fact independent of the Issuer, any other obligor upon
the Notes, the Trust Depositor, NFUSA 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, NFUSA or any of their
respective Affiliates, and (iii) is not connected with the Issuer, any such
other obligor, NFUSA 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 A-5 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 Pooling and Servicing Agreement.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Majority in Interest" has the same meaning given the term Required
Holders in the Pooling and Servicing Agreement.
"Note Depository Agreement" means the agreement dated as of the Closing
Date, among the Issuer, the Administrator, the Indenture Trustee and DTC, as the
initial Clearing Agency, relating to the Notes, substantially in the form of
Exhibit F hereto.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.04.
3
<PAGE>
"Noteholder" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency) and with
respect to a Definitive Note the Person in whose name a Note is registered on
the Note Register.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to,
the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer and who shall be satisfactory to the Indenture Trustee
and which shall comply with any applicable requirements of Section 11.01, and
shall be in form and substance satisfactory to the Indenture Trustee.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(a) Notes theretofore canceled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(b) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision for such notice has been made, satisfactory to the Indenture
Trustee, has been made); and
(c) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes
are held by a bona fide purchaser;
provided, however, that in determining whether the Holders of the requisite
Outstanding Amount have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any other Transaction Document,
Notes owned by the Issuer, any other obligor upon the Notes, the Trust
Depositor, NFUSA 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, NFUSA or any of
their respective Affiliates.
"Outstanding Amount" means the aggregate principal amount of all Notes
of one Class or of all Classes, as the case may be, Outstanding at the date of
determination.
"Owner Trustee" means The ______ Bank, 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.
4
<PAGE>
"Payment Date" means the twentieth (20th) day (or if any such date is
not a Business Day, then on the next succeeding Business Day) of each calendar
month commencing ____________, 1999.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Record Date" means, with respect to any Payment Date, the calendar day
immediately preceding such Payment Date; provided, however, that with any
Definitive Note the Record Date shall be the last calendar day of the month
preceding the month in which such Payment Date occurs.
"Redemption Date" means in the case of a redemption of the Notes
pursuant to Section 10.01(a) or a payment to Noteholders pursuant to Section
10.01(b), the Payment Date specified by the Servicer or the Issuer pursuant to
Section 10.01(a) or 10.01(b), as the case may be.
"Redemption Date Amount" means (i) in the case of a redemption of the
Notes pursuant to Section 10.01(a), an amount equal to the unpaid principal
amount of the Notes redeemed plus accrued and unpaid interest thereon at the
weighted average of the Interest Rate for each Class of Notes being so redeemed
to but excluding the Redemption Date, or (ii) in the case of a payment made to
Noteholders pursuant to Section 10.01(b), the amount on deposit in the Note
Distribution Account, but not in excess of the amount specified in clause (i)
above.
"Registered Holder" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office (or any successor group of the
Indenture Trustee), including any Vice President, assistant secretary or other
officer or assistant officer of the Indenture Trustee customarily performing
functions similar to those performed by the people who at such time shall be
officers, respectively, or to whom any corporate trust matter is referred at the
Corporate Trust Office of the Indenture Trustee because of his knowledge of and
familiarity with the particular subject.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement, dated as of the date hereof, among the Issuer, the Trust Depositor,
the Servicer and the Indenture Trustee.
"State" means any one of the 50 states of the United States, or the
District of Columbia or any of its territories.
"Targeted Holder" means any holder of a right to receive interest or
principal with respect to the Notes or other interests in the Trust (other than
a Note or other interest with respect to which an opinion is or has been
rendered that such interest will be treated as debt for federal income tax
purposes) and any holder of a right to receive any amount in respect of the
Certificate; 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 Trust Agreement, dated as of the date
hereof, between the Trust Depositor and the Owner Trustee.
5
<PAGE>
"Trust Certificate" means the Equity Certificate of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Pooling and Servicing Agreement.
Section 1.02 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.03 Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in
the plural include the singular.
(vi) any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to time
amended, modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments incorporated
therein; references to a Person are also to its permitted successors and
assigns; and
6
<PAGE>
(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.
[remainder of this page intentionally left blank]
7
<PAGE>
ARTICLE TWO
THE NOTES
Section 2.01 Form. The Notes, in each case together with the Indenture
Trustee's certificate of authentication, shall be in substantially the forms set
forth as Exhibits to this Indenture with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Note.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibits hereto are part of the terms of this Indenture.
Section 2.02 Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall, upon receipt of an Issuer Order,
authenticate and deliver for original issue (i) Class A-1 Notes in an aggregate
principal amount of $_____________, (ii) Class A-2 Notes in an aggregate
principal amount of $_____________, (iii) Class A-3 Notes in an aggregate
principal amount of $__________, (iv) Class A-4 Notes in an aggregate principal
amount of $_____________, (v) Class A-5 Notes in an aggregate principal amount
of $_________, (vi) Class B Notes in an aggregate principal amount of
$_____________, (vii) Class C Notes in an aggregate principal amount of
$_________, and (viii) 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 or in such other denomination as
shall be necessary.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein by
the Indenture Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
Section 2.03 Temporary Notes. Pending the preparation of Book-Entry
Notes or Definitive Notes, the Issuer may execute, and upon receipt of an Issuer
Order the Indenture Trustee shall authenticate and deliver, temporary Notes that
are printed, lithographed, typewritten, mimeographed or otherwise produced, of
the tenor of the definitive Notes in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes are issued, the Issuer will cause Book-Entry Notes or
Definitive Notes to be prepared without unreasonable delay. After the
preparation of Book-Entry Notes or Definitive Notes, the temporary Notes shall
be exchangeable for Book-Entry Notes or Definitive Notes upon surrender of the
temporary Notes at the office or agency of the Issuer to be maintained as
provided in Section 3.02, without charge to the Holder. Upon surrender
8
<PAGE>
for cancellation of any one or more Notes, the Issuer shall execute and the
Indenture Trustee shall authenticate and deliver in exchange therefor a like
tenor and principal amount of definitive Notes of authorized denominations.
Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as Book-Entry Notes or Definitive Notes.
Section 2.04 Registration; Registration of Transfer and Exchange;
Transfer Restriction. The Issuer shall cause to be kept a register (the "Note
Register") in which, subject to such reasonable regulations as it may prescribe,
the Issuer shall provide for the registration of Notes and the registration of
transfers of Notes. The Indenture Trustee shall be "Note Registrar" for the
purpose of registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Holders of the Notes and
the principal amounts and the amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes of the same Class in any
authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, the Issuer shall execute, and the
Indenture Trustee shall authenticate and the Noteholder shall obtain from the
Indenture Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located in the city in which the Corporate Trust Office is
located, or by a member firm of a national securities exchange, and such other
documents as the Indenture Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03 not involving
any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
9
<PAGE>
Neither the Indenture Trustee nor the Registrar shall have any
responsibility to monitor or restrict the transfer of beneficial ownership in
any Note an interest in which is transferable through the facilities of the
Clearing Agency.
Section 2.05 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by them to hold the Issuer and the Indenture
Trustee harmless, then, in the absence of notice to the Issuer, the Note
Registrar or the Indenture Trustee that such Note has been acquired by a bona
fide purchaser, the Issuer shall execute and upon its written request the
Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Note, a replacement Note of the
same Class; provided, however, that if any such destroyed, lost or stolen Note,
but not a mutilated Note, shall have become or within seven days shall be due
and payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer, and the Indenture Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section, the Issuer
or the Indenture Trustee may require the payment by the Holder of such Note of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost of stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.06 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee, and any
of their respective agents may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Indenture Trustee nor any of their respective agents
shall be affected by notice to the contrary.
Section 2.07 Payment of Principal and Interest; Defaulted Interest.
(a) Each Class of Notes shall accrue interest at the related
Interest Rate, and such interest shall be payable on each Payment Date, subject
to Section 3.01. Any installment of interest or principal, if any, payable on
any Note which is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall be paid to the Person in whose name such Note (or
one or more Predecessor Notes) is registered on the Record Date, by wire
transfer in immediately available funds to the account designated by such
nominee and except for the final installment of principal payable with respect
to such Note on a Payment Date or on the related final Payment Date, as the case
may be (and except for the Redemption Price for any Note called for redemption
pursuant to Section 10.01(a)), which shall be payable as provided below.
10
<PAGE>
(b) The principal of each Note shall be payable on each Payment
Date to the extent provided in the form of the related Note set forth as an
Exhibit hereto. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable, if not previously paid, on the
date on which an Event of Default shall have occurred and be continuing, unless
the Required Holders have waived such Event of Default in the manner provided in
Section 5.02. All principal payments on each Class of Notes shall be made pro
rata to the Noteholders of such Class entitled thereto. The Indenture Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Payment Date on which the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed within five Business Days of receipt
of notice of termination of the Trust pursuant to Section 9.01(c) of the Trust
Agreement and shall specify that such final installment will be payable only
upon presentation and surrender of such Note and shall specify the place where
such Note may be presented and surrendered for payment of such installment.
Notices in connection with redemptions of Notes shall be mailed to Noteholders
as provided in Section 10.02.
(c) If the Issuer defaults in a payment of interest on the Notes,
the Issuer shall pay defaulted interest at the applicable Interest Rate in any
lawful manner. The Issuer may pay such defaulted interest to the Persons who are
Noteholders on any Payment Date in the manner and to the extent provided in the
Pooling and Servicing Agreement.
(d) All payments to be made by the Issuer under this Indenture
shall be made only from the income and proceeds from the Collateral and only to
the extent that the Issuer shall have sufficient income or proceeds from the
Collateral to enable the Issuer to make payments in accordance with the terms
hereof. The Indenture Trustee is not personally liable for any amounts payable
under this Indenture, except as expressly provided herein.
Section 2.08 Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly canceled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly canceled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes canceled as provided in this Section, except as expressly permitted by
this Indenture. All canceled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Order that they
be destroyed or returned to it; provided that such Issuer Order is timely and
the Notes have not been previously disposed of by the Indenture Trustee.
Section 2.09 Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to DTC, the initial Depository, by, or on behalf of, the
Issuer. Such Notes shall initially be registered on the Note Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no
Noteholder of such Notes will receive a Definitive Note representing such
Noteholder's interest in such Note, except as provided in Section 2.11. Unless
and until definitive, fully registered Notes (the "Definitive Notes") have been
issued to Noteholders pursuant to Section 2.11:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the giving
of instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Noteholders;
(c) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this Section
shall control;
11
<PAGE>
(d) the rights of Noteholders shall be exercised only through the
Clearing Agency and shall be limited to those established by law and agreements
between such Noteholders and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to the Note Depository Agreement, unless and until
Definitive Notes are issued pursuant to Section 2.11, the Clearing Agency will
make book-entry transfers among the Clearing Agency Participants and receive and
transmit payments of principal of and interest on the Notes to such Clearing
Agency Participants; and
(e) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Noteholders evidencing a
specified percentage of the Outstanding Amount, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it has received
instructions to such effect from Noteholders and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to the Indenture
Trustee.
Section 2.10 Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Noteholders pursuant to Section
2.11, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders to the Clearing Agency, and shall
have no obligation to the Noteholders.
Section 2.11 Definitive Notes. With respect to the Classes of Notes, if
(i)(A) the Administrator advises the Indenture Trustee in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities as described in the Note Depository Agreement, and (B) the
Indenture Trustee or the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Indenture Trustee in
writing that it elects to terminate the book-entry system through the Clearing
Agency, or (iii) after the occurrence of an Event of Default, Holders of Notes
representing not less than 66 2/3% of the Outstanding Amount of such Class of
Notes advise the Indenture Trustee and the Clearing Agency through the Clearing
Agency Participants in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interests of the related
Noteholders, then the Indenture Trustee shall notify all Noteholders of the
related Class or Classes of Notes, through the Clearing Agency, of the
occurrence of any such event and of the availability of Definitive Notes of the
related Class of Notes to Noteholders requesting the same. Upon surrender to the
Indenture Trustee of the Note or Notes representing the Book-Entry Notes by the
Clearing Agency, accompanied by registration instructions, the Issuer shall
execute and the Indenture Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Clearing Agency. None of the Issuer, the
Note Registrar or the Indenture Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Notes of a Class, the Indenture Trustee shall recognize the holders of the
Definitive Notes as Noteholders hereunder.
The Indenture Trustee shall not be liable if the Indenture Trustee or
the Administrator is unable to locate a qualified successor Clearing Agency.
Definitive Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.
Section 2.12 Release of Collateral. Subject to Section 11.01 and the
terms of the Transaction Documents, the Indenture Trustee shall release property
from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate.
Section 2.13 Tax Treatment. The Issuer and the purchasers of the Notes
intend, and will take all actions consistent with the intention, that the Notes
be treated as indebtedness which is solely secured by the assets of the Trust
for all federal, state, local, and foreign income and franchise tax purposes and
that, pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii) as in effect
for periods after January 1, 1997, the Trust be disregarded as a separate entity
from the Trust Depositor for federal income tax purposes. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of its Note
agrees to treat the Notes for federal, state and local income, single business
and franchise tax purposes as indebtedness.
12
<PAGE>
ARTICLE THREE
COVENANTS; REPRESENTATIONS AND WARRANTIES
Section 3.01 Payment of Principal and Interest. The Issuer will duly and
punctually pay the principal of and interest, if any, on the Notes in accordance
with the terms of the Notes and this Indenture. Without limiting the foregoing,
subject to Section 8.02(c), the Issuer and the Indenture Trustee will cause to
be deposited into the Note Distribution Account amounts allocated pursuant to
Section 7.05 of the Pooling and Servicing Agreement, and cause to be distributed
all such amounts on a Payment Date as deposited therein (i) for the benefit of
the Class A-1 Notes, to the Class A-1 Noteholders, (ii) for the benefit of the
Class A-2 Notes, to the Class A-2 Noteholders, (iii) for the benefit of the
Class A-3 Notes, to the Class A-3 Noteholders, (iv) for the benefit of the Class
A-4 Notes, to the Class A-4 Noteholders, (v) for the benefit of its Class A-5
Noteholder, to the Class A-5 Noteholder, (vi) for the benefit of the Class B
Notes, to the Class B Noteholders, (vi) for the benefit of the Class C Notes, to
the Class C Noteholders and (viii) 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 New York, New York, an office or agency where Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes. The Issuer will give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
Section 3.03 Money for Payments to be Held in Trust. As provided in
Section 8.02, all payments of amounts due and payable with respect to any Notes
that are to be made from amounts withdrawn from the Collection Account and the
Note Distribution Account pursuant to Section 8.02(b) shall be made on behalf of
the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts
so withdrawn from the Collection Account and the Note Distribution Account for
payments of Notes shall be paid over to the Issuer except as provided in this
Section.
On or before the Business Day immediately preceding each Payment Date
and Redemption Date, upon written notice and instruction from the Servicer, the
Indenture Trustee shall withdraw from the Collection Account and deposit or
cause to be deposited in the Note Distribution Account an aggregate sum
sufficient to pay the amounts then becoming due, such sum to be held in trust
for the benefit of the Persons entitled thereto and (unless the Paying Agent is
the Indenture Trustee) shall promptly notify the Indenture Trustee of its action
or failure to so act.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and pay such sums to such Persons as herein provided;
(b) give the Indenture Trustee notice of any default by the
Issuer (or any other obligor upon the Notes) in the making of any payment
required to be made with respect to the Notes;
13
<PAGE>
(c) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent;
(d) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if at
any time it ceases to meet the standards required to be met by a Paying Agent at
the time of its appointment; and
(e) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and upon receipt of an Issuer Request shall be deposited by the Indenture
Trustee in the Collection Account; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Issuer for payment thereof,
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that if such money or
any portion thereof had been previously deposited by the Issuer with the
Indenture Trustee for the payment of principal or interest on the Notes, and
provided, further, that the Indenture Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Issuer cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to or for the
account of the Issuer. The Indenture Trustee may also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but not have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Indenture Trustee or of any
Paying Agent, at the last address of record for each such Holder).
Section 3.04 Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States, in which
case the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Indenture, the Notes, the Collateral and each other instrument or agreement
included in the Collateral.
Section 3.05 Protection of Collateral. The Issuer intends the security
interest Granted pursuant to this Indenture in favor of the Indenture Trustee on
behalf of the Noteholders to be prior to all other liens in respect of the
Collateral, and the Issuer shall take all actions necessary to obtain and
maintain, for the benefit of the Indenture Trustee on behalf of the Noteholders,
a first lien on and a first priority, perfected security interest in the
Collateral. In connection therewith, pursuant to Section 2.06 of the Pooling and
Servicing Agreement, the Issuer shall cause to be delivered into the possession
of the Indenture Trustee as pledgee hereunder, indorsed in blank, any
"instruments" (within the meaning of the UCC), not constituting part of chattel
paper, evidencing any Contract which is part of the Collateral. The Indenture
Trustee agrees to maintain continuous possession of such delivered instruments
as pledgee hereunder until this Indenture shall have terminated in accordance
with its terms or until, pursuant to the terms hereof or of the Pooling and
Servicing Agreement, the Indenture Trustee is otherwise authorized to release
14
<PAGE>
such instrument from the Collateral. The Issuer will from time to time execute,
deliver and file all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, all as prepared by the Servicer and delivered to the
Issuer, and will take such other action necessary or advisable to:
(a) Grant more effectively all or any portion of the Collateral;
(b) maintain or preserve the lien and security interest (and the
priority thereof) created by this Indenture or carry out more effectively the
purposes hereof;
(c) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(d) enforce any of the Collateral;
(e) preserve and defend title to the Collateral and the rights of
the Indenture Trustee and the Noteholders in such Collateral against the claims
of all persons and parties; and
(f) pay all taxes or assessments levied or assessed upon the
Collateral when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute all financing statements, continuation statements or
other instruments required to be executed pursuant to this Section.
Section 3.06 [Reserved].
Section 3.07 Performance of Obligations; Servicing of Contracts.
(a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any such Person's material covenants or obligations under any
instrument or agreement included in the Collateral or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in the Transaction Documents or such other instrument or
agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties and obligations under this Indenture, and any performance
of such duties by a Person identified to the Indenture Trustee in an Officer's
Certificate shall be deemed to be action taken by the Issuer. The Indenture
Trustee shall not be responsible for the action or inaction of the Servicer or
the Administrator. Initially, the Issuer has contracted with the Servicer and
the Administrator to assist the Issuer in performing its duties under this
Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Transaction
Documents and in the instruments and agreements included in the Collateral,
including but not limited to filing or causing to be filed all UCC financing
statements and continuation statements required to be filed by the terms of this
Indenture and the Pooling and Servicing Agreement in accordance with and within
the time periods provided for herein and therein. Except as otherwise expressly
provided therein, the Issuer shall not waive, amend, modify, supplement or
terminate any Transaction Document or any provision thereof without the consent
of the Indenture Trustee or the Required Holders.
(d) If the Issuer shall have knowledge of the occurrence of a
Servicer Default, the Issuer shall promptly notify the Indenture Trustee and
each Rating Agency thereof. Upon any termination of the Servicer's rights and
powers pursuant to the Pooling and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee. As soon as a Successor Servicer is
appointed, the Issuer shall notify the Indenture Trustee and the Rating Agencies
of such appointment (to the extent such party has not already been notified
pursuant to the Pooling and Servicing Agreement), specifying in such notice the
name and address of such Successor Servicer.
15
<PAGE>
(e) The Issuer agrees that it will not waive timely performance
or observance by the Servicer or NFUSA 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:
(a) except as expressly permitted by the Transaction Documents,
sell, transfer, exchange or otherwise dispose of any of the properties or assets
of the Issuer, including those included in the Collateral, unless directed to do
so by the Indenture Trustee;
(b) claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code or applicable state law) or assert
any claim against any present or former Noteholder by reason of the payment of
the taxes levied or assessed upon any part of the Collateral; or
(c) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien created by this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person to be
released from any covenant; or obligations with respect to the Notes under this
Indenture except as may be expressly permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance (other
than the lien of this Indenture) to be created on or extend to or otherwise
arise upon or burden the Collateral or any part thereof or any interest therein
or the proceeds thereof (other than Permitted Liens), (C) permit the lien
created by this Indenture not to constitute a valid first priority (other than
with respect to any such tax, mechanics' or other lien) security interest in the
Collateral, or (D) amend, modify or fail to comply with the provisions of the
Transaction Documents without the prior written consent of the Indenture
Trustee, except where the Transaction Documents allow for amendment or
modification without the consent or approval of the Indenture Trustee; or
(d) dissolve or liquidate in whole or in part.
Section 3.09 Issuer May Consolidate, etc. Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any
other Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and existing
under the laws of the United States or any State and shall expressly assume, by
an indenture supplemental hereto, executed and delivered to the Indenture
Trustee, in form and substance satisfactory to the Indenture Trustee, the due
and punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture and
each other Transaction Document on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Indenture Trustee
to the effect that such transaction will not have any material adverse tax
consequence to the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
16
<PAGE>
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel (which shall describe
the actions taken as required by clause (v) above or that no such actions will
be taken) each stating that such consolidation or merger and such supplemental
indenture comply with this Article Three and that all conditions precedent
herein provided for relating to such transaction have been complied with; and
(vii) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger has a net worth, immediately after such
consolidation or merger, that is (A) greater than zero and (B) not less than the
net worth of the Issuer immediately prior to giving effect to such consolidation
or merger.
(b) The Issuer shall not convey or transfer all or substantially
all of its properties or assets, including those included in the Collateral, to
any Person (except as expressly permitted by the Transaction Documents), unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer shall (A) be a United States citizen or a
Person organized and existing under the laws of the United States or any State,
(B) expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form and substance satisfactory to the
Indenture Trustee, the due and punctual payment of the principal of and interest
on all Notes and the performance or observance of every agreement and covenant
of this Indenture and each other Transaction Document on the part of the Issuer
to be performed or observed, all as provided herein, (C) expressly agree by
means of such supplemental indenture that all right, title and interest so
conveyed or transferred shall be subject and subordinate to the rights of
Holders of the Notes and (D) unless otherwise provided in such supplemental
indenture, expressly agree to indemnify, defend and hold harmless the Issuer
against and from any loss, liability or expense arising under or related to this
Indenture and the Notes;
(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Indenture Trustee
to the effect that such transaction will not have any material adverse tax
consequence to the Trust, any Noteholder or the Equity 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
17
<PAGE>
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with same effect as if such Person has been named as the Issuer
herein.
(b) Upon a conveyance or transfer of all or substantially all the
assets or properties of the Issuer pursuant to Section 3.09(b), the Issuer will
be released from every covenant and agreement of this Indenture to be observed
or performed on the part of the Issuer with respect to the Notes immediately
upon the delivery of written notice to the Indenture Trustee stating that the
Issuer is to be so released.
Section 3.11 No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Indenture and the other Transaction
Documents and activities incidental thereto.
Section 3.12 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes and (ii) any other Indebtedness permitted
by or arising under the other Transaction Documents. The proceeds of the Notes
and the Equity Certificate shall be used exclusively to fund the Issuer's
purchase of the Contracts and the other assets specified in the Pooling and
Servicing Agreement, to fund the Cash Collateral Account and to pay the
transactional expenses of the Issuer.
Section 3.13 Notice of Events of Default. The Issuer agrees to give the
Indenture Trustee and each Rating Agency prompt written notice of each Event of
Default hereunder and of a Servicer Default under the Pooling and Servicing
Agreement.
Section 3.14 Further Instruments and Acts. Upon request of the Indenture
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.15 Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
other Transaction Document.
Section 3.16 Amendments of Trust Agreement. The Issuer shall not agree
to any amendment to Section 11.01 of the Trust Agreement to eliminate the
requirements thereunder that the Indenture Trustee or the Holders of the Notes
consent to amendments thereto as provided therein.
Section 3.17 Removal of Administrator. So long as any Notes are issued
and outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agency Condition shall have been satisfied in connection with
such removal.
Section 3.18 Representations and Warranties of Issuer. The Issuer
represents and warrants as follows:
(a) Power and Authority. It has full power, authority and legal
right to execute, deliver and perform its obligations as Issuer under this
Indenture and the Notes (the foregoing documents, the "Issuer Documents").
(b) Due Authorization; Binding Obligation. The execution and
delivery of the Issuer Documents and the consummation of the transactions
provided for therein have been duly authorized by all necessary action on its
part. Issuer Documents constitute the legal, valid and binding obligation of the
Issuer enforceable in accordance with their terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of equitable
remedies.
(c) No Conflict. The execution and delivery of the Issuer
Documents, the performance of the transactions contemplated thereby and the
fulfillment of the terms thereof will not conflict with, result in any breach of
any of the materials terms and provisions of, or constitute (with or without
notice or lapse of time or both) a
18
<PAGE>
default under, any indenture, contract, agreement, mortgage, deed of trust, or
other instrument to which the Issuer is a party or by which it or any of its
property is bound.
(d) No Violation. The execution and delivery of the Issuer
Documents, the performance of the transactions contemplated thereby and the
fulfillment of the terms thereof will not conflict with or violate, in any
material respect, any Requirements of Law applicable to the Issuer.
(e) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or any Governmental Authority
required in connection with the execution and delivery of the Issuer Documents,
the performance of the transactions contemplated thereby and the fulfillment of
the terms thereof have been obtained.
(f) Location. The Issuer has its chief executive office and place
of business (as such terms are used in Article 9 of the UCC) in Wilmington,
Delaware. The Issuer agrees that it will not change the location of such office
to a location outside of Wilmington, Delaware, without at least thirty (30) days
prior written notice to NFUSA, the Servicer, the Indenture Trustee and the
Rating Agencies.
[remainder of this page intentionally left blank]
19
<PAGE>
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.01, 3.03, 3.04, 3.05,
3.07, 3.08, 3.10, 3.12, 3.13, 3.15 and 3.16, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.07 and the obligations of the Indenture
Trustee under Section 4.02) and (vi) the rights of Noteholders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them, and the Indenture Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when
(A) either
1. all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 2.05
and (ii) Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Issuer
and thereafter repaid to the Issuer or discharged from such
trust, as provided in Section 3.03) have been delivered to the
Indenture Trustee for cancellation;
2. all Notes not theretofore delivered to the Indenture
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at the applicable
Maturity Date within one year, or
(ii) 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 Payment Date (if
Notes shall have been called for redemption pursuant to Section
10.01(a)), as the case may be;
(B) the Issuer has paid or performed or caused to be paid or
performed all amounts and obligations which the Issuer may owe to or on behalf
of the Indenture Trustee for the benefit of the Noteholders under this Indenture
or the Notes; and
(C) the Issuer has delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel and (if required by the TIA or
the Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section 11.01(a)
and, subject to Section 11.02,
20
<PAGE>
stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with and the
Rating Agency Condition has been satisfied.
Section 4.02 Application of Trust Money. Except as provided in Section
5.06, all moneys deposited with the Indenture Trustee pursuant to Section 4.01
shall be held in trust and applied by it, in accordance with the provisions of
the Notes and this Indenture, to the payment, either directly or through any
Paying Agent, as the Indenture Trustee may determine, to the Holders of the
particular Notes for the payment or redemption of which such moneys have been
deposited with the Indenture Trustee, of all sums due and to become due thereon
for principal and interest; but such moneys need not be segregated from other
funds except to the extent required herein or in the Pooling and Servicing
Agreement or required by law.
Section 4.03 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.03 and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
Section 4.04 Release of Collateral. Subject to Section 11.01 and the
terms of the Transaction Documents, the Indenture Trustee shall release property
from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate and an Opinion of Counsel and
Independent Certificates in accordance with TIA '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.
[remainder of this page intentionally left blank]
21
<PAGE>
ARTICLE FIVE
REMEDIES
Section 5.01 "Events of Default."
"Events of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) failure to pay on any Payment Date the full amount of
accrued interest on any Note and which continues
unremedied for five (5) or more calendar days after such
Payment Date;
(b) failure to pay the then outstanding principal amount of
any Note, if any, on its related Maturity Date;
(c) (i) failure on the part of NFUSA to make any payment or
deposit required under the Pooling and Servicing Agreement
or Purchase and Sale Agreement within three (3) Business
Days after the date the payment or deposit is required to
be made, or (ii) failure on the part of NFUSA, the Trust
Depositor or the Owner Trustee to observe or perform any
other covenants or agreements of such entity set forth in
the Purchase and Sale Agreement, Pooling and Servicing
Agreement or the Indenture, which failure has a material
adverse effect on the Noteholders and which continues
unremedied for a period of sixty (60) calendar days after
written notice; provided, that no such sixty (60) calendar
day cure period shall apply in the case of a failure by
NFUSA to perform its agreement to repurchase or substitute
for Ineligible Contracts, and further provided, that only
a five (5) day cure period shall apply in the case of a
failure by NFUSA 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 NFUSA, the Trust
Depositor, the Indenture Trustee or the Owner Trustee in
the Pooling and Servicing Agreement or the Indenture or
any information required to be given by NFUSA or the Trust
Depositor to the Indenture Trustee to identify the
Contracts proves to have been incorrect in any material
respect when made and continues to be incorrect in any
material respect for a period of (sixty) 60 days after
written notice and as a result of which the interests of
the Noteholders are materially and adversely affected;
provided, however, that an Event of Default shall not be
deemed to occur thereunder if NFUSA has repurchased the
related Contracts through the Trust Depositor during such
period in accordance with the
22
<PAGE>
provisions of the Pooling and Servicing Agreement and the
Purchase and Sale Agreement;
(e) the occurrence of an Insolvency Event relating to NFUSA,
the Trust Depositor or the Issuer; or
(f) the Issuer becomes an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
Section 5.02 Rights Upon Event of Default; Notice.
If an Event of Default referred to in subparagraph (e) of Section 5.01
has occurred, then and in every such case the unpaid principal of the Notes,
together with interest accrued but unpaid thereon, and all other amounts due to
the Noteholders under the Indenture, shall immediately and without further act
become due and payable. If any other Event of Default has occurred, the Required
Holders by written notice to the Trustee may require the Trustee to, or the
Trustee may without such notice, declare by written notice to the Trust
Depositor and the Owner Trustees (with a copy to each Rating Agency) that the
unpaid principal of the Notes together with interest accrued but unpaid thereon,
and all other amounts due to the Noteholder under the Indenture shall
immediately and without further act become due and payable.
In the case of any event described in clause (a), (b), (c), (d) or (f)
above, an Event of Default with respect to the Notes shall not be deemed to have
occurred if the Required Holders waive such Event of Default pursuant to a
written notice to the Trust Depositor, Indenture Trustee and the Servicer. In
the event the Indenture Trustee has actual knowledge of an Event of Default, it
shall give written notice thereof to the Trust Depositor, NFUSA, the Servicer,
the Owner Trustee and the Rating Agencies. The Indenture Trustee shall not be
deemed to have notice of an Event of Default unless it shall have received a
written notice pursuant to this Section 5.02 or it has actual knowledge of an
Event of Default.
If an Insolvency Event relating to the Trust Depositor occurs, pursuant
to the Trust Agreement and the Pooling and Servicing Agreement, on the day of
such Insolvency Event, the Trust Depositor shall promptly give notice to the
Indenture Trustee of the Insolvency Event, and the Indenture Trustee shall,
unless notified to the contrary by the Required Holders, promptly act pursuant
to and in accordance with the terms thereof to sell, dispose of or otherwise
liquidate the Collateral in a commercially reasonable manner and on commercially
reasonable terms. The proceeds from any such sale, disposition or liquidation of
Contracts shall be deposited in the Collection Account and allocated as
described in the Pooling and Servicing Agreement and herein.
Promptly following its receipt of notice hereunder or under any other
Transaction Document of any Event of Default, the Indenture Trustee shall send a
copy thereof to the Issuer and each Rating Agency.
Section 5.03 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee; Authority of Indenture Trustee.
(a) The Issuer covenants that if the Notes are accelerated
following the occurrence of an Event of Default, the Issuer will, upon demand of
the Indenture Trustee, pay to it, for the benefit of the Holders of the Notes,
the whole amount then due and payable on such Notes for principal and interest,
with interest, with interest upon the overdue principal, and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest, at the applicable Interest Rate and in addition
thereto such further amount as shall be sufficient to cover costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee and its agents and counsel.
23
<PAGE>
(b) The Indenture Trustee following the occurrence of an Event of
Default, shall have full right, power and authority to take, or defer from
taking, any and all acts with respect to the administration, maintenance or
disposition of the Collateral.
(c) If an Event of Default occurs, the Indenture Trustee may in
its discretion (except as provided in Section 5.03(d)), proceed to protect and
enforce its rights and the rights of the Noteholders, by such appropriate
Proceedings as the Indenture Trustee shall deem most effective to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in the Indenture Trustee by this Indenture or by law.
(d) Notwithstanding anything to the contrary contained in this
Indenture if an Event of Default shall have occurred, and if the Issuer fails to
perform its obligations under Section 10.01(b) when and as due, the Indenture
Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Noteholders by such appropriate Proceedings as the Indenture
Trustee shall deem most effective to protect and enforce any such rights,
whether for specific performance of any covenant or agreement in this Indenture
or in aid of the exercise of any power granted herein, or to enforce any other
proper remedy or legal or equitable right vested in the Indenture Trustee by
this Indenture or by law, provided that the Indenture Trustee shall only be
entitled to take any such actions to the extent such actions (i) are taken only
to enforce the Issuer's obligations to redeem the principal amount of Notes, and
(ii) are taken only against the Collateral, any investments therein and any
proceeds thereof.
(e) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Collateral, Proceedings under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture Trustee,
and their respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of negligence
or bad faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations,
to vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts received
with respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
24
<PAGE>
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(f) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
compensation affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(g) All rights of action and of asserting claims under this
Indenture or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or Proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Holders of the Notes.
(h) In any Proceedings brought by the Indenture Trustee
(including any Proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all of the Holders
of the Notes, and it shall not be necessary to make any Noteholder a party to
any such proceedings.
Section 5.04 Remedies. If an Event of Default shall have occurred the
Indenture Trustee (subject to Section 5.05) may, and shall (subject to Section
6.02) if so directed by the Required Holders in writing:
(a) institute Proceedings in its own name and as or on behalf of
a trustee of an express trust for the collection of all amounts then payable on
the Notes or under this Indenture with respect thereto, whether by declaration
or otherwise, enforce any judgment obtained, and collect from the Issuer and any
other obligor upon such Notes moneys adjudged due;
(b) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;
(c) exercise any remedies of a secured party under the UCC and
any other remedy available to the Indenture Trustee and take any other
appropriate action to protect and enforce the rights and remedies of the
Indenture Trustee on behalf of the Noteholders under this Indenture or the
Notes; and
(d) direct the Owner Trustee to sell the Collateral or any
portion thereof or rights or interest therein, at one or more public or private
sales called and conducted in any manner permitted by law; provided, however,
that the Indenture Trustee may not sell or otherwise liquidate the Collateral
following an Event of Default, other than an Event of Default described in
Section 5.01(a) or (b), unless (A) the Holders of 100% of the Principal Amount
of the Notes consent thereto, (B) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge in full all amounts
then due and unpaid upon such Notes for principal and interest or (C) the
Indenture Trustee determines that the Collateral will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes as
they would have become due if the Notes had not been declared due and payable,
and the Indenture Trustee provides prior written notice to each Rating Agency
and obtains the consent of the Required Holders. In determining such sufficiency
or insufficiency with respect to clauses (B) and (C), the Indenture Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm or national reputation as to the feasibility of such
proposed action and as to the sufficiency of the
25
<PAGE>
Collateral for such purpose; provided, however, upon the occurrence of an Event
of Default described in Section 5.01(e), caused solely from an event described
in such subparagraph occurring with respect to the Trust Depositor, the
Collateral will be liquidated by the Indenture Trustee and the Trust will be
terminated 90 days after the date of such Insolvency Event, unless, before the
end of such 90-day period, the related Trustee shall have received written
instructions from the Required Holders, to the effect that such Required Holders
disapprove of the liquidation of such Collateral and termination of such Trust.
Section 5.05 Optional Preservation of the Contracts. Following an Event
of Default and except as otherwise provided above, the Indenture Trustee may,
but need not, elect to maintain possession of the Collateral. It is the desire
of the parties hereto and the Noteholders that there be at all times sufficient
funds for the payment of principal and interest on the Notes, and the Indenture
Trustee shall take such desire into account when determining whether or not to
maintain possession of the Collateral. In determining whether to maintain
possession of the Collateral, the Indenture Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment banking or accounting firm
of national reputation as to the feasibility of such proposed action and as to
the sufficiency of the Collateral for such purpose.
Section 5.06 Priorities.
(a) If the Indenture Trustee collects any money or property
pursuant to this Article Five, it shall pay out the money or property in the
order and priority set forth in Section 7.05(b) of the Pooling Agreement.
(b) The Indenture Trustee may fix a record date and payment date
for any payment to Noteholders pursuant to this Section. At least 15 days before
such record date, the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the record date, the payment date and the amount to
be paid.
Section 5.07 Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless (and in all events subject to Section 11.16):
(a) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% of the Outstanding Amount of
the Notes have made written request to the Indenture Trustee to institute such
Proceeding in respect of such Event of Default in its own name as Indenture
Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in complying with such request;
(d) the Indenture Trustee for sixty (60) days after its receipt
of such notice, request and offer of indemnity has failed to institute such
Proceedings; and
(e) no direction inconsistent with such written request has been
given to the Indenture Trustee during such sixty (60) day period by the Holders
of a majority of the Outstanding Amount of the Notes, voting together as a
single class.
It is understood and intended that no one or more Holders of Notes shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided.
26
<PAGE>
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
Section 5.08 Unconditional Rights of Noteholders to Receive Principal
and Interest. Notwithstanding any other provisions in the Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
Section 5.09 Restoration of Rights and Remedies. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Indenture Trustee
and the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
Section 5.10 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11 Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article Five or by
law to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
Section 5.12 Control by Noteholders. The Required Holders shall have the
right to direct the time, method and place of conducting any Proceeding for any
remedy available to the Indenture Trustee with respect to the Notes or
exercising any trust or power conferred on the Indenture Trustee (in all events
subject to Section 6.02(f)); provided that:
(a) such direction shall not be in conflict with any rule of law
or with any other provision of this Indenture;
(b) subject to the terms of Section 5.04, any direction to the
Indenture Trustee to sell or liquidate the Collateral shall be by the Holders of
Notes representing not less than 100% of the Outstanding Amount of the Notes;
(c) if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Collateral pursuant to
such Section, then any direction to the Indenture Trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the Notes to sell or
liquidate the Collateral shall be of no force and effect; and
(d) the Indenture Trustee may take any other action deemed proper
by the Indenture Trustee that is not inconsistent with such direction.
27
<PAGE>
Notwithstanding the rights of Noteholders set forth in this Section,
subject to Section 6.01, the Indenture Trustee need not take any action that it
determines might involve it in liability or might materially and adversely
affect the rights of any Noteholders not consenting to such action.
Section 5.13 Waiver of Past Defaults. In the case of any waiver of an
Event of Default, the Issuer, the Indenture Trustee and the Holders of the Notes
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other Event of Default or
impair any right consequent thereto. Upon any such waiver, such Event of Default
shall cease to exist and be deemed to have been cured and not to have occurred,
for every purpose of this Indenture.
Section 5.14 Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (i) any suit instituted by the
Indenture Trustee, (ii) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (iii) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
Section 5.15 Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantages of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Indenture Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.
Section 5.16 Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Collateral or upon any of
the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.06.
Section 5.17 Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to do
so and at the Administrator's expense, the Issuer shall take all such lawful
action as the Indenture Trustee may request to compel or secure the performance
and observance by the Trust Depositor and the Servicer as applicable, of each of
their obligations to the Issuer under or in connection with the Pooling and
Servicing Agreement in accordance with the terms thereof, and to exercise any
and all rights, remedies, powers and privileges lawfully available to the Issuer
under or in connection with the Pooling and Servicing Agreement to the extent
and in the manner directed by the Indenture Trustee, including the transmission
of notices of default on the part of the Trust Depositor or the Servicer
thereunder and the institution of legal or administrative actions or proceedings
to compel or secure performance by the Trust Depositor or the Servicer of each
of their obligations under the Pooling and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in
writing, including facsimile) of the Required Holders shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the Trust
Depositor or the Servicer under or in connection with the Pooling and Servicing
Agreement, including the right or power to take any action to compel or
28
<PAGE>
secure performance or observance by the Trust Depositor or the Servicer of each
of their obligations to the Issuer thereunder and to give any consent, request,
notice, direction, approval, extension or waiver under the Pooling and Servicing
Agreement, and any right of the Issuer to take such action shall be suspended.
[remainder of this page intentionally left blank]
29
<PAGE>
ARTICLE SIX
THE INDENTURE TRUSTEE
Section 6.01 Duties of Indenture Trustee.
(a) If an Event of Default has occurred, the Indenture Trustee
shall exercise the rights and powers vested in it by this Indenture and in the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except upon and after the occurrence of an Event of Default:
(i) the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of the factual
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and conforming to
the requirements of this Indenture; however, the Indenture Trustee shall examine
the certificates and opinions to determine whether or not they conform on their
face to the requirements of this Indenture and the other Transaction Documents
to which the Indenture Trustee is a party.
(c) The Indenture Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(i) this paragraph does not limit the effect of Section
6.01(b);
(ii) the Indenture Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to
the Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture or the Pooling and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayments of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(h) The Indenture Trustee shall have no discretionary duties
other than those explicitly set forth in this Indenture.
30
<PAGE>
(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.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute wilful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Indenture Trustee shall, upon the occurrence of an Event
of Default (that has not been cured), exercise the rights and powers vested in
it by this Indenture in a manner consistent with Section 6.01; provided,
however, that the Indenture Trustee shall be under no obligation to institute,
conduct or defend any litigation under this Indenture or in relation to this
Indenture, at the request, order or direction of any of the Holders of Notes,
pursuant to the provisions of this Indenture, unless such Holders of Notes shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities that may be incurred therein or thereby.
(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless so requested by the Holders of
Notes evidencing not less than 25% of the Outstanding Amount of the Notes;
provided, however, that if the payment within a reasonable time to the Indenture
Trustee of the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Indenture Trustee, not
reasonably assured to the Indenture Trustee by the security afforded to it by
the terms of this Indenture or the Pooling and Servicing Agreement, the
Indenture Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to so proceeding; the reasonable expense of every such
examination shall be paid by the Person making such request, or, if paid by the
Indenture Trustee, shall be reimbursed by the Person making such request upon
demand.
Section 6.03 Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee is required to comply with Section 6.11.
Section 6.04 Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Collateral or the Notes, it shall not be
31
<PAGE>
accountable for the Issuer's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Issuer in the Transaction Documents
or in any document issued in connection with the sale of the Notes or in the
Notes other than the Indenture Trustee's certificate of authentication.
Section 6.05 Notice of Defaults. If a Default occurs and if it is known
to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall
mail to each Noteholder notice of the Default within ninety (90) days after it
occurs. A Default shall be known to a Responsible Officer of the Indenture
Trustee if the Indenture Trustee has actual knowledge of such Default or has
received notice thereof pursuant to Section 5.02. Except in the case of an Event
of Default in payment of principal of or interest on any Note (including
payments pursuant to the redemption of such Notes), the Indenture Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of
Noteholders.
Section 6.06 Reports by Indenture Trustee to Holders. The Indenture
Trustee shall deliver to each Noteholder such information, including without
limitation, IRS Form 1099, as may be required to enable such holder to prepare
its federal and state income tax returns.
Section 6.07 Compensation and Indemnity. The Issuer shall pay or shall
cause the Administrator or Servicer to pay to the Indenture Trustee from time to
time reasonable compensation for its services. The Indenture Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Issuer shall or shall cause the Administrator or Servicer to
reimburse the Indenture Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Indenture Trustee's
agents, counsel, accountants and experts. The Issuer shall indemnify or shall
cause the Administrator or Servicer to indemnify the Indenture Trustee and its
officers, directors, employees and agents against any and all loss, liability or
expense (including attorneys' fees) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder. The
Indenture Trustee shall notify the Issuer and the Administrator promptly of any
claim for which it may seek indemnity. Failure by the Indenture Trustee to so
notify the Issuer and the Administrator shall not relieve the issuer or the
Administrator of its obligations hereunder. The Issuer shall defend or shall
cause the Administrator or Servicer to defend any such claim, and the Indenture
Trustee may have separate counsel and the Issuer shall pay or shall cause the
Administrator or Servicer to pay the fees and expenses of such counsel. Neither
the Issuer nor the Administrator or Servicer need reimburse any expense or
indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith. The parties hereto agree and acknowledge that, notwithstanding
anything to the contrary, all payments required to be made pursuant to this
Section 6.07 shall not be made from the Trust Assets; provided, however, if an
Event of Default has occurred payments required to be made pursuant to this
Section 6.07, to the extent unpaid, shall be paid in accordance with Section
5.06; provided, further, that any payments required to be made pursuant to this
Section 6.07, if unpaid, shall not constitute a general recourse claim against
the Issuer.
The Issuer's, Servicer's and Administrator's payment obligations to the
Indenture Trustee pursuant to this Section shall survive the discharge of this
Indenture. When the Indenture Trustee incurs expenses after the occurrence of a
Default specified in Section 5.01(e) with respect to the Issuer, the expenses
are intended to constitute expenses of administration under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
Section 6.08 Replacement of Indenture Trustee. The Indenture Trustee may
resign at any time by so notifying the Issuer and the Servicer. The Issuer may
remove the Indenture Trustee if:
(a) the Indenture Trustee fails to comply with Section 6.11;
(b) a court having jurisdiction in the premises in respect of the
Indenture Trustee in an involuntary case or proceeding under federal or state
banking or bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, shall
have entered a decree or order granting relief or appointing a receiver,
liquidator, assignee, custodian, trustee, conservator, sequestrator (or similar
32
<PAGE>
official) for the Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or ordering the winding-up or liquidation of the Indenture
Trustee's affairs, provided any such decree or order shall have continued
unstayed and in effect for a period of thirty (30) consecutive days;
(c) the Indenture Trustee commences a voluntary case under any
federal or state banking or bankruptcy laws, as now or hereafter constituted, or
any other applicable federal or state bankruptcy, insolvency or other similar
law, or consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, conservator, sequestrator or other
similar official for the Indenture Trustee or for any substantial part of the
Indenture Trustee's property, or makes any assignment for the benefit of
creditors or fails generally to pay its debts as such debts become due or takes
any corporate action in furtherance of any of the foregoing; or
(d) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed, the Issuer shall promptly
appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The Issuer or the successor
Indenture Trustee shall mail a notice of its succession to Noteholders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority in Outstanding Amount
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of the Indenture Trustee and appointment of a
successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to this Section and payment of all fees and expenses
owed to the outgoing Indenture Trustee. Notwithstanding the replacement of the
Indenture Trustee pursuant to this Section, the retiring Indenture Trustee shall
be entitled to payment or reimbursement of such amounts as such Person is
entitled pursuant to Section 6.07.
Section 6.09 Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall provide
each Rating Agency prompt notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor Indenture Trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such
33
<PAGE>
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 fifteen (15) days after the receipt
by it of a request so to do, the Indenture Trustee alone shall have the power to
make such appointment. No co-Indenture Trustee or separate Indenture Trustee
hereunder shall be required to meet the terms of eligibility of a successor
Indenture Trustee under Section 6.11 and no notice to Noteholders of the
appointment of any co-Indenture Trustee or separate Indenture Trustee shall be
required under Section 6.08.
(b) Every separate Indenture Trustee and co-Indenture Trustee
shall, to the extent permitted by law, be appointed and act subject to the
following provisions and conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate Indenture
Trustee or co-Indenture Trustee jointly (it being understood that such separate
Indenture Trustee or co-Indenture Trustee is not authorized to act separately
without the Indenture Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or acts are to be
performed the Indenture Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate Indenture
Trustee or co-Indenture Trustee, but solely at the direction of the Indenture
Trustee;
(ii) no Indenture Trustee hereunder shall be personally
liable by reason of any act or omission of any other Indenture Trustee
hereunder; and
(iii) the Indenture Trustee and the Administrator may at
any time accept the resignation of or remove any separate Indenture Trustee or
co-Indenture Trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate
Indenture Trustees and co-Indenture Trustees, as effectively as if given to each
of them. Every instrument appointing any separate Indenture Trustee or
co-Indenture Trustee shall refer to this Agreement and the conditions of this
Article. Each separate Indenture Trustee and co-Indenture Trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of co-appointment, either jointly with the Indenture
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of or affording protection
to, the Indenture Trustee. Every such instrument shall be filed with the
Indenture Trustee and a copy thereof given to the Administrator.
(d) Any separate Indenture Trustee or co-Indenture Trustee may at
any time constitute the Indenture Trustee, its agent or attorney-in-fact with
full power and authority, to the extent not prohibited by law, to do any lawful
act under or in respect of this Agreement on its behalf and in its name. If any
separate Indenture Trustee or co-Indenture Trustee shall die, become incapable
of acting, resign or be removed, all of its estates,
34
<PAGE>
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.
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 ______ banking corporation in good standing under the
laws of each jurisdiction where its business so requires. It has full
corporate power, authority and legal right to execute, deliver and
perform its obligations as Indenture Trustee under this Indenture and
the Pooling and Servicing Agreement (the foregoing documents, the
"Indenture Trustee Documents") and to authenticate the Notes.
(b) Due Authorization; Binding Obligation. The execution and
delivery of the Indenture Trustee Documents, the consummation of the
transactions provided for therein and the authentication of the Notes
have been duly authorized by all necessary corporate action on its part,
either in its individual capacity or as Indenture Trustee, as the case
may be. The Indenture Trustee Documents constitute the legal, valid and
binding obligation of the Indenture Trustee enforceable in accordance
with their terms, except as enforcement may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditor's
rights generally and by the availability of equitable remedies.
(c) No Conflict. The execution and delivery of the Indenture
Trustee Documents, the performance of the transactions contemplated
thereby and the fulfillment of the terms thereof (including the
authentication of the Notes), will not conflict with, result in any
breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, any
indenture, contract, agreement, mortgage, deed of trust, or other
instrument to which the Indenture Trustee is a party or by which it or
any of its property is bound.
(d) No Violation. The execution and delivery of the Indenture
Trustee Documents, the performance of the transactions contemplated
thereby and the fulfillment of the terms thereof (including the
authentication of the Notes), will not conflict with or violate, in any
material respect, any Requirements of Law applicable to the Indenture
Trustee.
35
<PAGE>
(e) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or any Governmental
Authority applicable to the Indenture Trustee, required in connection
with the execution and delivery of the Indenture Trustee Documents, the
performance by the Indenture Trustee of the transactions contemplated
thereby and the fulfillment by the Indenture Trustee of the terms
thereof (including the authentication of the Notes), have been obtained.
(f) Validity, Etc. Each Indenture Trustee Document constitutes a
legal, valid and binding obligation of the Indenture Trustee,
enforceable against the Indenture Trustee in accordance with its terms,
except as such enforceability may be limited by Insolvency Laws and
except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity) or by an
implied covenant of good faith and fair dealing.
Section 6.14 Execution of Transaction Documents. The Issuer hereby
requests and the Indenture Trustee agrees to execute and deliver the Pooling and
Servincing Agreement and Administration Agreement.
[remainder of this page intentionally left blank]
36
<PAGE>
ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01 Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (i) not more than five days after the earlier of (a) each Record Date
and (b) three months after the last Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of the
Noteholders as of such Record Date and (ii) at such other times as the Indenture
Trustee may request in writing, within (thirty) 30 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than ten days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
Section 7.02 Preservation of Information: Communication to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Noteholders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.01 and the names and addresses of Noteholders received by the
Indenture Trustee in its capacity as Note Registrar and shall otherwise comply
with TIA '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 fifteen (15)
days after the Issuer or the Trust Depositor is required (if at all) to file the
same with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may from time to time by rules and regulations prescribe) that
the Issuer or Trust Depositor may be required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this Indenture as
may be required from time to time by such rules and regulations;
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA '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;
(iv) file with the Indenture Trustee reports in compliance
with TIA 'SS'314(a) and TIA 'SS'314(b).
(b) Unless the Issuer otherwise determines, the fiscal year of
the Issuer shall end on December 31 of each year.
37
<PAGE>
Section 7.04 Reports by Indenture Trustee. If required by TIA
'SS'313(a), within sixty (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).
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.
[remainder of this page intentionally left blank]
38
<PAGE>
ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01 Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture and the Pooling
and Servicing Agreement. The Indenture Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of the Collateral,
the Indenture Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article Five.
Section 8.02 Trust Accounts.
(a) On or prior to the Closing Date, the Indenture Trustee shall
establish and maintain, in the name of the Indenture Trustee, for the benefit of
the Noteholders and the Certificateholder, the Trust Accounts as provided in
Section 7.01 of the Pooling and Servicing Agreement.
(b) On or before each Payment Date, all amounts required to be
disbursed to the Indenture Trustee with respect to the preceding Collection
Period pursuant to Section 7.01 of the Pooling and Servicing Agreement will be
transferred from the Collection Account and/or the Cash Collateral Account and
deposited by the Indenture Trustee upon receipt to the Note Distribution
Account.
(c) On each Payment 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 in the order and priority set forth in Section 7.05(a) of
the Pooling and Servicing Agreement:
Section 8.03 General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have
occurred, all or a portion of the funds in the Trust Accounts shall be invested
in accordance with the provisions of Section 7.03 of the Pooling and Servicing
Agreement. Except as otherwise provided in Section 7.03 of the Pooling and
Servicing Agreement, all income or other gain 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.
39
<PAGE>
(c) If (i) the Issuer shall have failed to give written
investment directions for any funds on deposit in the Trust Accounts to the
Indenture Trustee by 11:00 a.m., New York City time (or such other time as may
be agreed by the Issuer and Indenture Trustee), on any Business Day or (ii) a
Default or Event of Default shall have occurred and be continuing with respect
to the Notes but the Notes shall not have been declared due and payable pursuant
to Section 5.02 or (iii) if such Notes shall have been declared due and payable
following an Event of Default, but amounts collected or receivable from the
Collateral are being applied in accordance with Section 5.05 as if there had not
been such a declaration, then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts in Eligible
Investments described in clause (vi) of the definition thereof in the Pooling
and Servicing Agreement.
Section 8.04 Release of Collateral.
(a) Subject to the payment of its fees and expenses pursuant to
Section 6.07, the Indenture Trustee may, and when required by the provisions of
this Indenture or the Pooling and Servicing Agreement shall, execute instruments
to release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article shall
be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due the Indenture Trustee pursuant to Section
6.07 have been paid, release any remaining portion of the Collateral that
secured the Notes from the lien of this Indenture and release to the Issuer or
any other Person entitled thereto any funds then on deposit in the Trust
Accounts. The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA as so stated in the Opinion of Counsel) Independent
Certificates in accordance with TIA '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.
[remainder of this page intentionally left blank]
40
<PAGE>
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01 Supplemental Indentures Without Consent of Noteholders.
Without the consent of the Holders of any Notes and with prior notice to
each Rating Agency, the Issuer and the Indenture Trustee, when authorized by an
Issuer Order and upon receipt by the Indenture Trustee of an Opinion of Counsel,
and the other parties hereto at any time from time to time, may enter into one
or more indentures supplemental hereto (which shall conform to the provisions of
the TIA as in force at the date of the execution thereof), in form satisfactory
to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien created by this Indenture, or to subject to the lien
created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and in
the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any other
provision herein or in any supplemental indenture or the Transaction Documents
or to make any other provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture; provided that such action
shall not adversely affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor Indenture Trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more than
one Indenture Trustee, pursuant to the requirements of Article Six;
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification of
this Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be expressly
required by the TIA; and
(viii) to elect into the FASIT provisions of the Code, provided
an Opinion of Counsel to the effect that such election will not adversely affect
the Noteholders, is delivered to the Issuer and Indenture Trustee.
The Indenture Trustee is hereby authorized to join in the exemption of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
Section 9.02 Supplemental Indentures With Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order and upon
receipt by the Indenture Trustee of an Opinion of Counsel, also may, with prior
notice to each Rating Agency, and with the consent of a Majority in Interest, by
Act of such
41
<PAGE>
Holders delivered to the Issuer and the Indenture Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that, no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
(i) change the date of payment of any installment of principal of
or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Date Amount with respect
thereto, change the provisions of this Indenture relating to the
application of collections on, or the proceeds of the sale of, the
Collateral to payment of principal of or interest on the Notes, or
change any place of payment where, or the coin or currency in which, any
Note or the interest thereon is payable, or impair the right to
institute suit for the enforcement of the provisions of this Indenture
requiring the application of funds available therefor, as provided in
Article Five, to the payment of any such amount due on the Notes on or
after the respective due dates thereof (or, in the case of redemption,
on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the second proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to sell or liquidate the
Collateral pursuant to Section 5.04 or amend the provisions of this
Article which specify the percentage of the Outstanding Amount of the
Notes required to amend this Indenture or the other Transaction
Documents;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Transaction Documents cannot
be modified or waived without the consent of the Holder of each
Outstanding Note affected thereby; or
(vi) permit the creation of any lien ranking prior to or on a
parity with the lien created by this Indenture with respect to any part
of the Collateral or, except as otherwise permitted or contemplated
herein, terminate the lien created by this Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the
security provided by the lien created by this Indenture.
Neither the Issuer, the Indenture Trustee nor any of their respective
affiliates shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Noteholder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture, the Pooling and Servicing Agreement or the
Notes unless such consideration is offered to be paid to all Noteholders that so
consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of the Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
42
<PAGE>
Promptly after the execution by the parties hereto of any supplemental
indenture pursuant to this Section, the Indenture Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
Section 9.03 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Indenture Trustee shall be entitled to receive, and subject
to Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
Section 9.04 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
parties hereto and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
Section 9.05 Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act as then in
effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
Section 9.06 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture. If
the Issuer or the Indenture Trustee shall so determine, new notes so modified as
to conform, in the opinion of the Indenture Trustee and the Issuer, to any such
supplemental indenture may be prepared and executed by the Issuer and
authenticated and delivered by the Indenture Trustee in exchange for Outstanding
Notes.
[remainder of this page intentionally left blank]
43
<PAGE>
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01 Redemption.
(a) In the event that NFUSA pursuant to Section 7.08 of the
Pooling and Servicing Agreement purchases (through the Trust Depositor) the
corpus of the Trust, the Notes are subject to redemption in whole, but not in
part, on the Payment Date on which such repurchase occurs, for a purchase price
equal to the outstanding principal, and accrued interest on the Notes (the
"Redemption Price"); provided, however, that the Issuer has available funds
sufficient to pay such amounts. NFUSA, the Servicer or the Issuer shall furnish
each Rating Agency notice of such redemption. If the Notes are to be redeemed
pursuant to this Section 10.01(a), the Servicer or the Issuer shall furnish
notice of such election to the Indenture Trustee not later than twenty (20) days
prior to the Redemption Date and the Issuer shall deposit with the Indenture
Trustee in the Note Distribution Account the Redemption Price of the Notes to be
redeemed whereupon all such Notes shall be due and payable on the Redemption
Date upon the furnishing of a notice complying with Section 10.02 to each Holder
of the Notes.
(b) In the event that the assets of the Trust are sold pursuant
to Section 9.02 of the Trust Agreement or Section 5.02(b) of this Indenture, the
proceeds of such sale shall be distributed as provided in Section 5.06. If
amounts are to be paid to Noteholders pursuant to this Section 10.01(b), the
Servicer or the Issuer shall, to the extent practicable, furnish notice of such
event to the Indenture Trustee not later than twenty (20) days prior to the
Redemption Date whereupon all such amounts shall be payable on the Redemption
Date.
Section 10.02 Form of Redemption Notice. Notice of redemption under
section 10.01(a) shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than five days prior to the applicable
Redemption Date to each Holder of Notes, as of the close of business on the
Record Date preceding the applicable Redemption Date, at such Holder's address
appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Date Amount; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Date Amount (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
Section 10.03 Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, following notice of redemption (if any) as
required by Section 10.02, on the Redemption Date become due and payable at the
Redemption Date Amount and (unless the Issuer shall default in the payment of
the Redemption Date Amount) no interest shall accrue on the Redemption Date
Amount for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Date Amount.
Section 10.04 Optional Purchase of Class A-5 Notes by Depositor. The
Trust Depositor shall have the right to purchase, on any Payment Date, all, but
not less than all, of the Class A-5 Notes, at a price equal to the principal
balance thereof, plus a premium equal to the excess, discounted as described
below, of (i) the amount of
44
<PAGE>
interest that would have accrued on the Class A-5 Notes at the Class A-5
Interest Rate during the period commencing on and including the Payment Date on
which the Class A-5 Notes are to be so purchased to but excluding Class A-5
Maturity Date, Over (ii) the amount of interest that would have accrued on the
Class A-5 Notes over the same period at a per annum rate of interest equal to
the bond equivalent yield to maturity on the fifth Business Day preceding such
Payment Date of a United States Treasury security, which is trading in the
public securities market, maturing on a date closest to the date equal to the
remaining weighted average life of the Class A-5 Notes. Such excess shall be
discounted to present value to such Payment Date at the yield described in
clause (ii) above. For purposes of the preceding two sentences only, (i) the
Class A-5 principal balance upon which interest will de deemed to accrue, and
(ii) the weighted average remaining life of the Class A-5 Notes, shall be
determined based upon the amortization of the Contract Pool Principal Balance
remaining at such Payment Date at a rate to ___% CPR. Interest payable on the
Class A-5 Notes on such Payment Date shall be paid to the Holders of Class A-5
Notes on the related Record Date in the ordinary manner. If the Trust Depositor
elects to purchase the Class A-5 Notes as described in this paragraph, the Trust
Depositor shall furnish notice of such election and the Payment Date on which
the purchase is to be made (the "Purchase Date") to the Trustee no less than 25
days (or such lesser number of days as shall be satisfactory to the Trustee)
prior to such Purchase Date, and shall thereafter deposit, or cause to be
deposited, into the Note Distribution Account the purchase price of the Class
A-5 Notes, whereupon all Class A-5 Notes shall be subjected to purchase on such
Purchase Date upon the furnishing of a notice complying with Section 10.05 to
each Holder of Class A-5 Notes.
Section 10.05 Form of Purchase Note. Notice of purchase under section
10.04 shall be given by the Trustee not less than five days prior to the
Purchase Date by first-class mail, postage prepaid, mailed to each Holder of
Class A-5 Notes, as of the close of business on the Record Date with respect to
the Payment Date immediately preceding the Purchase Date, at such Holder's
address appearing in the Note Register.
All notices of purchase shall state:
(i) the Purchase Date;
(ii) the purchase price;
(iii) the place where such Notes are to be surrendered for
payment of the purchase price (the "Place of Purchase," which shall be
the office or agency of the Issuer to be maintained as provided in
Section ___); and
(iv) that interest payable on the Class A-5 Notes on such
Purchase Date shall be paid to the Holders of record on the related
Record Date in the ordinary manner.
Notice of purchase of the Notes shall be given by the Trustee in
the name and at the expense of the Trust Depositor. Failure to give notice of
purchase, or any defect therein, to any Holder of any Class A-5 Note shall not
impair or effect the validity of the purchase of any other Class A-5 Note.
Section 10.06 Class A-5 Notes to be Purchased on Purchase Date.
(a) The Class A-5 Notes shall, following notice of purchase as
required by Section 10.05, be purchased on the Purchase Date, but solely from
the moneys deposited in the Note Distribution Account for such purpose, at the
purchase price therefor, such purchase price to be payable upon presentation and
surrender of the Class A-5 Notes to the Trustee at the Place of Purchase.
(b) All Class A-5 Notes must be surrendered for purchase on the
Purchase Date and, provided that funds are available and on hand with the
Trustee to pay the purchase price thereof, (1) the Class A-5 Notes shall be
"deemed purchased" on the Purchase Date, whether or not received by the Trustee
on such date, (2) interest on the Class A-5 Notes, whether or not such class A-5
Notes are received by the Trustee, shall cease to accrue on the
45
<PAGE>
Purchase Date and the former Holders of such Class A-5 Notes shall have no
further interest or rights in such Class A-5 Notes except that said former
Holders shall be entitled to payment of the purchase price thereof, exclusively
from moneys in the Note Distribution Account held by the Trustee for such
payment, upon presentation of such Class A-5 Notes to the Trustee at the Place
of Purchase at or before 10:00 a.m., New York City time, on such Purchase Date
or any Business Day thereafter, (3) on and after the Purchase Date, the Trustee,
the Note Regristar and each Paying Agent shall no longer treat the former
Holders of such Class A-5 Notes as the Holders thereof except for purposes of
such Holders' right to receive payment of the purchase price of such Class A-5
Notes, and (4) on the Purchase Date, the Trustee shall authenticate one or more
new Class A-5 Notes, of authorized denominations and in the aggregate principal
amount of the Class A-5 Notes, in the name of the Trust Depositor or any other
Person or Persons designated by the Depositor, as provided in and subject to
the terms of this Indenture.
(c) Any Class A-5 Notes issued in lieu of Class A-5 Notes purchased or
otherwise deemed purchased pursuant to this Section 10.06 shall not be canceled
or the indebtedness represented thereby otherwise extinguished, it being the
intention of the Issuer and the Trust Depositor that such Class A-5 Notes
remain outstanding and represent a continuing indebtedness of the Issuer,
whether such Class A-5 Notes are held by the Trust Depositor or any other
purchase.
46
<PAGE>
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the
Indenture Trustee to take any action under any provision of this Indenture, the
Issuer shall furnish to the Indenture Trustee (i) an Officer's Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with, (ii) an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, and (iii) (if required by the TIA as
so stated in the Opinion of Counsel) an Independent Certificate from a firm of
certified public accountants meeting the applicable requirements of this section
and TIA 'SS'314(c), except that, in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or
condition and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion
as to whether or not such covenant or condition has been complied
with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for
authentication and delivery of the Notes or the release of any property subject
to the lien created by this Indenture, the Issuer shall, in addition to any
obligation imposed in Section 11.01(a) or elsewhere in this Indenture, furnish
to the Indenture Trustee an Officer's Certificate certifying or stating the
opinion of the signer thereof as to the fair value (within ninety (90) days of
such deposit) to the Issuer of the Collateral or other property or securities to
be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer shall also
deliver to the Indenture Trustee an Independent Certificate as to the named
matters, if the fair value to the Issuer of the property to be so deposited and
of all other such property made the basis of any such withdrawal or release
since the commencement of the then-current fiscal year of the Issuer, as set
forth in the certificates delivered pursuant to clause (i) above and this clause
(ii), is 10% or more of the Outstanding Amount of the Notes, but such a
certificate need not be furnished with respect to any property so deposited, if
the fair value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the Outstanding
Amount of the Notes.
47
<PAGE>
(iii) Other than with respect to any release described in clause
(A) or (B) of Section 11.01(b)(v), whenever any property or securities are to be
released from the lien created by this Indenture, the Issuer shall also furnish
to the Indenture Trustee an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value (within
ninety (90) days of such release) of the property or securities proposed to be
released and stating that in the opinion of such person the proposed release
will not impair the security created by this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer shall also
furnish to the Indenture Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property or securities (other than property described in clauses (A) or (B) of
Section 11.01(b)(v)) released from the lien created by this Indenture since the
commencement of the then current fiscal year, as set forth in the certificates
required by clause (iii) above and this clause (iv), equals 10% or more of the
Outstanding Amount of the Notes, but such certificate need not be furnished in
the case of any release of property or securities if the fair value thereof as
set forth in the related Officer's Certificate is less than $25,000 or less than
one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding any other provision of this Section, the
Issuer may, without compliance with the other provisions of this Section, (A)
collect, liquidate, sell or otherwise dispose of the Contracts as and to the
extent permitted or required by the Transaction Documents, (B) make cash
payments out of the Trust Accounts as and to the extent permitted or required by
the Transaction Documents, so long as the Issuer shall deliver to the Indenture
Trustee every twelve months, commencing on the December 2000 Payment Date, an
Officer's Certificate stating that all the dispositions of Collateral described
in clauses (A) or (B) that occurred during the preceding twelve calendar months
were in the ordinary course of the Issuer's business and that the proceeds
thereof were applied in accordance with the Transaction Documents.
Section 11.02 Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Person as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Servicer, NFUSA
or the Issuer, stating that the information with respect to such factual matters
is in the possession of the Servicer, NFUSA 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
48
<PAGE>
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.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 11.04 Notices. All notices, demands, certificates, requests and
communications hereunder ("Notices") shall be in writing and shall be effective
(a) upon receipt when sent through the U.S. mails, registered or certified mail,
return receipt requested, postage prepaid, with such receipt to be effective the
date of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient at the address specified in the Pooling and Servicing
Agreement for such recipient.
Each party hereto may, by Notice given in accordance herewith to each of
the other parties hereto, designate any further or different address to which
subsequent Notices shall be sent.
Section 11.05 Notices to Noteholders; Waiver. Where this Indenture
provides for Notice to Noteholders of any event, such Notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such Notice. In any case where Notice to Noteholders is given by mail,
neither the failure to mail such Notice nor any defect in any Notice so mailed
to any particular Noteholder shall affect the sufficiency of such Notice with
respect to other Noteholders, and any Notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for Notice in any manner, such Notice may
be waived in writing by any Person entitled to receive such Notice, either
before or after the event, and such waiver shall be the equivalent of such
Notice. Waivers of Notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event of Noteholders when such notice is required to be given
49
<PAGE>
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
Section 11.06 Alternate Payment and Notice Provisions. Notwithstanding
any provisions of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer will furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
Section 11.07 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 11.08 Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-Indenture Trustees and agents.
Section 11.09 Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 11.10 Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Collateral, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 11.11 Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 11.12 Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THE AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 11.13 Counterparts. This Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 11.14 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
Section 11.15 Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficiary interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of
50
<PAGE>
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 NFUSA, the Trust Depositor or the Issuer, or join in any institution
against NFUSA, the Trust Depositor or the Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the other Transaction Documents.
Section 11.17 Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees and independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
Section 11.18 Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
Section 11.19 Communication by Noteholders With Other Noteholders.
Noteholders may communicate with other Noteholders with respect to their rights
under this Indenture or the Notes pursuant to Section 312(b) of the TIA. Every
Noteholder, by receiving and holding the same, agrees with the Issuer and the
Indenture Trustee that none of the Issuer and the Indenture Trustee nor any
agent of the Issuer and the Indenture Trustee shall be deemed to be in violation
of any existing law, or any law hereafter enacted which does not specifically
refer to Section 312 of the TIA, by reason of the disclosure of any such
information as to the names and addresses of the Noteholders in accordance with
Section 312 of the TIA, regardless of the source from which such information was
derived, and that the Indenture Trustee shall not be held accountable by reason
of mailing any material pursuant to a request made under Section 312(b) of the
TIA.
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.
[signature page follows]
51
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and delivered as of the day and year first above written.
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
By: The _________ Bank, not in
its individual capacity but
solely on behalf of the
Issuer as Owner Trustee under
the Trust Agreement
By: ______________________________
Printed Name:_____________________
Title:____________________________
______________________ BANK, not in its
individual capacity but solely as
Indenture Trustee
By: _________________________________
Printed Name: _______________________
Title: _______________________________
52
<PAGE>
STATE OF_____ )
) ss
COUNTY OF_____ )
On__________ before me, ______________________________________________,
[insert date] [Here insert name and title of notary]
personally appeared __________________________________________________________,
personally known to me, or
proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature _____________________________________ [Seal]
53
<PAGE>
STATE OF _____ )
) ss
COUNTY OF _____ )
On ____________ before me, ____________________________________________,
[insert date] [Here insert name and title of notary]
personally appeared ________________________________________________________,
personally known to me, or
proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature ______________________________________ [Seal]
54
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
[ ]% CLASS A-1 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. __________
Newcourt Equipment Trust Securities 1999-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($____) payable on
the earlier of [ ] (the "Class A-1 Maturity Date") and the Redemption
Date, if any, pursuant to Section 10.01 of the Indenture referred to on the
reverse hereof.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date), subject to certain limitations contained in Section
3.01 of the Indenture. Interest on this Note will accrue for each Payment Date
from the most recent Payment 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.
A-1-1
<PAGE>
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.
A-1-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as of the date set forth
below.
Date: __________ ___, 1999 NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
By: The _______________Bank, not in its individual
capacity but solely on behalf of the Issuer as
Owner Trustee, under the Trust Agreement
By: ______________________________________
Printed Name:_____________________
Title:_____________________________
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
_______________Bank, not in its individual
capacity but solely as Indenture Trustee
By: _______________________________________
Authorized Signatory
A-1-3
<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 [ ], 1999 (the
"Indenture"), between the Issuer and ____________ Bank, as Indenture Trustee
(the "Indenture Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Class A-1 Notes are subject to all terms of the Indenture. All
terms used in this Note that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the
Indenture, as so supplemented or amended.
The Class A-1 Notes and the other Notes described in the Indenture
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture subject to
the priorities of allocations as to interest and principal payments as described
therein and in the Pooling and Servicing Agreement.
Principal of the Class A-1 Notes will be payable on the earlier of the
Class A-1 Maturity Date and the Redemption Date, if any, selected pursuant to
the Indenture. Notwithstanding the foregoing, the entire unpaid principal amount
of the Class A-1 Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing unless the Required Holders have
waived such Event of Default.
Payments of interest on this Note due and payable on each Payment Date
shall be made by check 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 Payment Date shall be
binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Payment Date by notice mailed within
five (5) days of such Payment Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Corporate Trust
Office of the Indenture Trustee or at the office of the Indenture Trustee's
agent appointed for such purposes located in the City of Chicago.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of
NFUSA, on the Payment Date on or after the date on which the Contract Pool
Principal Balance is less than 10% of the Contract Pool Principal Balance on 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-1 Notes of authorized denominations and in the same aggregate
principal amount will be issued to the designated transferee or transferees.
A-1-4
<PAGE>
No service charge will be charged for any registration of transfer or exchange
of this Note, but the transferor may be required to pay a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any such registration of transfer or exchange.
Each Noteholder by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or assign
of the Indenture Trustee or the Owner Trustee in its individual capacity, except
as any such Person may have expressly agreed and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the 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.
A-1-5
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
A-1-6
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
[ ]% CLASS A-2 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Equipment Trust Securities 1999-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($___________)
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.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date), subject to certain limitations contained in the
Indenture. Interest on this Note will accrue for each Payment Date from the most
recent Payment Date on which interest has been paid to but excluding such
Payment 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.
A-2-1
<PAGE>
Payment of interest and principal on the Class A-2 Notes is subject to
certain prior payments rights of Holders of Class A-1 and Class A-5 Notes as set
forth in the Indenture.
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.
A-2-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: _____________ __, 1999 NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
By: The ________________ Bank, not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee, under the Trust
Agreement
By: ______________________________________
Printed Name:_____________________
Title:_____________________________
A-2-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
___________Bank, not in its individual
capacity but solely as Indenture Trustee
By: ____________________________________
Authorized Signatory
A-2-4
<PAGE>
[REVERSE OF CLASS A-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class A-2 Receivable-Backed Notes (the "Class A-2
Notes"), all issued under an Indenture, dated as of [ ], 1999 (the
"Indenture"), between the Issuer and ___________________ Bank, as Indenture
Trustee (the "Indenture Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes. The Notes are subject to all terms of the Indenture. All
terms used in this Note that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the
Indenture, as so supplemented or amended.
The Class A-2 Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Pooling and Servicing Agreement.
Principal of the Class A-2 Notes will be payable on the earlier of the
Class A-2 Maturity Date and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class A-2 Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing unless the
Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Payment 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 Payment Date shall be
binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Payment Date by notice mailed within
five (5) days of such Payment Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Indenture
Trustee's principal Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in the City of Chicago.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of
NFUSA, on any Payment Date on or after the date on which the Contract Pool
Principal Balance is less than 10% of the Contract Pool Principal Balance 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
A-2-5
<PAGE>
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer, of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the 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.
A-2-6
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
A-2-7
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
[ ]% CLASS A-3 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Equipment Trust Securities 1999-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($___________)
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.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date), subject to certain limitations contained in the
Indenture. Interest on this Note will accrue for each Payment Date from the most
recent Payment Date on which interest has been paid to but excluding such
Payment 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.
A-3-1
<PAGE>
Payment of principal and interest on the Class A-3 Notes is subject to
certain prior payment rights of Holders of Class A-1, Class A-2 and Class A-5
Notes as set forth in the Indenture.
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.
A-3-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date:_________ __, 1999 NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
By: The_________________ Bank, not in its individual
capacity but solely on behalf of the Issuer as
Owner Trustee, under the Trust Agreement
By: ______________________________________
Printed Name:_____________________
Title:_____________________________
A-3-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
___________Bank, not in its individual
capacity but solely as Indenture Trustee
By: ____________________________________
Authorized Signatory
A-3-4
<PAGE>
[REVERSE OF CLASS A-3 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class A-3 Receivable-Backed Notes (the "Class A-3
Notes"), all issued under an Indenture, dated as of [ ], 1999 (the
"Indenture"), between the Issuer and ____________ Bank, as Indenture Trustee
(the "Indenture Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class A-3 Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Pooling and Servicing Agreement.
Principal of the Class A-3 Notes will be payable on the earlier of the
Class A-3 Maturity Date and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class A-3 Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing unless the
Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Payment 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 Payment Date shall be
binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Payment Date by notice mailed within
five (5) days of such Payment Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Indenture
Trustee's principal Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in the City of Chicago.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of
NFUSA, on any Payment Date on or after the date on which the Contract Pool
Principal Balance is less then 10% of the Contract Pool Principal Balance 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
A-3-5
<PAGE>
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer, of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the 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.
A-3-6
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
A-3-7
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
[ ]% CLASS A-4 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Equipment Trust Securities 1999-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($___________)
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.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date), subject to certain limitations contained in the
Indenture. Interest on this Note will accrue for each Payment Date from the most
recent Payment Date on which interest has been paid to but excluding such
Payment 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.
A-4-1
<PAGE>
Payment of interest and principal on the Class A-4 Notes is subject to
certain prior payment rights of the Holders of Class A-1, Class A-2, Class A-3
and Class A-5 Notes as set forth in the Indenture.
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.
A-4-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date:_________ __, 1999 NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
By: The __________________Bank, not in its individual
capacity but solely on behalf of the Issuer as Owner
Trustee, under the Trust Agreement
By: _____________________________________________
Printed Name:_____________________
Title:_____________________________
A-4-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
__________ Bank, not in its individual
capacity but solely as Indenture Trustee
By: _____________________________________
Authorized Signatory
A-4-4
<PAGE>
[REVERSE OF CLASS A-4 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class A-4 Receivable-Backed Notes (the "Class A-4
Notes"), all issued under an Indenture, dated as of [ ], 1999 (the
"Indenture"), between the Issuer and ______________ Bank, as Indenture Trustee
(the "Indenture Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class A-4 Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Pooling and Servicing Agreement.
Principal of the Class A-4 Notes will be payable on the earlier of the
Class A-4 Maturity Date and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class A-4 Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing unless the
Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Payment 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 Payment Date shall be
binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Payment Date by notice mailed within
five (5) days of such Payment Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Indenture
Trustee's principal Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in the City of Chicago.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of
NFUSA, on any Payment Date on or after the date on which the Contract Pool
Principal Balance is less than 10% of the initial Contract Pool Principal
Balance 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
A-4-5
<PAGE>
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer, of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the 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.
A-4-6
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
A-4-7
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
[ ]% CLASS A-5 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Equipment Trust Securities 1999-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($___________)
payable on the earlier of [ ], (the "Class A-5 Maturity Date")
and the Redemption Date, if any, pursuant to Section 10.01 of the Indenture
referred to on the reverse hereof.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date), subject to certain limitations contained in the
Indenture. Interest on this Note will accrue for each Payment Date from the most
recent Payment Date on which interest has been paid to but excluding such
Payment 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.
A-5-1
<PAGE>
Payment of interest and principal on the Class A-4 Notes is subject to
certain prior payment rights of the Holders of Class A-1, Class A-2, Class A-3
and Class A-4 Notes as set forth in the Indenture.
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.
A-5-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date:________ __, 1999 NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
By: The __________________Bank, not in its individual
capacity but solely on behalf of the Issuer as
Owner Trustee, under the Trust Agreement
By: _____________________________________________
Printed Name:_____________________
Title:_____________________________
A-5-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
__________ Bank, not in its individual
capacity but solely as Indenture Trustee
By: ____________________________________
Authorized Signatory
A-5-4
<PAGE>
[REVERSE OF CLASS A-5 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class A-5 Receivable-Backed Notes (the "Class A-5
Notes"), all issued under an Indenture, dated as of [ ], 1999 (the
"Indenture"), between the Issuer and ______________ Bank, as Indenture Trustee
(the "Indenture Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class A-5 Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Pooling and Servicing Agreement.
Principal of the Class A-5 Notes will be payable on the earlier of the
Class A-5 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-5 Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing unless the
Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Payment Date
shall be made by check 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 Payment Date shall be
binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Payment Date by notice mailed within
five (5) days of such Payment Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Indenture
Trustee's principal Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in the City of Chicago.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of
NFUSA, on any Payment Date on or after the date on which the Contract Pool
Principal Balance is less than 10% of the initial Contract Pool Principal
Balance as of the Initial Cutoff Date.
The Trust Depositor will have the right to purchase all of the Class A-5
Notes on any Payment Date (the "Purchase Date"), at a purchase price equal to
the principal balance thereof plus a premium equal to the excess, discounted as
described below, of (i) the amount of interest that would have accrued on the
Class A-5 Notes at the Class A-5 Interest Rate during the period commencing on
and including the Payment Date on which the Class A-5 Notes are to be so
purchased to but excluding Class A-5 Maturity Date, over the (ii) the amount of
interest that would have accrued on the Class A-5 Notes over the same period at
a per annum rate of interest equal to the bond equivalent yield to maturity on
the fifth Business Day preceding such Payment Date of a United States Treasury
security, which is trading in the public securities market, maturing on a date
closest to the date equal to the remaining weighted average life of the Class
A-5 Notes. Such excess shall be discounted to present value to such Payment Date
at the yield described in clause (ii) above. For purposes of the preceding two
sentences only, (i) the
A-5-5
<PAGE>
Class A Principal Balance upon which interest will be deemed to accrue, and
(ii) the weighted average remaining life of the Class A-5 Notes, shall be
determined based upon the amortization of the Contract Pool Principal Balance
remaining at such Payment at a rate equal to ___% CPR. Interest payable on the
Class A-5 notes on any such Payment Date shall be paid to the Holders of record
on the related Record Date in the ordinary manner. Following such purchase, the
Class A-5 Notes will not be retired, but will continue to be entitled to
interest and principal payments on each Payment Date in the manner described
above. At such time as the Depositor elects to so purchase the Class A-5 Notes
and notice thereof has been given as provided in the Indenture, provided moneys
are on deposit with the Trustee in the amount necessary, and available, to pay
the purchase price thereof, (1) this Note shall be "deemed purchased" on the
Purchase Date, whether or not received by the Trustee on such date, (2)
interest hereon, whether or not this Note is received by the Trustee, shall
cease to accrue on the Purchase Date and the former Holder of this Note shall
have no further interest or rights in this Note except that said former Holder
shall be entitled to payment of the purchase price hereof, exclusively from
moneys held by the Trustee for such payment, upon presentation of this Note to
the Trustee at the Place of Purchase at or before 10:00 a.m., New York City
time, on such Purchase Date or any Business Day thereafter, and (3) on and
after the Purchase Date, the Trustee, the Note Registrar and each Paying Agent
shall no longer treat the former Holder of this Note as the Holder hereof
except for purposes of such Holder's right to receive payment of the purchase
price hereof.
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-5 Notes of authorized denomination and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer, of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the 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
A-5-6
<PAGE>
beneficial interest in a Note, agrees to treat the Notes for the federal, state
and local income, single business and franchise tax purposes as indebtedness.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer, the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Required Holders. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
A-5-7
<PAGE>
EXHIBIT B
FORM OF CLASS B NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
[ ]% CLASS B RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Equipment Trust Securities 1999-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($_________)
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.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date), subject to certain limitations contained in the
Indenture. Interest on this Note will accrue for each Payment Date from the most
recent Payment Date on which interest has been paid to but excluding such
Payment 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.
B-1
<PAGE>
The payment of interest and principal on the Class B Notes is subject to
certain prior payment rights of the Holders of Class A Notes, as set forth in
the Indenture.
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-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date:_________ __, 1999 NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
By: The_______________________, not in its individual capacity
but solely on behalf of the Issuer as Owner Trustee, under
the Trust Agreement
By: _____________________________________________
Printed Name:_____________________
Title:_____________________________
B-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
_____________________Bank, not in its individual
capacity but solely as Indenture Trustee
By: ____________________________________________
Authorized Signatory
B-4
<PAGE>
[REVERSE OF CLASS B NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class B Receivable-Backed Notes (the "Class B Notes"),
all issued under an Indenture, dated as of [ ], 1999 (the
"Indenture"), between the Issuer and _______________ Bank, as Indenture Trustee
(the "Indenture Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class B Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Pooling and Servicing Agreement.
Principal of the Class B Notes will be payable on the earlier of the
Class B Maturity Date and the Redemption Date, if any, pursuant to Section 10.01
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class B Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing unless the Required
Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Payment 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 Payment Date shall be
binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Payment Date by notice mailed within
five (5) days of such Payment Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Indenture
Trustee's principal Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in the City of Chicago.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of
NFUSA, on any Payment Date on or after the date on which the Contract Pool
Principal Balance is less than 10% of the initial Contract Pool Principal
Balance 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
B-5
<PAGE>
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer, of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the 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.
B-6
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
B-7
<PAGE>
EXHIBIT C
FORM OF CLASS C NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
[ ]% CLASS C RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Equipment Trust Securities 1998-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($_________)
payable on the earlier of [ ] (the "Class C Maturity Date") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred to
on the reverse hereof.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date), subject to certain limitations contained in the
Indenture. Interest on this Note will accrue for each Payment Date from the most
recent Payment Date on which interest has been paid to but excluding such
Payment 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.
Payment of interest and principal on the Class C Notes is subject to
certain prior payment rights of the Holders of Class A and Class B Notes as set
forth in the Indenture.
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
C-1
<PAGE>
the Issuer with respect to this Note shall be applied first to interest due
and payable on this Note as provided above and then to the unpaid principal
of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
C-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date:_____________ __, 1999 NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
By: The __________________ Bank, not in its individual
capacity but solely on behalf of the Issuer as
Owner Trustee, under the Trust Agreement
By: ______________________________________
Printed Name:_____________________
Title:_____________________________
C-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
___________ Bank, not in its individual
capacity but solely as Indenture Trustee
By: _____________________________________
Authorized Signatory
C-4
<PAGE>
[REVERSE OF CLASS C NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class C Receivable-Backed Notes (the "Class C Notes"),
all issued under an Indenture, dated as of [ ], 1999 (the
"Indenture"), between the Issuer and _____________ Bank, as Indenture Trustee
(the "Indenture Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class C Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Pooling and Servicing Agreement.
Principal of the Class C Notes will be payable on the earlier of the
Class C Maturity Date and the Redemption Date, if any, pursuant to Section 10.01
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class C Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing unless the Required
Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Payment 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 Payment Date shall be
binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Payment Date by notice mailed within
five (5) days of such Payment Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Indenture
Trustee's principal Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in the City of Chicago.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of
NFUSA, on any Payment Date on or after the date on which the Contract Pool
Principal Balance is less than 10% of the initial Contract Pool Principal
Balance 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
C-5
<PAGE>
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 beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness which is solely
secured by the Collateral and that the Trust will be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulations Section
301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of a Note or of a
beneficial interest in a Note, agrees to treat the Notes for the federal, state
and local income, single business and franchise tax purposes as indebtedness.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer, the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Required Holders. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
C-6
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C-7
<PAGE>
EXHIBIT D
FORM OF CLASS D NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
[ ]% CLASS D RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1
Newcourt Equipment Trust Securities 1999-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to [ ]., or
its registered assigns, the principal sum of [ ] Dollars ($_________)
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.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date), subject to certain limitations contained in the
Indenture. Interest on this Note will accrue for each Payment Date from the most
recent Payment Date on which interest has been paid to but excluding such
Payment 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.
D-1
<PAGE>
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.
Payment of interest and principal on the Class D Notes is subject to
certain prior payment rights of the Holders of Class A, Class B and Class C
Notes as set forth in the Indenture.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
D-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date:_____________ __, 1999 NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
By: The _______________ Bank, not in its individual
capacity but solely on behalf of the Issuer as
Owner Trustee, under the Trust Agreement
By: _____________________________________
Printed Name:_____________________
Title:_____________________________
D-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
__________ Bank, not in its individual
capacity but solely as Indenture Trustee
By: _____________________________________
Authorized Signatory
D-4
<PAGE>
[REVERSE OF CLASS D NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class D Receivable-Backed Notes (the "Class D Notes"),
all issued under an Indenture, dated as of [ ], 1999 (the "Indenture"),
between the Issuer and _______________ Bank, as Indenture Trustee (the
"Indenture Trustee"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class D Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Pooling and Servicing Agreement.
Principal of the Class D Notes will be payable on the earlier of the
Class D Maturity Date and the Redemption Date, if any, pursuant to Section 10.01
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class D Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing unless the Required
Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Payment 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 Payment Date shall be
binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Payment Date by notice mailed within
five (5) days of such Payment Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Indenture
Trustee's principal Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in the City of Chicago.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of
NFUSA, on any Payment Date on or after the date on which the Contract Pool
Principal Balance is less than 10% of the initial Contract Pool Principal
Balance 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
D-5
<PAGE>
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness which is solely
secured by the Collateral and that the Trust will be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulations Section
301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of a Note or of a
beneficial interest in a Note, agrees to treat the Notes for the federal, state
and local income, single business and franchise tax purposes as indebtedness.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer, the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Required Holders. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
D-6
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
D-7
<PAGE>
EXHIBIT F
FORM OF NOTE ASSIGNMENT
F-1
<PAGE>
EXHIBIT G
FORM OF NOTE DEPOSITORY AGREEMENT
G-1
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption 'Experts' and to
the use of our report dated July 2, 1999 in the Registration Statement
(Form S-3 No. 333-74847) and related Prospectus Supplement of Newcourt Equipment
Trust Securities 1999-1.
/S/ ERNST & YOUNG LLP
Ernst & Young LLP
New York, New York
July 2, 1999
<PAGE>
EXHIBIT 99.1
- --------------------------------------------------------------------------------
ADMINISTRATION AGREEMENT
among
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1,
as Issuer,
-----------------------------------
as Administrator
NCT FUNDING COMPANY, L.L.C.
as Trust Depositor,
and
------------------------------
as Indenture Trustee
Dated as of _________, 1999
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Section 1. Duties of the Administrator...................................................1
Section 2. Records.......................................................................5
Section 3. Compensation..................................................................5
Section 4. Additional Information to be Furnished to the Issuer..........................5
Section 5. Independence of the Administrator.............................................5
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...............................6
Section 10. Notices......................................................................7
Section 11. Amendments...................................................................8
Section 12. Successors and Assigns.......................................................8
Section 13. Governing Law................................................................8
Section 14. Headings.....................................................................8
Section 15. Counterparts.................................................................8
Section 16. Severability.................................................................8
Section 17. Not Applicable to __________ in Other Capacities.............................8
Section 18. Limitation of Liability of Owner Trustee and Indenture Trustee...............9
Section 19. Third-party Beneficiary......................................................9
Section 20. Survivability................................................................9
</TABLE>
<PAGE>
This Administration Agreement, dated as of ________, 1999 (this
"Agreement"), is among Newcourt Equipment Trust Securities 1999-1 (the
"Issuer"), _________ (together with its successors and assigns, "_________") in
its capacity as administrator (the "Administrator"), NCT Funding Company, L.L.C.
(together with its successors and assigns, the "Trust Depositor") and _________
Bank, not in its individual capacity but solely as Indenture Trustee (together
with its successors and assigns, the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, the Issuer is issuing ______% Class A-1 Receivable-Backed
Notes, Series 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 A-5
Receivable-Backed Notes, Series 1999-1 _________% Class B Receivable-Backed
Notes, Series 1999-1, _________% Class C Receivable-Backed Notes, Series 1999-1,
and _________% Class D Receivable-Backed Notes, Series 1999-1 (collectively, the
"Notes") pursuant to the Indenture, dated as of the date hereof (the
"Indenture"), between the Issuer and the Indenture Trustee (capitalized terms
used herein that are not otherwise defined shall have the meanings ascribed
thereto in the Pooling 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) the Pooling Agreement (ii) the Indenture, and (iii)
the other Transaction Documents to which the Issuer is a party;
WHEREAS, pursuant to the Transaction Documents, the Issuer and the
Owner Trustee are required to perform certain duties in connection with (i) the
Notes and the Collateral therefor pledged pursuant to the Indenture and (ii) the
beneficial ownership interest in the Issuer evidenced by the Equity Certificate
(the registered holder of such interest being referred to herein as the
"Owner");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner Trustee
referred to in the preceding clause and to provide such additional services
consistent with the terms of this Agreement and the Transaction Documents as the
Issuer and the Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Duties of the Administrator.
(a) Duties with respect to the Transaction Documents.
(i) The Administrator agrees to perform all its duties as Administrator
and the duties of the Issuer and the Owner Trustee under the Transaction
Documents. In addition, the Administrator shall consult with the Owner
Trustee regarding the duties of the Issuer or the Owner Trustee under the
Transaction Documents. The Administrator shall monitor the performance of
the Issuer and shall advise the Owner Trustee when action is necessary to
comply with the respective duties of the Issuer and the Owner Trustee under
the Transaction Documents. The Administrator shall prepare for execution by
the Issuer or shall cause the preparation by other appropriate persons of,
all such documents, reports, filings, instruments, certificates and
opinions that it shall be the duty of the Issuer or the Owner Trustee to
prepare, file or deliver pursuant to the Transaction Documents. In
furtherance of the foregoing, the Administrator shall take all appropriate
action that the Issuer or the Owner Trustee is required to take pursuant to
the Indenture including, without limitation, such of the foregoing as are
required with respect to the following matters under the Indenture
(references are to Sections of the Indenture):
1
<PAGE>
(A) the duty to cause the Note Register to be kept and to give the
Indenture Trustee notice of any appointment of a new Note Registrar and the
location, or change in location, of the Note Register (Section 2.04);
(B) the notification of Noteholders of the final principal payment on
their Notes (Section 2.07(b));
(C) the preparation of or obtaining of the documents and instruments
required for execution and authentication of the Notes and delivery of the
same to the Indenture Trustee (Section 2.02);
(D) the preparation, obtaining or filing of the instruments, opinions
and certificates and other documents required for the release of Collateral
(Section 2.12);
(E) the maintenance of an office in New York, New York, or the
appointment of the Indenture Trustee as its agent therefor, for
registration of transfer or exchange of Notes (Section 3.02);
(F) the duty to cause newly appointed Paying Agents, if any, to deliver
to the Indenture Trustee the instrument specified in the Indenture
regarding funds held in trust (Section 3.03);
(G) the direction to the Indenture Trustee to deposit monies with
Paying Agents, if any, other than the Indenture Trustee (Section 3.03);
(H) the obtaining and preservation of the Issuer's qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, the collateral and each other instrument and agreement included in
the Collateral (Section 3.04);
(I) the preparation of all supplements and amendments to the Indenture
and all financing statements, continuation statements, instruments of
further assurance and other instruments and the taking of such other action
as is necessary or advisable to protect the Collateral other than as
prepared by the Servicer (Section 3.05);
(J) the delivery of certain statements as to compliance with the
Indenture (Sections 3.09);
(K) the identification to the Indenture Trustee in an Officer's
Certificate of a Person with whom the Issuer has contracted to perform its
duties under the Indenture (Section 3.07(b));
(L) the notification of the Indenture Trustee and each Rating Agency of
a Servicer Default under the Pooling Agreement;
(M) the preparation and obtaining of documents and instruments required
for the release of the Issuer from its obligations under the Indenture
(Section 3.10(b));
(N) the monitoring of the Issuer's obligations as to the satisfaction
and discharge of the Indenture and the preparation of an Officer's
Certificate and the obtaining of the Opinion of Counsel and the Independent
Certificate relating thereto (Section 4.01);
(O) the compliance with any written directive of the Indenture Trustee
with respect to the sale of the Collateral in a commercially reasonable
manner if an Event of Default shall have occurred and be continuing
(Section 5.04);
(P) the preparation and delivery of notice to Noteholders of the
removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.08);
2
<PAGE>
(Q) the preparation of any written instruments required to confirm more
fully the authority of any co-trustee or separate trustee and any written
instruments necessary in connection with the resignation or removal of the
Indenture Trustee or any co-trustee or separate trustee (Sections 6.08 and
6.10);
(R) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee is
not the Note Registrar (Section 7.01);
(S) the filing of reports required by the Commission (Section 7.03);
(T) the opening of one or more accounts in the Indenture Trustee's
name, the preparation and delivery of Issuer Orders, Officer's Certificates
and Opinions of Counsel and all other actions necessary with respect to
investment and reinvestment of funds in the Trust Accounts (Sections 8.02
and 8.03);
(U) the preparation of an Issuer Request and Officer's Certificate and
the obtaining of an Opinion of Counsel and Independent Certificates, if
necessary, for the release of the Collateral (Sections 8.04 and 8.05);
(V) the preparation of Issuer Orders and the obtaining of Opinions of
Counsel with respect to the execution of supplemental indentures and the
mailing to the Noteholders of notices with respect to such supplemental
indentures (Sections 9.01, 9.02 and 9.03);
(W) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.06);
(X) the duty to notify Noteholders of redemption of the Notes or to
cause the Indenture Trustee to provide such notification (Section 10.02);
(Y) the preparation and delivery of all Officer's Certificates,
Opinions of Counsel and Independent Certificates with respect to any
requests by the Issuer to the Indenture Trustee to take any action under
the Indenture (Section 11.01(a));
(Z) the preparation and delivery of Officer's Certificates and the
obtaining of Independent Certificates, if necessary, for the release of
property from the lien of the Indenture (Section 11.01(b));
(AA) the notification of the Rating Agencies, upon the failure of the
Issuer, the Owner Trustee or the Indenture Trustee to provide notification;
(BB) the preparation and delivery to Noteholders and the Indenture
Trustee of any agreements with respect to alternate payment and notice
provisions (Section 11.06); and
(CC) the recording of the Indenture, if applicable (Section 11.14).
(ii) The Administrator will:
(A) except as otherwise expressly provided in the Indenture or the
Pooling 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 officers, directors,
employees or agents for, and hold them harmless against, any loss,
liability or expense incurred without negligence or bad faith on their
part, arising out of or in connection with the acceptance or administration
of the transactions contemplated
3
<PAGE>
by the Indenture and this Agreement, including the reasonable costs and
expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or
duties under the Indenture; and
(C) indemnify the Owner Trustee and its officers, directors, employees
or agents for, and hold them harmless against, any loss, liability or
expense incurred without negligence or bad faith on their part, arising out
of or in connection with the acceptance or administration of the
transactions contemplated by the Trust Agreement and this Agreement,
including the reasonable costs and expenses of defending themselves against
any claim or liability in connection with the exercise or performance of
any of their powers or duties under the Trust Agreement (and including
without limitation, an indemnity as described above with respect to the
Trust Depositor's obligations in favor of the Owner Trustee under Section
8.02 of the Trust Agreement).
(b) Additional Duties.
(i) In addition to the duties set forth in Section 1(a)(i), the
Administrator shall perform such calculations and shall prepare or shall
cause the preparation by other appropriate persons of, and shall execute on
behalf of the Issuer or the Owner Trustee, all such documents, reports,
filings, instruments, certificates and opinions that the Issuer or the
Owner Trustee are required to prepare, file or deliver pursuant to the
Transaction Documents or Section 5.05 of the Trust Agreement, and at the
request of the Owner Trustee shall take all appropriate action that the
Issuer or the Owner Trustee are required to take pursuant to the
Transaction Documents. In furtherance thereof, the Owner Trustee shall, on
behalf of itself and of the Issuer, execute and deliver to the
Administrator and to each successor Administrator appointed pursuant to the
terms hereof, one or more powers of attorney substantially in the form of
Exhibit A hereto, appointing the Administrator the attorney-in-fact of the
Owner Trustee and the Issuer for the purpose of executing on behalf of the
Owner Trustee and the Issuer all such documents, reports, filings,
instruments, certificates and opinions. Subject to Section 5, and in
accordance with the directions of the Issuer, the Administrator shall
administer, perform or supervise the performance of such other activities
in connection with the Collateral (including the Transaction Documents) as
are not covered by any of the foregoing provisions and as are expressly
requested by the Issuer and are reasonably within the capability of the
Administrator.
(ii) Notwithstanding anything in this Agreement or the Transaction
Documents to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding tax
is imposed on the Trust's payments (or allocations of income) to the Owner
as contemplated in Section 5.02(c) of the Trust Agreement. Any such notice
shall specify the amount of any withholding tax required to be withheld by
the Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Transaction
Documents to the contrary, the Administrator shall be responsible for
performance of the duties of the Owner Trustee set forth in Section
5.05(a), (b), (c) and (d), the penultimate sentence of Section 5.05 and
Section 5.06(a) of the Trust Agreement with respect to, among other things,
accounting and reports to the Owner; provided, however, that the Owner
Trustee shall retain responsibility for the distribution of information
forms necessary to enable the Owner to prepare its federal and state income
tax returns.
(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.
4
<PAGE>
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions or otherwise deal with any of its Affiliates; provided,
however, that the terms of any such transactions or dealings shall be in
accordance with any directions received from the Issuer and shall be, in
the Administrator's opinion, no less favorable to the Issuer than would be
available from unaffiliated parties.
(c) Non-Ministerial Matters.
(i) With respect to matters that in the reasonable judgment of the
Administrator are non-ministerial, the Administrator shall not take any
action unless within a reasonable time before the taking of such action,
the Administrator shall have notified the Owner Trustee of the proposed
action and the Owner Trustee shall not have withheld consent or provided an
alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the Issuer
(other than in connection with the collection of the Contracts);
(C) the amendment, change or modification of any other Transaction
Documents;
(D) the appointment of successor Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or the
appointment of successor Administrators or a successor Servicer, or the
consent to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement, the
Administrator shall not be obligated to, and shall not, (A) make any
payments to the Noteholders under the Transaction Documents, (B) sell the
Collateral pursuant to clause (iv) of Section 5.04 of the Indenture, (C)
take any other action that the Issuer directs the Administrator not to take
on its behalf or (D) take any other action which may be construed as having
the effect of varying the investment of the Noteholders or the Equity
Certificateholder.
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 Pooling 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.
5
<PAGE>
Section 6. No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Administrator and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
Section 7. Other Activities of Administrator. Nothing herein shall prevent
the Administrator or its Affiliates from engaging in other business or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other Person or entity even though such person or entity may engage in business
activities similar to those of the Issuer, the Owner Trustee or the Indenture
Trustee.
Section 8. Term of Agreement; Resignation and Removal of Administrator.
This Agreement shall continue in force until the dissolution of the Issuer, upon
which event this Agreement shall automatically terminate.
(a) Subject to Section 8(d) and Section 8(e), the Administrator may resign
its duties hereunder by providing the Issuer with at least sixty (60)
days' prior written notice.
(b) Subject to Section 8(d) and Section 8(e), the Issuer may remove the
Administrator without cause by providing the Administrator with at
least sixty (60) days' prior written notice.
(c) Subject to Section 8(d) and Section 8(e), at the sole option of the
Issuer, the Administrator may be removed immediately upon written
notice of termination from the Issuer to the Administrator if any of
the following events shall occur:
(i) the Administrator shall default in the performance of any of its
duties under this Agreement and, after notice of such default, shall not
cure such default within ten (10) days (or, if such default cannot be cured
in such time, shall not give within ten (10) days such assurance of cure as
shall be reasonably satisfactory to the Issuer); or
(ii) an Insolvency Event shall occur with respect to the
Administrator.
The Administrator agrees that if any of the events specified in clause (ii)
above shall occur, it shall give written notice thereof to the Issuer and the
Indenture Trustee within seven (7) days after the occurrence of such event.
(d) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall
have been appointed by the Issuer and (ii) such successor
Administrator shall have agreed in writing to be bound by the terms of
this Agreement in the same manner as the Administrator is bound
hereunder.
(e) The appointment of any successor Administrator shall be effective only
after the satisfaction of the Rating Agency Condition with respect to
the proposed appointment.
(f) Subject to Section 8(d) and 8(e), the Administrator acknowledges that
upon the appointment of a Successor Servicer pursuant to the Pooling
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.
6
<PAGE>
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:
------------------------
------------------------
------------------------
------------------------
Fax No.: __________
(ii) If to the Trust Depositor:
NCT Funding Company, L.L.C.
2 Gatehall Drive
Parsippany, New Jersey 07054
Attention: Treasurer
Fax No.: (973) 355-7019
(iii) If to the Indenture Trustee:
------------------------
------------------------
------------------------
Attn: Indenture Trust Administration
Fax No.: ___________
(iv) If to the Issuer or the Owner Trustee:
The ______________________Bank
------------------------
------------------------
Attn: Corporate Trust Administration
Fax No.: ___________
with a copy to:
The __________________Bank
------------------------
------------------------
------------------------
Attn: __________________
Fax No.: ______________
7
<PAGE>
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 Equity Certificateholder, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders or the Equity
Certificateholder; provided that such amendment will not, in the Opinion of
Counsel satisfactory to the Indenture Trustee, materially and adversely affect
the interest of any Noteholder or the Equity 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 Equity
Certificateholder; provided, however, that no such amendment may (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the Contracts or distributions that are required to
be made for the benefit of the Noteholders or the Equity Certificateholder or
(ii) reduce the aforesaid percentage of the Noteholders and the Equity
Certificateholder which are required to consent to any such amendment, without
the consent of the Noteholders of all outstanding Notes and the Equity
Certificate. Notwithstanding the foregoing, the Administrator may not amend this
Agreement without the permission of the Trust Depositor, which permission shall
not be unreasonably withheld. Promptly after the execution of any amendment to
this Agreement, the Administrator shall furnish written notification of the
substance of such amendment, together with a copy thereof, to each Rating
Agency.
Section 12. Successors and Assigns. This Agreement may not be assigned by
the Administrator unless such assignment is previously consented to in writing
by the Issuer, the Indenture Trustee and the Owner Trustee and subject to the
satisfaction of the Rating Agency Condition in respect thereof. An assignment
with such consent and satisfaction, if accepted by the assignee, shall bind the
assignee hereunder in the same manner as the Administrator is bound hereunder.
Notwithstanding the foregoing, this Agreement may be assigned by the
Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger, consolidation
or purchase of all or substantially all assets) to the Administrator; provided
that such successor organization executes and delivers to the Issuer, the Owner
Trustee and the Indenture Trustee an agreement, in form and substance reasonably
satisfactory to the Owner Trustee and the Indenture Trustee, in which such
corporation or other organization agrees to be bound hereunder by the terms of
said assignment in the same manner as the Administrator is bound hereunder.
Subject to the foregoing, this Agreement shall bind any successors or assigns of
the parties hereto.
Section 13. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, 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 __________ in Other Capacities. Nothing in
this Agreement shall affect any obligation __________ may have in any other
capacity.
8
<PAGE>
Section 18. Limitation of Liability of Owner Trustee and Indenture Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by The _________ Bank, not in its
individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall The _________Bank 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 _________ Bank not in its
individual capacity but solely as Indenture Trustee and in no event
shall _________ Bank have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
Section 19. Third-party Beneficiary. The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
Section 20. Survivability. The obligations of the Administrator described
in Section 1(a)(ii) hereof shall survive termination of this Agreement.
[signature page follows]
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
NEWCOURT EQUIPMENT TRUST SECURITIES 1999-1
By:________________The ___________________Bank,
not in its individual capacity but solely
as Owner Trustee
By: ________________________________
Printed Name:________________________
Title: ______________________________
NCT FUNDING COMPANY, L.L.C.
as Trust Depositor
By:_________________________________
________Printed Name: _______________________
________Title: _______________________________
By:_________________________________
________Printed Name: _______________________
_________Title: _______________________________
____________________________BANK,
not in its individual capacity but solely
as Indenture Trustee
By:_________________________________
________Printed Name: _______________________
________Title: ______________________________
_______________________________, as
Administrator
By:________________________________
Printed Name: _______________________
Title: ______________________________
<PAGE>
EXHIBIT A
LIMITED POWER OF ATTORNEY
State of _______________)
) SS.
County of ______________)
KNOW ALL PERSONS BY THESE PRESENTS, that The _________ Bank, a Delaware
banking corporation (the "Owner Trustee"), by and through its duly elected and
authorized officer, ________________________, a ___________________, on behalf
of itself and of Newcourt Equipment Trust Securities 1999-1 (the "Trust") as
Issuer under the Administration Agreement, dated as of __________ [ ], 1999 (the
"Administration Agreement"), among the Trust, NCT Funding Company, L.L.C.,
__________ Bank, as Indenture Trustee, and __________, as Administrator, does
hereby nominate, constitute and appoint__________, a Delaware corporation, each
of its officers from time to time and each of its employees authorized by it
from time to time to act hereunder, jointly and each of them severally, together
or acting alone, its true and lawful attorney-in-fact, for the Owner Trustee and
the Issuer in their name, place and stead, in the sole discretion of such
attorney-in-fact, to perform such calculations and prepare or cause the
preparation by other appropriate persons of, and to execute on behalf of the
Issuer or the Owner Trustee, all such documents, reports, filings, instruments,
certificates and opinions that the Issuer or the Owner Trustee is required to
prepare, file or deliver pursuant to the Administration Agreement, and to take
any and all other action, as such attorney-in-fact may deem necessary or
desirable in accordance with the directions of the Owner Trustee and in
connection with its duties as Administrator or successor Administrator under the
Administration Agreement. Capitalized terms used herein that are not otherwise
defined shall have the meanings ascribed thereto in the Administration
Agreement.
The Owner Trustee hereby ratifies and confirms the execution, delivery
and performance (whether before or after the date hereof) of the above-mentioned
documents, reports, filings, instruments, certificates and opinions, by the
attorney-in-fact and all that the attorney-in-fact shall lawfully do or cause to
be done by virtue hereof.
The Owner Trustee hereby agrees that no person or other entity dealing
with the attorney-in-fact shall be bound to inquire into such attorney-in-fact's
power and authority hereunder and any such person or entity shall be fully
protected in relying on such power of authority.
This Limited Power of Attorney may not be assigned without the prior
written consent of the Owner Trustee. It is effective immediately and will
continue until it is revoked.
This Limited Power of Attorney shall be governed and construed in
accordance with the laws of the State of New York without reference to
principles of conflicts of law.
Executed as of this ____ day of ______________, 1999.
THE _______________________ BANK,
not in its individual capacity but solely as
Owner Trustee
By: ____________________________________
Printed Name: ________________________
Title: _______________________________
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT OF
NOTARY PUBLIC
State of _________ )
) SS.
County of ________ )
On_______________, 1998 before me, ___________________________________
[insert date]
________________________________________________________________________________
[Here insert name and title of notary]
personally appeared ____________________________________________________________
personally known to me, or
proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ties), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature___________________________________________________________ [SEAL]
STATEMENT OF DIFFERENCES
------------------------
The section symbol shall be expressed as...................................'SS'
