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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): June 28, 1999
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 333-52021 13-3526694
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
One New York Plaza 10292
New York, New York (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code: (212) 778-1000
No Change
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Notes and the Mortgage Loans
Prudential Securities Secured Financing Corporation registered
issuances of up to $750,000,000 principal amount of Mortgage-Backed Notes on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Act"), by the Registration Statements on Form S-3
(Registration File No. 333-52021) (as amended, the "Registration Statement").
Pursuant to the Registration Statement, ABFS Equipment Contract Trust 1999-A
(the "Trust") issued approximately $78,146,000 in aggregate principal amount of
its Backed Notes Certificates (the "Notes"), on June 28, 1999. This Current
Report on Form 8-K is being filed to satisfy an undertaking to file copies of
certain agreements executed in connection with the issuance of the Certificates,
the forms of which were filed as Exhibits to the Registration Statement.
The Notes were issued pursuant to an Indenture (the
"Indenture") attached hereto as Exhibit 4.1, dated as of June 1, 1999, between
ABFS Equipment Contract Trust 1999-A (the "Trust"), American Business Leasing,
Inc., in its capacity as servicer (the "Servicer") and The Chase Manhattan Bank,
in its capacity as indenture trustee (the "Indenture Trustee"). The Notes
consist of five classes of senior notes, the $15,000,000 5.2935%, Class A-1,
$13,000,000 6.025% Class A-2, $34,160,000 6.650% Class A-3, $10,000,000 6.650%
Class A-4 (collectively, the "Class A Notes") and $5,986,000 6.940% Class B (the
"Class B Notes") and, together with the Class A Notes, the "Notes"); and two
classes of Pledged Notes (the "Pledged Notes"). Only the Class A Notes and Class
B Notes were offered. The Notes initially evidenced, in the aggregate, 100% of
the undivided beneficial ownership interests in the Trust.
The assets of the Trust consist primarily of The assets of the
Issuer will consist of certain "finance" leases, "true" or "operating" leases,
if any, and commercial loans (collectively, the "Contracts"), certain interests
in the underlying equipment or other property securing such Contracts
(collectively, the "Equipment" and, together with the Contracts, the
"Receivables"), funds on deposit in certain accounts, and certain other
property.
As of the Closing Date, the Contracts possessed the
characteristics described in the Prospectus dated June 23, 1999 and the
Prospectus Supplement dated June 24 filed pursuant to Rule 424(b) (5) of the Act
on June 28, 1999.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated June 24, 1999, between
Prudential Securities Secured Financing Corporation, American
Business Leasing and Prudential Securities Incorporated.
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1.2 Indemnification Agreement, dated as of June 24, 1999, among
Prudential Securities Incorporated, ABFS Equipment contract
Trust 1999-A and Financial Security Assurance Inc.
4.1 Indenture, dated as of June 1, 1999, between ABFS Equipment
Contract Trust 1999-A and The Chase Manhattan Bank, as
indenture trustee.
4.2 Receivables Sale Agreement, dated as of June 1, 1999, among
American Business Leasing Inc., ABFS Finance LLC 1999-A and
ABFS Residual LLC 1999-A.
4.3 Receivables Pledge Agreement, dated as of June 1, 1999, among
ABFS Finance LLC 1999-A, ABFS Residual LLC 1999-A, Prudential
Securities Secured Financing Corporation, ABFS Equipment
Contract Trust 1999-A and The Chase Manhattan Bank.
4.4 Servicing Agreement, dated as of June 1, 1999, among, American
Business Leasing, Inc., ABFS Equipment Contract Trust 1999-A,
Chase Bank of Texas, N.A., ABFS Finance LLC 1999-A, ABFS
Residual LLC 1999-A and The Chase Manhattan Bank.
8.1 Opinion of Dewey Ballantine LLP, Counsel to Prudential
Securities Secured Corporation regarding certain tax matters.
10.1 Financial Guaranty Insurance Policy, dated June 28, 1999.
23.1 Consent of PricewaterhouseCoopers, L.L.P. regarding financial
statements of Financial Security Assurance Inc. and their
report.
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SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
As Depositor and on behalf of
ABFS Equipment Contract Trust
1999-A Registrant
By: /s/ Evan Mitnick
-------------------------------
Name: Evan Mitnick
Title: Vice President
Dated: July 7, 1999
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
1.1 Underwriting Agreement, dated June 24, 1999, between
Prudential Securities Secured Financing Corporation,
American Business Leasing and Prudential Securities
Incorporated.
1.2 Indemnification Agreement, dated as of June 24,
1999, among Prudential Securities Incorporated, ABFS
Equipment contract Trust 1999-A and Financial
Security Assurance Inc.
4.1 Indenture, dated as of June 1, 1999, between ABFS
Equipment Contract Trust 1999-A and The Chase
Manhattan Bank, as indenture trustee.
4.2 Receivables Sale Agreement, dated as of June 1,
1999, among American Business Leasing Inc., ABFS
Finance LLC 1999-A and ABFS Residual LLC 1999-A.
4.3 Receivables Pledge Agreement, dated as of June 1,
1999, among ABFS Finance LLC 1999-A, ABFS Residual
LLC 1999-A, Prudential Securities Secured Financing
Corporation, ABFS Equipment Contract Trust 1999-A
and The Chase Manhattan Bank.
4.4 Servicing Agreement, dated as of June 1, 1999,
among, American Business Leasing, Inc., ABFS
Equipment Contract Trust 1999-A, Chase Bank of
Texas, N.A., ABFS Finance LLC 1999-A, ABFS Residual
LLC 1999-A and The Chase Manhattan Bank.
8.1 Opinion of Dewey Ballantine LLP, Counsel to
Prudential Securities Secured Corporation regarding
certain tax matters.
10.1 Financial Guaranty Insurance Policy, dated June 28,
1999.
23.1 Consent of PricewaterhouseCoopers, L.L.P. regarding
financial statements of Financial Security Assurance
Inc. and their report.
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Exhibit 1.1
ABFS EQUIPMENT CONTRACT TRUST 1999-A
EQUIPMENT CONTRACT-BACKED NOTES
SERIES 1999-A
UNDERWRITING AGREEMENT
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UNDERWRITING AGREEMENT
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza
New York, New York 10292
June 24, 1999
Ladies and Gentlemen:
Prudential Securities Secured Financing Corporation (the
"Depositor") proposes, subject to the terms and conditions stated herein and in
the attached Underwriting Agreement Standard Provisions, dated June 24, 1999
(the "Standard Provisions"), between the Depositor, American Business Leasing,
Inc. (the "Originator") and Prudential Securities Incorporated, to issue and
sell to you (the "Underwriter") the Securities specified in Schedule I hereto
(the "Offered Securities"). The Depositor and the Originator agree that each of
the provisions of the Standard Provisions is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Underwriting Agreement to
the same extent as if such provisions had been set forth in full herein; and
each of the representations and warranties set forth therein shall be deemed to
have been made at and as of the date of this Underwriting Agreement. Each
reference to the "Representative" herein and in the provisions of the Standard
Provisions so incorporated by reference shall be deemed to refer to you. Unless
otherwise defined herein, terms defined in the Standard Provisions are used
herein as therein defined. The Prospectus Supplement and the accompanying
Prospectus relating to the Offered Securities (together, the "Prospectus") are
incorporated by reference herein.
Subject to the terms and conditions set forth herein and in
the Standard Provisions incorporated herein by reference, the Depositor agrees
to issue and sell to the Underwriter, and the Underwriter agrees to purchase
from the Depositor, at the time and place and at the purchase price to the
Underwriter and in the manner set forth in Schedule I hereto, the entire
original principal balance of the Offered Securities.
[Remainder of Page Intentionally Left Blank]
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If the foregoing is in accordance with your understanding,
please sign and return to us two counterparts hereof, and upon acceptance hereof
by you, this letter and such acceptance hereof, including the provisions of the
Standard Provisions incorporated herein by reference, shall constitute a binding
agreement between the Underwriter, the Originator and the Depositor.
Yours truly,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:
-------------------------------------
Name:
Title:
AMERICAN BUSINESS LEASING, INC.
By:
-------------------------------------
Name:
Title:
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED
By:
-----------------------------------
Name:
Title:
[Signature Page to Underwriting Agreement]
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SCHEDULE I
Title of Offered Securities: ABFS Equipment Contract Trust 1999-A,
Equipment Contract Backed Notes, Series
1999-A, Class A-1, Class A-2, Class A-3
and Class A-4.
Terms of Offered Securities: The Offered Securities shall have the
terms set forth in the Prospectus and
shall conform in all material respects
to the descriptions thereof contained
therein, and shall be issued pursuant to
an Indenture, to be dated as of June 1,
1999, between the ABFS Equipment
Contract Trust 1999-A, as issuer,
American Business Leasing, Inc., as
servicer and The Chase Manhattan Bank,
as indenture trustee.
Purchase Price: The purchase price for the Offered
Securities shall be 99.65%, 99.65%,
99.65% and 98.259375% of the aggregate
note principal balance of the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes
and Class A-4 Notes, respectively, as of
the Closing Date, plus accrued interest
at the rate of 6.025% per annum, 6.650%
per annum and 6.650% per annum, on the
aggregate note principal balance of the
Class A-2 Notes, Class A-3 Notes and
Class A-4 Notes, respectively, from, and
including June 15, 1999 to, but not
including the Closing Date.
Specified funds for payment of
Purchase Price: Federal Funds (immediately available
funds).
Required Ratings of the Class A-1, For the Class A-1 Notes, "P-1", and for
Class A-2, Class A-3 and Class A-4 the Class A-2, Class A-3 and Class A-4
Notes: Notes, "Aaa" by Moody's Investors
Service, Inc.
For the Class A-1 Notes, "A-1+", and for
the Class A-2, Class A-3 and Class A-4
Notes, "AAA" by Standard & Poor's
Ratings Services
Closing Date: On or about June 28, 1999 at 10:00 A.M.
eastern standard time or at such other
time as the Depositor, the Originator
and the Underwriter shall agree.
Closing Location: Dewey Ballantine LLP, 1301 Avenue of the
Americas, New York, New York 10019.
Name and address of Representative: Designated Representative: Prudential
Securities Incorporated.
Address for Notices, etc.: One New York Plaza
New York, New York 10292
Attn: Joseph Donovan
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STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
June 24, 1999
From time to time, Prudential Securities Secured Financing
Corporation, a Delaware corporation (the "Depositor") and American Business
Leasing, Inc., a Delaware corporation (the "Originator") may enter into one or
more underwriting agreements (each, an "Underwriting Agreement") that provide
for the sale of designated securities to the several underwriters named therein
(such underwriters constituting the "Underwriters" with respect to such
Underwriting Agreement and the securities specified therein). The several
underwriters named in an Underwriting Agreement will be represented by one or
more representatives as named in such Underwriting Agreement (collectively, the
"Representative"). The term "Representative" also refers to a single firm acting
as sole representative of the Underwriters and to Underwriters who act without
any firm being designated as their representative. The standard provisions set
forth herein (the "Standard Provisions") may be incorporated by reference in any
Underwriting Agreement. These Standard Provisions shall not be construed as an
obligation of the Depositor to sell any securities or as an obligation of any of
the Underwriters to purchase such securities. The obligation of the Depositor to
sell any securities and the obligation of any of the Underwriters to purchase
any of the securities shall be evidenced by the Underwriting Agreement with
respect to the securities specified therein. An Underwriting Agreement shall be
in the form of an executed writing (which may be in counterparts), and may be
evidenced by an exchange of telegraphic communications or any other rapid
transmission device designed to produce a written record of the communications
transmitted. The obligations of the underwriters under these Standard Provisions
and each Underwriting Agreement shall be several and not joint. Unless otherwise
defined herein, the terms defined in the Underwriting Agreement are used herein
as defined in the Prospectus referred to below.
1. The Offered Securities. The Depositor proposes to sell
pursuant to the applicable Underwriting Agreement to the several Underwriters
named therein equipment contract backed notes (the "Securities") representing
indebtedness secured primarily by the property of a trust which consists of two
pledged notes (the "Pledged Notes") which are secured by a pool of receivables
consisting of direct finance leases and commercial loans (the "Contracts"), the
security interests in the underlying equipment (the "Equipment") and certain
related property. The Securities will be issued pursuant to an Indenture (the
"Indenture") by and between ABFS Equipment Contract Trust 1999-A, as issuer (the
"Issuer"), American Business Leasing, Inc., as servicer (the "Servicer") and The
Chase Manhattan Bank, as indenture trustee (the "Indenture Trustee"). The Issuer
will be formed, at the direction of the Depositor, pursuant to the terms of a
Trust Agreement (the "Trust Agreement"), among the Transferors, the Depositor,
and First Union Trust Company, as owner trustee (the "Owner Trustee"). The
Contracts will be by the Originator to ABFS Residual LLC 1999-A and ABFS Finance
LLC 1999-A (together, the "Transferors") pursuant to the terms of a Receivables
Sale Agreement (the "Receivables Sale Agreement"), among the Originator and the
Transferors. The Transferors will, at the direction of the Depositor, contribute
the Contracts to the Issuer pursuant to the terms of a Receivables Pledge
Agreement (the "Receivables Pledge Agreement"), among the Issuer, the Depositor,
the Indenture Trustee, and the Transferors. The Contracts will be serviced by
the Servicer pursuant to the terms of a Servicing Agreement ("Servicing
Agreement"), by and among the Originator, the Transferors, the Servicer, Chase
Bank of Texas, N.A., as collateral agent (the "Collateral Agent"), the Issuer
and the Indenture Trustee. The Class A Notes will have the benefit of a note
insurance policy (the
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"Policy") issued by Financial Security Assurance Inc. (the "Note Insurer")
pursuant to the terms of an Insurance and Indemnity Agreement (the "Insurance
Agreement") among the Note Insurer, the Originator, the Transferors, the Issuer,
ABFS Special Purpose Management, Inc. (the "Manager") and American Business
Credit, Inc. ("ABC"). The Indenture, Trust Agreement, Receivables Sale
Agreement, Receivables Pledge Agreement, Insurance Agreement and Servicing
Agreement are collectively referred to herein as the "Transaction Documents".
The terms and rights of any particular issuance of Securities
shall be as specified in the Underwriting Agreement relating thereto and in or
pursuant to the Indenture identified in such Underwriting Agreement. The
Securities which are the subject of any particular Underwriting Agreement into
which these Standard Provisions are incorporated are herein referred to as the
"Offered Securities."
The Depositor has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-52021), including a prospectus relating to the Securities under the
Securities Act of 1933, as amended (the "1933 Act"). The term "Registration
Statement" means such registration statement as amended to the date of the
Underwriting Agreement. The term "Base Prospectus" means the prospectus included
in the Registration Statement. The term "Prospectus Supplement" means the
prospectus supplement specifically relating to the Offered Securities, dated
June 24, 1999. The term "Prospectus" means the Base Prospectus together with the
Prospectus Supplement, as first filed with the Commission pursuant to Rule 424.
The term "Preliminary Prospectus" means a preliminary prospectus supplement
specifically relating to the Offered Securities together with the Base
Prospectus.
2. Offering by the Underwriters. Upon the execution of the
Underwriting Agreement applicable to any Offered Securities and the
authorization by the Representative of the release of such Offered Securities,
the several Underwriters propose to offer for sale to the public the Offered
Securities at the prices and upon the terms set forth in the Prospectus.
3. Purchase, Sale and Delivery of the Offered Securities.
Unless otherwise specified in the Underwriting Agreement, payment for the
Offered Securities shall be made by certified or official bank check or checks
payable to the order of the Depositor in immediately available or next day
funds, at the time and place set forth in the Underwriting Agreement, upon
delivery to the Representative for the respective accounts of the several
Underwriters of the Offered Securities registered in definitive form and in such
names and in such denominations as the Representative shall request in writing
not less than five full business days prior to the date of delivery. The time
and date of such payment and delivery with respect to the Offered Securities are
herein referred to as the "Closing Date".
4. Conditions of the Underwriters' Obligations. The respective
obligations of the several Underwriters pursuant to the Underwriting Agreement
shall be subject, in the discretion of the Representative, to the accuracy in
all material respects of the representations and warranties of the Depositor and
the Originator contained herein as of the date of the Underwriting Agreement and
as of the Closing Date as if made on and as of the Closing Date, to the accuracy
in all material respects of the statements of the officers of the Issuer, the
Depositor and the Originator made in any certificates pursuant to the provisions
hereof and of the Underwriting Agreement, to the
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performance by the Depositor of its covenants and agreements contained herein
and to the following additional conditions precedent:
(a) All actions required to be taken and all filings required to
be made by or on behalf of the Depositor under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the "1934 Act") prior to
the sale of the Offered Securities shall have been duly taken or made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall be in effect; (ii) no proceedings for
such purpose shall be pending before or threatened by the Commission,
or by any authority administering any state securities or "Blue Sky"
laws; (iii) any requests for additional information on the part of the
Commission shall have been complied with to the Representative's
reasonable satisfaction; (iv) since the respective dates as of which
information is given in the Registration Statement and the Prospectus
except as otherwise stated therein, there shall have been no material
adverse change in the condition, financial or otherwise, earnings,
affairs, regulatory situation or business prospects of the Depositor;
(v) there are no material actions, suits or proceedings pending before
any court or governmental agency, authority or body or threatened,
affecting the Depositor or the transactions contemplated by the
Underwriting Agreement; (vi) the Depositor is not in violation of its
charter or its by-laws or in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or its properties may
be bound, which violations or defaults separately or in the aggregate
would have a material adverse effect on the Depositor; and (vii) the
Representative shall have received, on the Closing Date a certificate,
dated the Closing Date and signed by an executive officer of the
Depositor, to the foregoing effect.
(c) Subsequent to the execution of the Underwriting Agreement,
there shall not have occurred any of the following: (i) if at or prior
to the Closing Date, trading in securities on the New York Stock
Exchange shall have been suspended or any material limitation in
trading in securities generally shall have been established on such
exchange, or a banking moratorium shall have been declared by New York
State or federal authorities; (ii) if at or prior to the Closing Date,
there shall have been an outbreak or escalation of hostilities between
the United States and any foreign power, or of any other insurrection
or armed conflict involving the United States which results in the
declaration of a national emergency or war, and, in the reasonable
opinion of the Representative, makes it impracticable or inadvisable
to offer or sell the Offered Securities; or (iii) if at or prior to
the Closing Date, a general moratorium on commercial banking
activities in the State of New York shall have been declared by either
federal or New York State authorities.
(d) The Representative shall have received, on the Closing Date,
a certificate dated the Closing Date and signed by an executive
officer of the Depositor to the effect that attached thereto is a true
and correct copy of the letter from each nationally recognized
statistical rating organization (as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the 1933 Act) that
rated the Offered Securities and confirming that, unless otherwise
specified in the Underwriting Agreement, the Offered Securities have
been
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rated in the highest rating categories by each such organization and
that each such rating has not been rescinded since the date of the
applicable letter.
(e) The Representative shall have received, on the Closing Date,
an opinion of Dewey Ballantine LLP, special counsel for the Depositor,
dated the Closing Date, in form and substance satisfactory to the
Representative and containing opinions substantially to the effect set
forth in Exhibit A hereto.
(f) The Representative shall have received, on the Closing Date,
an opinion of counsel for the Servicer, the Transferors and the
Originator, dated the Closing Date, in form and substance satisfactory
to the Representative and counsel for the Underwriters and containing
opinions substantially to the effect set forth in Exhibit B hereto.
(g) The Representative shall have received, on the Closing Date,
an opinion of counsel for the Indenture Trustee, dated the Closing
Date, in form and substance satisfactory to the Representative and
counsel for the Underwriters and containing opinions substantially to
the effect set forth in Exhibit C hereto.
(h) The Representative shall have received, on the Closing Date,
an opinion of counsel for the Issuer and First Union Trust Company,
National Association, as owner trustee (the "Owner Trustee"), dated
the Closing Date, in form and substance satisfactory to the
Representative and counsel for the Underwriters and containing
opinions substantially to the effect set forth in Exhibit D hereto.
(i) The Representative shall have received, on the Closing Date,
an opinion of Dewey Ballantine LLP, special counsel for the Depositor,
dated the Closing Date, with respect to the incorporation of the
Depositor, the validity of the Offered Securities, the Registration
Statement, the Prospectus and other related matters as the
Underwriters may reasonably require, and the Depositor shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(j) The Representative shall have received, on or prior to the
date of first use of the prospectus supplement relating to the Offered
Securities, and on the Closing Date if requested by the
Representative, letters of independent accountants of the Depositor in
the form and reflecting the performance of the procedures previously
requested by the Representative.
(k) The Depositor shall have furnished or caused to be furnished
to the Representative on the Closing Date a certificate of an
executive officer of the Depositor satisfactory to the Representative
as to the accuracy of the representations and warranties of the
Depositor herein at and as of such Closing Date as if made as of such
date, as to the performance by the Depositor of all of its obligations
hereunder to be performed at or prior to such Closing Date, and as to
such other matters as the Representative may reasonably request;
(l) The Servicer shall have furnished or caused to be furnished
to the Representative on the Closing Date a certificate of officers of
such Servicer in form and substance reasonably satisfactory to the
Representative;
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(m) The Note Insurance Policy shall have been duly executed and
issued at or prior to the Closing Date and shall conform in all
material respects to the description thereof in the Prospectus
Supplement.
(n) The Representative shall have received, on the Closing Date,
an opinion of counsel to Financial Security Assurance Inc. (the "Note
Insurer"), dated the Closing Date, in form and substance satisfactory
to the Representative and counsel for the Underwriters and containing
opinions as to such matters as the Representative may reasonably
request.
(o) On or prior to the Closing Date there shall not have occurred
any downgrading, nor shall any notice have been given of (i) any
intended or potential downgrading or (ii) any review or possible
change in rating the direction of which has not been indicated, in the
rating accorded the Note Insurer's claims paying ability by any
"nationally recognized statistical rating organization," as such term
is defined for purposes of the 1933 Act.
(p) There has not occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, since March 31,
1999, of the Note Insurer, that is in the Representative's judgment
material and adverse and that makes it in the Representative's
judgment impracticable to market the Offered Securities on the terms
and in the manner contemplated in the Prospectus.
(q) The Representative shall have been furnished such further
information, certificates, documents and opinions as the
Representative may reasonably request.
5. Covenants of the Depositor. In further consideration of the
agreements of the Underwriters contained in the Underwriting Agreement, the
Depositor covenants as follows:
(a) To furnish the Representative, without charge, copies of the
Registration Statement and any amendments thereto including exhibits
and as many copies of the Prospectus and any supplements and
amendments thereto as the Representative may from time to time
reasonably request.
(b) Immediately following the execution of the Underwriting
Agreement, the Depositor will prepare a prospectus supplement setting
forth the principal amount, notional amount or stated amount, as
applicable, of Offered Securities covered thereby, the price at which
the Offered Securities are to be purchased by the Underwriters from
the Depositor, either the initial public offering price or prices or
the method by which the price or prices at which the Offered
Securities are to be sold will be determined, the selling concessions
and reallowances, if any, any delayed delivery arrangements, and such
other information as the Representative and the Depositor deem
appropriate in connection with the offering of the Offered Securities,
but the Depositor will not file any amendment to the Registration
Statement or any supplement to the Prospectus of which the
Representative shall not previously have been advised and furnished
with a copy a reasonable time prior to the proposed filing or to which
the Representative shall have reasonably objected. The Depositor will
use its best efforts to cause any amendment to the Registration
Statement to
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become effective as promptly as possible. During the time when a
Prospectus is required to be delivered under the 1933 Act, the
Depositor will comply so far as it is able with all requirements
imposed upon it by the 1933 Act and the rules and regulations
thereunder to the extent necessary to permit the continuance of sales
or of dealings in the Offered Securities in accordance with the
provisions hereof and of the Prospectus, and the Depositor will
prepare and file with the Commission, promptly upon request by the
Representative, any amendments to the Registration Statement or
supplements to the Prospectus which may be necessary or advisable in
connection with the distribution of the Offered Securities by the
Underwriters, and will use its best efforts to cause the same to
become effective as promptly as possible. The Depositor will advise
the Representative, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement or any amended
Registration Statement has become effective or any supplement to the
Prospectus or any amended Prospectus has been filed. The Depositor
will advise the Representative, promptly after it receives notice or
obtains knowledge thereof, of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or any order preventing or suspending the use of any preliminary
Prospectus or the Prospectus, or the suspension of the qualification
of the Offered Securities for offering or sale in any jurisdiction, or
of the initiation or threatening of any proceeding for any such
purpose, or of any request made by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information, and the Depositor will use its best efforts to
prevent the issuance of any such stop order or any order suspending
any such qualification, and if any such order is issued, to obtain the
lifting thereof as promptly as possible.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the 1933 Act, any event
occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact, or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary for any other reason to amend or supplement the Prospectus
to comply with the 1933 Act, to promptly notify the Representative
thereof and upon their request to prepare and file with the
Commission, at the Depositor's own expense, an amendment or supplement
which will correct such statement or omission or any amendment which
will effect such compliance.
(d) During the period when a prospectus is required by law to be
delivered in connection with the sale of the Offered Securities
pursuant to the Underwriting Agreement, the Depositor will file, on a
timely and complete basis, all documents that are required to be filed
by the Depositor with the Commission pursuant to Sections 13, 14, or
15(d) of the 1934 Act.
(e) To qualify the Offered Securities for offer and sale under
the securities or "Blue Sky" laws of such jurisdictions as the
Representative shall reasonably request and to pay all expenses
(including fees and disbursements of counsel) in connection with such
qualification of the eligibility of the Offered Securities for
investment under the laws of such jurisdictions as the Representative
may designate provided that in connection
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therewith the Depositor shall not be required to qualify to do
business or to file a general consent to service of process in any
jurisdiction.
(f) To make generally available to the Depositor's security
holders, as soon as practicable, but in any event not later than
eighteen months after the date on which the filing of the Prospectus,
as amended or supplemented, pursuant to Rule 424 under the 1933 Act
first occurs, an earnings statement of the Depositor covering a
twelve-month period beginning after the date of the Underwriting
Agreement, which shall satisfy the provisions of Section 11(a) of the
1933 Act and the applicable rules and regulations of the Commission
thereunder (including, at the option of the Depositor, Rule 158).
(g) For so long as any of the Offered Securities remain
outstanding, to furnish to the Representative upon request in writing
copies of such financial statements and other periodic and special
reports as the Depositor may from time to time distribute generally to
its creditors or the holders of the Offered Securities and to furnish
to the Representative copies of each annual or other report the
Depositor shall be required to file with the Commission.
(h) For so long as any of the Offered Securities remain
outstanding, the Depositor will, or will cause the Servicer to,
furnish to the Representative, as soon as available, a copy of (i) the
annual statement of compliance delivered by the Servicer to the
Indenture Trustee under the Servicing Agreement, (ii) the annual
independent public accountants' servicing report furnished to the
Indenture Trustee pursuant to the Servicing Agreement, (iii) each
report regarding the Offered Securities mailed to the holders of such
Securities, and (iv) from time to time, such other information
concerning such Securities as the Representative may reasonably
request.
6. Representations and Warranties of the Depositor and the
Originator.
(a) The Depositor represents and warrants to, and agrees with,
each Underwriter and the Originator, as of the date of the
Underwriting Agreement, as follows:
(i) The Registration Statement including a prospectus relating to
the Securities and the offering thereof from time to time in
accordance with Rule 415 under the 1933 Act has been filed with the
Commission and such Registration Statement, as amended to the date of
the Underwriting Agreement, has become effective. No stop order
suspending the effectiveness of such Registration Statement has been
issued and no proceeding for that purpose has been initiated or
threatened by the Commission. A prospectus supplement specifically
relating to the Offered Securities will be filed with the Commission
pursuant to Rule 424 under the 1933 Act; provided, however, that a
supplement to the Prospectus prepared pursuant to -------- -------
Section 5(b) hereof shall be deemed to have supplemented the base
Prospectus only with respect to the Offered Securities to which it
relates. The conditions to the use of a registration statement on Form
S-3 under the 1933 Act, as set forth in the General Instructions on
Form S-3, and the conditions of Rule 415 under the 1933 Act, have been
satisfied with respect to the Depositor and the Registration
Statement. There are no contracts or documents of the Depositor that
are required to be filed as exhibits to the Registration Statement
pursuant to the 1933 Act or the rules and regulations thereunder that
have not been so filed.
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<PAGE>
(ii) On the effective date of the Registration Statement, the
Registration Statement and the base Prospectus conformed in all
material respects to the requirements of the 1933 Act and the rules
and regulations thereunder, and did not include any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; on the date of the Underwriting Agreement and as of the
Closing Date, the Registration Statement and the Prospectus conform,
and as amended or supplemented, if applicable, will conform in all
material respects to the requirements of the 1933 Act and the rules
and regulations thereunder, and on the date of the Underwriting
Agreement and as of the Closing Date, neither of such documents
includes any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and neither of such documents as
amended or supplemented, if applicable, will include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing does not
apply to statements or omissions in any of such documents based upon
written information furnished to the Depositor by any Underwriter
specifically for use therein.
(iii) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise
stated therein, there has been no material adverse change in the
condition, financial or otherwise, earnings, affairs, regulatory
situation or business prospects of the Depositor, whether or not
arising in the ordinary course of the business of the Depositor.
(iv) The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(v) The Depositor has all requisite power and authority
(corporate and other) and all requisite authorizations, approvals,
orders, licenses, certificates and permits of and from all government
or regulatory officials and bodies to own its properties, to conduct
its business as described in the Registration Statement and the
Prospectus and to execute, deliver and perform these Standard
Provisions, the Underwriting Agreement and the Transaction Documents
to which it is a party, except such as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution by the Underwriter of the Offered Securities; all such
authorizations, approvals, orders, licenses, certificates are in full
force and effect and contain no unduly burdensome provisions; and,
except as set forth or contemplated in the Registration Statement or
the Prospectus, there are no legal or governmental proceedings pending
or, to the best knowledge of the Depositor, threatened that would
result in a material modification, suspension or revocation thereof.
(vi) The Offered Securities have been duly authorized, and when
the Offered Securities are issued and delivered pursuant to the
Underwriting Agreement, the Offered Securities will have been duly
executed, issued and delivered and will be entitled to the benefits
provided by the Indenture, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting the rights of creditors generally, and to general
principles of equity (regardless of whether the entitlement to such
benefits is considered in a proceeding in equity or at law), and will
8
<PAGE>
conform in substance to the description thereof contained in the
Registration Statement and the Prospectus, and will in all material
respects be in the form contemplated by the Indenture.
(vii) The execution and delivery by the Depositor of these
Standard Provisions, the Underwriting Agreement and the Transaction to
which it is a party are within the corporate power of the Depositor
and none of the execution and delivery by the Depositor of these
Standard Provisions, the Underwriting Agreement and the Transaction
Document to which it is a party, the consummation by the Depositor of
the transactions therein contemplated, or the compliance by the
Depositor with the provisions thereof, will conflict with or result in
a breach of, or constitute a default under, the charter or the by-laws
of the Depositor or any of the provisions of any law, governmental
rule, regulation, judgment, decree or order binding on the Depositor
or its properties, or any of the provisions of any indenture,
mortgage, contract or other instrument to which the Depositor is a
party or by which it is bound, or will result in the creation or
imposition of a lien, charge or encumbrance upon any of its property
pursuant to the terms of any such indenture, mortgage, contract or
other instrument, except such as have been obtained under the 1933 Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Offered
Securities by the Underwriters.
(viii) The Underwriting Agreement has been, and at the Closing
Date Transaction Documents to which it is a party will have been, duly
authorized, executed and delivered by the Depositor.
(ix) At the Closing Date, each of the Underwriting Agreement and
the Transaction Documents to which it is a party will constitute a
legal, valid and binding obligation of the Depositor, enforceable
against the Depositor, in accordance with its terms, subject, as to
the enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of
creditors generally, and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
(x) No filing or registration with, notice to, or consent,
approval, non-disapproval, authorization or order or other action of,
any court or governmental authority or agency is required for the
consummation by the Depositor of the transactions contemplated by the
Underwriting Agreement and the Transaction Documents, except such as
have been obtained and except such as may be required under the 1933
Act, the rules and regulations thereunder, or state securities or
"Blue Sky" laws, in connection with the purchase and distribution of
the Offered Securities by the Underwriters.
(xi) The Depositor owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease, own or license, as the case may be,
and to operate, its properties and to carry on its business as
presently conducted and has received no notice of proceedings relating
to the revocation of any such license, permit, consent, order or
approval, which singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially adversely
affect
9
<PAGE>
the conduct of the business, results of operations, net worth or
condition (financial or otherwise) of the Depositor.
(xii) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending to which the
Depositor is a party or of which any property of the Depositor is the
subject which, if determined adversely to the Depositor would
individually or in the aggregate have a material adverse effect on the
condition (financial or otherwise), earnings, affairs, or business or
business prospects of the Depositor and, to the best of the
Depositor's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(xiii) At the Closing Date or any Subsequent Transfer Date, as
the case may be, each of the Contracts which is a subject of the
Transaction Documents and all such Contracts in the aggregate will
meet the criteria for selection described in the Prospectus, and at
the Closing Date or any Subsequent Transfer Date, as the case may be,
the representations and warranties made by the Depositor in the
Transaction Documents will be true and correct as of such date.
(xiv) At the time of execution and delivery of the Transaction
Documents and on any Subsequent Transfer Date, as the case may be, the
Transferors will have good and marketable title to the Contracts being
transferred to the Issuer at the direction of the Depositor pursuant
to the Receivables Pledge Agreement, free and clear of any lien,
mortgage, pledge, charge, encumbrance, adverse claim or other security
interest (collectively, "Liens"), and they will not have assigned to
any person (other than the Issuer and the Indenture Trustee) any of
their respective right, title or interest in such Contracts and each
will have the power and authority to transfer such Contracts to the
Issuer, and upon execution and delivery to the Issuer of the
Receivables Pledge Agreement, and on any Subsequent Transfer Date, as
the case may be, the Issuer will have good and marketable title to the
Contracts free and clear of any Liens.
(xv) At the time of execution and delivery of the Transaction
Documents, the Depositor will have good and marketable title to the
Offered Securities free and clear of any Liens and will not have
assigned to any person any of its right, title or interest in the
Offered Securities being issued pursuant thereto, the Depositor will
have the power and authority to transfer the Offered Securities to
each of the Underwriters, and upon delivery to each of the
Underwriters of the Offered Securities, each of the Underwriters will
have good and marketable title to the Offered Securities, free and
clear of any Liens.
(xvi) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of the
Underwriting Agreement, these Standard Provisions, the Transaction
Documents and the Offered Securities have been or will be paid at or
prior to the Closing Date.
(b) The Originator represents and warrants to, and agrees with,
each Underwriter and the Depositor, as of the date of the Underwriting
Agreement, as follows:
10
<PAGE>
(i) The Originator has been duly organized and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Pennsylvania.
(ii) The Originator has all requisite power and authority
(corporate and other) and all requisite authorizations, approvals,
orders, licenses, certificates and permits of and from all government
or regulatory officials and bodies to own its properties, to conduct
its business as described in the Prospectus and to execute, deliver
and perform these Standard Provisions, the Underwriting Agreement, and
the Transaction Documents to which it is a party, except such as may
be required under state securities or Blue Sky laws in connection with
the purchase and distribution by the Underwriter of the Offered
Securities; all such authorizations, approvals, orders, licenses,
certificates are in full force and effect and contain no unduly
burdensome provisions; and, except as set forth or contemplated in the
Prospectus, there are no legal or governmental proceedings pending or,
to the best knowledge of the Originator, threatened that would result
in a material modification, suspension or revocation thereof.
(iii) The Offered Securities have been duly authorized, and when
the Offered Securities are issued and delivered pursuant to the
Underwriting Agreement, the Offered Securities will have been duly
executed, issued and delivered and will be entitled to the benefits
provided by the applicable Indenture, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting the rights of creditors generally,
and to general principles of equity (regardless of whether the
entitlement to such benefits is considered in a proceeding in equity
or at law), and will conform in substance to the description thereof
contained in the Registration Statement and the Prospectus, and will
in all material respects be in the form contemplated by the Indenture.
(iv) The execution and delivery by the Originator of these
Standard Provisions, the Underwriting Agreement and the Transaction
Documents to which it is a party are within the corporate power of the
Originator and none of the execution and delivery by the Depositor of
these Standard Provisions, the Underwriting Agreement, and the
Transaction Documents to which it is a party, the consummation by the
Originator of the transactions therein contemplated, or the compliance
by the Originator with the provisions thereof, will conflict with or
result in a breach of, or constitute a default under, the charter or
the by-laws of the Originator or any of the provisions of any law,
governmental rule, regulation, judgment, decree or order binding on
the Originator or its properties, or any of the provisions of any
indenture, mortgage, contract or other instrument to which the
Originator is a party or by which it is bound, or will result in the
creation or imposition of a lien, charge or encumbrance upon any of
its property pursuant to the terms of any such indenture, mortgage,
contract or other instrument, except such as have been obtained under
the 1933 Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Offered Securities by the Underwriters.
(v) The Underwriting Agreement has been, and at the Closing Date
the Transaction Documents to which it is a party will have been, duly
authorized, executed and delivered by the Originator.
11
<PAGE>
(vi) At the Closing Date, each of the Underwriting Agreement and
the Transaction Documents to which it is a party will constitute a
legal, valid and binding obligation of the Originator, enforceable
against the Originator, in accordance with its terms, subject, as to
the enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of
creditors generally, and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
(vii) No filing or registration with, notice to, or consent,
approval, non-disapproval, authorization or order or other action of,
any court or governmental authority or agency is required for the
consummation by the Originator of the transactions contemplated by the
Underwriting Agreement and the Transaction Documents, except such as
have been obtained and except such as may be required under the 1933
Act, the rules and regulations thereunder, or state securities or
"Blue Sky" laws, in connection with the purchase and distribution of
the Offered Securities by the Underwriters.
(viii) The Originator owns or possesses or has obtained all
material governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to lease, own or license, as the
case may be, and to operate, its properties and to carry on its
business as presently conducted and has received no notice of
proceedings relating to the revocation of any such license, permit,
consent, order or approval, which singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would
materially adversely affect the conduct of the business, results of
operations, net worth or condition (financial or otherwise) of the
Originator.
(ix) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending to which the
Originator is a party or of which any property of the Originator is
the subject which, if determined adversely to the Originator would
individually or in the aggregate have a material adverse effect on the
condition (financial or otherwise), earnings, affairs, or business or
business prospects of the Originator and, to the best of the
Originator's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(x) At the Closing Date or any Subsequent Transfer Date, as the
case may be, each of the Contracts which is a subject of the
Transaction Documents, and all such Contracts in the aggregate will
meet the criteria for selection described in the Prospectus, and at
the Closing Date or any Subsequent Transfer Date, as the case may be,
the representations and warranties made by the Originator in the
Transaction Documents will be true and correct as of such date.
(xi) At the time of execution and delivery of the Transaction
Documents to which it is a party, the Originator will have good and
marketable title to the Contracts being transferred to the Transferors
and then from the Transferors to the Issuer pursuant to the
Transaction Documents, free and clear of any lien, mortgage, pledge,
charge, encumbrance, adverse claim or other security interest
(collectively, "Liens"), and will not have assigned to any person
(other than the Issuer and the Indenture Trustee) any of its right,
title or interest in such Contracts or in such Transaction Documents,
the Originator will have the power and
12
<PAGE>
authority to transfer such Contracts to the Transferors, and upon
execution and delivery of the Transaction Documents and delivery of
the Contracts to, or on behalf of, the Issuer, and on any Subsequent
Transfer Date, as the case may be, the Issuer will have good and
marketable title to the Contracts free and clear of any Liens.
(xii) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of the
Underwriting Agreement and the Transaction Documents and the Offered
Securities have been or will be paid at or prior to the Closing Date.
7. Indemnification and Contribution.
(a) The Depositor and the Underwriters.
(i) The Depositor agrees to indemnify and hold harmless each
Underwriter (including Prudential Securities Incorporated acting in
its capacity as Representative and as one of the Underwriters), and
each person, if any, who controls any Underwriter within the meaning
of the 1933 Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person
may become subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement, any preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred
by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Depositor will not be liable in
any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, any preliminary Prospectus, the Prospectus or
any amendment or supplement thereto in reliance upon and in conformity
with (1) written information furnished to the Depositor by any
Underwriter through the Representative specifically for use therein or
(2) information regarding the Contracts except to the extent that the
Depositor has been indemnified by the Servicer. This indemnity
agreement will be in addition to any liability which the Depositor may
otherwise have.
(ii) Each Underwriter will indemnify and hold harmless the
Depositor, each of the Depositor's directors, each of the Depositor's
officers who signed the Registration Statement and each person, if
any, who controls the Depositor, within the meaning of the 1933 Act,
against any losses, claims, damages or liabilities to which the
Depositor, or any such director, officer or controlling person may
become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement, any preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or any other prospectus relating to
the
13
<PAGE>
Offered Securities, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statements or alleged untrue statements or omission or
alleged omission was made in reliance upon and in conformity with
written information furnished to the Depositor by any Underwriter
through the Representative specifically for use therein; and each
Underwriter will reimburse any legal or other expenses reasonably
incurred by the Depositor or any such director, officer or controlling
person in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be
in addition to any liability which such Underwriter may otherwise
have. The Depositor acknowledges that the statements set forth under
the caption "UNDERWRITING" in the Prospectus Supplement constitute the
only information furnished to the Depositor by or on behalf of any
Underwriter for use in the Registration Statement, any preliminary
Prospectus or the Prospectus, and each of the several Underwriters
represents and warrants that such statements are correct as to it.
(iii) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the
preceding parts of this Section 7 is for any reason held to be
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof);
provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. In determining the amount
of contribution to which the respective parties are entitled, there
shall be considered the relative benefits received by the Depositor on
the one hand, and the Underwriters on the other, from the offering of
the Offered Securities (taking into account the portion of the
proceeds of the offering realized by each), the Depositor's and the
Underwriters' relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission, and any
other equitable considerations appropriate in the circumstances. The
Depositor and the Underwriters agree that it would not be equitable if
the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriters were treated as one entity
for such purpose). No Underwriter or person controlling such
Underwriter shall be obligated to make contribution hereunder which in
the aggregate exceeds the total underwriting fee of the Offered
Securities purchased by such Underwriter under the Underwriting
Agreement, less the aggregate amount of any damages which such
Underwriter and its controlling persons have otherwise been required
to pay in respect of the same or any substantially similar claim. The
Underwriters' obligation to contribute hereunder are several in
proportion to their respective underwriting obligations and not joint.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as such Underwriter, and each
director of the Depositor, each officer of the Depositor who signed
the Registration Statement, and each person, if any, who controls the
Depositor within the meaning of Section 15 of the 1933 Act, shall have
the same rights to contribution as the Depositor.
14
<PAGE>
(b) The Originator and the Depositor.
(i) The Originator agrees (A) to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who have signed
the Registration Statement, and each of its directors and each person
or entity who controls the Depositor or any such person, within the
meaning of Section 15 of the Securities Act, against any and all
losses, claims, damages or liabilities, joint and several, to which
the Depositor or any such person or entity may become subject, under
the Securities Act or otherwise, and will reimburse the Depositor and
each such controlling person for any legal or other expenses incurred
by the Depositor or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in the Prospectus Supplement or any amendment or supplement to the
Prospectus Supplement or the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements in the Prospectus Supplement or any amendment or
supplement to the Prospectus Supplement approved in writing by the
Originator, in light of the circumstances under which they were made,
not misleading, but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission relates to
the information contained in the Prospectus Supplement other than the
information under the caption "UNDERWRITING"; this indemnity agreement
will be in addition to any liability which the Originator may
otherwise have; and (B) to indemnify and to hold the Depositor
harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Depositor may sustain in any way
related to the failure of any of the Originator or its affiliates to
perform its duties in compliance with the terms of the Transaction
Documents; the Originator shall immediately notify the Depositor if a
claim is made by a third party with respect to the Transaction
Documents, and the Originator shall assume the defense of any such
claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Depositor in
respect of such claim.
(ii) The Depositor agrees to indemnify and hold harmless the
Originator, its directors and each person or entity who controls the
Originator or any such person, within the meaning of Section 15 of the
Securities Act, against any and all losses, claims, damages or
liabilities, joint and several, to which the Originator or any such
person or entity may become subject, under the Securities Act or
otherwise, and will reimburse the Originator and any such director or
controlling person for any legal or other expenses incurred by such
party or any such director or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in the Registration Statement, the Prospectus, the Prospectus
Supplement, any amendment or supplement to the Prospectus or the
Prospectus Supplement or the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, but only to the extent that such
untrue statement or alleged untrue statement or
15
<PAGE>
omission or alleged omission is other than a statement or omission
relating to the information set forth in subsection (c)(i) of this
Section 7; provided, however, that in no event shall -------- -------
the Depositor be liable to the Originator under this paragraph (ii) in
an amount in excess of the Depositor's resale profit or the
underwriting fee on the sale of the Notes; this indemnity agreement
will be in addition to any liability which the Depositor may otherwise
have.
(iii) Promptly after receipt by an indemnified party under this
Section 7(b) of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 7(b), notify the
indemnifying party in writing of the commencement thereof, but the
omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability which the indemnifying party may
have to any indemnified party hereunder except to the extent such
indemnifying party has been prejudiced thereby. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may
elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to
such indemnified party. After notice from the indemnifying party to
such indemnified party of its election to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party
under this Section 7(b) for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses
available to it that are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party
shall not be liable for the expenses of more than one separate
counsel.
(iv) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the
preceding parts of this Section 4.04 is for any reason held to be
unavailable to or insufficient to hold harmless an indemnified party
under subsection (i) or subsection (ii) of this Section 7(b) in
respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages or liabilities (or actions in
respect thereof) subject to the limits set forth in subsection (i) and
subsection (ii) of this Section 7(b); provided, however, that 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. In determining the amount of contribution to which
the respective parties are entitled, there shall be considered the
relative benefits received by the Originator on the one hand, and the
Depositor on the other, the Originator's and the Depositor's relative
knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and
prevent any statement or omission, and any other equitable
considerations
16
<PAGE>
appropriate in the circumstances. The Originator and the Depositor
agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation. For
purposes of this Section 7(b), each director of the Depositor, each
officer of the Depositor who signed the Registration Statement, and
each person, if any who controls the Depositor within the meaning of
Section 15 of the Securities Act, shall have the same rights to
contribution as the Depositor, and each director of the Originator,
and each person, if any who controls the Originator within the meaning
of Section 15 of the Securities Act, shall have the same rights to
contribution as the Originator.
(c) The parties hereto agree that the first sentence of Section 5
of the Indemnification Agreement (the "Indemnification Agreement")
dated as of the Closing Date among the Note Insurer, the Issuer, the
Depositor and the Underwriter shall not be construed as limiting the
Depositor's right to enforce its rights under Section 7 of these
Standard Provisions. The parties further agree that, as between the
parties hereto, to the extent that the provisions of Section 5 of the
Indemnification Agreement conflict with Section 7 hereof, the
provisions of Section 7 hereof shall govern.
8. Survival of Certain Representations and Obligations. The
respective representations, warranties, agreements, covenants, indemnities and
other statements of the Depositor and the Originator, its officers and the
several Underwriters set forth in, or made pursuant to, the Underwriting
Agreement shall remain in full force and effect, regardless of any
investigation, or statement as to the result thereof, made by or on behalf of
any Underwriter, the Depositor and the Originator, or any of the officers or
directors or any controlling person of any of the foregoing, and shall survive
the delivery of and payment for the Offered Securities.
9. Termination. (a) The Underwriting Agreement may be terminated
by the Depositor by notice to the Representative and the Originator in
the event that a stop order suspending the effectiveness of the
Registration Statement shall have been issued or proceedings for that
purpose shall have been instituted or threatened.
(b) The Underwriting Agreement may be terminated by the
Representative by notice to the Depositor and the Originator in the
event that the Depositor shall have failed, refused or been unable to
perform all obligations and satisfy all conditions to be performed or
satisfied hereunder by the Depositor at or prior to the Closing Date.
(c) Termination of the Underwriting Agreement pursuant to this
Section 9 shall be without liability of any party to any other party
other than as provided in Sections 7 and 11 hereof.
10. Default of Underwriters. If any Underwriter or Underwriters
defaults or default in their obligation to purchase Offered Securities which it
or they have agreed to purchase under the Underwriting Agreement and the
aggregate principal amount of the Offered Securities which such defaulting
Underwriter or Underwriters agreed but failed to purchase is ten percent (10%)
or less of the aggregate principal amount, notional amount or stated amount, as
applicable, of the Offered Securities to be sold under the Underwriting
Agreement, as the case may be, the other Underwriters shall be obligated
severally in proportion to their respective commitments under the Underwriting
Agreement to purchase the Offered Securities which such defaulting Underwriter
17
<PAGE>
or Underwriters agreed but failed to purchase. If any Underwriter or
Underwriters so defaults or default and the aggregate principal amount of the
Offered Securities with respect to which such default or defaults occurs or
occur is more than ten percent (10%) of the aggregate principal amount, notional
amount or stated amount, as applicable, of Offered Securities to be sold under
the Underwriting agreement, as the case may be, and arrangements satisfactory to
the Representative and the Depositor for the purchase of such Offered Securities
by other persons (who may include one or more of the non-defaulting Underwriters
including the Representative) are not made within 36 hours after any such
default, the Underwriting Agreement will terminate without liability on the part
of any non-defaulting Underwriters or the Depositor except for the expenses to
be paid or reimbursed by the Depositor pursuant to Section 11 hereof. As used in
the Underwriting Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10. Nothing herein shall
relieve a defaulting Underwriter from liability for its default.
11. Expenses. (a) The Depositor agrees with the several
Underwriters that:
(i) whether or not the transactions contemplated in the
Underwriting Agreement are consummated or the Underwriting Agreement
is terminated, the Depositor will pay all fees and expenses incident
to the performance of its obligations under the Underwriting
Agreement, including, but not limited to, (i) the Commission's
registration fee, (ii) the expenses of printing and distributing the
Underwriting Agreement and any related underwriting documents, the
Registration Statement, any preliminary Prospectus, the Prospectus,
any amendments or supplements to the Registration Statement or the
Prospectus, and any Blue Sky memorandum or legal investment survey and
any supplements thereto, (iii) fees and expenses of rating agencies,
accountants and counsel for the Depositor, (iv) the expenses referred
to in Section 5(e) hereof, and (v) all miscellaneous expenses referred
to in Item 30 of the Registration Statement;
(ii) all out-of-pocket expenses, including counsel fees,
disbursements and expenses, reasonably incurred by the Underwriters in
connection with investigating, preparing to market and marketing the
Offered Securities and proposing to purchase and purchasing the
Offered Securities under the Underwriting Agreement will be borne and
paid by the Depositor if the Underwriting Agreement is terminated by
the Depositor pursuant to Section 9(a) hereof or by the Representative
on account of the failure, refusal or inability on the part of the
Depositor to perform all obligations and satisfy all conditions on the
part of the Depositor to be performed or satisfied hereunder; and
(iii) the Depositor will pay the cost of preparing the
certificates for the Offered Securities.
(b) In connection with the transactions contemplated under this
Underwriting Agreement and the Transaction Documents, the Originator
shall promptly pay (or shall promptly reimburse the Depositor to the
extent that the Depositor shall have paid or otherwise incurred): (i)
the fees and disbursements of the Depositor's and the Originators'
counsel; (ii) the fees of S&P and Moody's; (iii) any of the fees of
the Indenture Trustee and the fees and disbursements of the Indenture
Trustee's counsel; (iv) any of the fees of the Owner Trustee and the
fees and disbursements of the Owner Trustee's counsel; (v) expenses
incurred in connection with printing the Prospectus, the Prospectus
Supplement, any
18
<PAGE>
amendment or supplement thereto, any preliminary prospectus and the
Notes; (vi) fees and expenses relating to the filing of documents with
the Commission (including without limitation periodic reports under
the Exchange Act); (vii) the shelf registration amortization fee of
0.04% of the Note Principal Balance of the Notes on the Closing Date,
paid in connection with the issuance of Notes; (viii) the fees and
disbursements for Deloitte & Touche LLP, accountants for the
Originator; and (ix) all of the initial expenses (not to exceed
$75,000) of the Note Insurer including, without limitation, legal fees
and expenses, accountant fees and expenses and expenses in connection
with due diligence conducted on the Contract Files but not including
the initial premium paid to the Note Insurer. For the avoidance of
doubt, the parties hereto acknowledge that it is the intention of the
parties that the Depositor shall not pay any of the Indenture
Trustee's or Owner Trustee's fees and expenses in connection with the
transactions contemplated by this Underwriting Agreement and the
Transaction Documents. All other costs and expenses in connection with
the transactions contemplated hereunder shall be borne by the party
incurring such expenses.
(c) Except as otherwise provided in this Section 11, the
Underwriters agree to pay all of their expenses in connection with
investigating, preparing to market and marketing the Offered
Securities and proposing to purchase and purchasing the Offered
Securities under the Underwriting Agreement, including the fees and
expenses of their counsel and any advertising expenses incurred by
them in making offers and sales of the Offered Securities.
12. Notices. All communications under the Underwriting Agreement
shall be in writing and, (i) if sent to the Underwriters, shall be mailed,
delivered or telegraphed and confirmed to the Representative at the address and
to the attention of the person specified in the Underwriting Agreement, (ii) if
sent to the Depositor, shall be mailed, delivered or telegraphed and confirmed
to Prudential Securities Secured Financing Corporation, One New York Plaza, New
York, New York 10292, Attention: Managing Director-Asset Backed Finance Group
and (iii) if sent to the Originator, shall be mailed, delivered or telegraphed
and confirmed to American Business Leasing, Inc., Balapointe Office Centre, 111
Presidential Boulevard, Suite 127, Bala Cynwyd, Pennsylvania 19004; provided,
however, that any notice to any Underwriter pursuant to the Underwriting
Agreement shall be mailed, delivered or telegraphed and confirmed to such
Underwriter at the address furnished by it.
13. Representative of Underwriters. Any Representative identified
in the Underwriting Agreement will act for the Underwriters of the Offered
Securities and any action taken by the Representative under the Underwriting
Agreement will be binding upon all of such Underwriters.
14. Successors. The Underwriting Agreement shall inure to the
benefit of and shall be binding upon the several Underwriters, the Depositor and
the Originator and their respective successors and legal representatives, and
nothing expressed or mentioned herein or in the Underwriting Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of the Underwriting Agreement, or any
provisions herein contained, the Underwriting Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the representations and warranties of the Depositor and the
19
<PAGE>
Originator contained herein or in the Underwriting Agreement shall also be for
the benefit of any person or persons who controls or control any Underwriter
within the meaning of Section 15 of the 1933 Act, and (ii) the indemnities by
the several Underwriters shall also be for the benefit of the directors of the
Depositor, the officers of the Depositor who have signed the Registration
Statement and any person or persons who control the Depositor within the meaning
of Section 15 of the 1933 Act. No purchaser of the Offered Securities from any
Underwriter shall be deemed a successor because of such purchase. These Standard
Provisions and each Underwriting Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. Time of the Essence. Time shall be of the essence of each
Underwriting Agreement.
16. Governing Law. These Standard Provisions and each
Underwriting Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
[Signature Page Follows]
20
<PAGE>
If the foregoing is in accordance with your understanding,
please sign and return two counterparts hereof.
Yours truly,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:
----------------------------------------
Name:
Title:
AMERICAN BUSINESS LEASING, INC.
By:
----------------------------------------
Name:
Title:
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED
By:
---------------------------------
Name:
Title:
[Signature Page to Underwriting Agreement Standard Provisions]
<PAGE>
Exhibit A
Opinions of Dewey Ballantine LLP,
special counsel for the Depositor
(1) Each of the Trust Agreement, the Receivables Pledge
Agreement, the Underwriting Agreement and the Standard Provisions (collectively,
with the Indemnification Agreement, the "Documents") constitutes the valid,
legal and binding agreement of the Depositor, and is enforceable against the
Depositor in accordance with its terms.
(2) The Notes, assuming the due execution by the Issuer and
due authentication by the Indenture Trustee and payment therefor pursuant to the
Underwriting Agreement, are validly issued and outstanding and are entitled to
the benefits of the Indenture.
(3) No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority or court
is required under federal laws or the laws of the State of New York for the
execution, delivery and performance of the Documents or the offer, issuance,
sale or delivery of the Notes or the consummation of any other transaction
contemplated thereby by the Depositor, except such which have been obtained.
(4) The Registration Statement and the Prospectus (other than
the financial and statistical data included therein, as to which we are not
called upon to express any opinion), at the time the Registration Statement
became effective, as of the date of execution of the Underwriting Agreement and
as of the date hereof comply as to form in all material respects with the
requirements of the 1933 Act and the rules and regulations thereunder, and the
Exchange Act and the rules and regulations thereunder, and we do not know of any
amendment to the Registration Statement required to be filed, or of any
contracts, indentures or other documents of a character required to be filed as
an exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus, which has not been filed or described
as required.
(5) The registration of the Trust Estate created by the
Indenture under the Investment Company Act of 1940 is not required.
(6) The statements in the Prospectus Supplement set forth
under the caption "DESCRIPTION OF THE NOTES," to the extent such statements
purport to summarize certain provisions of the Notes or of the Transaction
Documents, are fair and accurate in all material respects.
<PAGE>
Exhibit B
Opinions of Counsel to
the Originator
(1) The Originator has been duly organized and is validly
existing as a corporation in good standing under the federal laws of the United
States and is duly qualified to transact business in the Commonwealth of
Pennsylvania.
(2) The Originator has the requisite power and authority to
execute and deliver, engage in the transactions contemplated by, and perform and
observe the conditions of, each of the Transaction Documents to which it is a
party.
(3) Each of the Transaction Documents to which the Originator
is a party have been duly and validly authorized, executed and delivered by the
Originator, all requisite corporate action having been taken with respect
thereto, and each constitutes the valid, legal and binding agreement of the
Originator, and are enforceable against the Originator in accordance with their
respective terms.
(4) Neither the transfer of the Contracts to the Transferors,
nor the execution, delivery or performance by the Originator of the each of the
Documents to which it is a party (A) conflicts or will conflict with or results
or will result in a breach of, or constitutes or will constitute a default under
or violates or will violate, (i) any term or provision of the charter or by-laws
of the Originator; (ii) any term or provision of any material agreement,
contract, instrument or indenture, to which the Servicer or any of its
subsidiaries is a party or is bound; or (iii) any order, judgment, writ,
injunction or decree of any court or governmental agency or body or other
tribunal having jurisdiction over the Originator or any of its properties; or
(B) results in, or will result in the creation or imposition of any lien, charge
or encumbrance upon the Pledged Property or upon the Notes, except as otherwise
contemplated by the Indenture.
(5) No consent, approval, authorization or order of,
registration or qualification of or with or notice to, any court, governmental
agency or body or other tribunal is required under the laws of the State of New
York or the Commonwealth of Pennsylvania, for the execution, delivery and
performance of each of the Transaction Documents to which it is a party or the
consummation of any other transaction contemplated thereby by the Originator,
except such which have been obtained.
(6) There are no legal or governmental suits, proceedings or
investigations pending or, to such counsel's knowledge, threatened against the
Originator before any court, governmental agency or body or other tribunal (A)
which, if determined adversely to the Servicer, would individually or in the
aggregate have a material adverse effect on (i) the consolidated financial
position, business prospects, stockholders' equity or results of operations of
the Originator; (ii) the Originator 's ability to perform its obligations under,
or the validity or enforceability of, each of the Transaction Documents to which
it is a party; (iii) any Contract or Equipment, or the title of any Obligor to
any Equipment; or (B) which have not otherwise been disclosed in the Prospectus
and to the best of such counsel's knowledge, no such proceedings or
investigations are threatened or contemplated by governmental authorities or
threatened by others.
<PAGE>
Exhibit C
Opinions of Counsel to
the Indenture Trustee
(1) The Indenture Trustee is a New York banking corporation
duly organized, validly existing and in good standing under the laws of the New
York and has the power and authority to enter into and to take all actions
required of it under the Indenture.
(2) Each of the Documents to which the Indenture Trustee is a
party have been duly authorized, executed and delivered by the Indenture Trustee
and each such Document constitutes the legal, valid and binding obligation of
the Indenture Trustee, enforceable against the Indenture Trustee in accordance
with its terms, except as enforceability thereof may be limited by (A)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, as such laws would apply in the
event of a bankruptcy, insolvency or reorganization or similar occurrence
affecting the Indenture Trustee, and (B) general principles of equity regardless
of whether such enforcement is sought in a proceeding at law or in equity.
(3) No consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part of the
Indenture Trustee in connection with its execution and delivery of each of the
Documents to which it is a party or the performance of its obligations
thereunder.
(4) The Notes have been duly authenticated and delivered by
the Indenture Trustee.
(5) The execution and delivery of, and performance by the
Indenture Trustee of its obligations under, each of the Documents to which it is
a party do not conflict with or result in a violation of any statute or
regulation applicable to the Indenture Trustee, or the charter or bylaws of the
Indenture Trustee, or to the best knowledge of such counsel, any governmental
authority having jurisdiction over the Indenture Trustee or the terms of any
indenture or other agreement or instrument to which the Indenture Trustee is a
party or by which it is bound.
<PAGE>
Exhibit D
Opinions of Counsel to
the Issuer
(1) The Issuer is a Delaware business trust duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the power and authority to enter into and to take all actions required
of it under the each of the Documents to which it is a party.
(2) Each of the Documents to which the Issuer is a party have
been duly authorized, executed and delivered by the Issuer and each such
Document constitutes the legal, valid and binding obligation of the Issuer,
enforceable against the Issuer in accordance with its terms, except as
enforceability thereof may be limited by (A) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally, as such laws would apply in the event of a bankruptcy,
insolvency or reorganization or similar occurrence affecting the Issuer, and (B)
general principles of equity regardless of whether such enforcement is sought in
a proceeding at law or in equity.
(3) No consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part of the
Issuer in connection with its execution and delivery of the Documents to which
it is a party or the performance of its obligations thereunder.
(4) The Notes have been duly executed and delivered by the
Issuer.
(5) The execution and delivery of, and performance by the
Issuer of its obligations under each of the Documents to which it is a party do
not conflict with or result in a violation of any statute or regulation
applicable to the Issuer, or the certificate of trust of the Issuer, or to the
best knowledge of such counsel, any governmental authority having jurisdiction
over the Issuer or the terms of any indenture or other agreement or instrument
to which the Issuer is a party or by which it is bound.
<PAGE>
Exhibit 1.2
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
ABFS EQUIPMENT CONTRACT TRUST 1999-A
and
PRUDENTIAL SECURITIES INCORPORATED
Dated as of June 28, 1999
ABFS Equipment Contract Trust 1999-A
$15,000,000 5.3925% Equipment Contract-Backed Notes, Class A-1
$13,000,000 6.025% Equipment Contract-Backed Notes, Class A-2
$34,160,000 6.650% Equipment Contract-Backed Notes, Class A-3
$10,000,000 6.650% Equipment Contract-Backed Notes, Class A-4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. Definitions 1
Section 2. Representations, Warranties and Agreements of Financial Security 2
Section 3. Representations, Warranties and Agreements of the Underwriter 5
Section 4. Indemnification 5
Section 5. Indemnification Procedures 6
Section 6. Contribution 7
Section 7. Miscellaneous. 8
</TABLE>
EXHIBIT
Exhibit A Opinion of General Counsel
<PAGE>
-1-
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of June 28, 1999, among
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), ABFS EQUIPMENT
CONTRACT TRUST 1999-A (the "Issuer") and PRUDENTIAL SECURITIES INCORPORATED (the
"Underwriter"):
Section 1. Definitions. For purposes of this Agreement,
the following terms shall have the meanings provided below:
"Agreement" means this Indemnification Agreement, as amended
from time to time.
"Issuer Party" means any of the Issuer, its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
"Financial Security Agreements" means this Agreement and the
Insurance Agreement.
"Financial Security Information" has the meaning provided in
Section 2(g) hereof.
"Financial Security Party" means any of Financial Security,
its parent, subsidiaries and affiliates, and any shareholder, director, officer,
employee, agent or "controlling person" (as such term is used in the Securities
Act) of any of the foregoing.
"Indemnified Party" means any party entitled to any
indemnification pursuant to Section 4 hereof.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 4 hereof.
"Insurance Agreement" means the Insurance and Indemnity
Agreement, dated as of June 1, 1999, by and among Financial Security, American
Business Credit, Inc., American Business Leasing, Inc., ABFS Finance LLC 1999-A,
ABFS Residual LLC, 1999-A, ABFS Special Purpose Management, Inc. and the Issuer.
"Issuer" means ABFS Equipment Contract Trust 1999-A.
"Losses" means (a) any actual out-of-pocket damages incurred
by the party entitled to indemnification or contribution hereunder, (b) any
actual out-of-pocket costs or actual expenses reasonably incurred by such party,
including reasonable fees or expenses of its counsel and other expenses incurred
in connection with investigating or defending any claim, action or other
proceeding which entitle such party to be indemnified hereunder (subject to the
limitations set forth in Section 5 hereof), to the extent not paid, satisfied or
reimbursed from funds provided by any other Person other than an affiliate of
such party (provided that the foregoing shall not
<PAGE>
-2-
create or imply any obligation to pursue recourse against any such other
Person), plus (c) interest on the amount paid by the party entitled to
indemnification or contribution from the date of such payment to the date of
payment by the party who is obligated to indemnify or contribute hereunder at
the statutory rate applicable to judgments for breach of contract.
"Offering Circular" means the Prospectus Supplement, dated
June 24, 1999, relating to the Securities.
"Offering Document" means the Offering Circular and any
amendments or supplements thereto and any other material or documents delivered
by the Underwriter to any Person in connection with the offer or sale of the
Securities.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization or other organization or entity
(whether governmental or private).
"Policy" means the financial guaranty insurance policy
delivered by Financial Security with respect to the Securities.
"Securities" means the Class A Notes issued pursuant to the
Indenture.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Underwriter" means Prudential Securities Incorporated.
"Underwriter Information" has the meaning provided in Section
3(c) hereof.
"Underwriter Party" means any of the Underwriter, its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
"Underwriting Agreement" means the Underwriting Agreement
dated as of June 24, 1999, between the American Business Credit, Inc.,
American Business Leasing, Inc., ABFS Finance LLC 1999-A, ABFS Residual LLC
1999-A and the Underwriter in respect of the Notes.
Section 2. Representations, Warranties and Agreements
of Financial Security. Financial Security represents, warrants and agrees, as
of the date hereof and as of the Closing Date, as follows:
(a) Organization, Etc. Financial Security is a stock
insurance company duly organized, validly existing and authorized to transact
financial guaranty insurance business under the laws of the State of New York.
(b) Authorization, Etc. The Policy and the Financial
Security Agreements have been duly authorized, executed and delivered by
Financial Security.
(c) Validity, Etc. The Policy and the Financial Security
Agreements constitute valid and binding obligations of Financial Security,
enforceable against Financial Security in
<PAGE>
-3-
accordance with their terms, subject, as to the enforcement of remedies, to
bankruptcy, insolvency, reorganization, rehabilitation, moratorium and other
similar laws affecting the enforceability of creditors' rights generally
applicable in the event of the bankruptcy or insolvency of Financial Security
and to the application of general principles of equity and subject, in the case
of this Agreement, to principles of public policy limiting the right to enforce
the indemnification provisions contained herein.
(d) Exemption From Registration. The Policy is exempt from
registration under the Securities Act.
(e) No Conflicts. Neither the execution or delivery by
Financial Security of the Policy or the Financial Security Agreements, nor the
performance by Financial Security of its obligations thereunder, will conflict
with any provision of the certificate of incorporation or the bylaws of
Financial Security or result in a breach of, or constitute a default under,
any material agreement or other instrument to which Financial Security is a
party or by which any of its property is bound nor violate any judgment, order
or decree applicable to Financial Security of any governmental or regulatory
body, administrative agency, court or arbitrator having jurisdiction over
Financial Security (except that, in the published opinion of the Securities
and Exchange Commission, the indemnification provisions of this Agreement,
insofar as they relate to indemnification for liabilities arising under the
Securities Act, are against public policy as expressed in the Securities Act
and are therefore unenforceable).
(f) Financial Information. The consolidated balance sheets
of Financial Security as of December 31, 1998 and December 31, 1997 and the
related consolidated statements of income, changes in shareholder's equity and
cash flows for the fiscal year then ended, furnished by Financial Security for
use in the Offering Circular, fairly present in all material respects the
financial condition of Financial Security as of such dates and for such
periods in accordance with generally accepted accounting principles
consistently applied (subject as to interim statements to normal year-end
adjustments) and since the date of the most current consolidated balance sheet
referred to above there has been no change in the financial condition of
Financial Security which would materially and adversely affect its ability to
perform its obligations under the Policy.
(g) Financial Security Information. The information in the
Offering Circular set forth under the caption "The Note Insurer" (as revised
from time to time in accordance with the provisions hereof, the "Financial
Security Information") is limited and does not purport to provide the scope of
disclosure required to be included in a prospectus with respect to a
registrant in connection with the offer and sale of securities of such
registrant registered under the Securities Act. Within such limited scope of
disclosure, however, as of the date of the Offering Circular and as of the
date hereof, the Financial Security Information does not contain any untrue
statement of a material fact, or omit to state a material fact necessary to
make the statements contained therein, in light of the circumstances under
which they were made, not misleading.
(h) Additional Information. Financial Security will furnish
to the Underwriter or the Issuer, upon request of the Underwriter or the
Issuer, as the case may be, copies of Financial Security's most recent
financial statements (annual or interim, as the case may be) which fairly
present in all material respects the financial condition of Financial Security
as of the dates and for the periods indicated, in accordance with generally
accepted accounting principles
<PAGE>
-4-
consistently applied except as noted therein (subject, as to interim statements,
to normal year-end adjustments); provided, however, that, if the Underwriter or
the Issuer shall require a manually signed report or consent of Financial
Security's auditors in connection with such financial statements, such report or
consent shall be at the expense of the Underwriter or the Issuer, as the case
may be. In addition, if the delivery of an Offering Circular relating to the
Securities is required at any time prior to the expiration of nine months after
the time of issue of the Offering Circular in connection with the offering or
sale of the Securities, the Underwriter or the Issuer will notify Financial
Security of such requirement to deliver an Offering Circular and Financial
Security will promptly provide the Underwriter and the Issuer with any revisions
to the Financial Security Information that are in the judgment of Financial
Security necessary to prepare an amended Offering Circular or a supplement to
the Offering Circular which will correct such statement or omission.
(i) Opinion of Counsel. Financial Security will furnish to
the Underwriter and the Issuer on the closing date for the sale of the
Securities an opinion of its General Counsel or Assistant General Counsel, to
the effect set forth in Exhibit A attached hereto, dated such closing date and
addressed to the Underwriter and the Issuer.
(j) Consents and Reports of Independent Accountants.
Financial Security will furnish to the Underwriter and the Issuer, upon request,
as comfort from its independent accountants in respect of its financial
condition, (i) at the expense of the Person specified in the Insurance
Agreement, a copy of the Offering Circular, including either a manually signed
consent or a manually signed report of Financial Security's independent
accountants and (ii) the quarterly review letter by Financial Security's
independent accountants in respect of the most recent interim financial
statements of Financial Security.
Nothing in this Agreement shall be construed as a
representation or warranty by Financial Security concerning the rating of its
claims-paying ability by Standard & Poor's Ratings Group or Moody's Investors
Service, Inc. or any other rating agency (collectively, the "Rating
Agencies"). The Rating Agencies, in assigning such ratings, take into account
facts and assumptions not described in the Offering Circular and the facts and
assumptions which are considered by the Rating Agencies, and the ratings
issued thereby, are subject to change over time.
Section 3. Representations, Warranties and Agreements of
the Underwriter. The Underwriter represents, warrants and agrees, as of the
date hereof and as of the Closing Date, as follows:
(a) Compliance With Laws. The Underwriter will comply in all
material respects with all legal requirements in connection with offers and
sales of the Securities and make such offers and sales in the manner provided in
the Offering Circular.
(b) Offering Document. The Underwriter will not use, or
distribute to other broker-dealers for use, any Offering Document in
connection with the offer and sale of the Securities unless such Offering
Document includes such information as has been furnished by Financial Security
for inclusion therein and the information therein concerning Financial
Security has been approved by Financial Security in writing. Financial
Security hereby consents to the information in respect of Financial Security
included in the Offering Circular. Each
<PAGE>
-5-
Offering Document will include the following statement: "The Policy is not
covered by the property/casualty insurance security fund specified in Article 76
of the New York Insurance Law".
(c) Underwriter Information. All material provided by the
Underwriter for inclusion in the Offering Circular (as revised from time to
time, the "Underwriter Information"), insofar as such information relates to
the Underwriter, is true and correct in all material respects. In respect of
the Offering Circular, the Underwriter Information is limited to the
information set forth under the caption "Underwriting" in the Offering
Circular.
Section 4. Indemnification. (a) Financial Security agrees,
upon the terms and subject to the conditions provided herein, to indemnify,
defend and hold harmless each Underwriter Party and each Issuer Party against
(i) any and all Losses incurred by them with respect to the offer and sale of
the Securities and resulting from Financial Security's breach of any of its
representations, warranties or agreements set forth in Section 2 hereof and
(ii) any and all Losses to which any Underwriter Party or Issuer Party may
become subject, under the Securities Act or otherwise, insofar as such Losses
arise out of or result from an untrue statement of a material fact contained
in any Offering Document or the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or omission was made in the Financial Security Information
included therein in accordance with the provisions hereof.
(b) The Underwriter agrees, upon the terms and subject to
the conditions provided herein, to indemnify, defend and hold harmless each
Financial Security Party against (i) any and all Losses incurred by them with
respect to the offer and sale of the Securities and resulting from the
Underwriter's breach of any of its representations, warranties or agreements
set forth in Section 3 hereof and (ii) any and all Losses to which any
Financial Security Party may become subject, under the Securities Act or
otherwise, insofar as such Losses arise out of or result from an untrue
statement of a material fact contained in any Offering Document or the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or omission was
made in the Underwriter Information included therein.
(c) Upon the incurrence of any Losses for which a party is
entitled to indemnification hereunder, the Indemnifying Party shall reimburse
the Indemnified Party promptly upon establishment by the Indemnified Party to
the Indemnifying Party of the Losses incurred.
Section 5. Indemnification Procedures. Except as provided
below in Section 6 with respect to contribution or in Section 7(e), the
indemnification provided herein by an Indemnifying Party shall be the exclusive
remedy of any and all Indemnified Parties for the breach of a representation,
warranty or agreement hereunder by an Indemnifying Party; provided, however,
that each Indemnified Party shall be entitled to pursue any other remedy at law
or in equity for any such breach so long as the damages sought to be recovered
shall not exceed the Losses incurred thereby resulting from such breach. In the
event that any action or regulatory proceeding shall be commenced or claim
asserted which may entitle an Indemnified Party to be indemnified under this
Agreement, such party shall give the Indemnifying Party written or telegraphic
notice of such action or claim reasonably promptly after receipt of written
notice thereof. The Indemnifying Party shall be entitled to participate in and,
upon notice to the
<PAGE>
-6-
Indemnified Party, assume the defense of any such action or claim in reasonable
cooperation with, and with the reasonable cooperation of, the Indemnified Party.
The Indemnified Party will have the right to employ its own counsel in any such
action in addition to the counsel of the Indemnifying Party, but the fees and
expenses of such counsel will be at the expense of such Indemnified Party,
unless (a) the employment of counsel by the Indemnified Party at its expense has
been authorized in writing by the Indemnifying Party, (b) the Indemnifying Party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, or (c)
the named parties to any such action or proceeding (including any impleaded
parties) include both the Indemnifying Party and one or more Indemnified
Parties, and the Indemnified Parties shall have been advised by counsel that
there may be one or more legal defenses available to them which are different
from or additional to those available to the Indemnifying Party (it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for all Issuer
Parties and one such firm for all Underwriter Parties and one such firm for all
Financial Security Parties, as the case may be, which firm shall be designated
in writing by the Issuer in respect of the Issuer Parties, by the Underwriter in
respect of the Underwriter Parties and by Financial Security in respect of the
Financial Security Parties), in each of which cases the fees and expenses of
counsel will be at the expense of the Indemnifying Party and all such fees and
expenses will be reimbursed promptly as they are incurred. The Indemnifying
Party shall not be liable for any settlement of any such claim or action unless
the Indemnifying Party shall have consented thereto or be in default in its
obligations hereunder. Any failure by an Indemnified Party to comply with the
provisions of this Section shall relieve the Indemnifying Party of liability
only if such failure is prejudicial to the position of the Indemnifying Party
and then only to the extent of such prejudice.
Section 6. Contribution. (a) To provide for just and
equitable contribution if the indemnification provided by any Indemnifying
Party is determined to be unavailable for any Indemnified Party (other than
due to application of this Section), each Indemnifying Party shall contribute
to the Losses arising from any breach of any of its representations,
warranties or agreements contained in this Agreement in such proportion as is
appropriate to reflect (i) the benefits received by such Indemnifying Party
relative to the benefits received by the Indemnified Party 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
Indemnifying Party on the one hand and the Indemnified Party on the other in
connection with such Loss; provided, however, that an Indemnifying Party shall
in no event be required to contribute to all Indemnified Parties an aggregate
amount in excess of the Losses incurred by such Indemnified Parties resulting
from the breach of representations, warranties or agreements contained in this
Agreement.
(b) The relative fault of each Indemnifying Party, on the
one hand, and of each Indemnified Party, on the other, shall be determined by
reference to, among other things, whether the breach of, or alleged breach of,
any representations, warranties or agreements contained in this Agreement
relates to information supplied by, or action within the control of, the
Indemnifying Party or the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
breach.
<PAGE>
-7-
(c) The parties agree that Financial Security shall be
solely responsible for the Financial Security Information, the Underwriter
shall be solely responsible for the Underwriter Information and that, as and
to the extent provided in the Insurance Agreement, the balance of the Offering
Document shall be the responsibility of the Issuer.
(d) Notwithstanding anything in this Section 6 to the
contrary, the Underwriter shall not be required to contribute an amount
greater than the amount of total discount received by the Underwriter from the
Issuer set forth in the Underwriting Agreement.
(e) 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.
(f) Upon the incurrence of any Losses entitled to
contribution hereunder, the contributor shall reimburse the party entitled to
contribution promptly upon establishment by the party entitled to contribution
to the contributor of the Losses incurred.
(g) The provisions relating to contribution set forth in
this Section 6 do not limit the rights of any party to indemnification under
Section 4.
Section 7. Miscellaneous.
(a) Notices. All notices and other communications provided
for under this Agreement shall be delivered to the address set forth below or
to such other address as shall be designated by the recipient in a written
notice to the other party or parties hereto.
If to Financial Security:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Re: ABFS Equipment Contract Trust 1999-A
Equipment Contract Backed Notes, Class A-1, Class A-2,
Class A-3, Class A-4
If to the Issuer:
ABFS Equipment Contract Trust 1999-A
c/o First Union Trust Company, National Association
One Rodney Square
920 King Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
If to the Underwriter: Prudential Securities Incorporated
One New York Plaza
<PAGE>
-8-
New York, New York 10292
Attention: Managing Director, Asset-Backed Finance
Group
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(c) Assignments. This Agreement may not be assigned by any
party without the express written consent of each other party. Any assignment
made in violation of this Agreement shall be null and void.
(d) Amendments. Amendments to this Agreement shall be in
writing signed by each party hereto.
(e) Survival, Etc. The indemnity and contribution
agreements contained in this Agreement shall remain operative and in full
force and effect, regardless of (i) any investigation made by or on behalf of
any Indemnifying Party, (ii) the issuance of the Securities or (iii) any
termination of this Agreement or the Policy. The indemnification provided in
this Agreement will be in addition to any liability which the parties may
otherwise have and shall in no way limit any obligations of the Issuer or the
Underwriter under the Underwriting Agreement or the Insurance Agreement, as
applicable.
(f) Counterparts. This Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first above written.
FINANCIAL SECURITY ASSURANCE INC.
By:
Name:
Title:
ABFS EQUIPMENT CONTRACT TRUST 1999-A
By: First Union Trust Company,
National Association, not
in its individual capacity
but solely as owner trustee
of ABFS Equipment Contract
Trust 1999-A
By:
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
By
Name:
Title:
<PAGE>
EXHIBIT A
OPINION OF COUNSEL
Based upon the foregoing, I am of the opinion that:
1. Financial Security is a stock insurance company duly
organized, validly existing and authorized to transact financial guaranty
insurance business under the laws of the State of New York.
2. The Policy and the Agreements have been duly authorized,
executed and delivered by Financial Security.
3. The Policy and the Agreements constitute valid and binding
obligations of Financial Security, enforceable against Financial Security in
accordance with their terms, subject, as to the enforcement of remedies, to
bankruptcy, insolvency, reorganization, rehabilitation, moratorium and other
similar laws affecting the enforceability of creditors' rights generally
applicable in the event of the bankruptcy or insolvency of Financial Security
and to the application of general principles of equity and subject, in the
case of the Indemnification Agreement, to principles of public policy limiting
the right to enforce the indemnification provisions contained therein insofar
as they relate to indemnification for liabilities arising under applicable
securities laws.
4. The Policy is exempt from registration under the Securities
Act of 1933, as amended (the "Act").
5. Neither the execution or delivery by Financial Security of
the Policy or the Agreements, nor the performance by Financial Security of its
obligations thereunder, will conflict with any provision of the certificate of
incorporation or the by-laws of Financial Security or, to the best of my
knowledge, result in a breach of, or constitute a default under, any agreement
or other instrument to which Financial Security is a party or by which it or
any of its property is bound or, to the best of my knowledge, violate any
judgment, order or decree applicable to Financial Security of any governmental
or regulatory body, administrative agency, court or arbitrator having
jurisdiction over Financial Security (except that in the published opinion of
the Securities and Exchange Commission the indemnification provisions of the
Indemnification Agreement, insofar as they relate to indemnification for
liabilities arising under the Act, are against public policy as expressed in
the Act and are therefore unenforceable).
In addition, please be advised that I have reviewed the
description of Financial Security under the caption "The Note Insurer" in the
Prospectus Supplement dated June 24, 1999 (the "Offering Document") of the
Issuer with respect to the Securities. The information provided in the
Offering Document with respect to Financial Security is limited and does not
purport to provide the scope of disclosure required to be included in a
prospectus with respect to a registrant under the Act in connection with a
public offering and sale of securities of such registrant. Within such limited
scope of disclosure, however, there has not come to my attention any
information which would cause me to believe that the description of Financial
Security referred to above, as of the date of the Offering Document or as of
the date of this opinion, contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading (except that I express no opinion with respect to
any financial statements or other financial information contained or referred
to therein).
<PAGE>
Exhibit 4.1
INDENTURE
by and among
ABFS EQUIPMENT CONTRACT TRUST 1999-A,
as Issuer,
AMERICAN BUSINESS LEASING, INC.,
as Servicer,
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee and as Back-up Servicer
Dated as of June 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
ARTICLE I DEFINITIONS .........................................................................................1
SECTION 1.01 Definitions..............................................................................1
SECTION 1.02 Incorporation by Reference of the Trust Indenture Act....................................1
SECTION 1.03 General Interpretive Principles..........................................................1
SECTION 1.04 Conflict with TIA........................................................................2
ARTICLE II PLEDGE OF INITIAL PLEDGED PROPERTY; ORIGINAL ISSUANCE OF NOTES; CONVEYANCE OF SUBSEQUENT
CONTRACTS................................................................................2
SECTION 2.01 Pledge of Pledged Property...............................................................2
SECTION 2.02 Indenture Trustee to Act as Custodian....................................................3
SECTION 2.03 Conditions to Closing....................................................................3
SECTION 2.04 Acceptance by Indenture Trustee..........................................................5
SECTION 2.05 Conveyance and Acceptance of Subsequent Contracts........................................5
SECTION 2.06 Liabilities of the Trust and Parties to this Indenture; Limitations Thereon..............6
SECTION 2.07 Intended Tax Characterization............................................................7
SECTION 2.08 Originator or Affiliates as Noteholders..................................................8
ARTICLE III ACCOUNTS; ALLOCATION AND APPLICATION OF THE TRUST PROPERTY.........................................8
SECTION 3.01 Collection Account; Pre-Funding Account; Capitalized Interest Account....................8
SECTION 3.02 Investment of Monies Held in the Accounts; Subaccounts..................................11
SECTION 3.03 The Note Insurance Policy...............................................................11
SECTION 3.04 Disbursements From Collection Account...................................................13
SECTION 3.05 Statements to Noteholders...............................................................17
SECTION 3.06 Compliance With Withholding Requirements................................................19
ARTICLE IV ........................................................................................19
ARTICLE IV REMOVAL OF NON-CONFORMING PLEDGED PROPERTY; SUBSTITUTION OF CONTRACTS..............................19
SECTION 4.01 Removal of Non-Conforming Pledged Property..............................................19
SECTION 4.02 Substitution of Contracts...............................................................19
SECTION 4.03 Release of Trust Property...............................................................21
ARTICLE V THE NOTES ........................................................................................21
SECTION 5.01 The Notes...............................................................................21
SECTION 5.02 Initial Issuance of Notes...............................................................23
SECTION 5.03 Registration of Transfer and Exchange of Notes..........................................23
SECTION 5.04 Mutilated, Destroyed, Lost or Stolen Notes..............................................24
SECTION 5.05 Persons Deemed Owners...................................................................25
SECTION 5.06 Access to List of Noteholders' Names and Addresses......................................25
SECTION 5.07 Acts of Noteholders.....................................................................25
SECTION 5.08 No Proceedings..........................................................................26
ARTICLE VI THE TRUST ........................................................................................26
</TABLE>
<PAGE>
<TABLE>
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SECTION 6.01 Liability of the Trust..................................................................26
SECTION 6.02 Limitation on Liability of the Trust....................................................26
SECTION 6.03 Indemnity for Liability Claims..........................................................26
SECTION 6.04 Liabilities.............................................................................27
SECTION 6.05 [Reserved]..............................................................................27
SECTION 6.06 Annual Statement as to Compliance.......................................................27
SECTION 6.07 Payment of Principal and Interest.......................................................27
SECTION 6.08 Maintenance of Office or Agency.........................................................27
SECTION 6.09 Money for Payments to be Held in Trust..................................................27
SECTION 6.10 Existence...............................................................................29
SECTION 6.11 Protection of Trust Property............................................................29
SECTION 6.12 Performance of Obligations; Servicing of Receivables....................................30
SECTION 6.13 Negative Covenants......................................................................31
SECTION 6.14 Trust May Consolidate, Etc. Only on Certain Terms.......................................31
SECTION 6.15 Successor or Transferee.................................................................33
SECTION 6.16 No Other Business.......................................................................33
SECTION 6.17 No Borrowing............................................................................33
SECTION 6.18 Guarantees, Loans, Advances and Other Liabilities.......................................34
SECTION 6.19 Capital Expenditures....................................................................34
SECTION 6.20 Compliance with Laws....................................................................34
SECTION 6.21 Further Instruments and Acts............................................................34
ARTICLE VII THE INDENTURE TRUSTEE.............................................................................34
SECTION 7.01 Duties of Indenture Trustee.............................................................34
SECTION 7.02 Eligible Investments....................................................................36
SECTION 7.03 Indenture Trustee's Assignment of Contracts.............................................36
SECTION 7.04 Certain Matters Affecting the Indenture Trustee.........................................36
SECTION 7.05 Indenture Trustee Not Liable for Notes or Contracts.....................................38
SECTION 7.06 Indenture Trustee May Own Notes.........................................................38
SECTION 7.07 Indenture Trustee's Fees and Expenses...................................................39
SECTION 7.08 Eligibility Requirements for Indenture Trustee..........................................39
SECTION 7.09 Preferential Collection of Claims Against Issuer........................................40
SECTION 7.10 Resignation or Removal of Indenture Trustee.............................................40
SECTION 7.11 Successor Indenture Trustee.............................................................41
SECTION 7.12 Merger or Consolidation of Indenture Trustee............................................42
SECTION 7.13 Appointment of Co-Indenture Trustee or Separate Indenture Trustee.......................42
SECTION 7.14 Indenture Trustee May Enforce Claims Without Possession of Note.........................44
SECTION 7.15 Suits for Enforcement...................................................................44
SECTION 7.16 Undertaking for Costs...................................................................44
SECTION 7.17 Representations and Warranties of Indenture Trustee.....................................44
SECTION 7.18 Tax Returns.............................................................................45
ARTICLE VIII EVENTS OF DEFAULT; REMEDIES......................................................................45
SECTION 8.01 Events of Default.......................................................................45
SECTION 8.02 Acceleration of Maturity, Rescission and Annulment......................................47
SECTION 8.03 Remedies................................................................................48
SECTION 8.04 Notice of Event of Default..............................................................48
SECTION 8.05 Exercise of Power by Indenture Trustee..................................................48
SECTION 8.06 Indenture Trustee May File Proofs of Claim..............................................48
SECTION 8.07 Allocation of Money Collected...........................................................49
SECTION 8.08 Waiver of Events of Default.............................................................50
</TABLE>
ii
<PAGE>
<TABLE>
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SECTION 8.09 Limitation On Suits.....................................................................50
SECTION 8.10 Unconditional Right of Noteholders to Receive Principal and Interest....................51
SECTION 8.11 Restoration of Rights and Remedies......................................................51
SECTION 8.12 Rights and Remedies Cumulative..........................................................51
SECTION 8.13 Delay or Omission Not Waiver............................................................51
SECTION 8.14 Control by Controlling Parties..........................................................52
SECTION 8.15 Sale of Pledged Property................................................................52
SECTION 8.16 Action on Notes.........................................................................52
ARTICLE IX TERMINATION........................................................................................53
SECTION 9.01 Termination of Obligations and Responsibilities.........................................53
SECTION 9.02 Optional Redemption of Notes; Final Disposition of Funds................................53
ARTICLE X Noteholders' Lists and Reports......................................................................54
SECTION 10.01 Trust To Furnish To Indenture Trustee Names and Addresses of Noteholders................54
SECTION 10.02 Preservation of Information; Communications to Noteholders..............................55
SECTION 10.03 Reports by Trust........................................................................55
SECTION 10.04 Reports by Indenture Trustee............................................................55
SECTION 10.05 Compliance Certificates and Opinions, etc...............................................56
ARTICLE XI MISCELLANEOUS PROVISIONS...........................................................................56
SECTION 11.01 Amendment...............................................................................56
SECTION 11.02 Conformity With Trust Indenture Act.....................................................57
SECTION 11.03 Limitation on Rights of Noteholders.....................................................57
SECTION 11.04 Counterparts............................................................................58
SECTION 11.05 GOVERNING LAW...........................................................................58
SECTION 11.06 Notices.................................................................................58
SECTION 11.07 Severability of Provisions..............................................................58
SECTION 11.08 Conflict with Trust Indenture Act.......................................................59
SECTION 11.09 Third Party Beneficiary.................................................................59
SECTION 11.10 Assignment..............................................................................59
SECTION 11.11 Binding Effect..........................................................................59
SECTION 11.12 Survival of Agreement...................................................................59
SECTION 11.13 Captions................................................................................59
SECTION 11.14 Exhibits................................................................................59
SECTION 11.15 Calculations............................................................................59
SECTION 11.16 No Proceedings..........................................................................60
Annex A - Defined Terms
</TABLE>
iii
<PAGE>
EXHIBITS
Exhibit A - Form of Indenture Trustee's Acknowledgement of Receipt
Exhibit B - Form of Wiring Instructions
Exhibit C - Form of Class A Notes
Exhibit D - Form of Class B Notes
Exhibit E - Form of Transferee Certification (Non-144A)
Exhibit F - Form of Transferee Certification (144A QIB)
Exhibit G - Form of Transferee Certification (Investment Company)
Exhibit H - Form of Instrument of Transfer
Exhibit I - Form of Assignment
Exhibit J - Form of Note Insurer Consent for Subsequent Contracts
iv
<PAGE>
ABFS EQUIPMENT CONTRACT TRUST 1999-A
Reconciliation and Tie between the Indenture,
dated as of June 1, 1999, and the
Trust Indenture Act of 1939, as amended
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
--------------------------- -----------------
<S> <C>
Section 310(a)(1) Section 7.08
(a)(2) 7.08
(a)(3) 7.13
(a)(4) Not Applicable
(b) 7.08; 7.10
(c) Not Applicable
311(a) 7.09
(b) 7.09
312(a) 10.02
(b) 10.02
(c) 10.02
313(a) 10.04
(b)(1) 10.02; 10.04; 4.01; 4.02; 4.03
(b)(2) 10.04
(c) 10.04
(d) 10.04
314(a) 10.03; 3.05; 6.06
(b) Not Applicable
(c)(1) 10.05
(c)(2) 10.05
(c)(3) Not Applicable
(d) Not Applicable
(e) 10.05
(f) Not Applicable
315(a) 7.01; 7.05
(b) 8.04
(c) 8.05
(d) 7.01
(e) 7.01
316(a) (last sentence) 2.07
(a)(1)(A) 7.17
(a)(1)(B) 8.06
317(a)(1) 8.03
(a)(2) 8.04
(b) 6.09
318(a) 11.09
(c) 11.09
</TABLE>
<PAGE>
This INDENTURE, dated as of June 1, 1999 (this "Indenture"),
is made by and among ABFS Equipment Contract Trust 1999-A, a Delaware business
trust, as issuer (the "Issuer" or the "Trust"), American Business LEASING,
Inc., a Pennsylvania corporation, as servicer (the "Servicer"), and THE BANK
OF NEW YORK, a New York banking corporation, not in its individual capacity
but solely as the indenture trustee (the "Indenture Trustee") and as back-up
servicer (the "Back-up Servicer").
WITNESSETH:
In consideration of the mutual agreements herein contained,
and of other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Capitalized terms used and
not defined herein shall have the meanings specified in Annex A hereto.
SECTION 1.02 Incorporation by Reference of the Trust
Indenture Act. Whenever this Indenture refers to a 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.
All other TIA terms used in this Indenture that are defined
by the TIA, or defined by Commission rule have the meaning assigned to them by
such definitions.
SECTION 1.03 General Interpretive Principles. For
purposes of this Indenture except as otherwise expressly provided or unless
the context otherwise requires:
(a) the terms defined in this Indenture have the
meanings assigned to them in this Indenture and include the plural as
well as the singular, and the use of any gender herein shall be deemed
to include the other gender;
<PAGE>
(b) accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP as in effect on
the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "Paragraphs" and other subdivisions without reference
to a document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Indenture;
(d) a reference to a Subsection without further
reference to a Section is a reference to such Subsection as contained
in the same Section in which the reference appears, and this rule
shall also apply to Paragraphs and other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
SECTION 1.04 Conflict with TIA. If any provision hereof
limits, qualifies or conflicts with a provision of the TIA that is required
under the TIA to be part of and govern this Indenture, the latter provision
shall control and all provisions required by the TIA are hereby incorporated
by reference. If any provision of this Indenture modifies or excludes any
provision of the TIA that may be so modified or excluded, the latter provisions
shall be deemed to apply to this Indenture as so modified or to be excluded,
as the case may be.
ARTICLE II
PLEDGE OF INITIAL PLEDGED PROPERTY;
ORIGINAL ISSUANCE OF NOTES;
CONVEYANCE OF SUBSEQUENT CONTRACTS
SECTION 2.01 Pledge of Pledged Property. The Trust,
simultaneously with the execution and delivery of this Indenture, does hereby
pledge, deposit, transfer, assign, and otherwise grant to the Indenture Trustee,
to be held in trust for the benefit of the Noteholders and the Note Insurer, as
their interests may appear as provided in this Indenture, all the right, title,
and interest of the Trust in and to (1) the Pledged Notes, (2) the Note
Insurance Policy, (3) all Eligible Investments and all other amounts on deposit
in the Pre-Funding Account and the Capitalized Interest Account, and (4) an
assignment of the Trust's security interest in all of the following items that
have been pledged as collateral security for the Pledged Notes: (a) the security
interest or any ownership interest of the Transferors in the Equipment, (b) the
Contracts, including, without limitation, all Actual Payments and any other
payments due or made with respect to the Contracts after the Cut-Off Date
relating to such Contracts, (c) any guarantees of an Obligor's obligations under
a Contract, (d) all other documents in the Contract Files relating to the
Contracts, including, without limitation, any UCC financing statements related
to the Contracts or the Equipment, (e) any Insurance Policies and Insurance
Proceeds with respect to the Contracts, (f) the Receivables Pledge Agreement,
the Receivables Sale Agreement and the Servicing Agreement, each as executed and
delivered in accordance therewith, (g) all Eligible Investments and all other
amounts on deposit in the Collection Account held by the Indenture
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Trustee, (i) all Source Agreements and Source Agreement Rights to the extent
they relate to any Contract and any Equipment covered by the Contracts, and (j)
any and all income and proceeds of any of the foregoing (the property and
interests in (1) through (4) above, collectively, constituting the "Pledged
Property"); provided, however, that the pledge, transfer and assignment effected
by this Section 2.01 shall not include the Initial Unpaid Amounts relating
thereto.
This Indenture is a security agreement within the meaning of
Article 8 and Article 9 of the Uniform Commercial Code as in effect in the
State of New York and the Commonwealth of Pennsylvania. The pledge provided
for in this Section 2.01 is intended by the Trust to be a grant by the Trust
to the Indenture Trustee, on behalf of the Noteholders and the Note Insurer,
of a valid first priority perfected security interest in all of the Trust's
right, title and interest in and to the Pledged Property,
SECTION 2.02 Indenture Trustee to Act as Custodian. The
executed original counterpart of each Contract, together with the other
documents or instruments, if any, which constitute a part of a Contract File,
shall be held by the Indenture Trustee, as bailee for the benefit of the
Noteholders and the Note Insurer.
SECTION 2.03 Conditions to Closing. As conditions to the
execution, authentication and delivery of the Notes by the Indenture Trustee and
the sale of the Notes by the Indenture Trustee (by issuance thereof by the
Indenture Trustee upon the Trust's instructions) on the Closing Date, (a) the
Issuer shall have received by wire transfer the net proceeds of sale of the
Class A Notes and the Class B Notes in authorized denominations equal in the
aggregate to the Initial Class A Note Principal Balance and the Initial Class B
Note Principal Balance, and (b) each of the Indenture Trustee and the Note
Insurer shall have received the following on or before the Closing Date:
(i) The List of Initial Contracts, certified by the
President, any Senior Vice President, any Vice President or any
Assistant Vice President of the Servicer;
(ii) Copies of a written consent of the members for each
of the Transferors approving the execution, delivery and performance of
the Transaction Documents to which it is a party and the transactions
contemplated hereby and thereby, certified by a Secretary or an
Assistant Secretary of the Managing Member of such Transferor;
(iii) A copy of an officially certified document, dated
not more than thirty (30) days prior to the Closing Date, evidencing
the due organization and good standing of each Transferor in the State
of Delaware;
(iv) Delivery of the executed Financing Statements with
respect to the Contracts, in accordance with the Filing Requirements,
prepared for filing;
(v) A certificate listing the Servicing Officers as of
the Closing Date;
(vi) Executed copies of the Transaction Documents in
form and substance acceptable to the Note Insurer;
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(vii) Copies of resolutions of the Board of Directors of
each of the Originator approving the execution, delivery and
performance of the Transaction Documents to which it is a party and the
transactions contemplated hereby and thereby, certified by a Secretary
or an Assistant Secretary of the Originator;
(viii) Copies of officially certified documents, dated not
more than thirty (30) days prior to the Closing Date, evidencing the
due organization and good standing of (x) ABL in the Commonwealth of
Pennsylvania and (y) Federal Leasing in the State of New Jersey;
(ix) An executed Note Insurance Policy;
(x) A custody receipt, substantially in the form of
Exhibit A hereto, pursuant to which the Indenture Trustee certifies
that it has received (a) a Contract File with respect to each Contract
on the List of Contracts and (b) the Pledged Notes;
(xi) All Necessary Consents;
(xii) A letter from Moody's that it has assigned a rating
of "Aaa" to the Class A Notes;
(xiii) A letter from S&P that it has assigned a rating of
"AAA" to the Class A Notes;
(xiv) A letter from DCR that it has assigned a rating of
at least "BBB" to the Class B Notes; and
(xv) Opinions of counsel to the Originator, the
Transferors and the Servicer, in form and substance acceptable to the
Indenture Trustee and the Note Insurer, covering such matters as the
Indenture Trustee or the Note Insurer may reasonably request including,
without limitation, opinions concerning nonconsolidation, true sale,
security interest, Federal tax and general corporate matters;
and (c) the Note Insurer shall have received in writing on or before the
Closing Date the following:
(i) Acknowledgement by the Back-up Servicer that it and
the Servicer have agreed to a format pursuant to which data will be
received;
(xvi) An opinion of counsel to the Back-up Servicer, dated
as of the Closing Date, as to the due authorization, execution and
delivery of the Servicing Agreement by the Back-up Servicer; and
(xvii) An officer's certificate from a responsible officer
of the Back-up Servicer, dated as of the Closing Date, to the effect
that (i) the representations and warranties contained in Section 2.03
of the Servicing Agreement are true and correct in all material
respects as of the Closing Date and (ii) no Event of Back-up Servicing
Termination exists.
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SECTION 2.04 Acceptance by Indenture Trustee. The
Indenture Trustee acknowledges its acceptance, simultaneously with the execution
and delivery of this Indenture, of all right, title and interest in and to the
Pledged Property on behalf of the Noteholders and the Note Insurer, and declares
that the Indenture Trustee holds and will hold such right, title and interest
for the benefit of all present and future Noteholders and the Note Insurer, for
the use and purpose and subject to the terms and provisions of this Indenture.
The Trust hereby (x) appoints the Indenture Trustee as the Trust's
attorney-in-fact with all power independently to enforce all of the Trust's
rights against the Originator, the Transferors, the Source(s) and the Servicer
hereunder, under the Transfer Agreements, the Source Agreements and under the
Servicing Agreement, as applicable, and (y) directs the Indenture Trustee to
enforce such rights. The Indenture Trustee hereby accepts such appointment and
agrees to enforce such rights.
SECTION 2.05 Conveyance and Acceptance of Subsequent
Contracts. (a) From time to time the Transferors will, not less than five (5)
Business Days prior to each Subsequent Funding Date, deliver to the Note Insurer
and the Indenture Trustee a List of Subsequent Contracts that are scheduled to
be acquired by the Transferors, pledged by the Transferors to the Indenture
Trustee, on behalf of the Issuer, and such security interest to be assigned by
the Issuer to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, which Subsequent Contracts shall satisfy the requirements set
forth in Section 2.05(c). If any of the Subsequent Contracts included on such
List of Subsequent Contracts are not approved by the Note Insurer, the
Transferors may, not less than two (2) Business Days prior to the related
Subsequent Funding Date on or prior to the Funding Termination Date, deliver
another Contract which has been approved by the Note Insurer.
(b) Subject to the conditions set forth in Section
2.05(c), in consideration of the Indenture Trustee's delivery to, or at the
order of, the Transferors on the related Subsequent Funding Date, upon the order
of the Servicer, with the prior written consent of the Note Insurer in the form
of Exhibit J hereto, all or a portion of the Pre-Funded Amount in an amount
equal to 95% of the aggregate Discounted Contract Principal Balance of each
Subsequent Contract to be acquired on such Subsequent Funding Date, (a) the
Transferors shall, on each Subsequent Funding Date, pledge to the Indenture
Trustee, on behalf of the Issuer, all right, title and interest of such
Transferor in and to, and (b) the Issuer shall, on each Subsequent Funding Date,
assign to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, all rights, and interests of the Issuer in and to, in each case, (x)
each Subsequent Contract listed on the List of Subsequent Contracts delivered to
the Note Insurer and the Indenture Trustee (including all Scheduled Payments due
thereunder), (y) the security interest or ownership interest in the related
Equipment and (z) the items listed in clauses (c), (d), (e), (i) and (j) of
Section 2.01, with respect to the Subsequent Contracts.
(c) The Issuer agrees that any pledge of Subsequent
Contracts shall satisfy the following conditions:
(i) On or prior to the related Subsequent Funding Date,
the Issuer shall have delivered to the Indenture Trustee an Assignment
(and the Indenture Trustee shall have accepted such Assignment on
behalf of the Note Insurer and the Noteholders) in substantially the
form of Exhibit I attached hereto;
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(ii) The Note Insurer shall have approved in writing the
pledge to the Trust of such Subsequent Contracts, such approval to be
evidenced conclusively by the receipt by the Indenture Trustee on the
related Subsequent Funding Date of a written consent of the Note
Insurer, substantially in the form of Exhibit J attached hereto;
(iii) The Indenture Trustee shall have received a written
direction of the Servicer authorizing the Indenture Trustee to release
from the Pre-Funding Account and pay to, or at the direction of, the
Transferors, an amount equal to 95% of the aggregate Discounted
Contract Principal Balances of all Subsequent Contracts (calculated as
of the related Subsequent Funding Date) to be pledged to the Trust, and
pledged to the Indenture Trustee, for the benefit of the Noteholders
and the Note Insurer, on such Subsequent Funding Date;
(iv) The Indenture Trustee and the Note Insurer shall
have received the List of Subsequent Contracts with respect to the
related Subsequent Contracts together with the item listed in Section
2.03(b)(x) hereof with respect to the Subsequent Contracts;
(v) The Issuer shall have caused to be delivered to the
Indenture Trustee and the Note Insurer, Opinions of Counsel with
respect to the pledge to the Indenture Trustee, on behalf of the
Issuer, of the Subsequent Contracts on such Subsequent Funding Date,
substantially in the form of the respective Opinions of Counsel
delivered on the Closing Date pursuant to Section 2.03(b)(xv);
(vi) Each Subsequent Contract shall be a Contract, with
respect to which all of the representations and warranties set forth in
Section 2.02 of the Servicing Agreement were true as of the related
Subsequent Cut-Off Date;
(vii) As of the related Subsequent Cut-Off Date, none of
the Subsequent Contracts then being pledged shall have a final
scheduled payment date later than twelve months before the Class A
Maturity Date;
(viii) No selection process believed by the Transferors and
the Issuer to be materially adverse to the interests of the Noteholders
or the Note Insurer was used in selecting the Subsequent Contracts; and
(ix) Such pledge shall not occur after the Funding
Termination Date.
(d) Upon the release of the funds from the Pre-Funding
Account as described in Section 2.05(c)(iii) above, the Indenture Trustee shall
pay over such funds to the Transferors or their respective assigns, in
consideration for the related Subsequent Receivables, which the Transferors
shall have simultaneously acquired from the Originator pursuant to the
Subsequent Receivables Sale Agreement, and pledged to the Trust pursuant to the
Subsequent Receivables Pledge Agreement.
SECTION 2.06 Liabilities of the Trust and Parties
to this Indenture; Limitations Thereon. (a) The obligations evidenced by the
Notes provide recourse only to the Trust Property and provide no recourse
against the Originator, the Transferors, the Depositor, the
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Servicer, the Indenture Trustee, the Owner Trustee or any other Person, other
than the Note Insurer pursuant to the Note Insurance Policy.
(b) None of the Originator, the Transferors, the
Depositor, the Servicer, the Back-up Servicer or any other Person shall be
liable to the Indenture Trustee or the Noteholders except as provided in Article
VI hereof and Sections 5.01, 5.03, 5.05 and 5.07 of the Servicing Agreement and
Section 6.03 of the Receivables Sale Agreement and the Receivables Pledge
Agreement. Without limiting the generality of the foregoing, if any Obligor
fails to pay any Scheduled Payment, Final Scheduled Payment, or other amounts
due under a Contract, then none of the Indenture Trustee, the Noteholders or the
Note Insurer will have any recourse against the Originator, the Transferors, the
Depositor, or the Servicer for such Scheduled Payment, Final Scheduled Payment,
other amounts due under the Contract or any losses, damages, claims, liabilities
or expenses incurred by the Indenture Trustee, any Noteholder or the Note
Insurer as a direct or indirect result thereof, except as may be provided for in
Article VI hereof and Sections 5.01, 5.03, 5.05 and 5.07 of the Servicing
Agreement and Section 6.03 of the Receivables Sale Agreement and the Receivables
Pledge Agreement.
(c) The Indenture Trustee agrees that in the event of a
default by an Obligor under the terms of a Contract, which default is not cured
within any applicable cure period set forth in such Contract, the Indenture
Trustee, the Noteholders and the Note Insurer shall be expressly limited to the
sources of payment specified herein. In addition, the Indenture Trustee shall
have the right to exercise the rights of the Originator under the Contract, the
Insurance Policies and any document in the Contract File in the name of the
Indenture Trustee, the Noteholders and the Note Insurer, either directly or
through the Servicer as agent, and the Indenture Trustee is hereby directed by
the Trust to exercise such rights; provided, however, that the Indenture Trustee
shall not be required to take any action pursuant to this Section 2.06(c) except
upon written instructions from the Servicer or the Note Insurer (unless a Note
Insurer Default has occurred and is continuing). A carbon, photographic or other
reproduction of this Indenture or any financing statement is sufficient as a
financing statement in any State.
(d) The pledge of the Pledged Property by the Issuer
pursuant to this Indenture does not constitute and is not intended to result in
an assumption by the Indenture Trustee, the Trust, the Note Insurer, or any
Noteholder of any obligation (except for the obligation not to disturb an
Obligor's right of quiet enjoyment) of the Originator or the Servicer to any
Obligor or other Person in connection with the Equipment, the Contracts, the
Insurance Policies or any document in the Contract Files.
SECTION 2.07 Intended Tax Characterization. The parties
hereto agree that it is their mutual intent that, for all applicable tax
purposes, the Class A Notes and the Class B Notes shall constitute indebtedness
and that for all applicable tax purposes, accordingly, the Trust shall be
treated as sole and exclusive owner of the Pledged Property. Further, each party
hereto, and each Noteholder (by receiving and holding a Note), hereby covenants
to every other party hereto and the Noteholders to treat the Class A Notes and
the Class B Notes as indebtedness for all applicable tax purposes in all tax
filings, reports and returns and otherwise, and further covenants that neither
it nor any of its Affiliates will take or participate in the taking of, or
permit to be taken, any action that is inconsistent with the treatment of the
Class A Notes
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or of the Class B Notes as indebtedness for tax purposes. All successors and
assigns of the parties hereto shall be bound by the provisions hereof.
SECTION 2.08 Originator or Affiliates as Noteholders.
In determining whether the Noteholders of the required outstanding Percentage
Interests have concurred in any direction, waiver or consent, Notes owned by the
Originator, any other obligor upon the Notes or an Affiliate of the Originator
shall be considered as though not outstanding, except that for the purposes of
determining whether the Indenture Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes which a Responsible Officer of the
Indenture Trustee actually knows are so owned shall be so disregarded.
ARTICLE III
ACCOUNTS; ALLOCATION AND APPLICATION OF
THE TRUST PROPERTY
SECTION 3.01 Collection Account; Pre-Funding Account;
Capitalized Interest Account.
(a) The Collection Account.
(i) The Indenture Trustee shall establish and
maintain the Collection Account for the benefit of the Trust, as an
Eligible Bank Account, in the name of "ABFS Equipment Contract Trust
1999-A Collection Account, in trust for the benefit of the ABFS
Equipment Contract Trust 1999-A." At the Servicer's written
direction, the Indenture Trustee shall make withdrawals from the
Collection Account only as provided in the Receivables Pledge
Agreement in respect of payments on the Pledged Notes, and the
Indenture Trustee shall apply the proceeds of such payments to
make the disbursements set forth in Section 3.04(b) of this
Indenture. The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Collection
Account and all proceeds thereof. The Collection Account shall be
under the sole dominion and control of the Indenture Trustee, for
the benefit of the Trust.
(ii) At the times indicated in this Section
3.01(a)(ii) or in Section 3.01(a)(iii) below, the following amounts
(net of Excluded Amounts) shall be deposited in the Collection Account
in immediately available funds:
(A) The Servicer shall deposit or cause to
be deposited the aggregate amounts of Actual Payments;
(B) The Servicer shall deposit the
aggregate Servicer Advances payable pursuant to Section 4.03
of the Servicing Agreement;
(C) The Servicer shall deposit any
Reacquisition Amounts payable by it under the Servicing
Agreement, or by the Originator pursuant to Section 4.01
hereof;
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(D) The Indenture Trustee shall deposit
Investment Earnings (including, without limitation,
Pre-Funding Earnings), as described in Section 3.02(a)
hereof;
(E) The Indenture Trustee shall transfer
from the Capitalized Interest Account, the Capitalized
Interest Requirement, if any, with respect to each Payment
Date occurring during the Pre-Funding Period; and
(F) The Indenture Trustee shall deposit
the amount, if any, received by the Indenture Trustee as a
result of a drawing on the Note Insurance Policy pursuant to
Section 3.03(a) hereof.
(iii) The Servicer shall so transfer the aggregate amount
of Actual Payments to the Collection Account no later than two (2)
Business Days after the Servicer's receipt of such amount and
determination that such amounts relate to the Contracts, but in no
event later than three (3) Business Days following receipt thereof. The
Servicer shall so deposit the aggregate amount of Servicer Advances no
later than the related Determination Date. Except as otherwise
expressly set forth, any other deposits and transfers of funds to be
made pursuant to this Section 3.01(a) shall be made no later than the
third Business Day immediately preceding the related Payment Date.
(iv) Notwithstanding the foregoing, the Servicer may
deduct from amounts otherwise payable to the Collection Account amounts
previously deposited by the Servicer into the Collection Account but
(i) subsequently uncollectable as a result of dishonor of the
instrument of payment for or on behalf of the Obligor or (ii) later
determined to have resulted from mistaken deposits.
(b) The Pre-Funding Account.
(i) The Indenture Trustee shall establish and maintain
the Pre-Funding Account for the benefit of the Note Insurer and the
Noteholders, as an Eligible Bank Account, in the name of "ABFS
Equipment Contract Trust 1999-A Pre-Funding Account, in trust for
the benefit of the registered holders of Equipment Contract-Backed
Notes and the Note Insurer." At the Servicer's written direction,
the Indenture Trustee shall make withdrawals from the Pre-Funding
Account only as provided in Section 2.05 of this Indenture. The
Indenture Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Pre-Funding Account and all
proceeds thereof. The Pre-Funding Account shall be under the sole
dominion and control of the Indenture Trustee, for the benefit of
the Noteholders and the Note Insurer.
(ii) On the Closing Date, the Indenture Trustee shall
deposit, on behalf of the Noteholders and the Note Insurer, in the
Pre-Funding Account, the Original Pre-Funded Amount; provided, that the
Original Pre-Funded Amount shall not exceed 30% of the Initial
Aggregate Collateral Balance.
(iii) The Indenture Trustee shall withdraw and distribute
or cause to be distributed the following moneys held in the Pre-Funding
Account at the times
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specified, based on written instructions provided by the Servicer or
other party as indicated:
(A) On any Subsequent Funding Date, the
Servicer may instruct the Indenture Trustee to withdraw from
amounts on deposit in the Pre-Funding Account an amount
equal to 95% of the aggregate Discounted Contract Principal
Balances (as of the Subsequent Cut-Off Date) of all
Subsequent Contracts (which Subsequent Contracts have been
approved in writing by the Note Insurer) to be pledged to
the Trust on such Subsequent Funding Date and pay such
amount to, or at the direction of, the Transferors as an
additional advance of funds on the Pledged Notes;
(B) On each Payment Date through and
including the Payment Date immediately following the last
Subsequent Funding Date (or, if the last Subsequent Funding
Date is also a Payment Date, then on the last Subsequent
Funding Date), the Indenture Trustee shall transfer from the
Pre-Funding Account to the Collection Account the
Pre-Funding Earnings, if any, applicable to each such
Payment Date; and
(C) If all or any portion of the
Pre-Funded Amount remains in the Pre-Funding Account on the
Payment Date which immediately follows the Funding
Termination Date (or, in the event that the Funding
Termination Date is a Payment Date, then on such Payment
Date), the Indenture Trustee shall withdraw from the
Pre-Funding Account on such Payment Date the remaining
Pre-Funded Amount and shall distribute (a) the Class A
Accelerated Percentage of such amount to the Class A
Noteholders, as a prepayment of principal on the Class A
Notes and (b) the Class B Accelerated Percentage of such
amount to the Class B Noteholders, as a prepayment of
principal on the Class B Notes.
(c) The Capitalized Interest Account.
(i) The Indenture Trustee shall establish and
maintain the Capitalized Interest Account for the benefit of the Note
Insurer and the Noteholders, as an Eligible Bank Account, in the name
of "ABFS Equipment Contract Trust 1999-A Capitalized Interest Account,
in trust for the benefit of the registered holders of Equipment
Contract-Backed Notes and the Note Insurer." At the Servicer's written
direction, the Indenture Trustee shall make withdrawals from the
Capitalized Interest Account only as provided in Section 3.01(c)(ii) of
this Indenture. The Indenture Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the
Capitalized Interest Account and all proceeds thereof. The Capitalized
Interest Account shall be under the sole dominion and control of the
Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer.
(ii) On the Closing Date, the Indenture Trustee
will deposit from the proceeds of the sale of the Class A Notes and the
Class B Notes, the Capitalized Interest Account Deposit in the
Capitalized Interest Account. On each Payment Date occurring during the
Pre-Funding Period only, the Indenture Trustee shall transfer from the
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Capitalized Interest Account to the Collection Account the Capitalized
Interest Requirement, if any, for such Payment Date; provided that
such amounts will be used only to pay (A) interest on the Notes and
(B) the Premium Amount payable on such Payment Date. Any amount
remaining on deposit in the Capitalized Interest Account on the
Payment Date immediately following the end of the Pre-Funding Period
(after taking into account any transfer to be made from the Capitalized
Interest Account to the Collection Account on such Payment Date)
shall be released by the Indenture Trustee to the Transferors (in
proportion to the percentage of the Conveyed Assets held by each
Transferor), and the Capitalized Interest Account shall thereafter be
closed.
SECTION 3.02 Investment of Monies Held in the Accounts;
Subaccounts. (a) The Servicer shall direct the Indenture Trustee in writing to
invest the amounts in any Account in Eligible Investments that mature not later
than the Business Day immediately preceding the next Payment Date following the
investment of such amounts. Eligible Investments shall not be sold or disposed
of prior to their maturities. Investment Earnings on amounts held in any Account
shall be deposited in the Collection Account as earned. The amount of any
Insured Payment shall be held uninvested.
(b) The Indenture Trustee and the Servicer may, from
time to time and in connection with the administration of any Account, establish
and maintain with the Indenture Trustee one or more sub-accounts of any of the
Accounts, as the Indenture Trustee, the Note Insurer and/or the Servicer may
consider useful.
SECTION 3.03 The Note Insurance Policy. (a) On each
Determination Date, the Servicer shall determine with respect to the immediately
following Payment Date, the amounts to be on deposit in the Collection Account
on such Determination Date with respect to the immediately preceding Collection
Period and equal to the total of (x) Available Funds with respect to such
Collection Period, minus (y) the Trust Operating Expenses (the "Available
Distribution Amount"), and shall inform the Indenture Trustee in writing no
later than 10:00 a.m., New York City time, on such Determination Date of the
results of such determination.
(b) If the Class A Insured Distribution Amount for any
Payment Date exceeds the Available Distribution Amount for such Payment Date
(such event being an "Available Funds Shortfall"), the Indenture Trustee shall
complete a Notice in the form of Exhibit A to the Note Insurance Policy and
submit such notice to the Note Insurer via facsimile transmission no later than
12:00 noon New York City time on the second Business Day preceding such Payment
Date as a claim for an Insured Payment in an amount equal to such Available
Funds Shortfall.
(c) Upon receipt of Insured Payments from the Note
Insurer, the Indenture Trustee shall immediately deposit such Insured Payments
in the Collection Account pursuant to Section 3.01(a)(ii)(F) and shall
distribute such Insured Payments, or the proceeds thereof, in accordance with
Section 3.04 hereof to the Class A Noteholders exclusively. The parties hereto
recognize that the making of an Insured Payment does not relieve any of the
parties hereto of any obligation hereunder or under any of the Transaction
Documents.
(d) The Indenture Trustee shall (x) receive Insured
Payments as attorney-in-fact of each of the Class A Noteholders and (y) disburse
such Insured Payment to the Class A
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Noteholders as set forth in Section 3.04 hereof. The Note Insurer shall be
entitled to receive the related Reimbursement Amount pursuant to Sections
3.04(b)(xi) hereof with respect to each Insured Payment made by the Note
Insurer. The Trust hereby agrees for the benefit of the Note Insurer (and each
Noteholder, by acceptance of its Notes, will be deemed to have agreed) that to
the extent the Note Insurer makes Insured Payments, either directly or
indirectly (as by paying through the Indenture Trustee), to the Class A
Noteholders, the Note Insurer will be entitled to receive the related
Reimbursement Amount pursuant to Sections 3.04(b)(xi) hereof.
(e) The Class A Notes will be insured by the Note
Insurance Policy pursuant to the terms set forth therein, notwithstanding any
provisions to the contrary contained in this Indenture. All amounts received
under the Note Insurance Policy shall be used solely for the payment when due to
the Class A Noteholders of the Insured Payment.
(f) If a Responsible Officer of the Indenture Trustee at
any time has actual knowledge that there will not be sufficient moneys in the
Collection Account to make required payments of principal and interest on the
Pledged Notes in an amount necessary to subsequently make all required payments
of principal and interest to the Class A Noteholders on the applicable Payment
Date, the Indenture Trustee shall immediately notify the Note Insurer or its
designee by telephone, promptly confirmed in writing by overnight mail or
facsimile transmission, of the amount of such deficiency. In addition, if a
Responsible Officer of the Indenture Trustee has actual notice that any of the
Class A Noteholders have been required to disgorge payments of principal or
interest on the Class A Notes pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes a voidable preference to
such Holders within the meaning of any applicable bankruptcy laws, then the
Indenture Trustee shall notify the Note Insurer or its designee of such fact by
telephone, promptly confirmed in writing by overnight mail or facsimile
transmission. Such notice shall be in addition to the procedures set forth in
the Note Insurance Policy for making a claim under the Note Insurance Policy.
(g) Anything herein to the contrary notwithstanding,
any payment with respect to the principal of or interest on the Class A Notes
which is made with moneys received pursuant to the terms of the Note Insurance
Policy shall not be considered payment by the Issuer of the Class A Notes, shall
not discharge the Issuer in respect of its obligation to make such payment and
shall not result in the payment of or the provision for the payment of the
principal of or interest on the Class A Notes within the meaning of Section 9.01
hereof. The Issuer and the Indenture Trustee acknowledge that, without the need
for any further action on the part of the Note Insurer, the Issuer, the
Indenture Trustee or the Note Registrar (i) to the extent the Note Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Class A Notes to the Holders of such Class A Notes, the Note Insurer will be
fully subrogated to the rights of such Holders to receive such principal and
interest from the Issuer, and (ii) the Note Insurer shall be paid such principal
and interest in its capacity as a Holder of the Class A Notes, but only from the
sources and in the manner provided herein for the payment of such principal and
interest in each case only after the Holders of the Class A Notes have received
payment of all scheduled payments of principal and interest due thereon.
(h) Without limiting the provisions of Article VIII here
of or the rights or interests of the Holders as otherwise set forth herein, so
long as no Note Insurer Default exists, the Indenture Trustee shall cooperate in
all respects with any reasonable request by the Note
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Insurer for action to preserve or enforce the Note Insurer's rights or interests
under this Indenture, including, without limitation, upon occurrence and
continuance of an Event of Default, a request to take any one or more of the
following actions:
(i) institute proceedings for the collection of
all amounts then payable on the Class A Notes, or under this Indenture
in respect of the Class A Notes, enforce any judgment obtained and
collect from the Issuer moneys adjudged due;
(ii) institute proceedings from time to time for
the complete or partial foreclosure of this Indenture; and
(iii) exercise any remedies of a secured party
under the UCC and take any other appropriate action to protect and
enforce the rights and remedies of the Note Insurer hereunder.
(i) The parties hereto grant to the Note Insurer, as
long as no Note Insurer Default is continuing, the right of prior approval of
amendments or supplements to the Transaction Documents and of the exercise of
any option, vote, right, power or the like available to the Class A Noteholders
hereunder.
SECTION 3.04 Disbursements From Collection Account. (a)
On each Payment Date, the Indenture Trustee shall pay the Available Funds then
on deposit in the Collection Account with respect to the immediately preceding
Collection Period, as indicated on the Monthly Statement, as applicable, to the
Persons to which such money is then due, calculated on the basis of and in
accordance with the Monthly Statement for the related Collection Period;
provided, however, that in the event the Servicer fails to deliver a Monthly
Statement by a Payment Date the Indenture Trustee shall, nevertheless, pay
interest on the Notes from the sources of funding set forth herein, in each case
in an amount equal to the product of (i) one-twelfth, (ii) the Note Rate and
(iii) the related Note Principal Balance, as reflected on the Monthly Statement
most recently delivered by the Servicer (net of any principal payments in
respect thereof on the immediately preceding Payment Date).
(b) On each Payment Date, the Indenture Trustee shall
pay such money to the following Persons, in the following order of priority,
without duplication:
(i) To the Originator by wire transfer of
immediately available funds, the aggregate amount of any Excluded
Amounts or Initial Unpaid Amounts inadvertently deposited in the
Collection Account;
(ii) From the amount then remaining in the
Collection Account, to any party entitled thereto, by check, any
indemnity payments paid pursuant to any Contract, to the extent that
such amounts are inadvertently deposited in the Collection Account;
(iii) From the Available Funds then remaining in
the Collection Account, to the Servicer by wire transfer to the account
designated in writing by the Servicer of immediately available funds,
the aggregate amount of the following, in the following priority:
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(A) An amount equal to the unreimbursed Servicer Advances
(other than Servicer Advances for the current Collection Period);
(B) An amount equal to the Servicer Fee owing on such
Payment Date, plus any unpaid Servicer Fee owing from prior
Collection Periods; and
(C) Any Servicing Charges inadvertently deposited in the
Collection Account;
(iv) From the Available Funds then remaining in the
Collection Account, to the Back-up Servicer by wire transfer to the
account designated in writing by the Back-up Servicer of immediately
available funds, an amount equal to the Back-up Servicer Fee owing on
such Payment Date, plus any unpaid Back-up Servicer Fees from prior
Collection Periods;
(v) From the Available Funds then remaining in the
Collection Account, to the Note Insurer by wire transfer to the account
designated in writing by the Note Insurer, an amount equal to the
Premium Amount owing on such Payment Date, plus any unpaid Premium
Amounts from prior Collection Periods;
(vi) From the Available Funds then remaining in the
Collection Account, to the Indenture Trustee by wire transfer to the
account designated in writing by the Indenture Trustee, an amount equal
to the Indenture Trustee Fees owing on such Payment Date, plus any
unpaid Indenture Trustee Fees from prior Collection Periods;
(vii) From the Available Funds then remaining in the
Collection Account, to the Indenture Trustee by wire transfer to the
account designated in writing by the Indenture Trustee, an amount equal
to the reimbursable expenses due and unpaid to the Indenture Trustee in
accordance with Section 7.07(a)(ii) hereof, up to the $30,000
limitation set forth in Section 7.07(a)(ii);
(viii) From (x) the Available Funds then remaining in the
Collection Account plus (y) the proceeds of any applicable Insured
Payment, to the Class A Noteholders, the Class A Note Interest for the
related Collection Period;
(ix) As long as no Cumulative Loss Event has occurred,
from the Available Funds then remaining in the Collection Account, to
the extent that such disbursement shall not result in an Available
Funds Shortfall or any unpaid Reimbursement Amount, from Available
Funds then remaining in the Collection Account to the Class B
Noteholders an amount equal to the Class B Note Priority Interest for
the related Collection Period;
(x) From (x) the Available Funds then remaining in the
Collection Account plus (y) the proceeds of any applicable Insured
Payment, until the Class A Note Principal Balance has been reduced to
zero, to the Class A Noteholders from the Available Funds then
remaining in the Collection Account, the sum of (a) the Class A Base
Principal Distribution Amount for such Payment Date and (b) any Class A
Overdue Principal;
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(xi) From the Available Funds then remaining in the
Collection Account, to the Note Insurer by wire transfer to the account
designated in writing by the Note Insurer, the Reimbursement Amount, if
any, owing on such Payment Date;
(xii) if a Cumulative Loss Event has occurred, from the
Available Funds then remaining in the Collection Account, to the class
B noteholders, the Class B Note Priority Interest for the related
Collection Period (to the extent the disbursement of the Class B Note
Priority Interest will not result in (a) an Available Funds Shortfall
or (b) any unpaid Reimbursement Amount);
(xiii) From Available Funds then remaining in the
Collection Account, to the Class B Noteholders an amount equal to the
Class B Note Junior Interest for the related Collection Period;
(xiv) From the Available Funds then remaining in the
Collection Account, until the Class B Note Principal Balance has been
reduced to zero, to the Class B Noteholders, from the Available Funds
then remaining in the Collection Account, the sum of (a) the Class B
Base Principal Distribution Amount for such Payment Date and (b) any
Class B Overdue Principal, allocated, first, to the Class B
Collateralized Note Balance, and, second, to the Class B
Uncollateralized Note Balance; provided, however, that if a
Restricting Event exists on such Payment Date and the Class A Note
Principal Balance on such Payment Date (after giving effect to all
prior payments of principal to the Class A Noteholders made on such
Payment Date) exceeds zero, the amount otherwise required to be paid to
the Class B Noteholders under this clause (xiv), shall instead be paid
to the Class A Noteholders pursuant to this clause (xiv) during such
time as a Restricting Event is continuing as an additional reduction of
the Class A Note Principal Balance up to the amount necessary to reduce
the Class A Note Principal Balance to zero;
(xv) From the Available Funds then remaining in the
Collection Account, to the Indenture Trustee, the Indenture Trustee
Expenses then due, together with any Indenture Trustee Expenses from
prior Collection Periods, in excess of the $30,000 limitation set forth
in Section 7.07(a)(ii) hereof, and up to the aggregate $45,000
limitation set forth in Section 7.07(a)(iii);
(xvi) From the Available Funds then remaining in the
Collection Account, to the Servicer by wire transfer of immediately
available funds to the account designated in writing by the Servicer,
any other amounts due the Servicer as expressly provided in the
Servicing Agreement; and
(xvii) From the Available Funds then remaining in the
Collection Account, to the Residual Holders, as sponsors of the Trust,
any remaining Available Funds; provided, however, that
(I) if a Restricting Event does not exist on such Payment Date,
but if any payment of funds to the Residual Holders on such
Payment Date would result in the Residual Balance being less
than 3% of the Initial Aggregate
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Collateral Balance such entire remaining amount of Available
Funds then remaining, regardless of any allocation to
principal or interest in respect of the Residual Balance,
shall not be paid to the Residual Holders but shall instead be
paid (x) if the Class A Note Principal Balance on such Payment
Date (after giving effect to all payments of principal to the
Class A Noteholders made on such Payment Date pursuant to
clauses (x) and (xiv)) exceeds zero, to the Class A
Noteholders pursuant to this clause (xvii) as an additional
reduction of the Class A Note Principal Balance up to the
amount necessary to reduce such balance to zero; and (y) if
the Class A Note Principal Balance is zero, but the Class B
Note Principal Balance on such Payment Date (after giving
effect to all payments of principal to the Class B
Noteholders made on such Payment Date pursuant to clause
(xiv)) exceeds zero, the amount otherwise required to be paid
to the Residual Holders under this clause (xvii) shall
instead be paid to the Class B Noteholders pursuant to this
clause (xvii) as an additional reduction of the Class B Note
Principal Balance up to the amount necessary to reduce such
balance to zero; and
(II) if a Restricting Event exists on such Payment Date, the
amount otherwise required to be paid to the Residual Holders
under this clause (xvii) shall instead be paid (x) if the
Class A Note Principal Balance on such Payment Date (after
giving effect to all payments of principal to the Class A
Noteholders made on such Payment Date pursuant to clauses
(x) and (xiv)) exceeds zero, to the Class A Noteholders
pursuant to this clause (xvi) during such time as a
Restricting Event is continuing as an additional reduction
of the Class A Note Principal Balance up to the amount
necessary to reduce such balance to zero; (y) if the Class A
Note Principal Balance is zero, but the Class B Note
Principal Balance on such Payment Date (after giving effect
to all payments of principal to the Class B Noteholders
made on such Payment Date pursuant to clause (xiv))
exceeds zero, the amount otherwise required to be paid to
the Residual Holders under this clause (xvii) shall instead
be paid to the Class B Noteholders pursuant to this clause
(xvii) during such time as a Restricting Event is
continuing as an additional reduction of the Class B Note
Principal Balance up to the amount necessary to reduce such
balance to zero; and (z) if the Class A Note Principal
Balance and the Class B Note Principal Balance are each
zero, such amount shall be paid to the Residual Holders
pursuant to this clause (xvii).
(c) All payments to Noteholders shall be made on each Payment
Date to each Noteholder of record on the related Record Date by check, or, if
requested by a Noteholder holding $5,000,000 or more of any Class of Notes, by
wire transfer to the account designated in writing in the form of Exhibit B
hereto (or such other account as such Noteholder may designate in writing)
delivered to the Indenture Trustee on or prior to the related Determination
Date, in immediately available funds, in amounts equal to such Noteholder's pro
rata share (based on the aggregate Class A Percentage Interest in the case of
the Class A Noteholders and the aggregate Class B Percentage Interest in the
case of the Class B Noteholders) of such payment.
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SECTION 3.05 Statements to Noteholders. (a) If the
Servicer has delivered the Monthly Statement on the preceding Determination
Date, then on each Payment Date the Servicer will forward it to the Note
Insurer, and the Indenture Trustee will mail to the Rating Agencies and each
Noteholder, a statement (which statement will be prepared by the Servicer and
furnished to the Indenture Trustee in the Monthly Statement delivered pursuant
to Section 4.07 of the Servicing Agreement or otherwise pursuant to this
Indenture), setting forth the following information (per $1,000 of Initial Class
A Note Principal Amount or of Initial Class B Note Principal Amount (as the case
may be) as to (i) and (ii) below):
(i) With respect to a statement to a Class A
Noteholder or a Class B Noteholder, the amount of such payment
allocable to such Noteholder's Percentage Interest of the Class A or
Class B Base Principal Distribution Amount and Class A or Class B
Overdue Principal, as applicable;
(ii) With respect to a statement to a Noteholder, the
amount of such payment allocable to such Noteholder's Percentage
Interest of Class A or Class B Note Current Interest and Class A or
Class B Overdue Interest, as applicable;
(iii) The aggregate amount of fees and compensation
received by the Servicer pursuant to Section 3.04 hereof for the
Collection Period;
(iv) The aggregate Class A Note Principal Balance,
the aggregate Class B Note Principal Balance, the Class A Percentage,
the Class B Percentage, the Class A Note Factor, the Class B Note
Factor, the Pool Factor and the Aggregate Discounted Contract Principal
Balance, after taking into account all distributions made on such
Payment Date;
(v) The total unreimbursed Servicer Advances with
respect to the related Collection Period;
(vi) The amount of Defaulted Contract Recoveries for
the related Collection Period and the Aggregate Discounted Contract
Principal Balance for all Contracts that became Defaulted Contracts
during the related Collection Period calculated immediately prior to
the time such Contracts became Defaulted Contracts;
(vii) The total number of Contracts and the Aggregate
Discounted Contract Principal Balance thereof, together with the number
and Aggregate Discounted Contract Principal Balance of all Contracts as
to which the Obligors, have missed one, two, three or four Scheduled
Payments (including Final Scheduled Payments), and Delinquent Contracts
reconveyed; and
(viii) During the Pre-Funding Period only, the amount
on deposit in the Pre-Funding Account and the Capitalized Interest
Account after giving effect to withdrawals from such Accounts on such
Payment Date.
(b) By January 31 of each calendar year, commencing
January 31, 2000, or as otherwise required by applicable law, the Indenture
Trustee shall furnish to each Person who at any time during the immediately
preceding calendar year was a Noteholder a statement prepared
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by the Servicer, and delivered to the Indenture Trustee, containing the
applicable aggregate amounts with respect to such Noteholder hereof for such
calendar year or, in the event such Person was a Noteholder during a portion of
such calendar year, for the applicable portion of such year, for the purposes of
such Noteholder's preparation of Federal income tax returns. In addition to the
foregoing the Servicer and the Indenture Trustee (to the extent the Servicer has
provided the necessary information to the Indenture Trustee) shall make
available to Noteholders, the Rating Agencies or the Note Insurer (unless a Note
Insurer Default has occurred and is continuing) any other information provided
to the Servicer or the Indenture Trustee or otherwise in the Indenture Trustee's
possession reasonably requested by Noteholders, the Rating Agencies or the Note
Insurer in connection with tax matters, in accordance with the written
directions of the Servicer.
(c) The Servicer shall furnish to each Noteholder and
the Note Insurer (unless a Note Insurer Default has occurred and is continuing),
on request, during the term of this Indenture, such periodic, special or other
reports or information not specifically provided for herein, as shall be
necessary, reasonable or appropriate with respect to such Noteholder or the Note
Insurer all such reports or information to be provided by and in accordance with
such applicable instructions and directions as the Noteholder or the Note
Insurer may reasonably require and as the Servicer may reasonably be able to
produce; provided, however, that, as a condition of furnishing such materials,
the Servicer may require such Noteholder to execute a confidentiality agreement
in form and substance acceptable to the Servicer.
(d) The Indenture Trustee shall promptly send to the
Note Insurer, each Noteholder and to the Rating Agencies in writing:
(ix) Notice of any breach by the Transferors, the
Trust, the Originator or the Servicer of any of their respective
representations, warranties and covenants made herein, in the Servicing
Agreement or in any other Transaction Document;
(x) A copy of each Servicer compliance statement
delivered to the Indenture Trustee pursuant to Section 4.08 of the
Servicing Agreement;
(xi) Notice of any breach by the Indenture Trustee of
its representations and warranties set forth in Section 7.17 hereof of
which a Responsible Officer has actual knowledge;
(xii) Notice of the occurrence of any Event of
Default or Restricting Event;
(xiii) Notice of any Event of Servicing Termination or
default under the Insurance Agreement, or any other default under any
of the Transaction Documents;
(xiv) Notice of any Event of Back-up Servicing
Termination;
(xv) Notice of an Note Insurer Default; and
(xvi) Notice of the resignation or removal of the
Indenture Trustee;
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provided, however, that in each case the Indenture Trustee shall only be
required to send such notices and other items to the Noteholders to the extent
that the Indenture Trustee has itself received the related information and the
Noteholders have not already received such notice or other items. Except as
may be specifically provided herein, the Indenture Trustee shall have no
obligation to seek to obtain any such information.
SECTION 3.06 Compliance With Withholding Requirements.
Notwithstanding any other provisions of this Indenture, the Indenture Trustee,
as paying agent for and on behalf of, and at the direction of the Servicer,
shall comply with all Federal withholding requirements respecting payments (or
advances thereof) to Noteholders as may be applicable to instruments
constituting indebtedness for Federal income tax purposes. Any amounts so
withheld shall be treated as having been paid to the related Noteholder for all
purposes of this Indenture. In no event shall the consent of Noteholders be
required for any withholding.
ARTICLE IV
REMOVAL OF NON-CONFORMING PLEDGED
PROPERTY; SUBSTITUTION OF CONTRACTS
SECTION 4.01 Removal of Non-Conforming Pledged Property.
(a) Upon discovery by the Trust, the Note Insurer, the Servicer (or any of its
successors or assigns) or in the case of the Indenture Trustee, upon actual
knowledge of a Responsible Officer of the Indenture Trustee, of a breach of any
of the representations or warranties set forth in Section 2.02 of the Servicing
Agreement that materially and adversely affects the interest of the Note
Insurer, any Noteholders, any Contract, the related Equipment or the related
Contract File, as the case may be, or if the Servicer fails to cause delivery of
evidence of filing or copies of any UCC financing statement in accordance with
the Servicing Agreement (any such event, a "Warranty Event"), the party
(including any such successor or assign) discovering such breach shall give
prompt written notice to the other parties. As of the later of (x) the last day
of the calendar month of such discovery or such receipt of notice of breach or
(y) two weeks from the date of such discovery or such receipt of notice of
breach (or, at the Originator's election, any earlier date), the Originator
shall deposit (or cause to be deposited) in the Collection Account the
Reacquisition Amount with respect to such Contract or replace such Contract with
a Substitute Contract pursuant to Section 4.02 hereof. Any such nonconforming
Contract so removed shall not be deemed to be a Defaulted Contract for purposes
of this Article IV.
(b) The obligation of an Originator to remove any
Contract and to remit the Reacquisition Amount, as appropriate, with respect to
the related Contract as to which a breach has occurred and is continuing shall
constitute the sole remedy against the Originator for such breach available to
the Indenture Trustee and the Noteholders, except to the extent that such breach
is the result of any fraud or willful misconduct on the part of the Originator.
SECTION 4.02 Substitution of Contracts. (a) Subject to
the provisions of Sections 4.02(b) through (d) hereof, the Originator, with the
written consent of the Note Insurer (unless a Note Insurer Default has occurred
and is continuing), upon notice from the Servicer,
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may substitute one or more Contracts (each a "Substitute Contract") and the
related Equipment and replace a Contract and the related Equipment that (i)
becomes a Defaulted Contract or an Early Termination Contract or (ii) is the
subject of a Prepayment, a Casualty Loss or a Warranty Event.
(b) Each Substitute Contract shall be a Contract, with
respect to which all of the representations and warranties set forth in Section
2.02 of the Servicing Agreement were true as of the related Substitute Contract
Cut-Off Date.
(c) Prior to any substitution pursuant to this Section 4.02,
the Indenture Trustee shall have received an executed transfer agreement between
the related Transferor and the Originator providing for the unconditional sale
and transfer of the Substitute Contracts and related Equipment by the Originator
to such Transferor, the List of Substitute Contracts reflecting the
substitution, a release request, in form and substance acceptable to the
Transferors and the Indenture Trustee, with respect to the Contract being
replaced and the originally executed trust receipt relating thereto.
(d) No such substitution under this Section 4.02 shall
be permitted on any Transfer Date if:
(xvii) on a cumulative basis from the Initial Cut-Off
Date, the sum of the Discounted Contract Principal Balances (as of the
related Substitute Cut-Off Date) of such Substitute Contracts would
exceed ten percent (10%) of the Initial Aggregate Collateral Balance;
(xviii) as of the related Substitute Cut-Off Date, the
Substitute Contracts then being pledged have an Aggregate Discounted
Contract Principal Balance that is less than the Aggregate Discounted
Contract Principal Balance of the Contracts being replaced;
(xix) as of the related Substitute Cut-Off Date, any
of the Substitute Contracts then being pledged have a final scheduled
payment date later than twelve months before the Class A Maturity Date;
(xx) the Servicer makes a good faith determination
that the credit quality of the Substitute Contract is not worse than
that of the Contract being replaced; and
(xxi) as a result thereof, (x) the sum of the
Scheduled Payments on all Contracts, after giving effect to such
substitutions, due in any Collection Period thereafter would be less
than (y) the sum of the Scheduled Payments which would otherwise be due
in such Collection Period, prior to giving effect to such substitution.
(e) Upon the replacement of a Contract and the related
Equipment with a Substitute Contract as described above, the security interest
of the Indenture Trustee in such replaced Contract, the related Equipment and
all proceeds thereon shall be terminated and such Substitute Contract and the
related Equipment shall be transferred to the Transferor, pledged to the Trust
as collateral security for the Pledged Notes, and such security interest shall
be assigned to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer.
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SECTION 4.03 Release of Trust Property. (a) The
Indenture Trustee when required by the provisions of this Indenture and with the
prior written consent of the Note Insurer (unless a Note Insurer Default has
occurred and is continuing) shall execute instruments provided to it in order to
release property from the Lien of this Indenture, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture,
the Servicing Agreement and the Receivables Pledge Agreement. No party relying
upon an instrument executed by the Indenture Trustee as provided in this Article
IV 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
monies.
(b) The Indenture Trustee shall, at such time as the
parties' obligations under this Indenture terminate pursuant to Section 9.01
hereof, release any remaining portion of the Trust Property that secured the
Notes from the Lien of this Indenture and release to the Trust or any other
Person entitled thereto any funds then on deposit in the Collection Account and
any subaccounts thereof as may have been established pursuant to Section
3.02(b); provided, that with the prior written consent of the Note Insurer (so
long as no Note Insurer Default has occurred and is continuing), the Trust
Property may be released after the date on which there are no Notes outstanding
and all sums due the Indenture Trustee and the Note Insurer pursuant to this
Indenture, the Insurance Agreement and any other Transaction Document have each
been paid and prior to the expiration of the 123-day period reference in Section
9.01. The Indenture Trustee shall release property from the Lien of this
Indenture pursuant to this Section 4.03(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel, the
prior written consent of the Note Insurer (so long as no Note Insurer Default
has occurred and is continuing) and (if required by the TIA) Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the
applicable requirements of Section 10.05 hereof.
ARTICLE V
THE NOTES
SECTION 5.01 The Notes. (a) The Class A Notes will be
issued in denominations of $100,000 and $1,000 increments above $100,000 up to
the Initial Class A Note Principal Balance and the Class B Notes will be issued
in denominations of $100,000 and $1,000 increments above $100,000 up to the
Initial Class B Note Principal Balance. Each Note shall represent a validly
issued and binding obligation, but only if such Note has been executed on behalf
of the Trust by a Responsible Officer of the Owner Trustee by manual signature,
and authenticated on behalf of the Indenture Trustee by a Responsible Officer of
the Indenture Trustee by manual signature. Each Note bearing the manual
signatures of individuals who were, at the time when such signatures were
affixed, authorized to sign on behalf of the Trust shall continue to be a valid
and binding obligation, notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the authentication and delivery of such
Note or did not hold such offices at the date of such Note. No Note shall be
entitled to any benefit under this Indenture, or be valid for any purpose,
unless there appears on such Note a certificate of authentication substantially
in the form set forth in the form of the Notes of the related Class, each
attached as Exhibits hereto, signed by the Indenture Trustee by manual
signature, and such signature upon any Note shall be conclusive evidence, and
the only evidence, that such Note has
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been duly authenticated and delivered hereunder. All Class A Notes shall be
substantially in the form set forth in Exhibit C and all Class B Notes shall be
substantially in the form set forth in Exhibit D hereto. Each Note shall be
dated the date of its authentication. Neither the Notes nor the Contracts are
insured by the Federal Deposit Insurance Corporation or any other governmental
agency.
(b) It is intended that the Notes be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. The Class A Notes shall, except as otherwise provided in the next
paragraph, be initially issued in the form of a single fully registered Class A
Note with a denomination equal to the Initial Class A Note Principal Balance.
The Class B Notes shall, except as otherwise provided in the next paragraph, be
initially issued in the form of a single fully registered Class B Note, with a
denomination equal to the Initial Class B Note Principal Balance. Upon initial
issuance, the ownership of each such Class A Note and Class B Note shall be
registered in the Register in the name of Cede & Co., or any successor thereto,
as nominee for the Depository.
The Trust and the Indenture Trustee are hereby authorized to
execute and deliver the Representation Letter with the Depository.
With respect to Notes registered in the Register in the name
of Cede & Co., as nominee of the Depository, the Trust and the Indenture
Trustee shall have no responsibility or obligation to Direct Participants or
Indirect Participants or beneficial owners for which the Depository holds
Notes from time to time as a trustee. Without limiting the immediately
preceding sentence, the Trust, the Servicer and the Indenture Trustee shall
have no responsibility or obligation with respect to (i) the accuracy of the
records of the Depository, Cede & Co., or any Direct Participants or Indirect
Participant with respect to any ownership interest in any Note, (ii) the
delivery to any Direct Participants or Indirect Participant or any other
Person, other than a Noteholder, of any notice with respect to the Notes or
(iii) the payment to any Direct Participants or Indirect Participant or any
other Person, other than a Noteholder, of any amount with respect to any
distribution of principal or interest on the Notes. No Person other than a
Noteholder shall receive a certificate evidencing a Class A Note or Class B
Note.
Upon delivery by the Depository to the Indenture Trustee of
written notice to the effect that the Depository has determined to substitute
a new nominee in place of Cede & Co., and subject to the provisions hereof
with respect to the payment of interest by the mailing of checks or drafts to
the Noteholders appearing as Noteholders at the close of business on a Record
Date, the name "Cede & Co." in this Indenture shall refer to such new nominee
of the Depository.
(c) In the event that (i) the Depository or the Servicer
advises the Indenture Trustee in writing that the Depository is no longer
willing or able to discharge properly its responsibilities as nominee and
depository with respect to the Notes and the Servicer or the Depository is
unable to locate a qualified successor or (ii) the Indenture Trustee at its sole
option elects to terminate the book-entry system through the Depository, the
Notes shall no longer be restricted to being registered in the Register in the
name of Cede & Co. (or a successor nominee) as nominee of the Depository. At
that time, the Servicer may determine that the Notes shall be registered in the
name of and deposited with a successor depository operating a global book-
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entry system, as may be acceptable to the Servicer, or such depository's agent
or designee but, if the Servicer does not select such alternative global
book-entry system, then the Notes may be registered in whatever name or names
Noteholders transferring Notes shall designate, in accordance with the
provisions hereof; provided, however, that any such registration shall be at the
expense of the Servicer.
(d) Notwithstanding any other provision of this
Indenture to the contrary, so long as any Note is registered in the name of Cede
& Co., as nominee of the Depository, all distributions of principal or interest
on such Notes as the case may be and all notices with respect to such Notes as
the case may be shall be made and given, respectively, in the manner provided in
the Representation Letter.
In the event any Notes are issued in book-entry form with
the Depository: (i) the Indenture Trustee may deal with the Depository as the
authorized representative of the Noteholders; (ii) the rights of the
Noteholders shall be exercised only through the Depository and shall be
limited to those established by law and agreement between the Noteholders and
the Depository; (iii) the Depository will make book-entry transfers among the
direct participants of the Depository and will receive and transmit
distributions of principal and interest on the Notes to such direct
participants; and (iv) the direct participants of the Depository shall have no
rights under this Indenture under or with respect to any of the Notes held on
their behalf by the Depository, and the Depository may be treated by the
Indenture Trustee and its agents, employees, officers and directors as the
absolute owner of the Notes for all purposes whatsoever.
SECTION 5.02 Initial Issuance of Notes. (a) The
Indenture Trustee shall, upon the written instruction of the Trust, in exchange
for the Pledged Property, authenticate and deliver Class A Notes and Class B
Notes executed by the Trust in authorized denominations equaling in the
aggregate the Initial Class A Note Principal Balance and the Initial Class B
Note Principal Balance, respectively.
(b) Notwithstanding anything herein to the contrary, in
the case of the initial sale of a Note, the acquirer of such Note shall be
deemed to have represented and warranted (i) that it is not acquiring its
interest in the Note with the assets of (A) an employee benefit plan (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), which is subject to Title I of ERISA, (B) a plan or other
arrangement described in Section 4975 of the Code or (C) any entity whose
underlying assets include plan assets by reason of an investment in such entity
by a plan described in (A) or (B) above (collectively, a "Benefit Plan
Investor") or (ii) that it is purchasing Class A Notes and its purchase and
continued holding of the Class A Notes will be covered by a U.S. Department of
Labor Class Exemption.
SECTION 5.03 Registration of Transfer and Exchange of
Notes. (a) The Indenture Trustee, as initial Note Registrar, shall maintain, or
cause to be maintained, at the Corporate Trust Office, a register (the
"Register") in which the Indenture Trustee shall provide for the registration of
Notes and of transfers and exchanges of Notes as herein provided. All Notes
shall be so registered.
(b) Upon surrender for registration of transfer of any
Note at the Corporate Trust Office, the Trust shall execute, and the Indenture
Trustee shall authenticate and deliver, in
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the name of the designated transferee or transferees, one or more new Notes in
authorized denominations of the same class, of a like aggregate Class A
Percentage Interest or Class B Percentage Interest, as the case may be, dated
the date of such authentication; provided that, none of the Notes may be
transferred to the Transferors or any of their respective Affiliates unless the
Indenture Trustee, the Noteholders, the Note Insurer (so long as no Note Insurer
Default has occurred and is continuing) and the Rating Agencies shall have been
furnished with an Opinion of Counsel experienced in Federal bankruptcy matters
to the effect that such sale or transfer would not adversely affect the
character of the conveyance of the Conveyed Assets to the Transferors as an
absolute transfer.
(c) At the option of a Noteholder, Notes may be
exchanged for other Notes of the same Class (of authorized denominations in the
case of Class A Notes and Class B Notes) of a like aggregate Class A Percentage
Interest or Class B Percentage Interest, as the case may be, upon surrender of
the Notes to be exchanged at any such office or agency. Whenever any Notes are
so surrendered for exchange, the Trust shall execute, and the Indenture Trustee
shall authenticate and deliver the Notes that the Noteholder making the exchange
is entitled to receive. Every Note presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
substantially in the form of Exhibit H hereto, duly executed by the Noteholder
thereof or its attorney duly authorized in writing.
(d) No service charge shall be made for any registration
of transfer of any Note or for the exchange of any Note, but the Indenture
Trustee may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer of any Note or
exchange of any Note.
(e) Once definitive Notes have been issued, no sale or
other transfer of any Note shall be made to any Person unless such Person
delivers to the Indenture Trustee a completed representation letter in
substantially the form attached as either Exhibit F or Exhibit G hereto.
(f) All Notes surrendered for registration of transfer
and all Notes surrendered for exchange shall be delivered to the Indenture
Trustee and cancelled and subsequently destroyed by the Indenture Trustee in
accordance with its customary practices in effect from time to time.
(g) Notwithstanding the foregoing, in the case of any
sale or other transfer of record or beneficial ownership of a Note, the
transferee of such Note shall be deemed to have represented and warranted (i)
that it is not a Benefit Plan Investor or (ii) that it is purchasing the Class A
Notes and its purchase and continued holding of the Class A Notes will be
covered by a U.S. Department of Labor Class Exemption.
SECTION 5.04 Mutilated, Destroyed, Lost or Stolen Notes.
If 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 there is delivered to the Trust, the Servicer and the Indenture
Trustee such security or indemnity satisfactory to each of them as may be
required by them to save each of them harmless, then, in the absence of notice
to the Indenture Trustee that any such Note has been acquired by a bona fide
purchaser, the Trust
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shall execute and the Indenture Trustee shall authenticate and deliver in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note a
new Note of like Class and Percentage Interest. In connection with the issuance
of any new Note under this Section 5.04, the Indenture Trustee may require the
payment by the Noteholder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto. Any duplicate Note
issued pursuant to this Section 5.04 shall constitute a Note duly issued by the
Trust, as if originally issued, whether or not the lost, stolen or destroyed
Note shall be found at any time.
SECTION 5.05 Persons Deemed Owners. The Note Insurer and
the Indenture Trustee may treat the Person in whose name any Note is registered
as the owner of such Note for the purpose of receiving distributions pursuant to
Section 3.04 hereof and for all other purposes whatsoever, and the Note Insurer
and the Indenture Trustee shall not be affected by any notice to the contrary.
SECTION 5.06 Access to List of Noteholders' Names and
Addresses. The Indenture Trustee will furnish or cause to be furnished to the
Servicer within fifteen (15) days after receipt by the Indenture Trustee of a
request therefor from the Servicer in writing, a list, of the names and
addresses of the Noteholders as of the most recent Record Date. If one or more
Noteholders representing a Class A Percentage Interest or a Class B Percentage
Interest of not less than 25% (an "Applicant") shall apply in writing to the
Indenture Trustee, and such application shall state that the Applicant desires
to communicate with other Noteholders with respect to its rights under this
Indenture or under the Notes, then the Indenture Trustee shall, within five (5)
Business Days after the receipt of such application, send such notice to the
current list of Noteholders. Every Noteholder, by receiving and holding a Note,
agrees with the Trust, the Servicer and the Indenture Trustee that none of the
Trust, the Servicer or the Indenture Trustee shall be held accountable by reason
of the disclosure of any such information, regardless of the source from which
such information was derived.
SECTION 5.07 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 an agent 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 required to the Trust, the Note Insurer (so long as no Note
Insurer Default has occurred and is continuing) or the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 7.01
hereof) conclusive in favor of the Indenture Trustee, the Trust, the Originator
and the Servicer, if made in the manner provided in this Section 5.07.
(b) The fact and date of the execution by any Noteholder
of any such instrument or writing may be proven in any reasonable manner which
the Indenture Trustee deems sufficient.
(c) The ownership of Notes shall be proven by the
Register.
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(d) Any request, demand, authorization, direction,
notice, consent, waiver or other act by a Noteholder shall bind every holder of
every Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done or omitted to be done
by the Indenture Trustee, the Trust or the Servicer in reliance thereon, whether
or not notation of such action is made upon such Note.
SECTION 5.08 No Proceedings. By its acceptance of a
Note, each Noteholder shall be deemed to have agreed that it will not directly
or indirectly institute, or cause to be instituted, against the Residual Holders
or the Trust any bankruptcy or insolvency proceeding so long as there shall not
have elapsed one year plus one day since the maturity date of the latest
maturing securities of the Trust.
ARTICLE VI
THE TRUST
SECTION 6.01 Liability of the Trust. The Trust shall be
liable for payments in respect of the Notes in accordance herewith only to the
extent of the obligations specifically undertaken by the Trust herein.
SECTION 6.02 Limitation on Liability of the Trust.
Neither the Owner Trustee nor the directors, officers, employees or agents of
the Trust or the Owner Trustee shall be under any liability to the Indenture
Trustee, the Noteholders, the Originator, the Servicer, the Residual Holders or
any other Person hereunder or pursuant to any document delivered hereunder, it
being expressly understood that all such liability is expressly waived and
released as a condition of, and as consideration for, the Trust's execution and
delivery of this Indenture and the issuance of the Notes. The Trust shall not be
under any liability to the Indenture Trustee, the Noteholders, the Originator,
the Servicer, the Residual Holders or any other Person for any action taken or
for refraining from the taking of any action in its capacity as Trust pursuant
to this Indenture whether arising from express or implied duties under this
Indenture; provided, however, that this provision shall not protect the Trust
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith, misrepresentation or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
The Trust may rely in good faith on any document of any kind prima facie
properly executed and submitted by any other Person respecting any matters
arising hereunder.
SECTION 6.03 Indemnity for Liability Claims. The
Residual Holders, on behalf of the Trust, shall be deemed to have agreed to
indemnify, defend and hold harmless the Indenture Trustee (which shall include
any of its directors, employees, officers and agents), the Owner Trustee (which
shall include any of its directors, employees, officers and agents), the
Noteholders and the Note Insurer against and from any and all costs, expenses,
losses, damages, claims and liabilities arising out of or resulting from the
use, repossession or operation of the Equipment to the extent not covered by the
Servicer's indemnity provided by Section 5.01 of the Servicing Agreement;
provided, however, that such amounts shall be payable solely from amounts
payable to the Residual Holders pursuant to Section 3.04(b)(xvi) hereof.
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SECTION 6.04 Liabilities. Notwithstanding any provision
of this Indenture, by entering into this Indenture, the Trust and the Residual
Holders agree to be liable, directly to the injured party, for the entire amount
of any losses, claims, damages or liabilities (other than those losses incurred
by a Class A Noteholder or a Class B Noteholder in the capacity of an investor
in the Class A Notes or the Class B Notes) imposed on or asserted against the
Trust or otherwise arising out of or based on the arrangements created by this
Indenture (to the extent of the Trust Property remaining after the Class A
Noteholders, the Class B Noteholders and the Note Insurer have been paid in full
are insufficient to pay such losses, claims, damages or liabilities).
SECTION 6.05 [Reserved].
SECTION 6.06 Annual Statement as to Compliance. The
Servicer, on behalf of the Trust, will deliver to the Indenture Trustee and the
Note Insurer, within 90 days after the end of each fiscal year of the Trust
(commencing with the fiscal year ended December 31, 1999), and otherwise in
compliance with the requirements of TIA Section 314(a)(4) an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that:
(xxii) a review of the activities of the Trust during such
year and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(xxiii) to the best of such Authorized Officer's knowledge,
based on such review, the Trust has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 6.07 Payment of Principal and Interest. The
Trust will duly and punctually pay the principal of and interest on the Notes in
accordance with the terms of the Notes and this Indenture. 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 Trust
to such Noteholder for all purposes of this Indenture.
SECTION 6.08 Maintenance of Office or Agency. The Trust
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 Trust in respect of the Notes and this Indenture may be
served. The Trust hereby initially appoints the Indenture Trustee to serve as
its agent for the foregoing purposes. The Trust 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 Trust 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 Trust hereby appoints the Indenture Trustee
as its agent to receive all such surrenders, notices and demands.
SECTION 6.09 Money for Payments to be Held in Trust.
(a) On or before each Payment Date, the Trust shall deposit or cause to be
deposited in the Collection Account,
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but only from the sources described herein, an aggregate sum sufficient to pay
the amounts then becoming due under the Notes, such sum to be held in trust for
the benefit of the Persons entitled thereto and (unless the paying agent is the
Indenture Trustee) shall promptly notify the Indenture Trustee of its action or
failure so to act.
(b) The Trust will cause each paying agent other than
the Indenture Trustee to execute and deliver to the Indenture Trustee and the
Note Insurer an instrument in which such paying agent shall agree with the
Indenture Trustee (and if the Indenture Trustee acts as paying agent, it hereby
so agrees), subject to the provisions of this Section, that such paying agent
will:
(i) hold all sums held by it for the payment of
amounts due with respect to the Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Indenture Trustee notice of any
default by the Trust (or any other obligor upon the Notes) of which it
has actual knowledge in the making of any payment required to be made
with respect to the Notes;
(iii) at any time during the continuance of any
such default, upon the written request of the Indenture Trustee,
forthwith pay to the Indenture Trustee all sums so held in trust by
such paying agent;
(iv) immediately resign as a paying agent and
forthwith pay to the Indenture Trustee all sums held by it in trust for
the payment of Notes if at any time it ceases to meet the standards
required to be met by a paying agent at the time of its appointment;
and
(v) comply with all requirements of the Code
with respect to the withholding from any payments made by it on any
Notes of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection
therewith.
(c) The Trust may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for any other
purpose, 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 a payment by any paying agent to the Indenture Trustee,
such paying agent shall be released from all further liability with respect to
such money.
(d) Subject to Section 9.02(d) hereof and to applicable
laws with respect to the 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 be paid to the
Trust with the written consent and direction of the Note Insurer (so long as no
Note Insurer Default has occurred and is continuing) and 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 Trust for
payment thereof (but only to the extent of the amounts so paid
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to the Trust), 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 Note
Insurer with the Indenture Trustee for the payment of principal or interest on
the Notes, to the extent any amounts are owing to the Note Insurer, such amounts
shall be paid promptly to the Note Insurer, upon receipt of a written request by
the Note Insurer to such effect; and provided, further, that the Indenture
Trustee or such paying agent, before being required to make any such repayment,
shall at the expense of the Trust 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 thirty (30) days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Trust. The Indenture
Trustee shall also adopt and employ, at the expense of the Trust, 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
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 6.10 Existence. Except as otherwise permitted
by the provisions of Section 6.14, the Trust will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless, with the prior written consent of the Note Insurer (so long
as no Note Insurer Default has occurred and is continuing) and the satisfaction
of the Rating Agency Condition, it becomes, or any successor Trust hereunder is
or becomes, organized under the laws of any other state or of the United States
of America, in which case the Trust 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 and each other instrument or
agreement included in the Pledged Property.
SECTION 6.11 Protection of Trust Property. The Trust
intends the security interest granted pursuant to this Indenture in favor of the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, to
be prior to all other Liens in respect of the Trust Property, and the Trust
shall take all actions necessary to obtain and maintain, in favor of the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, a
first Lien on, and a first priority, perfected security interest in, the Trust
Property. The Trust will from time to time prepare (or shall cause to be
prepared), execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:
(i) grant more effectively all or any portion
of the Trust Property;
(ii) maintain or preserve the Lien and security
interest (and the priority thereof) in favor of the Indenture Trustee,
for the benefit of the Noteholders and the Note Insurer, created by
this Indenture or carry out more effectively the purposes hereof;
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(iii) perfect, publish notice of or protect the
validity of any grant made or to be made by this Indenture;
(iv) enforce any of the Pledged Property;
(v) preserve and defend title to the Trust
Property and the rights of the Indenture Trustee in such Trust Property
against the claims of all persons and parties; and
(vi) pay all taxes or assessments levied or
assessed upon the Trust Property when due.
The Trust hereby designates the Indenture Trustee as its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee or the Note Insurer
pursuant to this Section 6.11.
SECTION 6.12 Performance of Obligations; Servicing of
Receivables. (a) The Trust 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 of such Person's covenants or obligations under any instrument
or agreement included in the Trust Property 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
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the other Transaction Documents or any other instrument or agreement.
(b) The Trust may contract with other Persons acceptable
to the Note Insurer (so long as no Note Insurer Default has occurred and is
continuing) to assist it in performing its duties under this Indenture, and any
performance of such duties by a Person identified to the Indenture Trustee and
the Note Insurer in an Officer's Certificate of the Trust shall be deemed to be
action taken by the Trust. Initially, the Trust has contracted with the Servicer
to substantially perform the Trust's duties under this Indenture, and in such
regard, the Trust may rely upon information provided by the Servicer in
connection with any Officer's Certificate of the Trust to be provided pursuant
to this Indenture and any other action to be take by the Trust pursuant to this
Indenture.
(c) The Trust 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
Trust Property, including, but not limited to, preparing (or causing to be
prepared) and filing (or causing to be filed) all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture, the
Servicing Agreement and the other Transaction Documents in accordance with and
within the time periods provided for herein and therein.
(d) If a Responsible Officer of the Owner Trustee shall
have actual knowledge of the occurrence of (i) an Event of Servicing Termination
under the Servicing Agreement, (ii) a Restricting Event under this Indenture or
(iii) an Event of Default under this Indenture, the Trust shall promptly notify
the Indenture Trustee, the Note Insurer and the Rating Agencies thereof, and
shall specify in such notice the action, if any, the Trust is taking in respect
of such default. If
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a Servicer Termination Event shall arise from the failure of the Servicer to
perform any of its duties or obligations under the Servicing Agreement with
respect to the Contracts, the Trust shall take all reasonable steps available to
it to remedy such failure.
SECTION 6.13 Negative Covenants. So long as any Notes
are Outstanding, the Trust shall not:
(a) except as expressly permitted by this Indenture or the
Transaction Documents, sell, transfer, exchange or otherwise dispose of
any of the Trust Property, unless directed to do so by the Note Insurer
(or, in the case of a Note Insurer Default, the Majority Holders);
(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 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 Trust
Property; or
(c) (i) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Indenture
Trustee created by this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (ii)
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 Trust Property or
any part thereof or any interest therein or the proceeds thereof (other
than tax liens, mechanics' liens and other liens that arise by
operation of law, in each case on Equipment and arising solely as a
result of an action or omission of the related Obligor), (iii) permit
the Lien of 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 Trust Property or (iv) amend, modify or fail
to comply with the provisions of the Transaction Documents without the
prior written consent of the Note Insurer (so long as no Note Insurer
Default has occurred and is continuing) and the satisfaction of the
Rating Agency Condition.
SECTION 6.14 Trust May Consolidate, Etc. Only on Certain
Terms. (a) The Trust shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Trust) 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 satisfactory
to the Indenture Trustee and the Note Insurer (so long as no Note
Insurer Default has occurred and is continuing), the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Trust to be performed or observed, all as
provided herein;
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(ii) immediately after giving effect to such
transaction, no Event of Default or Restricting Event shall have
occurred and be continuing;
(iii) the Trust shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the Indenture
Trustee and the Note Insurer (so long as no Note Insurer Default has
occurred and is continuing)) to the effect that such transaction will
not have any material adverse tax consequence to the Trust, the Note
Insurer or any Noteholder;
(iv) any action as is necessary to maintain the
Lien and security interest created by this Indenture shall have been
taken;
(v) the Trust shall have delivered to the
Indenture Trustee and the Note Insurer (so long as no Note Insurer
Default has occurred and is continuing) an Officer's Certificate and an
Opinion of Counsel each stating that such consolidation or merger and
such supplemental indenture comply with this Article VI and that all
conditions precedent herein provided for relating to such transaction
have been complied with (including any filing required by the Exchange
Act);
(vi) the Rating Agencies have confirmed that
such transaction will not result in the reduction or withdrawal of any
rating on each Class of Notes; and
(vii) the Note Insurer has given its prior
written consent (or, in the case of a Note Insurer Default, the
Majority Holders).
(b) The Trust shall not convey or transfer all or
substantially all of its properties or assets, including those included in the
Trust Property, to any Person, unless:
(i) the Person that acquires by conveyance or
transfer the properties and assets of the Trust the conveyance or
transfer of which is hereby restricted shall (A) be a United States
citizen or a Person organized and existing under the laws of the
United States or any State, (B) expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture
Trustee, in form satisfactory to the Indenture Trustee and the
Note Insurer (or, in the case of a Note Insurer Default, the
Majority Holders), 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 of
the Transaction Documents on the part of the Trust 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, (D) unless otherwise provided in
such supplemental indenture, expressly agree to indemnify, defend
and hold harmless the Trust against and from any loss, liability or
expense arising under or related to this Indenture and the Notes and
(E) expressly agree by means of such supplemental indenture that such
Person (or if a group of persons, then one specified Person) shall
prepare (or cause to be prepared) and make all filings with the
Commission (and any other appropriate Person) required by the
Exchange Act in connection with the Notes;
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(ii) immediately after giving effect to such
transaction, no Event of Default or Restricting Event shall have
occurred and be continuing;
(iii) the Trust shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the Indenture
Trustee and the Note Insurer (so long as no Note Insurer Default has
occurred and is continuing)) to the effect that such transaction will
not have any material adverse tax consequence to the Trust, the Note
Insurer or any Noteholder;
(iv) any action as is necessary to maintain the
lien and security interest created by this Indenture shall have been
taken;
(v) the Trust shall have delivered to the
Indenture Trustee and the Note Insurer (so long as no Note Insurer
Default has occurred and is continuing) an Officer's Certificate and an
Opinion of Counsel each stating that such conveyance or transfer and
such supplemental indenture comply with this Article VI and that all
conditions precedent herein provided for relating to such transaction
have been complied with (including any filing required by the Exchange
Act);
(vi) the Rating Agencies have confirmed that
such transaction will not result in the reduction or withdrawal of any
rating on each Class of Notes; and
(vii) the Note Insurer has given its prior
written consent (or, in the case of a Note Insurer Default, the
Majority Holders).
SECTION 6.15 Successor or Transferee. (a) Upon any
consolidation or merger of the Trust in accordance with Section 6.14, the Person
formed by or surviving such consolidation or merger (if other than the Issuer)
shall succeed to, and be substituted for, and may exercise every right and power
of, the Trust under this Indenture with the same effect as if such Person had
been named as the Trust herein.
(b) Upon a conveyance or transfer of all the assets and
properties of the Trust pursuant to Section 6.14(b), the Trust will be released
from every covenant and agreement of this Indenture to be observed or performed
on the part of the Trust with respect to the Notes immediately upon the delivery
of written notice to the Indenture Trustee and the Note Insurer stating that the
Trust is to be so released.
SECTION 6.16 No Other Business. The Trust shall not engage in
any business other than financing, purchasing, owning, selling and managing the
Pledged Notes in the manner contemplated by this Indenture and the other
Transaction Documents and activities incidental thereto.
SECTION 6.17 No Borrowing. The Trust shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes and (ii) obligations owing from time to
time to the Note Insurer . The proceeds of the Notes shall be used exclusively
to fund the Trust's purchase of the Pledged Notes and the other assets
constituting the Pledged Property and to pay the Trust's organizational,
transactional and start-up expenses.
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SECTION 6.18 Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by the Servicing Agreement or this
Indenture, the Trust shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 6.19 Capital Expenditures. The Trust shall not make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personal).
SECTION 6.20 Compliance with Laws. The Trust 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 Trust to perform its obligations under the Notes, this Indenture or any
other Transaction Document.
SECTION 6.21 Further Instruments and Acts. Upon request of the
Indenture Trustee or the Note Insurer (so long as no Note Insurer Default has
occurred and is continuing), the Trust 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 and the other
Transaction Documents.
ARTICLE VII
THE INDENTURE TRUSTEE
SECTION 7.01 Duties of Indenture Trustee. (a) The Indenture
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. If an Event of Default of which a
Responsible Officer of the Indenture Trustee shall have actual knowledge has
occurred and has not been cured or waived, the Indenture Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise as a prudent Person would exercise or
use under the circumstances in the conduct of such Person's own affairs.
(b) The Indenture Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Indenture Trustee that are specifically required to
be furnished pursuant to any provision of this Indenture, shall examine them to
determine whether they conform as to form to the requirements of this Indenture.
No acceptance of, or reliance on, any such item by the Indenture Trustee shall
constitute a representation by the Indenture Trustee of the enforceability or
sufficiency of such item.
(c) No provision of this Indenture shall be construed to
relieve the Indenture Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct; provided, however,
that:
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(i) Prior to the occurrence of an Event of
Default, and after the curing of all such Events of Default that may
have occurred, the duties and obligations of the Indenture Trustee
shall be determined solely by the express provisions of this
Indenture; the Indenture Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Indenture; no implied covenants or obligations shall be
read into this Indenture against the Indenture Trustee; and in the
absence of bad faith on the part of the Indenture Trustee, the
Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Indenture Trustee
and, if specifically required to be furnished pursuant to any
provision of this Indenture, conforming to the requirements of
this Indenture;
(ii) The Indenture Trustee shall not be liable
for an error of judgment made in good faith by a Responsible Officer of
the Indenture Trustee unless it shall be proved that the Indenture
Trustee was negligent in ascertaining the pertinent facts;
(iii) The Indenture Trustee shall not be
personally liable with respect to any action taken, suffered or omitted
to be taken by it in good faith in accordance with this Indenture,
pursuant to the direction of the Holders of Notes evidencing the
greatest Percentage Interests in the related Class, but in no event
less than 25%, relating to the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or
exercising, suffering or omitting to take any trust or power conferred
upon the Indenture Trustee, under this Indenture;
(iv) The Indenture Trustee shall not be charged
with knowledge of any Event of Servicing Termination, any Event of
Default or Restricting Event unless a Responsible Officer of the
Indenture Trustee obtains actual knowledge of such failure or event or
the Indenture Trustee receives written notice of such failure or event
from the Servicer, the Trust, the Note Insurer or any Noteholder; and
(v) The Indenture Trustee shall have no duty
to monitor the performance of the Servicer (as custodian or
otherwise), nor shall it have any liability in connection with the
malfeasance or nonfeasance by the Servicer; provided, however, that
the foregoing shall not diminish or in any way modify any obligation of
the Back-up Servicer under the Servicing Agreement. The Indenture
Trustee shall have no liability in connection with compliance of the
Servicer or the Trust with statutory or regulatory requirements
related to the Contracts or the related Equipment. The Indenture
Trustee shall not make or be deemed to have made any representations
or warranties with respect to the Contracts or related Equipment or
the validity or sufficiency of any pledge of the Contracts to the
Trust or the Indenture Trustee. The Indenture Trustee shall have no
obligation or liability in respect of the maintenance of casualty or
liability insurance in connection with the Contracts or the related
Equipment.
(d) The Indenture Trustee shall not be required 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 there is reasonable ground for believing that the
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repayment of such funds or indemnity satisfactory to it against such risk or
liability is not assured to it, and none of the provisions contained in this
Indenture shall in any event require the Indenture Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer under this Indenture or the Servicing Agreement except during such
time, if any, as the Indenture Trustee shall be the successor to, and be vested
with the rights, duties, powers and privileges of, the Servicer in accordance
with the terms of this Indenture.
(e) On each Determination Date, the Indenture Trustee shall
give notice, by facsimile, to a Servicing Officer of the Servicer and the Note
Insurer (so long as no Note Insurer Default has occurred and is continuing) if
the total amount then on deposit in the Collection Account is less than the
amount indicated in the Monthly Statement.
(f) The Indenture Trustee shall immediately notify the Note
Insurer (so long as no Note Insurer Default has occurred and is continuing) and
each Rating Agency of: (i) any proposed change herein or supplement hereto; (ii)
the occurrence of any Event of Default, Event of Servicing Termination, Event of
Back-up Servicing Termination or Restricting Event actually known to a
Responsible Officer of the Indenture Trustee; (iii) any proposed change of the
Indenture Trustee hereunder; (iv) any matter to be put to the Noteholders for
election hereunder; (v) any proposed exercise by the Noteholders of any option,
vote, right, power or the like hereunder; and (vi) any other matter, notice of
which is required hereunder to be given to any of the Noteholders or to the
Indenture Trustee.
SECTION 7.02 Eligible Investments. The Servicer shall direct
the Indenture Trustee to invest in Eligible Investments, as further specified
from time to time by written notice to the Indenture Trustee executed by a
Servicing Officer, any cash amounts deposited in the Accounts pursuant to the
terms of this Indenture or the Servicing Agreement, immediately upon deposit of
any such cash amounts; provided, however, that each such Eligible Investment (i)
shall mature no later than the Business Day immediately preceding the Payment
Date in respect of the Collection Period during which such deposit was made and
(ii) shall not be sold or disposed of prior to its maturity. The Indenture
Trustee shall not be liable or responsible for the selection of or losses on any
investments made by it pursuant to and in compliance with such instructions of
the Servicer pursuant to this Section 7.02. The Indenture Trustee shall have no
obligation to initiate any investments in the absence of such written direction.
SECTION 7.03 Indenture Trustee's Assignment of Contracts. If
in any enforcement suit or legal proceeding it is held, or in connection with
the collection of a Defaulted Contract the Servicer or its assigns reasonably
anticipates that the Servicer or its assigns may not or will not be able to
enforce a Contract on the ground that neither the Servicer nor its assigns are a
real party-in-interest or a holder entitled to enforce the Contract, then the
Indenture Trustee shall, at the Servicer's or its assigns' expense, take such
steps as the Indenture Trustee deems necessary to enforce the Contract,
including (i) bringing suit in the Indenture Trustee's name or the names of the
Noteholders and the Note Insurer and (ii) executing and delivering all such
instruments or documents as shall be required to transfer title to a Contract to
the Servicer or its assigns or otherwise enforce such Contract.
SECTION 7.04 Certain Matters Affecting the Indenture
Trustee. Except as otherwise provided in Section 7.01:
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(a) The Indenture Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) The Indenture Trustee may consult with counsel and any
Opinion of Counsel or advice shall constitute full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of Counsel or
advice;
(c) The Indenture Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture, or to
institute, conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of the Note Insurer (or, in the case of a Note
Insurer Default, any of the Noteholders), pursuant to the provisions of this
Indenture unless the Note Insurer or such Noteholders shall have offered to the
Indenture Trustee such security or indemnity satisfactory to it against the
costs, expenses, and liabilities that may be incurred therein or thereby that
are reasonable in the opinion of the Indenture Trustee (the unsecured indemnity
agreement of the Note Insurer being satisfactory in all such instances);
provided, however, that nothing contained herein shall relieve the Indenture
Trustee of the obligations, upon the occurrence of an Event of Default (that has
not been cured), to exercise such of the rights and powers vested in it by this
Indenture and to use the same degree of skill and care in their exercise as a
prudent Person would exercise under the circumstances in the conduct of such
Person's own affairs;
(d) The Indenture Trustee shall not be personally liable for
any action taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred upon it by
this Indenture;
(e) Prior to the occurrence of an Event of Default of which a
Responsible Officer of the Indenture Trustee shall have actual knowledge and
after the curing of all Events of Default that may have occurred, 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 requested in writing to do so by the Note Insurer (so long as no Note
Insurer Default has occurred and is continuing) or by the Holders of Notes of
any Class evidencing Percentage Interests of not less than 25% of such Class;
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, the Indenture Trustee may require indemnity
satisfactory to it against such cost, expense or liability as a condition to so
proceeding (the unsecured indemnity agreement of the Note Insurer being
satisfactory in all such instances). The reasonable expense of every such
examination shall be paid by the requesting party. Nothing in this clause (e)
shall derogate from the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors; and
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(f) The Indenture Trustee may execute any of the trusts or
powers or perform any duties hereunder either directly or by or through agents
or attorneys or a custodian. The Indenture Trustee shall not be responsible for
the misconduct, negligence or for the supervision of any of the Indenture
Trustee's agents or attorneys appointed with due care by the Indenture Trustee
hereunder or that of the Originator, the Servicer or the Trust.
SECTION 7.05 Indenture Trustee Not Liable for Notes or
Contracts. The Notes do not represent an obligation issued by the Indenture
Trustee or any Affiliate thereof. The promise to pay the Notes according to
their terms and the terms of this Indenture set forth in the Notes and in
Section 2.05 hereof provides recourse to the Pledged Property and, with respect
to the Class A Notes, the Note Insurance Policy only. The Indenture Trustee does
not assume any responsibility for the accuracy of the statements herein or in
the Notes (other than as set forth in Section 7.17 and the certificate of
authentication on the Notes). The Indenture Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Notes (other than the
certificate of authentication on the Notes) or of any Contract or related
document. The Indenture Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity or enforceability of any
security interest in any Equipment or any Contract, to the perfection or
priority thereof, or to the efficacy of the Trust or any portion thereof to pay
any Note, the existence or validity of any Contract, the validity of the pledge
of any Contract to the Indenture Trustee, on behalf of the Trust, or of any
intervening assignment, the review of any Contract, any Contract File or the
Computer Tape (it being understood that neither the Indenture Trustee nor any of
its agents have reviewed or intend to review such matters, the sole
responsibility for such review being vested in the Trust), the completeness of
any Contract File, the receipt by it or its custodian of any Contract, the
performance or enforcement of any Contract, subject to Section 4.01 of the
Servicing Agreement, the compliance by the Trust with any covenant or the breach
by the Originator or the Trust of any warranty or representation made under the
Servicing Agreement, under the Transfer Agreements or in any related document or
the accuracy of any such warranty or representation, any investment of monies in
the Collection Account (except to the extent that the Indenture Trustee, in its
individual capacity, is an obligor with respect to any such investment) or any
loss resulting therefrom, the acts or omissions of the Servicer, or any Obligor,
any action of the Servicer taken in the name of the Indenture Trustee, any
action by the Indenture Trustee taken at the instruction of the Servicer or the
preparation and filing of tax returns for the Trust. No recourse shall be had
for any claim based on any provision of this Indenture, the Notes or any
Contract or assignment thereof against The Bank of New York, in its individual
capacity, and The Bank of New York, in its individual capacity shall not have
any personal obligation, liability or duty whatsoever to any Noteholder or any
other Person with respect to any such claim, and any such claim shall be
asserted solely against the Trust or any indemnitor who shall furnish indemnity
as provided herein, except for such liability as is determined to have resulted
from its own negligence or willful misconduct. The Indenture Trustee shall not
be accountable for the use or application by the Originator or the Trust of any
of the Notes or of the proceeds of such Notes or for the use or application of
any funds paid to the Servicer in respect of the Contracts.
SECTION 7.06 Indenture Trustee May Own Notes. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes with the same rights as it would have if it were not Indenture Trustee,
subject to the definition of the term "Noteholder" in Annex A hereto.
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SECTION 7.07 Indenture Trustee's Fees and Expenses.
(a) The Servicer, on behalf of the Residual Holders, agrees:
(i) to pay to the Indenture Trustee, pursuant
to Section 3.04(b)(vi), as applicable, on each Payment Date reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of an Indenture Trustee of an express trust); and
(ii) except to the extent otherwise expressly
provided herein, to reimburse the Indenture Trustee, pursuant to
Section 3.04(b)(vii), as applicable, upon its request for all
reasonable expenses, disbursements and advances incurred or made
by the Indenture Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and expenses and
disbursements of any of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its
negligence or willful misconduct; provided, that for purposes of
this clause (ii), such expenses, disbursements and advances shall
be limited to an aggregate amount of $30,000 over the life of the
transaction; and
(iii) to reimburse the Indenture Trustee,
pursuant to Section 3.04(b)(xiv), as applicable, for all reasonable
expenses, disbursements and advances that would have been paid pursuant
to Section 7.07(a)(ii) but for the $30,000 limitation; provided, that
for purposes of this clause (iii), such expenses, disbursements and
advances shall be limited to an aggregate amount of $45,000 over the
life of the transaction (for an aggregate limitation pursuant to
clauses (ii) and (iii) of $75,000).
(b) The Servicer's obligations under this Section 7.07 shall
survive the termination of this Indenture or the earlier resignation or removal
of the Indenture Trustee. The Indenture Trustee shall not be entitled to any
other or additional compensation or reimbursement, except as expressly provided
herein or as otherwise agreed from time to time.
(c) Subject to Section 7.10 hereof, the failure by the
Servicer to pay to the Indenture Trustee any compensation or other expenses
shall not relieve the Indenture Trustee of its obligations hereunder.
(d) In the event the Indenture Trustee performs services or
incurs expenses in the context of a proceeding described in Sections
6.01(a)(iv), 6.01(a)(v) or 6.01(a)(vii) of the Servicing Agreement, the fees for
such services and such expenses shall be considered expenses of administration
for the purposes of any bankruptcy laws or laws relating to creditors rights
generally.
SECTION 7.08 Eligibility Requirements for Indenture Trustee.
The Indenture Trustee shall at all times satisfy the requirements of TIA Section
310(a). The Indenture Trustee hereunder shall at all times be a corporation
acceptable to the Note Insurer (so long as no Note Insurer Default has occurred
and is continuing) having its principal office in a State, organized and doing
business under the laws of any State or the United States of America, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000, have a deposit rating of at least
"investment grade" from the
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Rating Agencies, and subject to supervision or examination by federal or State
authority; provided, however, that no entity shall qualify as Indenture Trustee
hereunder to the extent that such qualification would, in itself, affect any
then current rating of the Class A Notes or the Class B Notes by the Rating
Agencies. If such corporation publishes reports of condition at least annually,
pursuant to law or the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section 7.08, 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. Any
successor Indenture Trustee's deposit ratings shall be at least "investment
grade" by the Rating Agencies. In case at any time the Indenture Trustee shall
cease to be eligible in accordance with the provisions of this Section 7.08, the
Indenture Trustee shall resign immediately in the manner and with the effect
specified in Section 7.09 hereof. The Indenture Trustee shall comply with TIA
Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities of the Trust are outstanding if the requirements
for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.09 Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
SECTION 7.10 Resignation or Removal of Indenture Trustee. (a)
The Indenture Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer, the Trust, the
Note Insurer and each Noteholder which resignation will not become effective
until such time as a successor Indenture Trustee has been appointed in
accordance with the provisions of this Section 7.10. Upon receiving such notice
of resignation, the Servicer shall promptly appoint a successor Indenture
Trustee acceptable to the Note Insurer (so long as no Note Insurer Default has
occurred and is continuing) by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Indenture Trustee and one
copy to the successor Indenture Trustee. If no successor Indenture Trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Indenture Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee, which successor must be reasonably acceptable to the Note
Insurer (so long as no Note Insurer Default has occurred and is continuing) and
whose appointment satisfies the Rating Agency Condition.
(b) If at any time the Indenture Trustee shall cease to be
eligible in accordance with the provisions of Section 7.08 hereof and shall fail
to resign after written request therefor by the Servicer, the Note Insurer (so
long as no Note Insurer Default has occurred and is continuing), the Holders of
Notes of any Class evidencing Percentage Interests of more than 25% of such
Class, or, if at any time the Indenture Trustee shall be legally unable to act,
or shall be adjudged a bankrupt or insolvent, or a receiver of the Indenture
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Indenture Trustee or of its property or affairs for the
purpose of rehabilitation, conservation, or liquidation, then the Servicer may,
with the consent of the Note Insurer (so long as no Note Insurer Default has
occurred and is continuing), and shall, at the direction of (i) the Note Insurer
(so long as no Note
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Insurer Default has occurred and is continuing), or (ii) at the direction of the
Holders of Notes of any Class evidencing Percentage Interests of more than 25%
of the related Class (with the consent of the Note Insurer (so long as no Note
Insurer Default has occurred and is continuing)), remove the Indenture Trustee.
Notwithstanding anything in this Indenture to the contrary, the Note Insurer (so
long as no Note Insurer Default has occurred and is continuing) shall have the
right to remove the Indenture Trustee for "cause." For purposes of this section,
"cause" shall mean (i) the negligence or willful misconduct of the Indenture
Trustee in the performance of its duties under this Indenture or the Insurance
Agreement or (ii) the failure or unwillingness of the Indenture Trustee to
perform its duties under this Indenture or the Insurance Agreement; provided,
however, the Note Insurer may not remove the Indenture Trustee for "cause"
pursuant to clause (ii) of the immediately preceding sentence unless it has (A)
consulted with the Indenture Trustee in good faith and provided notice to the
Indenture Trustee regarding any actions or omissions of the Indenture Trustee
under this Indenture or the Insurance Agreement which the Note Insurer believes
constitutes a failure or unwillingness (if such failure or unwillingness is
capable of remedy) of the Indenture Trustee to perform its duties under this
Indenture or the Insurance Agreement and (B) provided the Indenture Trustee with
the opportunity to remedy such failure or unwillingness within ten (10) Business
Days (or such longer period to which the Note Insurer may reasonably consent)
following the receipt by the Indenture Trustee of written notice thereof. In the
event that the Indenture Trustee is removed by the Note Insurer pursuant to this
Section, the removal and substitution procedures set forth in this Section 7.10
and Section 7.11 hereof shall be followed. If the Note Insurer, Servicer or
Noteholders remove the Indenture Trustee, the Servicer or such Noteholders shall
promptly appoint a successor Indenture Trustee (acceptable to the Note Insurer
(so long as no Note Insurer Default has occurred and is continuing)) by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Indenture Trustee so removed and one copy to the successor Indenture Trustee.
(c) Any resignation or removal of the Indenture Trustee and
appointment of a successor Indenture Trustee pursuant to this Section 7.10 shall
not become effective until acceptance of appointment by the successor Indenture
Trustee as provided in Section 7.11 hereof. Notice of the resignation or removal
of the Indenture Trustee shall be given in writing to the Rating Agencies by the
Servicer. In the event no successor Indenture Trustee has been appointed within
thirty (30) days of the resignation or removal of the Indenture Trustee, the
Indenture Trustee may petition a court of competent jurisdiction to appoint a
successor Indenture Trustee.
SECTION 7.11 Successor Indenture Trustee. (a) Any successor
Indenture Trustee appointed as provided in Section 7.10 hereof shall execute,
acknowledge and deliver to the Servicer, the Trust and predecessor Indenture
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Indenture Trustee shall become
effective and such successor Indenture Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Indenture Trustee. The predecessor Indenture Trustee shall deliver to
the successor Indenture Trustee all documents and statements held by it
hereunder. The Servicer, the Trust and the predecessor Indenture 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
Indenture Trustee all
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such rights, powers, duties and obligations. The predecessor Indenture Trustee
shall not be liable for the acts or omissions of any successor Indenture Trustee
hereunder.
(b) No successor Indenture Trustee shall accept appointment as
provided in this Section 7.11 unless at the time of such acceptance such
successor Indenture Trustee shall be acceptable to the Note Insurer (so long as
no Note Insurer Default has occurred and is continuing) and shall satisfy the
Rating Agency Condition and eligible as the Indenture Trustee under the
provisions of Section 7.08 hereof, and as a successor Servicer under the
provisions of Section 6.02 of the Servicing Agreement.
(c) Upon acceptance of appointment by a successor Indenture
Trustee as provided in this Section 7.11, the Servicer shall mail notice of the
succession of such Indenture Trustee hereunder to the Note Insurer and all
Noteholders at their addresses as shown in the Note Register. If the Servicer
fails to mail such notice within ten (10) days after acceptance of appointment
by such successor Indenture Trustee, then the successor Indenture Trustee shall
cause such notice to be mailed at the expense of the Servicer.
SECTION 7.12 Merger or Consolidation of Indenture Trustee. Any
corporation into which the Indenture Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger, conversion, or
consolidation to which the Indenture Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Indenture Trustee,
shall be the successor of the Indenture Trustee hereunder, provided such
corporation shall be eligible under the provisions of Section 7.08 hereof,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
SECTION 7.13 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee. (a) Notwithstanding any other provisions of this Indenture,
at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust or any Equipment may at the time be
located, the Indenture Trustee shall, with the consent of the Note Insurer (so
long as no Note Insurer Default has occurred and is continuing) and the
satisfaction of the Rating Agency Condition, or the Note Insurer (so long as no
Note Insurer Default has occurred and is continuing) shall have the power from
time to time, and shall execute and deliver all instruments to appoint one or
more Persons approved by the Indenture Trustee to act as 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 and the Note Insurer, as their interests appear herein, such title
to the Trust, or any part thereof, and, subject to the other provisions of this
Section 7.13, such powers, duties, obligations, rights and trusts as the
Servicer, the Trust and the Indenture Trustee may consider necessary or
desirable; provided, however, that if there is a conflict between the Trust, the
Indenture Trustee and the Note Insurer regarding the appointment of a
co-Indenture Trustee or separate Indenture Trustee, the Note Insurer shall
prevail (so long as no Note Insurer Default has occurred and is continuing). If
the Servicer shall not have joined in such appointment within fifteen (15) days
after the receipt by it of a request so to do, or in the case an Event of
Servicing Termination shall have occurred and be continuing, the Indenture
Trustee and the Trust, acting jointly, shall have the power to make such
appointment; provided, however, that if the Trust shall not have joined
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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 as a successor Indenture
Trustee under Section 7.08 hereof, and no notice to Noteholders of the
appointment of any co-Indenture Trustee or separate Indenture Trustee shall be
required under Section 7.12 hereof.
(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 (whether as Indenture Trustee hereunder
or as successor to the Servicer hereunder), 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 Property 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 separate Indenture Trustee or
co-Indenture Trustee hereunder shall be personally liable by reason of
any act or omission of any other separate Indenture Trustee or
co-Indenture Trustee hereunder; and
(iii) The Indenture Trustee 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 Indenture and the conditions
of this Article VII. 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 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 Servicer and the Trust.
(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 Indenture 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, then all of its estates, properties,
rights,
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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
separate Indenture Trustee or successor co-Indenture Trustee.
(e) The Servicer shall be responsible for the payment of any
fees or expenses of any separate Indenture Trustee or co-Indenture Trustee.
SECTION 7.14 Indenture Trustee May Enforce Claims Without
Possession of Note. All rights of action and claims under this Indenture or the
Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Indenture Trustee
shall be brought in its own name or in its capacity as Indenture Trustee. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee, its
agents and counsel, be for the ratable benefit of the Noteholders in respect of
which such judgment has been recovered.
SECTION 7.15 Suits for Enforcement. In case an Event of
Servicing Termination or other default by the Servicer under the Servicing
Agreement or under this Indenture shall occur and be continuing, the Indenture
Trustee, in its discretion, may, subject to the provisions of 6.04 of the
Servicing Agreement, proceed to protect and enforce its rights and the rights of
the Noteholders and the Note Insurer under this Indenture by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Indenture or in aid
of the execution of any power granted in this Indenture or for the enforcement
of any other legal, equitable or other remedy, as the Indenture Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights of the Indenture Trustee, the Noteholders or the Note Insurer.
SECTION 7.16 Undertaking for Costs. All parties to this
Indenture agree (and each Holder of any Note by its acceptance thereof shall be
deemed to have agreed) that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against 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 7.16 shall not apply to any suit instituted by the
Indenture Trustee or the Note Insurer, to any suit instituted by any Noteholder,
or group of Noteholders, holding in the aggregate more than 10% of the then
outstanding Note Principal Balance, or to any suit instituted by any Noteholder
for the enforcement of the payment of the principal of or interest on any Note
on or after the maturities for such payments, including the stated maturity as
applicable.
SECTION 7.17 Representations and Warranties of Indenture
Trustee. The Indenture Trustee represents and warrants for the benefit of the
Noteholders and the Note Insurer that:
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(a) Organization and Good Standing. The Indenture Trustee
is a banking corporation duly organized, validly existing and in good
standing under the laws of the state of New York.
(b) Authorization. The Indenture Trustee has the power,
authority and legal right to execute, deliver and perform this
Indenture, and the execution, delivery and performance of this
Indenture have been duly authorized by the Indenture Trustee by all
necessary corporate action.
(c) Binding Obligations. This Indenture, assuming due
authorization, execution and delivery by all other parties thereto,
constitutes the legal, valid and binding obligation of the
Indenture Trustee, enforceable against the Indenture Trustee in
accordance with its terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws (whether statutory, regulatory or decisional) now
or hereafter in effect relating to creditors' rights generally and
the rights of trust companies in particular and (ii) the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought, whether in a proceeding at law or in equity.
SECTION 7.18 Tax Returns. In the event the Trust shall be
required to file tax returns, the Indenture Trustee shall prepare or shall cause
to be prepared any tax returns required to be filed by the Trust and shall remit
such returns to the Owner Trustee for signature at least five (5) Business Days
before such returns are due to be filed. The Servicer, upon request, will
furnish the Indenture Trustee with all such information known to the Servicer as
may be reasonably required in connection with the preparation of all tax returns
of the Trust. In no event shall the Indenture Trustee or the Owner Trustee in
their respective individual capacities be liable for any liabilities, costs or
expenses of the Trust, the Noteholders or the Servicer arising under any tax law
or regulation, including, without limitation, Federal, State or local income or
excise taxes or any other tax imposed on or measured by income (or any interest
or penalty with respect thereto or arising from any failure to comply
therewith).
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
SECTION 8.01 Events of Default. "Event of Default" wherever
used herein means any one of the following events (whatever the reason for such
Event of Default and without regard to 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 distribute or cause to be distributed to
the Indenture Trustee, for the benefit of the Noteholders, all or part
of any payment of interest required to be made on each Payment Date
under the terms of such Notes or this Indenture when due and payable;
or
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(b) failure to distribute or cause to be distributed to
the Indenture Trustee, for the benefit of the Noteholders (x) on any
Payment Date, an amount equal to the principal due on the outstanding
Notes as of such Payment Date to the extent that sufficient Available
Funds are on deposit in the Collection Account or (y) on the Class A
Maturity Date or the Class B Maturity Date, as the case may be, any
remaining principal owed on the outstanding Class A Notes or Class B
Notes, as the case may be; or
(c) default in the performance, or breach, of any other
covenant of the Issuer in this Indenture, and continuance of such
default or breach for a period of thirty (30) days after the earliest
of (i) any officer of the Issuer first acquiring the knowledge thereof,
(ii) the Indenture Trustee's giving written notice thereof to the
Issuer, or (iii) the Note Insurer or the Holders of a majority of the
then Outstanding Note Principal Balance of the Notes giving written
notice thereof to the Issuer and the Indenture Trustee; or
(d) any representation or warranty of the Issuer made in
this Indenture or any other writing provided to the Holders of the
Notes proves to be incorrect in any material respect as of the time
when the same has been made; provided, however, that the breach of any
representation or warranty made by the Issuer will be deemed to be
"material" only if it negatively affects the Note Insurer or the
Noteholders, the enforceability of this Indenture or the Notes; or
(e) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Issuer
in an involuntary case or proceeding under any applicable federal
or state bankruptcy, insolvency, reorganization, or other similar
law or (B) a decree or order adjudging the Issuer a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition of or in
respect of the Issuer under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or other similar official of the Issuer or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree
or order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(f) the commencement by the Issuer of a voluntary case
or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or of any other
case or proceeding to be adjudicated as bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in
respect of the Issuer in an involuntary case or proceeding under
any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or
relief under any applicable federal or state law, or the consent by
it to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or similar official of any such Person or of any
substantial part or its property, or the making by it of an
assignment for the benefit of creditors, or the failure of any such
Person to pay its debts generally as they become due, or the taking of
corporate action by any such Person in furtherance of any such action;
or
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(g) the Issuer becomes subject to regulation by the
Securities and Exchange Commission as an investment company within the
meaning of the Investment Company Act of 1940, as amended; or
(h) an event of default shall have occurred and be continuing
under the Insurance Agreement; or
(i) a Transferor Event of Default shall occur and be
continuing with respect to either of the Pledged Notes.
SECTION 8.02 Acceleration of Maturity, Rescission and
Annulment. (a) If an Event of Default occurs and is continuing, then and in
every such case the Indenture Trustee, at the written direction of the
Controlling Parties, shall declare the principal of all of the Notes to be
immediately due and payable, by a notice in writing to the Servicer, and upon
any such declaration such principal (together with all accrued and previously
unpaid interest) shall become immediately due and payable; provided, that, with
respect to Events of Default enumerated in Section 8.01(e) and (f), the
principal of all Notes shall become immediately due and payable without further
action of any Person. The Indenture Trustee shall give notice to each
Noteholder, the Note Insurer and the Rating Agencies of such declaration.
(b) At any time, after such a declaration of acceleration has
been made, but before any sale of the Pledged Property has been made or a
judgment or decree for payment of the money due has been obtained by the
Indenture Trustee as hereinafter in this Article VIII provided, the Controlling
Parties, by written notice to the Servicer and the Indenture Trustee, may
rescind and annul such declaration and its consequence if monies have been paid
or deposited with the Indenture Trustee in a sum sufficient to pay:
(i) all overdue installments of interest on all
Class A Notes and Class B Notes;
(ii) the principal of any of the Class A Notes
or Class B Notes which has become due otherwise than by such
declaration of acceleration and interest thereon at the applicable Note
Rate;
(iii) to the extent that payment of such interest
is lawful, interest upon overdue installments of interest on the Class
A Notes and Class B Notes at the rate specified therefor in the related
Note ; and
(iv) all sums paid or advanced, together with
interest thereon, by the Indenture Trustee or the Note Insurer
hereunder or under the Insurance Agreement or the Note Insurance
Policy, as applicable, and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, the Note Insurer
and their respective agents and counsel.
No such rescission shall affect any subsequent default or
impair any right consequent thereon.
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Subsequent to any such declaration of acceleration and so long
as such declaration and its consequences have not been rescinded and annulled,
prior to the exercise by the Indenture Trustee of the remedies set forth in
Section 8.03(a) or (c) hereof, the Indenture Trustee shall give the Noteholders
and the Note Insurer ten days' notice of its intention to take such actions.
SECTION 8.03 Remedies. If an Event of Default shall have
occurred and be continuing, the Indenture Trustee, at the written direction of
the Controlling Parties, shall do one or more of the following as shall be
directed by the Controlling Party:
(a) institute, in its own name and as Indenture Trustee,
Proceedings for the collection of the entire amount of principal and
interest remaining unpaid on the Notes, or under this Indenture in
respect of the Notes, whether by declaration or otherwise, enforce any
judgment obtained, and collect from the Pledged Property securing the
Notes the monies adjudged due;
(b) sell the Pledged Property or any portion thereof or
rights or interest therein, at one or more sales called and conducted
in any commercially reasonable manner permitted by law;
(c) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Pledged Property securing the Notes; or
(d) exercise any remedies of a secured party under the
UCC or other applicable law and take any other appropriate action to
protect and enforce the rights and remedies of the Indenture Trustee,
the Note Insurer or the Noteholders hereunder.
SECTION 8.04 Notice of Event of Default. Within two (2)
Business Days after a Responsible Officer obtaining actual knowledge of the
occurrence of any Event of Default, the Indenture Trustee shall transmit, by
certified mail return receipt requested, hand delivery or overnight courier, to
all Noteholders, as their names and addresses appear in the Register, notice of
such Event of Default, unless such Event of Default shall have been cured or
waived.
SECTION 8.05 Exercise of Power by Indenture Trustee In case an
Event of Default has occurred and is continuing to the actual knowledge of a
Responsible Officer of the Indenture Trustee, the Indenture Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
SECTION 8.06 Indenture Trustee May File Proofs of Claim. In
case of the pendency of any receivership, insolvency, liquidation,
reorganization, arrangement, adjustment, composition or other judicial
Proceeding, relating to the Trust or any other obligor upon the Notes or the
property of the Trust or of such other obligor or their creditors, the Indenture
Trustee (irrespective of whether the principal of any class of 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 for the
payment of overdue principal or interest) shall be entitled and empowered, to
intervene in such proceeding or otherwise:
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(a) to file and prove a claim for all amounts owing and
unpaid in respect of the Notes and to file such other papers or
documents and take such other action including participating as a
member, voting or otherwise, in any committee of creditors appointed in
the matter, as may be necessary or advisable in order to have the
claims of the Indenture Trustee, the Note Insurer (including, in each
case, any claim for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, the Note Insurer
and their respective agents and counsel) and the Noteholders allowed in
such judicial Proceeding;
(b) to petition for lifting of the automatic stay and
thereupon to foreclose upon the Pledged Property as elsewhere provided
herein; and
(c) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such judicial Proceeding is hereby authorized by each
Noteholder to make such payments to the Indenture Trustee, and in the event that
the Indenture Trustee shall consent to the making of such payments directly to
the Note Insurer or the Noteholders, to pay to the Indenture Trustee any amount
due to it for the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee, its agents and counsel.
Nothing herein contained shall be deemed to authorize the Indenture Trustee to
authorize or to consent or accept or adopt on behalf of the Note Insurer or
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Note Insurer or the Notes or the rights of any
Holder thereof, or to authorize the Indenture Trustee to vote in respect of
the claim of the Note Insurer or any Noteholder in any such Proceeding.
SECTION 8.07 Allocation of Money Collected. If the Notes have
been declared due and payable following an Event of Default and such declaration
and its consequences have not been rescinded and annulled, any money collected
by the Indenture Trustee with respect to the Notes pursuant to this Article VIII
(and any funds then held or thereafter received by the Indenture Trustee) shall
be applied in the following order, at the date or dates fixed by the Indenture
Trustee:
First : To the Indenture Trustee or the Note Insurer, as the
case may be, the costs incurred by such parties in the collection of such moneys
collected;
Second : To the payment of all amounts due the Indenture
Trustee under Section 7.07 hereof and all Back-up Servicer Fees due to the
Back-up Servicer under the Servicing Agreement;
Third : To the payment of all Premium Amounts due and payable
to the Note Insurer;
Fourth : To the payment of Class A Note Interest to the Class
A Noteholders;
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Fifth : To the payment of the outstanding Class A Note
Principal Balance to the Class A Noteholders;
Sixth : To the payment of all unpaid Reimbursement Amounts,
if any, to the Note Insurer;
Seventh : To the payment of Class B Note Interest to the
Class B Noteholders
Eighth : To the payment of the outstanding Class B Note
Principal Balance to the Class B Noteholders;
Ninth : To the payment of all reasonable costs and expenses
incurred by any Noteholder in connection with the enforcement of its rights
hereunder or under the Notes, ratably, without preference or priority of any
kind; and
Tenth : To the payment of any surplus to or at the written
direction of the Residual Holders.
SECTION 8.08 Waiver of Events of Default. (a) The Controlling
Party (with the prior written consent of the Note Insurer (so long as no Note
Insurer Default has occurred and is continuing)) may, by one or more instruments
in writing, waive any Event of Default hereunder and its consequences, except a
continuing Event of Default:
(i) in respect of the payment of the principal
of or interest on any Note (which may only be waived by the Holder of
such Note), or
(ii) in respect of a covenant or provision
hereof which under Article XI cannot be modified or amended without the
consent of the Holder of each Note outstanding affected (which only may
be waived by the Holders of all affected Notes outstanding).
(b) A copy of each waiver pursuant to Section 8.08(a) shall be
furnished by the Servicer to the Indenture Trustee. Upon any such waiver, such
Event of Default shall cease to exist and shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent thereon.
SECTION 8.09 Limitation On Suits. No Holder 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:
(a) such Holder has previously given written notice
to the Indenture Trustee of a continuing Event of Default;
(b) the Controlling Parties shall have made written
request to the Indenture Trustee to institute Proceedings in respect of
such Event of Default in its own name as Indenture Trustee hereunder;
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(c) such Holder or Holders have offered to the Indenture
Trustee indemnity reasonably satisfactory to it against the costs,
expenses and liabilities to be incurred in compliance with such
request;
(d) the Indenture Trustee for thirty (30) days after its
receipt of such notice, request and offer of indemnity has failed to
institute any such Proceeding;
(e) no direction inconsistent with such written request
has been given to the Indenture Trustee during such thirty (30) day
period by the Controlling Parties; and
(f) the Note Insurer has given its prior written consent
(or, in the case of a Note Insurer Default, the Majority Holders);
it being understood and intended that no one or more Holders 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
or the Note Insurer or to enforce any right under this Indenture, except in the
manner herein provided.
SECTION 8.10 Unconditional Right of Noteholders to Receive
Principal and Interest. Notwithstanding any other provision in this Indenture,
the Noteholders shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note as such principal
and interest becomes due and payable in accordance with the terms of this
Indenture (including, without limitation, the limitation on such payments to the
extent of Available Funds on each Payment Date) and the Controlling Party shall
have the right to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Controlling Party.
SECTION 8.11 Restoration of Rights and Remedies. If the
Indenture Trustee, the Note Insurer or any Noteholder has instituted any
Proceeding to enforce any right or remedy in accordance with the terms of this
Indenture and such Proceeding has been discontinued or abandoned for any reason,
or has been determined adverse to the Indenture Trustee, the Note Insurer or to
such Noteholder, then and in every such case, the Indenture Trustee, the Note
Insurer 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 hereunder shall continue as
though no such Proceeding has been instituted.
SECTION 8.12 Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Indenture Trustee, the Note
Insurer or 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 8.13 Delay or Omission Not Waiver. No delay or
omission of the Indenture Trustee, the Note Insurer or any Noteholder to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver
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of any such Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Indenture Trustee, the Note Insurer or
the Noteholders, or any of them, may be exercised from time to time, as often as
may be deemed expedient, by the Indenture Trustee, the Note Insurer or the
Noteholders, subject in each case however to the right of the Note Insurer to
control any such right and remedy.
SECTION 8.14 Control by Controlling Parties. The Controlling
Parties shall have the right to direct in writing the decision whether to
conduct, and 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 with respect to
the Notes; provided, that:
(a) such direction shall not be in conflict with any rule
of law or with this Indenture; and
(b) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee which is not inconsistent with
such direction; provided, however, that the Indenture Trustee need not
take any action which it determines might involve it in liability or be
unjustly prejudicial to the Holders not consenting.
SECTION 8.15 Sale of Pledged Property. (a) The power to effect
any sale pursuant to Section 8.03 hereof shall not be exhausted by any one or
more sales as to any portion of the Pledged Property remaining unsold, but shall
continue unimpaired until the entire Pledged Property securing the Notes shall
have been sold or all amounts payable under this Indenture with respect thereto
shall have been paid. The Indenture Trustee may from time to time postpone any
sale by public announcement made at the time and place of such sale. To the
extent permitted by applicable law, the Indenture Trustee shall not sell the
Pledged Property without the prior written consent of the Note Insurer (so long
as no Note Insurer Default has occurred and is continuing) and the satisfaction
of the Rating Agency Condition.
(b) The Note Insurer and any Noteholder may bid for and
acquire any portion of the Pledged Property securing the Notes in connection
with any sale thereof.
(c) Each of the parties hereby covenants and agrees that a
sale of the entirety of the Contracts and the Equipment by a public sale held
not less than ten days after notice thereof is commercially reasonable.
(d) The Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance, provided to it by the Servicer,
transferring its interest in any portion of the Pledged Property in connection
with a sale thereof. In addition, the Indenture Trustee is hereby irrevocably
appointed the agent and attorney-in-fact of the Trust to transfer and convey its
interest in any portion of the Pledged Property in connection with a sale
thereof, and to take all action necessary to effect such sale. No purchaser or
transferee at such a sale 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 monies.
SECTION 8.16 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,
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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 Trust or the Transferors or by the
levy of any execution under such judgment upon any portion of the Pledged
Property or upon any of the assets of the Trust or the Transferors.
ARTICLE IX
TERMINATION
SECTION 9.01 Termination of Obligations and Responsibilities.
The respective obligations and responsibilities of the Servicer, the Indenture
Trustee and the trust created hereby shall terminate at the option of the
Residual Holders, at any time which is 123 days after the payment to Noteholders
of all amounts required to be paid to them pursuant to this Indenture, reducing
the Class A Note Principal Balance and the Class B Note Principal Balance to
zero; provided that all amounts then owing to the Note Insurer and the Indenture
Trustee pursuant to the Transaction Documents have been paid to such parties;
and provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants living on the date of this Indenture of Joseph P. Kennedy, late
Ambassador to the Court of St. James. Notwithstanding the foregoing, the
representations and warranties and indemnification obligations of the Originator
and the Servicer hereunder and under the Servicing Agreement shall survive the
termination of the Trust and of this Indenture. Upon termination of the Trust,
the Indenture Trustee shall release any remaining Trust Property to the Residual
Holders; provided, that the Class A Note Principal Balance and the Class B Note
Principal Balance have been reduced to zero and all amounts then owing to the
Note Insurer or the Indenture Trustee pursuant to the Transaction Documents have
been paid to such parties.
SECTION 9.02 Optional Redemption of Notes; Final Disposition
of Funds. (a) On any Payment Date as of which the sum of (1) the Class A Note
Principal Balance and (2) the Class B Note Principal Balance is less than ten
percent (10.00%) of the sum of (x) the Initial Class A Note Principal Balance
and (y) the Initial Class B Note Principal Balance, the Servicer shall have the
option to cause the retirement of the Notes by depositing with the Indenture
Trustee the sum of (i) the outstanding Class A Note Principal Balance and the
outstanding Class B Note Principal Balance as of such Payment Date (after giving
effect to the payment of any principal on such Payment Date), (ii) accrued
interest on the related Note Principal Balances at the related Note Rate and
(iii) all amounts owed to the Indenture Trustee and the Note Insurer pursuant to
the Transaction Documents. Upon receipt of such amounts and all amounts then
owed to the Indenture Trustee the Indenture Trustee shall (x) make the final
payment in full to the Noteholders, (y) pay all amounts owed to the Note Insurer
and (z) release any remaining Trust Property to the Residual Holders. In the
event that the Servicer elects to redeem the Notes in accordance with this
Section 9.02, the Servicer shall be required to notify the Indenture Trustee in
writing by no later than two (2) Business Days prior to a notice required to be
sent by the Indenture Trustee pursuant to Section 9.02(b).
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(b) Notice of any termination pursuant to this Section 9.02
shall be given promptly by the Indenture Trustee, by letter to Noteholders, the
Rating Agencies and the Note Insurer mailed not later than the 10th day of the
month immediately preceding the month of such final Payment Date specifying (i)
the Payment Date upon which final payment of the Notes will be made, (ii) the
scheduled amount of any such final payment, (iii) that interest shall cease to
accrue on the Class A Notes and Class B Notes on such final Payment Date and
(iv) the address for presentation of the Notes for final payment. On such final
Payment Date, the Indenture Trustee shall cause to be distributed (A) to
Noteholders an amount equal to (x) the amount otherwise distributable to the
Noteholders on such Payment Date but for such purchase pursuant to this Section
9.02 and (y) each Class A Noteholder's and Class B Noteholder's pro rata share
(based on the aggregate related Percentage Interest) of the Class A Note
Principal Balance and the Class B Note Principal Balance deposited by the
Residual Holders into the Collection Account pursuant to this Section 9.02 and
(B) to the Note Insurer, all amounts owed to the Note Insurer under the
Transaction Documents. After such Payment Date, interest on the Class A Notes
and Class B Notes shall cease to accrue.
(c) The final payment on any Note shall only be made upon the
presentation of such Note to the Indenture Trustee at the office specified in
the notice described in Section 9.02(b) above.
(d) In the event that any amount due to any Noteholder remains
unclaimed, the Servicer shall, at its expense, cause to be published once, in
the eastern edition of The Wall Street Journal, notice that such money remains
unclaimed. If, within two years after such publication, such amount remains
unclaimed, the Servicer shall be entitled to all unclaimed funds and other
assets which remain subject hereto, and the Indenture Trustee upon written
direction from the Servicer shall transfer such funds and shall be discharged of
any responsibility for such funds and, the Noteholders shall look to the
Servicer for payment.
ARTICLE X
Noteholders' Lists and Reports
SECTION 10.01 Trust To Furnish To Indenture Trustee Names and
Addresses of Noteholders. The Trust will furnish or cause to be furnished to the
Indenture Trustee (a) not more than five (5) days after the earlier of (i) each
Record Date and (ii) 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 Holders as of such Record Date, (b) 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 (10) 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. The Indenture Trustee or, if the
Indenture Trustee is not the Note Registrar, the Trust shall furnish to the Note
Insurer or the Trust in writing upon their written request and at such other
times as the Note Insurer or the Trust may request a copy of the list of
Noteholders.
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SECTION 10.02 Preservation of Information; Communications 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 and the names and
addresses of Noteholders received by the Indenture Trustee in its capacity as
Note Registrar.
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar
shall have the protection of TIA Section 312(c).
SECTION 10.03 Reports by Trust. (a) The Trust shall:
(i) file with the Indenture Trustee, within
fifteen (15) days after the Trust is required to file the same with the
Commission, copies of the annual reports and copies 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) which the Trust 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; and
(iii) supply to the Indenture Trustee (and the
Indenture Trustee shall transmit by mail to all Noteholders described
in TIA Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Trust pursuant to clauses (i) and
(ii) of this Section 10.03(a) as may be required by rules and
regulations prescribed from time to time by the Commission.
(b) Unless the Trust otherwise determines, the fiscal
year of the Trust shall end as of December 31 of each year for purposes of this
section.
SECTION 10.04 Reports by Indenture Trustee. If required by TIA
Section 313(a), within sixty (60) days after each August 31, beginning with
August 31, 1999, the Indenture Trustee shall mail to each Noteholder as required
by TIA Section 313(c) a brief report dated as of such date that complies with
TIA Section 313(a). The Indenture Trustee also shall comply with TIA Section
313(b).
A copy of each report at the time of its mailing to
Noteholders shall be filed by the Indenture Trustee with the Commission and each
stock exchange, if any, on which the Notes are listed. The Trust shall notify
the Indenture Trustee if and when the Notes are listed on any stock exchange.
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SECTION 10.05 Compliance Certificates and Opinions, etc. (a)
Upon any application or request by the Trust to the Indenture Trustee to take
any action under any provision of this Indenture, the Trust shall furnish to the
Indenture Trustee and the Note Insurer (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) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section 10.05, 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.
(b) 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.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01 Amendment. (a) This Indenture may be amended
from time to time by the Trust, the Servicer and the Indenture Trustee, without
the consent of any of the Noteholders but with the prior written consent of the
Note Insurer (so long as no Note Insurer Default has occurred and is
continuing), to cure any ambiguity herein; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel acceptable to the Indenture
Trustee adversely affect in any respect the interests of any Noteholder.
(b) This Indenture may also be amended from time to time by
the Trust, the Servicer and the Indenture Trustee with the prior written consent
of the Controlling Party 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 Noteholders; provided, however, that
no such amendment shall (i) increase or reduce in any manner the
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amount of, or accelerate or delay the timing of, collections of payments on
Contracts or distributions that are required to be made on any Note without the
consent of the Holder of such Note or (ii) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the Holders of
all Notes then outstanding.
(c) Prior to the effectiveness of any amendment under Section
11.01(a) or (b), the Rating Agencies shall have confirmed in writing their
respective ratings of the Notes.
(d) Promptly after the execution of any such amendment, the
Indenture Trustee shall furnish a written copy of the text of such amendment
(and any consent required with respect thereto) to each Noteholder, the Note
Insurer and the Rating Agencies.
(e) Approval of the particular form of any proposed amendment
or consent shall not be necessary for the consent of the Noteholders under
Section 11.01(b), but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by the Noteholders shall be subject to
such reasonable requirements as the Indenture Trustee may prescribe.
(f) The Indenture Trustee and the Note Insurer (so long as no
Note Insurer Default has occurred and is continuing) shall be entitled to
receive an officer's certificate and an Opinion of Counsel to the effect that
all conditions precedent to the amendment of this Indenture have been satisfied.
The Indenture Trustee may, but shall not be obligated to, execute and deliver
any such amendment which affects that Indenture Trustee's rights, powers,
immunities or indemnifications hereunder.
SECTION 11.02 Conformity With Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article XI 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
TIA.
SECTION 11.03 Limitation on Rights of Noteholders. (a) The
death or incapacity of any Noteholder shall not operate to terminate this
Indenture or the Trust, nor entitle such Noteholder's legal representatives or
heirs to claim an accounting or to take any action or commence any proceeding in
any court for a partition or winding up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of them.
(b) It is understood and intended, and expressly covenanted by
each Noteholder with every other Noteholder and the Indenture Trustee, that no
one or more Holders of Notes shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this Indenture
to affect, disturb or prejudice the rights of the Holders of any other of the
Notes, to obtain or seek to obtain priority over or preference to any other
Holder of the same Class of Notes or to enforce any right under this Indenture,
except in the manner herein provided and for the equal, ratable and common
benefit of all Noteholders of the same Class. For the protection and enforcement
of the provisions of this Section 11.03, each and every Noteholder and the
Indenture Trustee shall be entitled to such relief as can be given either at law
or in equity.
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SECTION 11.04 Counterparts. For the purpose of facilitating
the execution of this Indenture and for other purposes, this Indenture may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 11.05 GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS OF
ANY STATE.
SECTION 11.06 Notices. All demands, notices, instructions,
directions and communications (other than periodic communications of a routine
nature made in connection with the dissemination of information regarding the
Pledged Property, the Servicer and the Trust required to be delivered hereunder,
which shall be delivered or mailed by first class mail or facsimile
transmission) hereunder shall be in writing, personally delivered or mailed by
overnight courier, and shall be deemed to have been duly given upon receipt (a)
in the case of the Servicer, at Balapointe Office Centre, 111 Presidential
Boulevard, Suite 127, Bala Cynwyd, Pennsylvania 19004, Attention: General
Counsel, telephone (610) 668-2440, telecopy (610) 668-1461, (b) in the case of
the Trust, First Union Trust Company, National Association, at One Rodney
Square, 920 King Street, Suite 102, Wilmington, Delaware 19801, Attention:
Corporate Trust Administration, telephone (302) 888-7539, telecopy (302)
888-7544, (c) in the case of the Indenture Trustee, at 101 Barclay Street, New
York, New York 10286, Attention: Global Trust Services, telephone (212)
815-5766, telecopy (212) 815-5309, (d) in the case of S&P, at 26 Broadway, 15th
Floor, New York, New York 10004, Attention: Asset Backed Surveillance, telephone
(212) 208-1278, telecopy (212) 208-8208, (e) in the case of Moody's, at 99
Church Street, New York, New York 10007-2701, telephone (212) 553-1402, telecopy
(212) 553-3856, (f) in the case of the Note Insurer, at 350 Park Avenue, New
York, New York, Attention: Surveillance Department (in each case in which notice
or other communication to the Note Insurer refers to an Event of Default, a
claim on the Note Insurance Policy or with respect to which failure on the part
of the Note Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of each of the General Counsel and the Head -- Financial
Guaranty Group and shall be marked to indicate "URGENT MATERIAL ENCLOSED"), and
(g) in the case of DCR, 55 East Monroe Street, Suite 3800, Chicago, Illinois
60603, Attention: Asset Backed Monitoring, telecopy (312) 368-2069. Any notice
required or permitted to be mailed to a Noteholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Note
Register. Any notice so mailed within the time prescribed in this Indenture
shall be conclusively presumed to have been duly given on the fifth Business Day
following mailing, whether or not the Noteholder receives such notice.
SECTION 11.07 Severability of Provisions. If any one or more
of the covenants, agreements, provisions, or terms of this Indenture 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 Indenture and shall in no
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way affect the validity or enforceability of the other provisions of this
Indenture or of the Notes or the rights of the Holders thereof.
SECTION 11.08 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.
The provisions of TIA Sections 310 through 317 that impose
duties on any person (including the provisions automatically deemed included
herein unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
SECTION 11.09 Third Party Beneficiary. The parties hereto
acknowledge and agree that the Note Insurer is an express third party
beneficiary of this Indenture.
SECTION 11.10 Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Section 5.02 of the Servicing
Agreement, this Indenture may not be assigned by the Servicer except with prior
written consent of the Trust, the Note Insurer (so long as no Note Insurer
Default has occurred and is continuing) and the Holders of the Applicable
Securities. Notice of any such assignment received by a Responsible Officer of
the Indenture Trustee shall be given to the Rating Agencies by the Indenture
Trustee.
SECTION 11.11 Binding Effect. This Indenture shall inure to
the benefit of, and shall be binding upon the Servicer, the Trust, the Indenture
Trustee and the Noteholders and their respective successors and permitted
assigns, subject, however, to the limitations contained in this Indenture. This
Indenture shall not inure to the benefit of any Person other than the Trust, the
Servicer, the Indenture Trustee, the Note Insurer and the Noteholders.
SECTION 11.12 Survival of Agreement. All covenants,
agreements, representations and warranties made herein and in the other
documents delivered pursuant hereto shall survive the pledge of the Pledged
Property and the issuance of the Notes and shall continue in full force and
effect until terminated pursuant to Section 9.01 hereof.
SECTION 11.13 Captions. The captions or headings in this
Indenture are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Indenture.
SECTION 11.14 Exhibits. The Exhibits to this Indenture are
hereby incorporated herein and made a part hereof and are an integral part of
this Indenture.
SECTION 11.15 Calculations. Except as otherwise provided in
this Indenture, all interest rate calculations under this Indenture, including
those with respect to the Contracts, will be made on the basis of a 360-day year
and twelve 30-day months (i.e., each Interest Accrual Period shall be deemed to
be equal 30 day periods) and will be carried out to at least seven decimal
places.
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SECTION 11.16 No Proceedings. The Servicer, the Trust and the
Indenture Trustee each hereby agrees that it will not directly or indirectly
institute, or cause to be instituted, against the Transferors, the Managers or
the Trust any bankruptcy or insolvency proceeding so long as there shall not
have elapsed one year plus one day since the maturity date of the latest
maturing securities of the Trust.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Trust, the Servicer, the Indenture
Trustee and the Back-up Servicer have caused this Indenture to be duly executed
by their respective officers, all as of the day and year first above written.
ABFS EQUIPMENT CONTRACT TRUST 1999-A,
as Issuer
By: FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Owner Trustee
By
-----------------------------
Name:
Title:
AMERICAN BUSINESS LEASING, INC., as Servicer
By
-----------------------------
Name: Jeffrey Ruben
Title: Senior Vice President
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Indenture Trustee and as Back-up Servicer
By
-----------------------------
Name:
Title:
[Signature Page for Indenture]
<PAGE>
EXHIBIT A
FORM OF
CLASS A NOTE
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY ("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 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 NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (B) TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A OR (C) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT SUBJECT, IN THE CASE OF CLAUSES (B) OR (C)
ABOVE, TO COMPLIANCE BY THE HOLDER AND THE TRANSFEREE WITH THE PROVISIONS OF
THE INDENTURE APPLICABLE TO SUCH TRANSFER.
THE PRINCIPAL OF THIS NOTE IS PAYABLE ON THE PAYMENT DATES AND IN THE AMOUNTS
DESCRIBED HEREIN. ACCORDINGLY, THE OUTSTANDING NOTE PRINCIPAL BALANCE OF THIS
NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF AND MAY
BE ASCERTAINED ONLY BY OBTAINING A WRITTEN CONFIRMATION THEREOF FROM THE
INDENTURE TRUSTEE NAMED HEREIN OR ITS SUCCESSOR.
A-1
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ABFS EQUIPMENT CONTRACT TRUST 1999-A
_____% EQUIPMENT CONTRACT BACKED NOTE, CLASS A
Secured by the assets of ABFS Equipment Contract Trust 1999-A (the
"Issuer") which consists of two notes issued by the Transferors as co-obligors,
and secured by certain direct finance leases and commercial loans, certain
interests in the underlying equipment and other property appurtenant thereto
pledged to the Indenture Trustee by the Issuer.
Principal in respect of this Class A Note is payable monthly as set
forth herein.
This Class A Note does not represent any interest in or obligation of
American Business Leasing, Inc. ("ABL"), or any Affiliate of ABL. Neither the
Class A Notes nor the Contracts are insured by any governmental agency.
Note No: A-1 CUSIP: __________
Initial Class A Note Class A
Principal Balance: $__________ Percentage Interest: 100%
The Issuer, for value received, hereby promises to pay to CEDE & Co.
the principal sum of __________ Million, _____ Hundred Thousand Dollars
($__________) in monthly installments and to pay interest monthly in arrears on
the unpaid portion of said principal sum (and, to the extent that the payment of
such interest shall be legally enforceable, on any overdue installment of
interest on this Note) on the 15th day of each month or, if such 15th day is not
a Business Day, the Business Day immediately following (each, a "Payment Date"),
commencing in July 1999, for the period commencing on and including the
immediately preceding Payment Date (or, with respect to the initial Payment
Date, on June 15, 1999) and ending on and including the day immediately
preceding such Payment Date, until such unpaid principal is fully paid, at a
rate per annum equal to _____% (the "Class A Note Rate"); provided, however,
that interest on any amount of principal or interest that is not timely paid
when due shall accrue interest until paid at the Class A Note Rate plus 1%. The
Issuer hereby agrees to pay to such registered holder its pro rata share (based
on the aggregate Class A Percentage Interest held by such registered Holder) of
the amounts which all Holders of the Class A Notes are entitled to receive, as
hereinafter set forth in this Class A Note and as more fully set forth in the
Indenture, dated as of June 1, 1999 (the "Indenture"), by and among the Issuer,
American Business Leasing, Inc., as Servicer (the "Servicer") and The Chase
Manhattan Bank, as Indenture Trustee (the "Indenture Trustee") and as Back-up
Servicer (the "Back-up Servicer"), at all times from the sources and on the
terms and conditions hereinafter set forth and as more fully set forth in the
Indenture.
The property pledged by the Issuer to the Indenture Trustee as security
for the Class A Notes includes, among other things, two notes issued by the
Transferors as co-obligors and secured by the Contracts, certain interest in the
related Equipment, all
A-2
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Scheduled Payments, Final Scheduled Payments, Residual Receipts (up to the
Booked Residual Value with respect to the related Contract), Defaulted Contract
Recoveries and other monies due thereunder after the close of business on May
31, 1999 (the "Initial Cut-Off Date"), and other property. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the Indenture.
This Class A Note is one of the duly authorized Class A Notes
designated as "$70,400,000 6.100% Equipment Contract Backed Notes of ABFS
Equipment Contract Trust 1999-A, Class A" (the "Class A Notes"). This Class A
Note is issued under and is subject to the terms, provisions and conditions of
the Indenture, to which Indenture the Holder of this Class A Note, by virtue of
the acceptance hereof, assents and by which such Holder is bound.
This Class A Note does not purport to summarize the Indenture and
reference is made to the Indenture for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Issuer. Copies of the Indenture and
all amendments thereto will be provided to any Class A Noteholder, at its
expense, upon a written request to the Servicer at: Balapointe Office Centre,
111 Presidential Boulevard, Bala Cynwyd, Pennsylvania 19004; Attention: General
Counsel.
Under the Indenture, the Issuer is obligated to cause the Indenture
Trustee to pay, to the extent that monies are available in the Collection
Account for such distributions, on each Payment Date, to the person in whose
name this Class A Note is registered and at the address specified in the
Register at the close of business on the Record Date, an amount from certain
monies deposited in the Collection Account with respect to the related
Collection Period equal to the sum of (i) the Class A Note Interest and (ii) the
Class A Base Principal Distribution Amount. The final payment of principal and
interest on this Class A Note will not be later than the [October, 2005] Payment
Date.
Payments on this Class A Note will be made by the Indenture Trustee by
check mailed, or upon request of the Holder hereof, by wire transfer of
immediately available funds, to the Person entitled thereto, as specified by
such Person in accordance with the terms of the Indenture or by such other means
as the Person entitled thereto and the Indenture Trustee shall agree, without
the presentation or surrender of this Class A Note or the making of any notation
hereon.
The Holder hereof, by its acceptance of this Class A Note, agrees to
look solely to the funds in the Collection Account to the extent available for
payment to the Holder hereof as provided in the Indenture for payment hereunder
and that the Indenture Trustee in its individual capacity is not personally
liable to the Holder hereof for any amounts due under this Class A Note or the
Indenture.
The Class A Notes do not represent an obligation of, or an interest in,
ABL or Federal Leasing or any Affiliate thereof. The Class A Notes are limited
in right of payment to certain collections and recoveries respecting the
Contracts, all as more specifically set forth above in the Indenture. Pursuant
to the Indenture, the Indenture
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<PAGE>
Trustee shall, in addition to the Class A Notes, issue Class B Notes (the "Class
B Notes"). THE RIGHT TO RECEIVE PAYMENTS WITH RESPECT TO THE CLASS B NOTES,
OTHER THAN THE CLASS B PRIORITY INTEREST, IS SUBORDINATE TO THE PRIOR PAYMENT IN
FULL OF ALL AMOUNTS OF PRINCIPAL AND INTEREST DUE AND PAYABLE ON THE CLASS A
NOTES ON EACH PAYMENT DATE.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the Servicer and the rights of the Class A Noteholders under the
Indenture at any time by the Servicer, the Issuer, the Owner Trustee and the
Indenture Trustee with the consent of the Majority Holders and the Note Insurer.
Any such consent by the Holder of this Class A Note shall be conclusive and
binding on such Holder and upon all future Holders of this Class A Note and of
any Class A Note issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this Class A
Note. The Indenture also permits the amendment thereof, in certain limited
circumstances, without the consent of the Class A Noteholders.
As provided in the Indenture, the transfer of this Class A Note is
registrable in the Register upon surrender of this Class A Note for registration
of transfer at the offices or agencies maintained by the Indenture Trustee
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new Class A Notes of
authorized denominations evidencing the same aggregate Class A Percentage
Interest in the Trust Property will be issued to the designated transferee or
transferees.
The Class A Notes are issuable only as registered Class A Notes without
coupons in minimum denominations of $100,000 of the Initial Class A Note
Principal Amount and integral multiples of $1,000 in excess thereof. As provided
in the Indenture and subject to certain limitations therein set forth, Class A
Notes are exchangeable for new Class A Notes of authorized denominations
evidencing the same aggregate Class A Percentage Interest, as requested by the
Class A Noteholder surrendering the same.
Unless earlier declared, or they otherwise become, due and payable by
reason of an Event of Default, the Notes are payable only at the time and in the
manner provided in the Indenture and are not redeemable or prepayable before
such time except that the Servicer will have the option, subject to certain
conditions set forth in the Indenture, including the deposit of the sum
specified in the Indenture, to cause early retirement of the Notes as of any
Payment Date following the date on which the aggregate outstanding Class A Note
Principal Balance and Class B Note Principal Balance is less than 10% of the sum
of the Initial Class A Note Principal Amount and the Initial Class B Note
Principal Amount. In the event of such redemption, the entire outstanding Class
A Note Principal Balance and Class B Note Principal Balance, together with
accrued interest thereon at the related Note Rate, will be required to be paid
to the respective Class A Noteholders and the respective Class B Noteholders, as
applicable, on such Payment Date. If an Event of Default as defined in the
Indenture shall occur and be
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<PAGE>
continuing, the principal of all the Notes may become or be declared due and
payable in the manner and with the effect provided in the Indenture.
No service charge will be made for any such registration of transfer
or exchange, but the Indenture Trustee may require payment of a sum sufficient
to cover any tax or governmental charge payable in connection therewith.
The Servicer, the Issuer, the Note Insurer, the Owner Trustee and the
Indenture Trustee and any agent of any of the foregoing may treat the person in
whose name this Class A Note is registered as the owner hereof for all purposes,
and none of the foregoing shall be affected by any notice to the contrary.
This Class A Note is entitled to the benefits of a financial guaranty
insurance policy (the "Note Insurance Policy") issued by Financial Security
Assurance Inc. (the "Note Insurer"), pursuant to which the Note Insurer has
unconditionally guaranteed payments of the Class A Insured Distribution Amount.
If the principal due in respect of the Class A Notes is accelerated due
to the occurrence of an Event of Default, the Note Insurer may elect either to
continue to make payments of the Class A Insured Distribution Amount or to make
one or more accelerated payments on the Class A Notes. All principal payments on
the Class A Notes shall be made pro rata to the Class A Noteholders entitled
thereto.
A-5
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Class A Note to be duly
executed.
ABFS EQUIPMENT CONTRACT TRUST 1999-A
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in
its individual capacity, but solely as
Owner Trustee
By:
--------------------------------
Name:
Title:
Dated: June __, 1999
A-6
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Notes of the series designated herein,
issued under the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
not in its individual capacity but solely
as Indenture Trustee
By:
----------------------------------
Name:
Title:
A-7
<PAGE>
EXHIBIT B
FORM OF
CLASS B NOTE
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY ("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 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 NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (B) TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A OR (C) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT SUBJECT, IN THE CASE OF CLAUSES (B) OR (C)
ABOVE, TO COMPLIANCE BY THE HOLDER AND THE TRANSFEREE WITH THE PROVISIONS OF
THE INDENTURE APPLICABLE TO SUCH TRANSFER.
THE PRINCIPAL OF THIS NOTE IS PAYABLE ON THE PAYMENT DATES AND IN THE AMOUNTS
DESCRIBED HEREIN. ACCORDINGLY, THE OUTSTANDING NOTE PRINCIPAL BALANCE OF THIS
NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF AND MAY
BE ASCERTAINED ONLY BY OBTAINING A WRITTEN CONFIRMATION THEREOF FROM THE
INDENTURE TRUSTEE NAMED HEREIN OR ITS SUCCESSOR.
B-1
<PAGE>
ABFS EQUIPMENT CONTRACT TRUST 1999-A
_____% EQUIPMENT CONTRACT-BACKED NOTE, CLASS B
Secured by the assets of the ABFS Equipment Contract Trust 1999-A (the
"Issuer") which consists of two notes issued by the Transferors, as co-obligors,
and secured by certain direct finance leases and commercial loans, certain
interests in the underlying equipment and other property appurtenant thereto
pledged to the Indenture Trustee by the Issuer.
Principal in respect of this Class B Note is payable monthly as set
forth herein.
This Class B Note does not represent any interest in or obligation of
American Business Leasing, Inc. ("ABL") or any Affiliate of ABL. Neither the
Class B Notes nor the Contracts are insured by any governmental agency.
Note No: B-1 CUSIP: __________
Initial Class B Note Class B
Principal Balance: $__________ Percentage Interest: 100%
The Issuer, for value received, hereby promises to pay to CEDE & Co.
the principal sum of _____ Million, _____ Hundred Thousand Dollars ($__________)
in monthly installments and to pay interest monthly in arrears on the unpaid
portion of said principal sum (and, to the extent that the payment of such
interest shall be legally enforceable, on any overdue installment of interest on
this Note) on the 15th day of each month or, if such 15th day is not a Business
Day, the Business Day immediately following (each, a "Payment Date"), commencing
in July 1999, for the period commencing on and including the immediately
preceding Payment Date (or, with respect to the initial Payment Date, on June
15, 1999) and ending on and including the day immediately preceding such Payment
Date, until such unpaid principal is fully paid, at a rate per annum equal to
_____% (the "Class B Note Rate"); provided, however, that interest on any amount
of principal or interest that is not timely paid when due shall accrue interest
until paid at the Class B Note Rate plus 1%. The Issuer hereby agrees to pay to
such registered holder its pro rata share (based on the aggregate Class B
Percentage Interest held by such registered Holder) of the amounts which all
Holders of the Class B Notes are entitled to receive, as hereinafter set forth
in this Class B Note and as more fully set forth in the Indenture, dated as of
June 1, 1999 (the "Indenture"), by and among the Issuer, American Business
Leasing, Inc., as Servicer (the "Servicer") and The Chase Manhattan Bank, as
Indenture Trustee (the "Indenture Trustee") and as Back-up Servicer (the
"Back-up Servicer"), at all times from the sources and on the terms and
conditions hereinafter set forth and as more fully set forth in the Indenture.
The property pledged by the Issuer to the Indenture Trustee as security
for the Class B Notes includes, among other things, two notes issued by the
Transferors as co-obligors, and secured by the Contracts, certain interests in
the related Equipment, all
B-2
<PAGE>
Scheduled Payments, Final Scheduled Payments, Residual Receipts (up to the
Booked Residual Value with respect to the related Contract), Defaulted Contract
Recoveries and other monies due thereunder after the close of business on May
31, 1999 (the "Initial Cut-Off Date"), and other property. A summary of certain
of the pertinent provisions of which is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the Indenture.
This Class B Note is one of the duly authorized Class B Notes
designated as "$__________ _____% Equipment Contract Backed Notes of ABFS
Equipment Contract Trust 1999-A, Class B" (the "Class B Notes"). This Class B
Note is issued under and is subject to the terms, provisions and conditions of
the Indenture, to which Indenture the Holder of this Class B Note, by virtue of
the acceptance hereof, assents and by which such Holder is bound.
This Class B Note does not purport to summarize the Indenture and
reference is made to the Indenture for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Issuer. Copies of the Indenture and
all amendments thereto will be provided to any Class B Noteholder, at its
expense, upon a written request to the Servicer at: Balapointe Office Centre,
111 Presidential Boulevard, Bala Cynwyd, Pennsylvania 19004; Attention: General
Counsel.
Under the Indenture, the Issuer is obligated to cause the Indenture
Trustee to pay, to the extent that monies are available in the Collection
Account for such distributions, on each Payment Date, to the person in whose
name this Class B Note is registered and at the address specified in the
Register at the close of business on the Record Date, an amount from certain
monies deposited in the Collection Account with respect to the related
Collection Period equal to the sum of (i) the Class B Note Interest and (ii) the
Class B Base Principal Distribution Amount. The final payment of principal and
interest on this Class B Note will not be later than the [October, 2005] Payment
Date.
Payments on this Class B Note will be made by the Indenture Trustee by
check mailed, or upon request of the Holder hereof, by wire transfer of
immediately available funds, to the Person entitled thereto, as specified by
such Person in accordance with the terms of the Indenture or by such other means
as the Person entitled thereto and the Indenture Trustee shall agree, without
the presentation or surrender of this Class B Note or the making of any notation
hereon.
The Holder hereof, by its acceptance of this Class B Note, agrees to
look solely to the funds in the Collection Account to the extent available for
payment to the Holder hereof as provided in the Indenture for payment hereunder
and that the Indenture Trustee in its individual capacity is not personally
liable to the Holder hereof for any amounts due under this Class B Note or the
Indenture.
The Class B Notes do not represent an obligation of, or an interest in,
ABL, Federal Leasing or any Affiliate thereof. The Class B Notes are limited in
right of payment to certain collections and recoveries respecting the Contracts,
all as more
B-3
<PAGE>
specifically set forth above in the Indenture. Pursuant to the Indenture, the
Indenture Trustee shall, in addition to the Class B Notes, issue Class A Notes
(the "Class A Notes"). THE RIGHT TO RECEIVE PAYMENTS WITH RESPECT TO THE CLASS B
NOTES, OTHER THAN THE CLASS B PRIORITY INTEREST, IS SUBORDINATE TO THE PRIOR
PAYMENT IN FULL OF ALL AMOUNTS OF PRINCIPAL AND INTEREST DUE AND PAYABLE ON THE
CLASS A NOTES ON EACH PAYMENT DATE.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the Servicer and the rights of the Class B Noteholders under the
Indenture at any time by the Servicer, the Issuer, the Owner Trustee and the
Indenture Trustee with the consent of the Majority Holders and the Note Insurer.
Any such consent by the Holder of this Class B Note shall be conclusive and
binding on such Holder and upon all future Holders of this Class B Note and of
any Class B Note issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this Class B
Note. The Indenture also permits the amendment thereof, in certain limited
circumstances, without the consent of the Class B Noteholders.
As provided in the Indenture, the transfer of this Class B Note is
registrable in the Register upon surrender of this Class B Note for registration
of transfer at the offices or agencies maintained by the Indenture Trustee
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new Class B Notes of
authorized denominations evidencing the same aggregate Class B Percentage
Interest in the Trust Property will be issued to the designated transferee or
transferees.
The Class B Notes are issuable only as registered Class B Notes without
coupons in minimum denominations of $100,000 of the Initial Class B Note
Principal Amount and integral multiples of $1,000 in excess thereof. As provided
in the Indenture and subject to certain limitations therein set forth, Class B
Notes are exchangeable for new Class B Notes of authorized denominations
evidencing the same aggregate Class B Percentage Interest, as requested by the
Class B Noteholder surrendering the same.
Unless earlier declared, or they otherwise become, due and payable by
reason of an Event of Default, the Notes are payable only at the time and in the
manner provided in the Indenture and are not redeemable or prepayable before
such time except that the Servicer will have the option, subject to certain
conditions set forth in the Indenture, including the deposit of the sum
specified in the Indenture, to cause early retirement of the Notes as of any
Payment Date following the date on which the aggregate outstanding Class A Note
Principal Balance and Class B Note Principal Balance is less than 10% of the sum
of the Initial Class A Note Principal Amount and the Initial Class B Note
Principal Amount. In the event of such redemption, the entire outstanding Class
A Note Principal Balance and Class B Note Principal Balance, together with
accrued interest thereon at the related Note Rate, will be required to be paid
to the respective Class A Noteholders and the respective Class B Noteholders, as
applicable, on
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<PAGE>
such Payment Date. If an Event of Default as defined in the Indenture shall
occur and be continuing, the principal of all the Notes may become or be
declared due and payable in the manner and with the effect provided in the
Indenture.
No service charge will be made for any such registration of transfer or
exchange, but the Indenture Trustee may require payment of a sum sufficient to
cover any tax or governmental charge payable in connection therewith.
The Servicer, the Issuer and the Indenture Trustee and any agent of any
of the foregoing may treat the person in whose name this Class B Note is
registered as the owner hereof for all purposes, and none of the foregoing shall
be affected by any notice to the contrary.
B-5
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Class B Note to be duly
executed.
ABFS EQUIPMENT CONTRACT TRUST 1999-A
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in
its individual capacity, but solely as
Owner Trustee
By:
---------------------------------
Name:
Title:
Dated: June __, 1999
B-6
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Notes of the series designated herein,
issued under the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
not in its individual capacity but solely
as Indenture Trustee
By:
---------------------------------------
Name:
Title:
B-7
<PAGE>
EXHIBIT C
FORM OF
ASSIGNMENT
This ASSIGNMENT, dated ____________ (the "Subsequent Funding Date"),
by and among ABFS EQUIPMENT CONTRACT TRUST 1999-A, a Delaware business trust,
as issuer (the "Issuer" or the "Trust"), AMERICAN BUSINESS LEASING, INC., a
Pennsylvania corporation, as servicer (the "Servicer"), and THE CHASE
MANHATTAN BANK, a New York banking corporation, as indenture trustee (the
"Indenture Trustee") and as back-up servicer (the "Back-up Servicer").
WITNESSETH:
Reference is hereby made to that certain Indenture, dated as of June 1,
1999 (the "Indenture") by and among the Issuer, the Servicer, the Back-up
Servicer and the Indenture Trustee. Pursuant to the Indenture, the Issuer agreed
to pledge, and the Indenture Trustee agreed to accept, from time to time, a
security interest in the Subsequent Pledged Property. The Indenture provides
that each such pledge of Subsequent Pledged Property be evidenced by the
execution and delivery of an Assignment such as this Assignment (this
"Assignment").
The "Subsequent Contracts" are those listed on the List of Subsequent
Contracts attached hereto.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For the purposes of this Assignment,
capitalized terms used herein but not otherwise defined shall have the
respective meanings assigned to such terms in Annex A to the Indenture.
Section 2. Pledge. (a) In consideration of the receipt of funds from
the Indenture Trustee, the Issuer hereby pledges to the Indenture Trustee, for
the benefit of the Noteholders and the Note Insurer, without recourse, all of
the Issuer's right, title and interest in, to, and under the Subsequent Pledged
Property, whether now existing or hereafter arising.
In connection with such pledge, the Issuer has heretofore recorded and
filed, or caused to be recorded and filed, at its own expense, financing
statements (and thereafter timely continuation statements with respect to such
financing statements) with respect to the Subsequent Pledged Property, meeting
the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect and to maintain the perfection of, the
pledge of the Subsequent Pledged Property from the Issuer to the Indenture
Trustee, and delivered a file-stamped copy of such financing statements or other
evidence of such filings to the Indenture Trustee on or prior to the Subsequent
Funding Date. A carbon, photographic or other reproduction of this Assignment or
of
C-1
<PAGE>
any financing statement signed by the Servicer or the Issuer is sufficient as
a financing statement in any state to perfect the pledges granted in this
Assignment.
In connection with such pledge, the Servicer shall, at its own expense
cause all of its records (including its Contract Management System) to be marked
to show that the Subsequent Pledged Property has been pledged to the Indenture
Trustee in accordance with the Indenture on or prior to the Subsequent Funding
Date.
Section 3. Representations and Warranties of the Issuer. With respect
to each Contract, the Issuer hereby assigns each of the representations and
warranties made by the related Originator in the Subsequent Receivables Sale
Agreement for the benefit of the Indenture Trustee, the Note Insurer and the
Noteholders, on which the Indenture Trustee relies in accepting the pledge of
the Subsequent Pledged Property and the Note Insurer relies in connection with
the Note Insurance Policy. Such representations and warranties speak as of the
Subsequent Funding Date unless otherwise indicated, and shall survive each
pledge, assignment, transfer and conveyance of the respective Subsequent Pledged
Property to the Indenture Trustee and its successors and assigns.
Section 4. Reacquisition of Contracts. Upon discovery by any of the
Issuer, the Indenture Trustee, the Servicer, the Note Insurer or any Noteholder
of a breach of any of the representations and warranties made by the Originators
pursuant to Section 3.03 of the Receivables Sale Agreement or Section 3 of any
Subsequent Receivables Sale Agreement, the party discovering such breach shall
give prompt written notice to such other Person; provided, that the Indenture
Trustee shall have no duty to inquire or to investigate the breach of any such
representations and warranties. The related Originator will be obligated to
reacquire a Contract which breaches a representation or warranty in accordance
with the provisions of Section 2.02 of the Servicing Agreement. Such
reacquisition obligation of such Originator shall constitute the sole remedy
against the Originators, the Transferors and the Issuer for such breach
available to the Servicer, the Trust, the Note Insurer and the Noteholders.
Section 5. Amendment. This Assignment may be amended from time to time
by the Issuer, the Indenture Trustee and the Servicer only with (x) the prior
written consent of the Note Insurer (or, in the event of a Note Insurer Default,
the Majority Holders) and (y) satisfaction of the Rating Agency Condition.
Section 6. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS ASSIGNMENT AND ANY
AMENDMENT HEREOF PURSUANT TO SECTION 5 SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS ASSIGNMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY AND FOR ANY COUNTERCLAIM THEREIN.
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<PAGE>
Section 7. Counterparts. This Assignment may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which shall constitute one and the same
instrument.
Section 8. Binding Effect; Third-Party Beneficiaries. This Assignment
will inure to the benefit of and be binding upon the parties hereto, the Trust,
the Note Insurer, the Noteholders, and their respective successors and
permitted assigns.
Section 9. Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
Section 10. Exhibits. The exhibits attached hereto and referred to
herein shall constitute a part of this Assignment and are incorporated into
this Assignment for all purposes.
[Remainder of page intentionally left blank]
C-3
<PAGE>
IN WITNESS WHEREOF, the Issuer, the Servicer, the Back-up Servicer and
the Indenture Trustee have caused this Assignment to be duly executed by their
respective officers as of the day and year first above written.
ABFS EQUIPMENT CONTRACT TRUST
1999-A, as Issuer
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in
its individual capacity but solely as
Owner Trustee
By:
-------------------------------------
Name:
Title:
AMERICAN BUSINESS LEASING, INC.,
as Servicer
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Indenture Trustee and as Back-up Servicer
By:
-------------------------------------
Name:
Title:
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<PAGE>
EXHIBIT D
FORM OF
NOTE INSURER CONSENT
FOR SUBSEQUENT CONTRACTS
____________, 19___
The Chase Manhattan Bank
as Indenture Trustee
450 West 33rd Street
New York, New York 10001
Re: ABFS Equipment Contract Trust 1999-A
Ladies and Gentlemen:
Reference is made to the Indenture, dated as of June 1, 1999 (the
"Indenture"), by and among ABFS Equipment Contract Trust 1999-A, as Issuer (the
"Trust"), American Business Leasing, Inc., as Servicer (the "Servicer"), and you
as Indenture Trustee (the "Indenture Trustee") and as Back-Up Servicer (the
"Back-up Servicer"). Pursuant to Section 2.05 of the Indenture, the undersigned
hereby approves and consents to the acquisition of the Subsequent Contracts
listed on Schedule I attached hereto aggregating $____________ in Discounted
Contract Principal Balance by the Transferors, the subsequent pledge of such
Subsequent Contracts and the related Equipment by the Transferors to the Trust,
and the subsequent assignment of such security interest by the Trust to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.
Capitalized terms used herein but not defined herein shall have the
meanings given in Annex A to the Indenture.
FINANCIAL SECURITY ASSURANCE INC.
By:
-------------------------------------
Name:
Title:
D-1
<PAGE>
Annex A - Defined Terms
"ABFS" means American Business Financial Services, Inc., a
Delaware corporation.
"ABFS Finance" means ABFS Finance LLC 1999-A, a Delaware
limited liability company.
"ABFS Group" means, as of any relevant date, the affiliated
group within the meaning of section 1504 of the Code of which ABFS, or any
successor thereto, is the common parent, or of which ABFS is a member, and
shall mean any group eligible to file consolidated, combined or unitary
returns for state, local or foreign tax purposes which includes ABFS,
regardless of the identity of the common parent.
"ABFS Residual" means ABFS Residual LLC 1999-A, a Delaware
limited liability company.
"Account" means any of the Collection Account, the
Pre-Funding Account and the Capitalized Interest Account.
"Actual Payment" means, with respect to a Collection Period
and a Contract, all Scheduled Payments, Prepayments, proceeds from any
Contract subject to a Casualty Loss, Final Scheduled Payments, Residual
Receipts (up to the Booked Residual Value of the related Contract) and
Defaulted Contract Recoveries received by the Servicer from or on behalf of an
Obligor with respect to such Contract during such Collection Period. Actual
Payments do not include Initial Unpaid Amounts, Excluded Amounts,
Reacquisition Amounts, Advance Payments, Servicer Advances and Residual
Receipts (to the extent they exceed the Booked Residual Value of the related
Contract).
"Advance Payment" means, with respect to a Contract and a
Collection Period, any Scheduled Payment, Final Scheduled Payment, Purchase
Option Payment or portion of either made by or on behalf of an Obligor and
received by the Servicer during such Collection Period, which Scheduled
Payment, Final Scheduled Payment, Purchase Option Payment or portion thereof
does not become due until a subsequent Collection Period; provided, that,
Advance Payments do not include Prepayment Amounts.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control," when used with respect to any specified Person, means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Aggregate Collateral Balance" means, as of any Payment
Date, the sum of (x) the Aggregate Discounted Contract Principal Balance of
the Contracts as of the end of the immediately preceding Collection Period and
(y) the Pre-Funded Collateral Amount as of such Payment Date.
<PAGE>
"Aggregate Discounted Contract Principal Balance" means, at
any time of determination, an amount equal to the sum of the Discounted
Contract Principal Balances of all Contracts.
"Aggregate Initial Note Principal Balance" means the sum of
the Initial Class A Note Principal Balance and the Initial Class B Note
Principal Balance.
"Applicable Securities" means, for so long as the Class A
Note Principal Balance is greater than zero, the Class A Notes. Following
reduction of the Class A Note Principal Balance to zero, and for so long as
the Class B Note Principal Balance is greater than zero, the Class B Notes.
"Applicant" has the meaning specified in Section 5.06 of the
Indenture.
"Assignment" means the written assignment of the security
interest in the Subsequent Receivables by the Trust to the Indenture Trustee,
for the benefit of the Noteholders and the Note Insurer, in substantially the
form of Exhibit C to the Indenture.
"Authorized Officer" means, with respect to the Issuer and
the Servicer, any officer or agent acting pursuant to a power of attorney of
the Owner Trustee or the Servicer, as applicable, who is authorized to act for
the Owner Trustee or the Servicer, as applicable, in matters relating to the
Trust and who is identified on the list of Authorized Officers delivered by
each of the Owner Trustee and the Servicer to the Indenture Trustee and the
Note Insurer on the Closing Date (as such list may be modified or supplemented
from time to time thereafter).
"Available Distribution Amount" means, with respect to a
Payment Date, the excess of (a) the Available Funds with respect to the
related Collection Period over (b) the Trust Operating Expenses.
"Available Funds" means, with respect to a Payment Date, all
amounts (including, without limitation, Actual Payments, Reacquisition
Amounts, proceeds of Servicer Advances, Investment Earnings and any amounts
required to be transferred to the Collection Account from the Pre-Funding
Account or the Capitalized Interest Account with respect to such Payment Date)
held in the Collection Account on the related Determination Date, after taking
into account all deposits to be made on such Determination Date, other than
any Advance Payments.
"Available Funds Shortfall" means an event which occurs on a
Payment Date if either (a) amounts are then or would otherwise be payable
under the Policy or (b) the Class A Insured Distribution Amount for such
Payment Date exceeds the Available Distribution Amount for such Payment Date.
"Back-up Servicer" means The Chase Manhattan Bank, a New
York banking corporation, and any successor thereto.
"Back-up Servicer Fee" means the fee payable to the Back-up
Servicer as set forth in Section 4.13 of the Servicing Agreement.
Ann.A-2
<PAGE>
"Back-up Servicer Fee Rate" means, the rate at which the
Back-up Servicer Fee is paid, which rate is, as long as The Chase Manhattan
Bank is the Back-up Servicer, included in the Indenture Trustee Fee Rate and
which rate shall not exceed 0.04% per annum.
"Bankruptcy Code" means the Bankruptcy Code of 1978, as
amended, as codified under Title 11 of the United States Code, and the
Bankruptcy Rules promulgated thereunder, as the same may be in effect from
time to time.
"Base Principal Amount" means, with respect to any Payment
Date, an amount equal to the excess of (x) the sum of (i) the Aggregate
Discounted Contract Principal Balance of the Contracts, as of the close of
business on the last day of the second preceding Collection Period, and (ii)
the Pre-Funded Collateral Amount as of the close of business on the last day
of the second preceding Collection Period, over (y) the sum of (i) the
Aggregate Discounted Contract Principal Balance of the Contracts, as of the
close of business on the last day of the immediately preceding Collection
Period, (ii) the Pre-Funded Collateral Amount, as of the close of business on
the last day of the immediately preceding Collection Period, (iii) the
aggregate Prepayment Amounts received by the Servicer during the related
Collection Period, (iv) any Defaulted Contract Amounts relating to the related
Collection Period and (v) the amount of any funds released from the
Pre-Funding Account as a prepayment of principal on the Notes, divided by
95.3%.
"Booked Residual Value" means, with respect to an item of
Equipment, the residual value thereof that was established by the Originator
at the commencement of the Contract covering such item of Equipment, as shown
on the books of the Originator on the applicable Cut-Off Date.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in New York, New York, Wilmington,
Delaware, Charlotte, North Carolina, in the city and State where the Indenture
Trustee's Corporate Trust Office is located, or in the city and State or
Commonwealth where the Servicer's principal office is located, are authorized
or obligated by law, executive order or governmental decree to be closed;
provided, however, that the Servicer shall, from time to time, deliver written
notice to the other parties hereto and the Note Insurer of any differences in
Business Days between the Commonwealth of Pennsylvania (or any other state
where the Servicer has its principal office) and the State of New York.
"Capitalized Interest Account" means the Eligible Bank
Account established and maintained pursuant to Section 3.01(c) of the
Indenture.
"Capitalized Interest Account Deposit" means $183,324.93.
"Capitalized Interest Amount" means, with respect to any
date of determination, the amount on deposit in the Capitalized Interest
Account.
"Capitalized Interest Requirement" means, with respect to
any Payment Date occurring during the Pre-Funding Period, the excess of (x)
one month's interest on the amount on deposit in the Pre-Funding Account,
calculated at the sum of (a) the weighted average (based on the
then-outstanding Note Principal Balances of each Class of Notes) of each Class
A Note Rate and the Class B Note Rate, and (b) the Class A Percentage of the
Premium Rate, over (y) any
Ann.A-3
<PAGE>
Pre-Funding Earnings to be transferred to the Collection Account on such Payment
Date pursuant to Section 3.01(b)(iii)(B) of the Indenture.
"Casualty Loss" means, with respect to a Contract, any loss,
theft, condemnation, governmental taking, destruction, or damage beyond repair
of any item of Equipment subject thereto which results, in accordance with the
terms of the Contract, in a reduction in the number or amount of any future
Scheduled Payments due thereunder or in the termination of the Obligor's
obligation to make future Scheduled Payments thereunder.
"Class" means all of the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes or the Class B Notes, as
applicable.
"Class A Accelerated Percentage" means 92.34%.
"Class A Additional Principal Distribution Amount" means (a)
with respect to any Payment Date prior to the Class A Termination Date, the
sum of the Residual Receipts (up to the amount of the Booked Residual Value
for the related Contracts), Reacquisition Amounts and Prepayment Amounts
actually received by the Servicer during the related Collection Period and any
Defaulted Contract Amounts relating to such Collection Period; and (b) with
respect to the Class A Termination Date, the amount described in clause (a)
above, to the extent necessary to reduce the Class A Note Principal Balance to
zero.
"Class A Base Principal Distribution Amount" means (a) with
respect to any Payment Date prior to the Class A Termination Date, the sum of
(x) the product of (i) the Class A Percentage and (ii) the Base Principal
Amount for such Payment Date, (y) the Class A Additional Principal
Distribution Amount for such Payment Date, and (z) the product of (i) the
Class A Accelerated Percentage and (ii) the amount of any funds released from
the Pre-Funding Account as a prepayment of principal; and (b) with respect to
the Class A Termination Date, the amount described in clause (a) above, to the
extent necessary to reduce the Class A Note Principal Balance to zero.
"Class A Default Interest" means, for any Payment Date and
each Class of Class A Notes, the product of (x) the sum of clauses (1) and (2)
of the definition of Class A Overdue Interest with respect to such Class,
(y)(1) for the Class A-1 Notes, the actual number of days elapsed in the
Interest Accrual Period divided by 360 days and (2) for each other Class of
Class A Notes, one-twelfth, and (z) 1%.
"Class A Insured Distribution Amount" means, with respect to
any Payment Date, the sum of the Class A Insured Distribution Amounts for each
Class of Class A Notes. The "Class A Insured Distribution Amount" for a Class
of Class A Notes is (a) with respect to any Payment Date (other than the
Payment Date which is the Class A Maturity Date for such Class), the sum of
(i) the Class A Note Interest for such Class less the amount of any Class A
Default Interest for such Class, and (ii) such Class's pro rata portion of the
excess, if any, of (A) the Class A Note Principal Balance over (B) the sum of
the Aggregate Discounted Contract Principal Balance of all Contracts and the
Pre-Funded Collateral Amount; and (b) with respect to the Payment Date which
is the Class A Maturity Date for such Class, the sum of (i) Class A Note
Ann.A-4
<PAGE>
Interest for such Class less the amount of any Class A Default Interest for
such Class and (ii) the then-outstanding Class A Note Principal Balance for
such Class.
"Class A Maturity Date" means any of the Class A-1 Maturity
Date, the Class A-2 Maturity Date, the Class A-3 Maturity Date or the Class
A-4 Maturity Date.
"Class A Note" means any of the Class A-1 Notes, the Class
A-2 Notes, the Class A-3 Notes or the Class A-4 Notes.
"Class A Note Current Interest" means, with respect to any
Payment Date and each Class of Class A Notes, the interest accrued during the
related Interest Accrual Period, equal to the product of (x)(1) for the Class
A-1 Notes, the actual number of days elapsed in the Interest Accrual Period
divided by 360 days and (2) for each other Class of Class A Notes, one
twelfth, (y) the Class A Note Rate for such Class and (z) the aggregate Class
A Note Principal Balance of such Class outstanding on the immediately
preceding Payment Date after taking into account all distributions made on
such Payment Date.
"Class A Note Factor" means the seven digit decimal number
that the Servicer will compute or cause to be computed for each Collection
Period and will make available to the Indenture Trustee and the Note Insurer
on the related Determination Date representing the ratio of (a) the Class A
Note Principal Balance which will be outstanding on the next Payment Date
(after taking into account all distributions to be made on such Payment Date)
to (b) the Initial Class A Note Principal Balance.
"Class A Noteholder" means the Person in whose name a Class
A Note is registered in the Register.
"Class A Note Interest" means, with respect to any Payment
Date and each Class of Class A Notes, the sum of the Class A Note Current
Interest for such Class and the Class A Overdue Interest for such Class.
"Class A Note Principal Balance" means, at any time, the sum
of the Class A-1 Note Principal Balance, the Class A-2 Note Principal Balance,
the Class A-3 Note Principal Balance and the Class A-4 Note Principal Balance.
For purposes of calculating the Class A Note Current Interest for a Class of
Class A Notes, the term "Class A Note Principal Balance" as used in clause (z)
of the definition of "Class A Note Current Interest" shall mean the Class A-1
Note Principal Balance, the Class A-2 Note Principal Balance, the Class A-3
Note Principal Balance or the Class A-4 Note Principal Balance, as the case
may be.
"Class A Note Rate" means any of the Class A-1 Note Rate,
the Class A-2 Note Rate, the Class A-3 Note Rate and the Class A-4 Note Rate.
"Class A Overdue Interest" means, with respect to any
Payment Date and each Class of Class A Notes, the difference between (a) the
sum of (i) the excess, if any, of that portion of any Class A Note Interest
due on the immediately preceding Payment Date for that Class of Class A Notes
over the Class A Note Interest paid on such immediately preceding Payment Date
for that Class of Class A Notes, (ii) without duplication of the amount
described in clause (i), the amount of the Class A Overdue Interest due and
unpaid as of the immediately
Ann.A-5
<PAGE>
preceding Payment Date attributable to that Class of Class A Notes and (iii) the
product of (x) the sum of clauses (i) and (ii), (y)(1) for the Class A-1 Notes,
the actual number of days elapsed in the Interest Accrual Period divided by 360
days, and (2) for each other Class of Class A Notes, one twelfth and (z) the
Class A Note Rate for that Class of Class A Notes, and (b) any Class A Overdue
Interest attributable to that Class of Class A Notes paid on such Payment Date.
"Class A Overdue Principal" means, with respect to any
Payment Date, the difference, if any, equal to (a) the aggregate of the Class
A Base Principal Distribution Amounts due on all prior Payment Dates and (b)
the aggregate amount of the principal (from whatever source) actually
distributed to Class A Noteholders on all prior Payment Dates.
"Class A Percentage" means 88%.
"Class A Percentage Interest" means the interest in the
Class A Portion of the Trust that is evidenced by a Class A Note and that is
set forth on the face of such Note; provided, however, that the Issuer shall
only issue Class A Notes evidencing in the aggregate Class A Percentage
Interests totaling 100%. To the extent that, for Federal income tax purposes,
the Class A Notes constitute indebtedness, all references in this Indenture to
Holders of Class A Notes owning a specified percentage of the outstanding
Class A Note Principal Balance shall be construed to mean Holders of Class A
Notes evidencing such specified percentage of the then outstanding
indebtedness.
"Class A Pledged Percentage" means, as of any Payment Date,
the fraction, expressed as a percentage, the numerator of which is the
outstanding Class A Note Principal Balance, and the denominator of which is
the sum of the outstanding Class A Note Principal Balance and the outstanding
Class B Note Principal Balance, each without giving effect to the
distributions to be made on such Payment Date.
"Class A Portion" means the aggregate interest in the Trust
Property evidenced by the Class A Notes.
"Class A Termination Date" means the Payment Date on which
the Class A Note Principal Balance is reduced to zero.
"Class A-1 Maturity Date" means July 15, 2000.
"Class A-1 Note Principal Balance" means the Initial Class
A-1 Note Principal Balance minus all payments theretofore received by the
Class A-1 Noteholders on account of principal (including, without limitation,
any amounts released from the Pre-Funding Account as a prepayment of principal
on the Class A-1 Notes).
"Class A-1 Note Rate" means 5.3925% per annum.
"Class A-1 Notes" means any one of the "Class A-1 Notes"
executed and authenticated by the Indenture Trustee, substantially in the form
of Exhibit A to the Indenture.
"Class A-2 Maturity Date" means June 15, 2001.
Ann.A-6
<PAGE>
"Class A-2 Note Principal Balance" means the Initial Class
A-2 Note Principal Balance minus all payments theretofore received by the
Class A-2 Noteholders on account of principal (including, without limitation,
any amounts released from the Pre-Funding Account as a prepayment of principal
on the Class A-2 Notes).
"Class A-2 Note Rate" means 6.025% per annum.
"Class A-2 Notes" means any one of the "Class A-2 Notes"
executed and authenticated by the Indenture Trustee, substantially in the form
of Exhibit A to the Indenture.
"Class A-3 Maturity Date" means December 15, 2003.
"Class A-3 Note Principal Balance" means the Initial Class
A-3 Note Principal Balance minus all payments theretofore received by the
Class A-3 Noteholders on account of principal (including, without limitation,
any amounts released from the Pre-Funding Account as a prepayment of principal
on the Class A-3 Notes).
"Class A-3 Note Rate" means 6.650% per annum.
"Class A-3 Notes" means any one of the "Class A-3 Notes"
executed and authenticated by the Indenture Trustee, substantially in the form
of Exhibit A to the Indenture.
"Class A-4 Maturity Date" means November 15, 2007.
"Class A-4 Note Principal Balance" means the Initial Class
A-4 Note Principal Balance minus all payments theretofore received by the
Class A-4 Noteholders on account of principal (including, without limitation,
any amounts released from the Pre-Funding Account as a prepayment of principal
on the Class A-4 Notes).
"Class A-4 Note Rate" means 6.650% per annum.
"Class A-4 Notes" means any one of the "Class A-4 Notes"
executed and authenticated by the Indenture Trustee, substantially in the form
of Exhibit A to the Indenture.
"Class B Accelerated Percentage" means 7.66%.
"Class B Additional Principal Distribution Amount" means (a)
with respect to any Payment Date prior to the Class A Termination Date, zero;
(b) with respect to the Class A Termination Date, the excess, if any, of (i)
sum of the Residual Receipts (up to the amount of the Booked Residual Value of
the related Contracts), Reacquisition Amounts and Prepayment Amounts actually
received by the Servicer during the related Collection Period and any
Defaulted Contract Amounts relating to such Collection Period, over (ii) the
amount of such sum necessary to reduce the Class A Note Principal Balance to
zero; and (c) with respect to any Collection Period following the Class A
Termination Date, the amount described in clause (b)(i) above to the extent
necessary to reduce the Class B Note Principal Balance to zero.
"Class B Base Principal Distribution Amount" means, (a) with
respect to any Payment Date prior to the Class A Termination Date, the sum of
(x) the product of (i) the Class
Ann.A-7
<PAGE>
B Percentage and (ii) the Base Principal Amount for such Payment Date, (y) the
Class B Additional Principal Distribution Amount and (z) the product of (i) the
Class B Accelerated Percentage and (ii) the amount of any funds released from
the Pre-Funding Account as a prepayment of principal; and (b) with respect to
the Class A Termination Date, the amount described in clause (a) above plus the
portion of the Class A Base Principal Distribution Amount, not applied as a
reduction of the Class A Note Principal Balance, on such date.
"Class B Collateralized Balance" means the positive
difference, if any, of the Class B Note Principal Balance over the Class B
Uncollateralized Balance.
"Class B Maturity Date" means November 15, 2007.
"Class B Note" means any one of the Class B Notes executed
and authenticated by the Indenture Trustee, substantially in the form of
Exhibit D to the Indenture
"Class B Note Current Junior Interest" means, with respect
to any Payment Date, the interest accrued during the related Interest Accrual
Period, equal to the product of (x) one-twelfth of the Class B Note Rate and
(y) the aggregate Class B Uncollateralized Balance outstanding immediately
prior to such Payment Date.
"Class B Note Current Priority Interest" means, with respect
to any Payment Date, the interest accrued during the related Interest Accrual
Period, equal to the product of (x) one-twelfth of the Class B Note Rate and
(y) the aggregate Class B Collateralized Balance outstanding immediately prior
to such Payment Date.
"Class B Note Factor" means the seven digit decimal number
that the Servicer will compute or cause to be computed for each Collection
Period and will make available to the Indenture Trustee and the Note Insurer
on the related Determination Date representing the ratio of (a) the Class B
Note Principal Balance which will be outstanding on the next Payment Date
(after taking into account all distributions to be made on such Payment Date)
to (b) the Initial Class B Note Principal Balance.
"Class B Noteholder" means the Person in whose name a Class
B Note is registered in the Register.
"Class B Note Interest" means, for each Payment Date, the
sum of the Class B Note Junior Interest and the Class B Note Priority
Interest.
"Class B Note Junior Interest" means, with respect to any
Payment Date, the Class B Note Current Junior Interest and the Class B Overdue
Junior Interest.
"Class B Note Principal Balance" means, at any time, the
Initial Class B Note Principal Balance minus all payments theretofore received
by the Class B Noteholders on account of principal (including, without
limitation, any amounts released from the Pre-Funding Account as a prepayment
of principal on the Class B Notes).
"Class B Note Priority Interest" means, with respect to any
Payment Date, the Class B Note Current Priority Interest and the Class B
Overdue Priority Interest.
Ann.A-8
<PAGE>
"Class B Note Rate" means 6.940% per annum.
"Class B Overdue Junior Interest" means, with respect to any
Payment Date, the difference between (a) the sum of (i) the excess, if any, of
any Class B Note Junior Interest due on the immediately preceding Payment Date
over the Class B Note Junior Interest paid on such immediately preceding
Payment Date, (ii) without duplication of the amount described in clause (i),
the amount of the Class B Junior Overdue Interest due and unpaid as of the
immediately preceding Payment Date and (iii) the product of (x) the sum of
clauses (i) and (ii), (y) one-twelfth and (z) the sum of the Class B Note Rate
plus 1%, and (b) any Class B Overdue Junior Interest paid on such Payment
Date.
"Class B Overdue Principal" means, with respect to any
Payment Date, the difference, if any, equal to (a) the aggregate of the Class
B Base Principal Distribution Amounts due on all prior Payment Dates and (b)
the aggregate amount of the principal (from whatever source) actually
distributed to Class B Noteholders on all prior Payment Dates.
"Class B Overdue Priority Interest" means, with respect to
any Payment Date, the difference between (a) the sum of (i) the excess, if
any, of any Class B Note Priority Interest due on the immediately preceding
Payment Date over the Class B Note Priority Interest paid on such immediately
preceding Payment Date, (ii) without duplication of the amount described in
clause (i), the amount of the Class B Priority Overdue Interest due and unpaid
as of the immediately preceding Payment Date and (iii) the product of (x) the
sum of clauses (i) and (ii), and (y) one-twelfth of the sum of the Class B
Note Rate plus 1%, and (b) any Class B Overdue Priority Interest paid on such
Payment Date.
"Class B Percentage" means 7.3%.
"Class B Percentage Interest" means the interest in the
Class B Portion of the Trust that is evidenced by a Class B Note and that is
set forth on the face of such Note; provided, however, that the Issuer shall
only issue Class B Notes evidencing in the aggregate Class B Percentage
Interests totaling 100%. To the extent that, for Federal income tax purposes,
the Class B Notes constitute indebtedness, all references in the Transaction
Documents to Holders of Class B Notes owning a specified percentage of the
outstanding Class B Note Principal Balance shall be construed to mean Holders
of Class B Notes evidencing such specified percentage of the then outstanding
indebtedness.
"Class B Pledged Percentage" means, as of any Payment Date,
the fraction, expressed as a percentage, the numerator of which is the
outstanding Class B Note Principal Balance, and the denominator of which is
the sum of the outstanding Class A Note Principal Balance and the outstanding
Class B Note Principal Balance, each without giving effect to the
distributions to be made on such Payment Date
"Class B Portion" means the aggregate interest in the Trust
Property evidenced by the Class B Notes.
"Class B Termination Date" means the Payment Date on which
the Class B Note Principal Balance is reduced to zero.
Ann.A-9
<PAGE>
"Class B Uncollateralized Balance" means the positive
difference, if any, of (x) the sum of (i) the Class A Note Principal Balance
and (ii) the Class B Note Principal Balance, over (y) the sum of (i) the
Aggregate Discounted Contract Principal Balance of all of the Contracts and
(ii) the Pre-Funded Collateral Amount.
"Closing Date" means June 28, 1999.
"Code" means the Internal Revenue Code of 1986, as amended,
and the Treasury Regulations adopted thereunder, as the same may be in effect
from time to time and any successor thereto.
"Collateral Agent" means Chase Bank of Texas, N.A., a
national banking association.
"Collateral Agent's Contract File" means with respect to
each Contract, (1) a certified copy of the master Contract, if applicable, (2)
the executed original counterpart of the Contract, (3) an original
certificate, executed by an Obligor, evidencing delivery and acceptance of the
Equipment, (4) documents evidencing or related to any Insurance Policy (such
documents required to be included therein only with respect to Equipment which
had an Original Equipment Cost of more than $100,000) and (5) evidence of
filing or copies of all UCC financing statements filed with respect to the
Equipment or the Contracts in accordance with the Filing Requirements
"Collection Account" means the Eligible Bank Account
established and maintained pursuant to Section 3.01(a) of the Indenture.
"Collection Period" means, with respect to any Payment Date,
the period from the opening of business on the first day of the immediately
preceding calendar month through the close of business on the last day of the
calendar month preceding the calendar month in which such Payment Date occurs.
"Collections" means all payments received on or with respect
to the Contracts or the related Equipment, including, without limitation,
Scheduled Payments, Final Scheduled Payments, Liquidation Proceeds,
Reacquisition Amounts, Insurance Proceeds, Early Termination Contract
Proceeds, proceeds from any Contract subject to a Casualty Loss, Expired
Contract Proceeds (to the extent of any amounts then due from a related Source
under the related Source Agreement), Residual Receipts (up to the Booked
Residual Value of the related Contract) and Prepayments and amounts received
in respect of the Contracts or related Equipment pursuant to any Source
Agreements (including amounts received under any recourse agreements), all as
related to amounts attributable to the Equipment and the Contracts for such
Collection Period, but excluding any Excluded Amounts and Initial Unpaid
Amounts.
"Commission" means the United States Securities and Exchange
Commission.
"Computer Tape" means, collectively, the computer tapes
generated by the Servicer which provide information relating to the Contracts.
"Contract" means each of the agreements evidencing the
indebtedness of the related Obligor, including, as applicable, schedules,
supplements and amendments thereto, under
Ann.A-10
<PAGE>
which the Originator or a Source leases specified Equipment to an Obligor and
which are identified on the List of Contracts delivered on the Closing Date or,
with respect to Subsequent Contracts and Substitute Contracts, on the List of
Subsequent Contracts or List of Substitute Contracts, respectively, delivered on
the related Subsequent Funding Date or Transfer Date, respectively.
"Contract File" means, with respect to each Contract, (1) a
certified copy of the master Contract, if applicable, (2) the executed
original counterpart of the Contract that constitutes "chattel paper" or an
"instrument" for purposes of Sections 9-105(1)(b), 9-105(l)(i) or 9-305 of the
UCC, legended to reflect the security interest of the Indenture Trustee, on
behalf of the Noteholders and the Note Insurer, (3) an original certificate,
executed by an Obligor, evidencing delivery and acceptance of the Equipment,
(4) Obligor's corporate resolutions and secretary's certificate, if required
under the Credit Policies and Procedures, (5) a guaranty, if any, (6) copies
of documentation relating to the purchase of the Equipment, including invoices
and the Originator's payment of such invoice, (7) documents evidencing or
related to any Insurance Policy (such documents required to be included
therein only with respect to Equipment which had an Original Equipment Cost of
more than $100,000), (8) evidence of filing or copies of all UCC financing
statements filed with respect to the Equipment or the Contract in accordance
with the Filing Requirements, (9) a certified copy of the related sale and
assignment between the Source and the Originator, (10) copies of any
additional Contract documents evidencing any changes or modifications of a
Contract by the Servicer in accordance with the terms of the Servicing
Agreement, and (11) reference to the applicable contract management code on
the Contract Management System and any other documents relating thereto held
by American Business Leasing, Inc., as Servicer.
"Contract Management System" means the computerized
electronic contract management system maintained by the Servicer for all
Contracts and other agreements similar to the Contracts, as the same may be
modified by the Servicer, the Originator and the Transferors.
"Contract Number" means, with respect to each Contract, its
identifying number.
"Contract Pool" means, at any time, all Contracts held as
part of the security for the Trust Property.
"Controlling Party" means the Note Insurer, but if a Note
Insurer Default has occurred and is continuing, the Majority Holders.
"Conveyance Date" means, with respect to the Initial
Contracts, the Closing Date, and with respect to Subsequent Contracts or
Substitute Contracts, the Subsequent Funding Date or Transfer Date,
respectively.
"Conveyed Assets" means, with respect to the Receivables
Sale Agreement and the Subsequent Receivables Sale Agreement and the
Originator, (a) all of the Originator's right, title and interest in and to,
but not its obligations under the Equipment relating to Contracts (except for
any licensed products that may accompany the Equipment) and any new unit or
units of Equipment substituted for any existing unit or units of Equipment,
including all income and proceeds upon any sale, re-lease or other disposition
of the Equipment, (b) all of the Originator's
Ann.A-11
<PAGE>
right, title and interest in and to, but not its obligations under, the
Contracts, and all amendments, additions and supplements including schedules,
summary schedules and subschedules made or hereafter made with respect thereto,
(c) all monies due or to become due in payment of the Contracts on or after the
related Conveyance Date, including all Scheduled Payments thereunder (whether or
not due), Residual Receipts (up to the Booked Residual Value for such Contract),
any Prepayments, any payments in respect of a casualty or early termination, and
any Liquidation Proceeds received with respect thereto, but excluding any
Excluded Amounts, (d) the Contract Files, (e) all Insurance Proceeds relating to
the foregoing and the Originator's rights and interests in the Insurance
Policies relating to the foregoing, (f) all Source Agreements, Source Agreement
Rights and agreements with manufacturers of the Equipment, to the extent they
relate to any Contract and any Equipment covered by the Contracts, (g) the
rights of the Originator under the Receivables Sale Agreement or Subsequent
Receivables Sale Agreement, as applicable, (h) any guarantees of an Obligor's
obligations under a Contract, and (i) all proceeds and income of the foregoing
or relating thereto; provided, that Conveyed Assets do not include any security
deposits, Initial Unpaid Amounts or Residual Receipts to the extent they exceed
the Booked Residual Value of the related Contract.
"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 the date of this Indenture is specified
in Section 11.06 of the Indenture.
"Credit Policies and Procedures" means the credit policies
and procedures of the Servicer.
"Credit File" means, with respect to each Contract, the
following documents: (a) copies of the Contract, any UCC financing statements
and any other original documents related to the Contract, (b) the application
of the related Obligor, (c) documentation evidencing the information with
respect to such Contract input into the Contract Management System and (d) any
other information maintained by the Servicer pursuant to its customary
policies and procedures.
"Cumulative Loss Event" means that the sum of the Defaulted
Contract Amounts (as of the first Payment Date for which such Contract is
classified as a Defaulted Contract) of all Contracts which have become
Defaulted Contracts, on a cumulative basis since the Closing Date, less any
Defaulted Contract Recoveries exceeds an amount equal to 5.25%, of the Initial
Aggregate Collateral Balance.
"Cut-Off Date" means, with respect to the Initial Contracts,
the Initial Cut-Off Date, with respect to each Subsequent Contract, the
related Subsequent Cut-Off Date, and, with respect to any Substitute
Contracts, the related Substitute Contract Cut-Off Date.
"DCR" means Duff & Phelps Credit Rating Co.
"Defaulted Contract" means a Contract that becomes defaulted
at the earlier of the date on which (i) the Servicer has determined in its
sole discretion, in accordance with the Servicing Standard and its customary
servicing procedures, that such Contract is not collectible, (ii) all or part
of a Scheduled Payment thereunder is more than 120 days delinquent, (iii) the
Ann.A-12
<PAGE>
Servicer elected not to make a Servicer Advance or for which the Servicer has
determined that a prior Servicer Advance is not recoverable or (iv) a
bankruptcy proceeding has been instituted by or against the Obligor, and the
Obligor has failed to make a Scheduled Payment or Final Scheduled Payment.
"Defaulted Contract Amounts" means, with respect to any
Payment Date, the sum of (x) the present values of all of the remaining
Scheduled Payments and any Final Scheduled Payment due or to become due under
each Contract which became a Defaulted Contract during the related Collection
Period, discounted monthly at the Discount Rate and (y) any Scheduled Payments
theretofore due and not paid by the Obligor.
"Defaulted Contract Recoveries" means all proceeds of the
sale or re-lease of Equipment related to Defaulted Contracts and any amounts
collected as judgments against an Obligor or others related to the failure of
such Obligor to pay any required amounts under the related Contract or to
return the Equipment, in each case as reduced by (i) any unreimbursed Servicer
Advances with respect to such Contract and (ii) any reasonably incurred
out-of-pocket expenses incurred by the Servicer in enforcing such Contract or
in liquidating such Equipment.
"Delinquency Trigger Event" shall exist on any Payment Date
on which the average of the Delinquency Trigger Ratios for such Payment Date
and the two immediately preceding Payment Dates exceeds 3%. Once a Delinquency
Trigger Event occurs, then such condition shall be deemed to continue until
the Payment Date which is the third consecutive Payment Date for which the
average of the Delinquency Trigger Ratio for such Payment Date and the two
immediately preceding Payment Dates is less then 3%.
"Delinquency Trigger Ratio" means, with respect to any
Payment Date, the quotient, expressed as a percentage of (a) the Aggregate
Discounted Contract Principal Balance of all Contracts as to which all or a
portion of a Scheduled Payment remained unpaid for more than 60 days from its
due date, determined as of the end of the immediately preceding calendar
month, divided by (b) the Aggregate Discounted Contract Principal Balance of
all Contracts as of the last day of the immediately preceding calendar month.
"Delinquent Contract" means, as of any Determination Date,
any Contract (other than a Contract which became a Defaulted Contract prior to
such Determination Date) with respect to which all or a portion of any
Scheduled Payment was not received by the Servicer as of 30 days from its due
date.
"Depositor" means Prudential Securities Secured Financing
Corporation, a Delaware corporation.
"Depository" means The Depository Trust Company, 55 Water
Street, New York, New York 10041 and any successor Depository hereafter named.
"Determination Date" means, with respect to a Payment Date,
a date which is the tenth day of the calendar month in the month in which such
Payment Date occurs, or if such day is not a Business Day, the immediately
preceding Business Day; provided, however, that in no event shall such
Determination Date be later than two Business Days prior to such Payment Date.
Ann.A-13
<PAGE>
"Direct Participant" means any broker-dealer, bank or other
financial institution for which the Depository holds Notes from time to time
as a securities depositary.
"Discounted Contract Principal Balance" means, with respect
to any Contract, on any Determination Date, the sum of the present value of
all of the remaining Scheduled Payments and any Final Scheduled Payment
becoming due under such Contract after the end of the prior Collection Period,
discounted monthly at the Discount Rate in the manner described below;
provided, however, that except to the extent expressly provided in the
Indenture or the Servicing Agreement, the Discounted Contract Principal
Balance of any Defaulted Contract, Early Termination Contract, or Expired
Contract or Contract reacquired by the Originator pursuant to the Servicing
Agreement shall be equal to zero.
In connection with all calculations required to be made
pursuant to the Transaction Documents with respect to the determination of
Discounted Contract Principal Balances, for any date of determination the
"Discounted Contract Principal Balance" for each Contract shall be calculated
assuming:
(i) Scheduled Payments are due on the last day of each
Collection Period;
(ii) Scheduled Payments are discounted on a monthly basis
using a 30 day month and a 360 day year; and
(iii) Scheduled Payments are discounted to the last day of
the Collection Period prior to the Determination Date.
"Discount Rate" means, as of any date of determination,
7.48%. The Discount Rate equals the sum of (a) the Class B Note Rate, (b) the
Servicing Fee Rate, (c) the Indenture Trustee Fee Rate, and (d) the Back-up
Servicer Fee Rate.
"Early Termination Contract" means any Contract that has
terminated pursuant to the terms of such Contract prior to its scheduled
expiration date, other than a Defaulted Contract.
"Early Termination Contract Proceeds" means any and all cash
proceeds or rents realized from the sale or re-lease of Equipment under an
Early Termination Contract (net of reasonable remarketing expenses).
"Eligible Bank Account" means a segregated account, which
may be an account maintained with the Indenture Trustee, which is either (a)
maintained with a depository institution or trust company whose long term
unsecured debt obligations are rated at least A by DCR and A2 by Moody's and
whose short-term unsecured obligations are rated at least A-1+ by S&P;
provided, that if DCR does not rate such entity then the ratings of S&P and
Moody's shall suffice, or (b) a segregated trust account or similar account in
the corporate trust department of a federally or state chartered depository
institution subject to regulations regarding fiduciary funds on deposit
substantially similar to 12 C.F.R. Section 9.10(b).
"Eligible Contract" means any Contract that is not a
Defaulted Contract and with respect to which all of the representations and
warranties set forth in Section 2.02 of the Servicing Agreement were true as
of the date made.
Ann.A-14
<PAGE>
"Eligible Investments" means any of the following, in each
case as determined at the time of the investment or contractual commitment to
invest therein (to the extent such investments would not require the
registration of the Trust as an investment company pursuant to the Investment
Company Act):
(a) negotiable instruments or securities
represented by instruments in bearer or registered or book-entry form
which evidence:
(i) obligations which have the benefit of
the full faith and credit of the United States of America,
including depository receipts issued by a bank as custodian
with respect to any such instrument or security held by the
custodian for the benefit of the holder of such depository
receipt,
(ii) demand deposits or time deposits in,
or bankers' acceptances issued by, any depositary
institution or trust company 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 depositary institution authorities; provided,
that at the time of the Indenture Trustee's investment or
contractual commitment to invest therein, the certificates
of deposit or short-term deposits (if any) or long-term
unsecured debt obligations (other than such obligations
whose rating is based on collateral or on the credit of a
Person other than such institution or trust company) of such
depositary institution or trust company has a credit rating
in the highest rating category from each Rating Agency,
(iii) certificates of deposit having a
rating in the highest rating category by each Rating Agency,
or
(iv) investments in money market mutual
funds which are (or which are composed of instruments or
other investments which are) rated in the highest rating
category by each Rating Agency (including funds for which
the Indenture Trustee or any of its Affiliates is investment
manager or advisor);
(b) demand deposits in the name of the Indenture
Trustee in any depositary institution or trust company referred to in
clause (a)(ii) above;
(c) commercial paper (having original or remaining
maturities of no more than 270 days) having a credit rating in the
highest rating category by each Rating Agency;
(d) Eurodollar time deposits that are obligations
of institutions whose time deposits carry a credit rating in the
highest rating category by each Rating Agency;
(e) repurchase agreements involving any Eligible
Investment described in any of clauses (a)(i), (a)(iii) or (d) above,
so long as the other party to the repurchase agreement has its
long-term unsecured debt obligations rated in the highest rating
category by each Rating Agency and so long as the Note Insurer has
approved of such repurchase agreement in writing; and
Ann.A-15
<PAGE>
(f) any other investment with respect to which the
Rating Agency Condition has been satisfied and to which the Note
Insurer has given its prior written consent.
Any Eligible Investment must mature no later than the
Business Day prior to the next Payment Date.
"Equipment" means the equipment leased or sold, as
applicable, to an Obligor pursuant to any Contract.
"ERISA" means The Employee Retirement Income Security Act of
1974, as amended.
"Event of Back-up Servicing Termination" has the meaning
specified in Section 6.06 of the Servicing Agreement.
"Event of Default" has the meaning specified in Section 8.01
of the Indenture.
"Event of Servicing Termination" has the meaning specified
in Section 6.01 of the Servicing Agreement.
"Excess Amounts" means, with respect to any Contract, any
payment required to be paid by the related Obligor pursuant to such Contract
at the maturity of such Contract in excess of the last Scheduled Payments or
the Final Scheduled Payment with respect to such Contract.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Amounts" means any payments received from an
Obligor or a Source in connection with any application fees, tax processing
fees, wire transfer fees, express mail fees, insurance premiums, late charges
and other penalty amounts, taxes, fees or other charges imposed by any
Governmental Authority or under the Contract, any indemnity payments made by
an Obligor for the benefit of the obligee under the related Contract or any
payments collected from an Obligor or received from a Source relating to
servicing and/or maintenance payments pursuant to the related Contract or
maintenance agreement, as applicable, or any other non-rental charges
reimbursable to the Servicer in accordance with the Servicer's customary
policies and procedures plus any collections as to which the Servicer has made
an unreimbursed Servicer Advance.
"Expired Contract" means any Contract that has terminated on
its scheduled expiration date.
"Expired Contract Proceeds" means any and all cash proceeds
or rents realized from the sale or re-lease of Equipment under an Expired
Contract.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System and any successor thereto.
Ann.A-16
<PAGE>
"Filing Locations" means the jurisdictions in which any
Equipment is located under Contracts as of the applicable Cut-Off Date.
"Filing Requirements" means (i) with respect to each
Contract relating to Equipment with an Original Equipment Cost of $25,000 or
more, a UCC-1 financing statement against the Equipment, naming the Obligor as
debtor and either (a) the Originator as secured party, or (b) the Source as
secured party, in which case the Originator has an assignment of such security
interest, (ii) a UCC-1 financing statement with respect to the assignment of
all Contracts and the ownership interest or security interest of the
Originator in the related Equipment to the Transferors pursuant to the
Receivables Sale Agreement, (iii) a UCC-1 financing statement with respect to
the pledge of all Contracts and the ownership interest or security interest of
the Transferors in the related Equipment to the Trust pursuant to the
Receivables Pledge Agreement, (iv) with respect to the Equipment, UCC-1
financing statements filed in each of the 50 states (other than Georgia,
Louisiana, Maryland, Oklahoma, and Tennessee) and the District of Columbia (1)
naming the Originator, as debtor, ABFS Residual, as secured party, and the
Indenture Trustee, as assignee, and (2) naming ABFS Residual, as debtor, and
the Indenture Trustee, as secured party, and (v) a UCC-1 financing statement
with respect to the assignment of the security interest in all of the
Contracts and the related Equipment by the Trust to the Indenture Trustee, for
the benefit of the Noteholders and the Note Insurer, pursuant to the
Indenture. The Originator has represented that it, or the related Source, has
filed UCC-1 financing statements with respect to Contracts as to which the
related Equipment had an Original Equipment Cost of $10,000 or more.
"Final Scheduled Payment" means, with respect to any
Contract, any payment set forth in such Contract other than the regular
Scheduled Payment which is required to be paid by the related Obligor at the
maturity of such Contract.
"Financing Statements" means a form UCC-1 or UCC-3 financing
statement, as applicable.
"Force Majeure" means any strike, fire, explosion, flood,
war (declared or undeclared), riots, rebellion, revolution, blockade, acts of
public enemies, acts of God, or any other cause of the nature and character
specifically enumerated above, which is beyond the control of any party to the
Transaction Documents.
"Funding Termination Date" means the earlier to occur of (a)
the date on which an Event of Default or Restricting Event occurs, (b) the
close of business on September 31, 1999, or (c) the date on which the
Pre-Funded Amount (exclusive of any Pre-Funding Earnings) falls below
$100,000.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards Board
(or agencies with similar function of comparable stature and authority within
the accounting profession), or in such other statements by such other entity
as may be in general use by significant segments of the U.S. accounting
profession, which are applicable to the circumstances as of the date of
determination.
Ann.A-17
<PAGE>
"Governmental Authority" means (a) any federal, state,
county, municipal or foreign government, or political subdivision thereof, (b)
any governmental or quasi-governmental agency, authority, board, bureau,
commission, department, instrumentality or public body, (c) any court or
administrative tribunal or (d) with respect to any Person, any arbitration
tribunal or other non-governmental authority to the jurisdiction of which such
Person has consented.
"Holder" means the Person in whose name a Note is registered
in the Register.
"Income Taxes" means any Federal, state, local or foreign
taxes based upon, measured by, or imposed upon gross or net income, gross or
net receipts, capital, net worth, or the privilege of doing business, and any
minimum taxes or withholding taxes based upon any of the foregoing, including
any penalties, interest or additions to tax imposed with respect thereto.
"Indebtedness" means, as to any Person, (a) all indebtedness
of such Person for borrowed money, (b) all leases of equipment of such Person
as Obligor, (c) to the extent not included in clause (b), above, all capital
leases of such Person as Obligor, (d) any obligation of such Person for the
deferred purchase price of property or services (other than trade or other
accounts payable in the ordinary course of business and not more than ninety
(90) days past due), (e) any obligation of such Person that is secured by a
Lien on assets of such Person, whether or not that Person has assumed such
obligation or whether or not such obligation is non-recourse to the credit of
such Person, (f) obligations of such Person arising under acceptance
facilities or under facilities for the discount of accounts receivable of such
Person, (g) any obligation of such Person to reimburse the issuer of any
letter of credit issued for the account of such Person upon which a draw has
been made and (h) obligations of such Person arising under the guaranty of the
obligations of others, of the type listed in (a) through (g) above.
"Indemnification Agreement" means the Indemnification
Agreement, dated as of June 24, 1999, among the Note Insurer, the Trust and
the Underwriter.
"Indenture" means the Indenture, dated as of June 1, 1999,
among the Trust, the Servicer, the Back-up Servicer and the Indenture Trustee.
"Indenture Trustee" means the institution executing the
Indenture and the Servicing Agreement as Indenture Trustee, or its successor
in interest, and any successor indenture trustee appointed as provided herein,
or any successor to the Indenture Trustee's corporate trust business (or a
substantial portion thereof) and initially shall mean The Chase Manhattan
Bank, a New York banking corporation.
"Indenture Trustee Expenses" means the amounts payable,
subject to the limitations set forth in Section 7.07 of the Indenture, to the
Indenture Trustee (a) as reimbursement for its reasonable expenses in its
capacity as Indenture Trustee, including, without limitation, the costs of any
transition of servicing from the Servicer to the Indenture Trustee, as Back-up
Servicer, and (b) as indemnification for loss, liability or expense incurred
by the Indenture Trustee without negligence or bad faith on its part, arising
out of the performance of its duties hereunder.
Ann.A-18
<PAGE>
"Indenture Trustee Fee" means, with respect to each Payment
Date, an amount equal to the greater of (i) the product of (a) one-twelfth of
the Indenture Trustee Fee Rate and (b) the Aggregate Discounted Contract
Principal Balance as of the last day of the prior Collection Period, and (ii)
$1,500.00.
"Indenture Trustee Fee Rate" means, for the purpose of
calculating the Indenture Trustee Fee and the Discount Rate, a rate equal to
0.04% per annum.
"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 10.05 of
the Indenture, prepared by an independent appraiser or other expert appointed
pursuant to an Issuer Order and approved by the Indenture Trustee in the
exercise of reasonable care, and such opinion or certificate shall state that
the signer has read the definition of "Independent" in the Indenture and that
the signer is independent within the meaning thereof.
"Independent Public Accountant" means any of (a) Arthur
Andersen LLP (b) Deloitte & Touche LLP, (c) PricewaterhouseCoopers LLP, (d)
Ernst & Young, LLP, (e) KPMG LLP and (f) BDO Seidman LLP (and any successors
thereof); provided, that such firm is independent with respect to the Servicer
or any subservicer, as the case may be, within the meaning of the Securities
Act of 1933, as amended.
"Indirect Participant" means any financial institution for
whom any Direct Participant holds an interest in a Note.
"Initial Aggregate Collateral Balance" means the sum of
(x) the Aggregate Discounted Contract Principal Balance of the Initial
Contracts as of the Initial Cut-Off Date, and (y) the Pre-Funded Collateral
Amount on the Closing Date.
"Initial Aggregate Discounted Contract Principal Balance"
means the Aggregate Discounted Contract Principal Balance as of the Initial
Cut-Off Date.
"Initial Class A Note Principal Balance" means the sum of
the Initial Class A-1 Note Principal Balance, the Initial Class A-2 Note
Principal Balance, the Initial Class A-3 Note Principal Balance and the
Initial Class A-4 Note Principal Balance.
"Initial Class A-1 Note Principal Balance" means $15,000,000.
"Initial Class A-2 Note Principal Balance" means $13,000,000.
"Initial Class A-3 Note Principal Balance" means $34,160,000.
"Initial Class A-4 Note Principal Balance" means $10,000,000.
"Initial Class B Note Principal Balance" means $5,986,000.
"Initial Contracts" means the Contracts pledged by the
Transferors to the Trust pursuant to the Receivables Pledge Agreement, on the
Closing Date.
Ann.A-19
<PAGE>
"Initial Conveyed Assets" means the Conveyed Assets relating
to the Initial Contracts.
"Initial Cut-Off Date" means, with respect to the Initial
Contracts, the close of business on May 31, 1999.
"Initial Equipment" means the Equipment relating to the
Initial Contracts.
"Initial Receivables" means the Initial Contracts and the
related Initial Equipment, and certain payments related thereto.
"Initial Unpaid Amount" means, with respect to a Contract,
the sum of (a) the excess of (x) the aggregate amount of all Scheduled
Payments due prior to the Cut-Off Date over (y) the aggregate of all Scheduled
Payments made prior to the Cut-Off Date with respect to such Contract and (b)
with respect to certain Contracts (as indicated on Schedule I to the
Receivables Sale Agreement) the Scheduled Payments due during the calendar
month of June 1999, which Scheduled Payments have not been transferred and
contributed to the Transferors.
"Insurance Agreement" means the Insurance and Indemnity
Agreement, dated as of June 1, 1999, among American Business Credit, Inc., the
Originator, the Servicer, the Trust, the Transferors, the Note Insurer and the
Manager.
"Insurance Policy" means, with respect to an item of
Equipment and the related Contract, any insurance policy required to be
maintained by the Obligor pursuant to such Contract that covers physical
damage to such Equipment and liability resulting from the use, operation or
possession of such Equipment (including policies procured by or on behalf of
the Originator on behalf of the Obligor), including any blanket insurance
policy of either Originator or their respective Affiliates relating to the
Contracts.
"Insurance Proceeds" means, with respect to an item of
Equipment and the related Contract, any amount received during a Collection
Period pursuant to an Insurance Policy issued with respect to such Equipment
and related Contract.
"Insured Payment" means, with respect to any Payment Date,
the excess of (a) the sum of (i) an amount equal to the Class A Insured
Distribution Amount, and (ii) any Preference Amounts, over (b) Available Funds
for such Payment Date available for distribution in respect of the Class A
Insured Distribution Amount.
"Interest Accrual Period" means, with respect to any Payment
Date, the period from and including the prior Payment Date to but excluding
such Payment Date and with respect to the initial Payment Date, (x) for the
Class A-1 Notes, the period from and including the Closing Date, up to but
excluding such Payment Date and (y) for each other Class of Notes, the period
from and including June 15, 1999 to but excluding such Payment Date.
"Investment Company Act" means the Investment Company Act of
1940, as amended (15 U.S.C. 80a-1 et seq.), as the same may be in effect from
time to time, or any successor statute thereto.
Ann.A-20
<PAGE>
"Investment Earnings" means any and all income from the
investment of monies held, from time to time, in any Account pursuant to
Section 3.02 of the Indenture, net of any losses on any investments held in
such Accounts.
"IRS" means the Internal Revenue Service, and any successor
thereto.
"Issuer" means the ABFS Equipment Contract Trust 1999-A.
"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 and the Note Insurer; provided,
however, that such order or request signed by an Authorized Officer of the
Owner Trustee shall be at the direction of the Owners (as defined in the Trust
Agreement).
"Late Payment Rate" has the meaning given in the Insurance
Agreement.
"Lien" means any mortgage, pledge, hypothecation, assignment
for security, security interest, encumbrance, levy, lien or charge of any and,
whether voluntarily incurred or arising by operation of law or otherwise,
affecting any property, including any agreement to grant any of the foregoing,
any conditional sale or other title retention agreement, any Contract in the
nature of a security interest, and the filing of or agreement to file or
deliver any financing statement (other than a precautionary financing
statement with respect to a lease that is not in the nature of a security
interest) under the UCC or comparable law of any jurisdiction.
"Liquidation Proceeds" means, with respect to a Defaulted
Contract, proceeds from the sale or re-lease of the Equipment, proceeds of the
related Insurance Policy, proceeds from any Source Agreements and any other
recoveries with respect to such Defaulted Contract and the related Equipment,
net of reasonable remarketing expenses and amounts so received that are
required to be refunded to the Originator on such Contract.
"List of Contracts" means the List of Initial Contracts, as
supplemented by each List of Subsequent Contracts and each List of Substitute
Contracts.
"List of Initial Contracts" means the List of Initial
Contracts delivered pursuant to Section 2.03(b)(i) of the Indenture.
"List of Subsequent Contracts" means the List of Subsequent
Contracts delivered pursuant to Section 2.05(a) of the Indenture.
"List of Substitute Contracts" means the List of Substitute
Contracts delivered pursuant to Section 4.02 of the Indenture.
"Majority Holders" means the holders of the Applicable
Securities that together own Applicable Securities with an aggregate
Percentage Interest in excess of 50%.
"Manager" means ABFS Special Purpose Management, Inc., a
Delaware corporation, the managing member of ABFS Finance and ABFS Residual.
Ann.A-21
<PAGE>
"Monthly Statement" has the meaning specified in Section
4.07 of the Servicing Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Necessary Consents" means, with respect to any Person, all
necessary consents to the closing of the transactions contemplated by the
Transaction Documents.
"Net Charge-Off Event" exists on any Payment Date on which
the average of the Net Charge-Off Ratio for such Payment Date and the two
immediately preceding Payment Dates exceeds 2.5%. Once a Net Charge-Off Event
occurs, then such condition shall be deemed to continue until the Payment Date
which is the fourth consecutive Payment Date for which the average of the Net
Charge-Off Ratio for such Payment Date and the two immediately preceding
Payment Dates is less than 2.5%
"Net Charge-Off Ratio" means, with respect to any Payment
Date, twelve times the quotient, expressed as a percentage, of (a) the sum of
the Discounted Contract Principal Balance of all Contracts that become
Defaulted Contracts during the immediately preceding calendar month
(regardless of whether a Substitute Contract was provided therefor) less all
recoveries received during the immediately preceding calendar month,
including, but not limited to, liquidation proceeds and residual proceeds,
divided by (b) the Aggregate Discounted Contract Principal Balance of all
Contracts as of the end of the immediately preceding calendar month. For the
purposes of the calculation of the Net Charge-Off Ratio, the Discounted
Contract Principal Balance of any Contract which is a Defaulted Contract shall
not be zero, but shall instead be calculated as provided in the definition of
Discounted Contract Principal Balance without reference to the last proviso in
such definition.
"Notes" means the Class A Notes and the Class B Notes.
"Noteholder" means the Person in whose name a Note is
registered in the Register held by the Note Registrar.
"Note Insurance Policy" means the Note Insurance Policy,
Policy Number 50828-N, relating to the Class A Notes.
"Note Insurer" means Financial Security Assurance Inc. or
any successor thereto, as issuer of the Note Insurance Policy.
"Note Insurer Default" means the existence and continuance
of any of the following:
(a) the Note Insurer shall have failed (and continue to fail)
to make a required payment when due under the Note Insurance Policy;
(b) the Note Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of
the Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization, (ii) made a general
assignment
Ann.A-22
<PAGE>
for the benefit of its creditors or (iii) had an order for relief
entered against it under the Bankruptcy Code, the New York State
Insurance Law or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation, or reorganization
that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York
Department of Insurance or any other competent regulatory authority
shall have entered a final and nonappealable order, judgment or
decree (i) appointing a custodian, indenture trustee, agent, or
receiver for the Note Insurer or for all or any material portion of
its property or (ii) authorizing the taking of possession by a
custodian, indenture trustee, agent, or receiver of the Note Insurer
or of all or any material portion of its property.
"Note Principal Balance" means, individually and
collectively, the Class A Note Principal Balance and the Class B Note
Principal Balance.
"Note Rate" means, individually and collectively, the Class
A Note Rate or the Class B Note Rate.
"Note Registrar" means, initially, the Indenture Trustee
pursuant to Section 5.03 of the Indenture.
"Obligor" means, with respect to any Contract, the Person or
Persons obligated to make payments with respect to such Contract, including
any guarantor thereof.
"Officer's Certificate" means a certificate delivered by an
Authorized Officer.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel employed by the Servicer, the Back-up Servicer or other
counsel, in each case reasonably acceptable to the Note Insurer and the
addressees thereof.
"Original Equipment Cost" means the invoice price of the
Equipment to be leased pursuant to a Contract, exclusive of amounts, if any,
paid for taxes, warranty extensions or service contracts. The Original
Equipment Cost includes only the cost of the actual Equipment being leased,
and not any boot collateral included therewith.
"Original Pre-Funded Amount" means $12,276,222.15.
"Originator" means American Business Leasing, Inc., a
Pennsylvania corporation.
"Owner Trustee" means First Union Trust Company, National
Association, a national banking association and any successor owner trustee.
"Payment Date" means the 15th day of each calendar month, or
if such day is not a Business Day, the immediately following Business Day,
commencing on July 15, 1999 until such time as the Indenture has been
terminated in accordance with the Article IX thereof.
"Percentage Interest" means, with respect to a Noteholder
and a Class of Notes on any date of determination, the percentage obtained by
dividing the Note Principal Balance of the
Ann.A-23
<PAGE>
Note held by such Noteholder as of the Closing Date by the related Note
Principal Balance of the related Class of Notes as of the Closing Date.
"Permitted Liens" means:
(a) Liens granted in favor of the Trust under the
Receivables Pledge Agreement or the Indenture Trustee on behalf of
the Noteholders and the Note Insurer and pursuant to the Indenture;
and
(b) Liens constituting the rights of Obligors under Contracts.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, limited liability partnership,
institution, public benefit corporation, firm, joint stock company, estate,
entity or Governmental Authority.
"Pledged Notes" means the notes issued to the Trust by the
Transferors pursuant to the Receivables Pledge Agreement and secured by a
pledge of the Conveyed Assets.
"Pledged Property" means the property pledged by the Trust
to the Indenture Trustee, on behalf of the Noteholders and the Note Insurer,
pursuant to Section 2.01 of the Indenture.
"Pool Factor" means the seven digit decimal number that the
Servicer will compute or cause to be computed for each Collection Period and
will make available on the related Determination Date representing the ratio
of (a) the Aggregate Discounted Contract Principal Balance of the Contracts as
of the immediately preceding Calculation Date to (b) the Aggregate Discounted
Contract Principal Balance as of the most recent Cut-Off Date.
"Preference Amount" has the meaning specified in the Note
Insurance Policy.
"Pre-Funded Amount" means, as of any date of determination,
the amount on deposit in the Pre-Funding Account.
"Pre-Funding Account" means the Eligible Bank Account
established and maintained pursuant to Section 3.01(b) of the Indenture.
"Pre-Funded Collateral Amount" means, as of any date of
determination, the amount on deposit in the Pre-Funding Account, divided by
95.3%.
"Pre-Funding Earnings" means, as of any date of
determination, the aggregate investment earnings then on deposit in the
Pre-Funding Account on such date.
"Pre-Funding Period" means the period beginning on the
Closing Date and ending on the Funding Termination Date.
Ann.A-24
<PAGE>
"Premium Amount" means, with respect to any Payment Date,
the product of (a) one-twelfth, (b) the Premium Rate and (c) the Class A Note
Principal Balance as of the end of the immediately preceding Collection
Period.
"Premium Rate" shall have the meaning assigned thereto in
the Premium Letter, dated as of June 1, 1999, between the Originator and the
Note Insurer.
"Prepayment" means, with respect to a Collection Period and
a Contract (except a Defaulted Contract), the amount received by the Servicer
during such Collection Period from or on behalf of an Obligor with respect to
such Contract in excess of the sum of (x) the Scheduled Payment and any Final
Scheduled Payment due, plus (y) the aggregate of any overdue Scheduled
Payments, Initial Unpaid Amounts and unpaid Servicing Charges for such
Contract, so long as such amount is designated by the Obligor as a prepayment
and the Servicer has consented to such prepayment. Neither Residual Receipts
nor Defaulted Contract Recoveries are Prepayments.
"Prepayment Amount" means, with respect to a Payment Date
and a Contract, an amount, without duplication, equal to the sum of (i) the
Discounted Contract Principal Balance as of the beginning of the immediately
preceding Collection Period (without any deduction for any security deposit
paid by an Obligor, unless such security deposit has been deposited in the
Collection Account pursuant to the Indenture); (ii) the product of (x) the
Discounted Contract Principal Balance of such Contract as of the beginning of
the immediately preceding Collection Period and (y) one-twelfth of the
Discount Rate; and (iii) any Scheduled Payments theretofore due and not paid
by an Obligor.
"Proceeding" means any suit in equity, action at law or
other judicial or administrative proceeding.
"Purchase Option Payment" means, with respect to a Contract,
any payment set forth in such Contract payable by the Obligor (including any
security deposit applied in respect thereof) upon the exercise of a purchase
option for the Equipment relating to such Contract at the end of the term of
such Contract, whether or not the Obligor actually exercises such purchase
option, or with respect to any Contract which does not set forth a purchase
option, any payment made by an Obligor to purchase the Equipment relating to
such Contract at the end of the term of such Contract.
"Rating Agency Condition" means, with respect to any
proposed action, written confirmation from each Rating Agency that such
proposed action will not result in the reduction or withdrawal of the rating
assigned by such Rating Agency to any of the Notes.
"Rating Agencies" means DCR, Moody's and S&P.
"Reacquired Contract" means any Contract that has been
reacquired by the Originator pursuant to Section 4.01 of the Indenture.
"Reacquisition Amount" means, with respect to a Payment Date
and a Contract, the sum, without duplication, of: (a) the Discounted Contract
Principal Balance as of the beginning of the immediately preceding Collection
Period (without any deduction for any
Ann.A-25
<PAGE>
security deposit paid by an Obligor, unless such security deposit has been
deposited in the Collection Account pursuant to the Indenture); (b) the product
of (i) the Discounted Contract Principal Balance of such Contract as of the
beginning of the immediately preceding Collection Period and (ii) one-twelfth of
the Discount Rate; and (c) any Scheduled Payments theretofore due and not paid
by an Obligor.
"Receivables" means the Contracts and the ownership interest
or security interest in the related Equipment.
"Receivables Pledge Agreement" means the Receivables Pledge
Agreement, dated as of June 1, 1999, among the Transferors, the Depositor, the
Issuer and the Indenture Trustee.
"Receivables Sale Agreement" means the Receivables Sale
Agreement, dated as of June 1, 1999, between the Originator and the
Transferors.
"Record Date" means, with respect to any Payment Date other
than the July 15, 1999 Payment Date, the last calendar day of the Collection
Period. With respect to the July 15, 1999 Payment Date, the Record Date shall
be the Closing Date.
"Register" means the register kept by the Indenture Trustee
pursuant to Section 5.03 of the Indenture.
"Regulations T, U and X" means, collectively, Regulations T,
U and X adopted by the Federal Reserve Board (12 C.F.R. Parts 220, 221 and
224, respectively) and any other regulation in substance substituted therefor.
"Reimbursement Amount" means, as of any Payment Date, the
sum of (x)(i) all Insured Payments previously received by the Indenture
Trustee from the Note Insurer and not previously repaid to the Note Insurer
pursuant to Section 3.04(b)(xi) of the Indenture plus (ii) interest accrued on
each such Insured Payment not previously repaid calculated at the Late Payment
Rate from the date the Indenture Trustee received the related Insured Payment
to, but not including, such Payment Date and (y)(i) any amounts then due and
owing to the Note Insurer under the Insurance Agreement plus (ii) interest on
such amounts at the Late Payment Rate.
"Representation Letter" means letters to, or agreements
with, the Depository to effectuate a book entry system with respect to the
Notes registered in the Register under the nominee name of the Depository.
"Residual Balance" means, as of any Payment Date, the
difference, if any, between (i) the sum of (x) the Aggregate Discounted
Contract Principal Balance of all Contracts as of the end of the immediately
preceding Collection Period, (y) the Pre-Funded Collateral Amount as of the
end of the immediately preceding Collection Period, and (ii) the sum of (x)
the outstanding Class A Note Principal Balance and (y) the outstanding Class B
Note Principal Balance (each, without taking into account any previous
distributions thereon attributable to Residual Receipts), after taking into
account any distributions on such Payment Date.
"Residual Holders" means Transferor I and Transferor II, as
sponsors of the Trust.
Ann.A-26
<PAGE>
"Residual Receipts" means all Purchase Option Payments or
other proceeds of the sale, release or remarketing of the underlying Equipment
to the extent such proceeds exceed any Scheduled Payments and Final Scheduled
Payments remaining unpaid, but limited to the Originator's Booked Residual
Value for such Contract.
"Responsible Officer" means (i) when used with respect to
the Indenture Trustee or the Back-up Servicer, any officer assigned to the
Corporate Trust Office, including any Managing Director, Vice President,
Assistant Vice President, Secretary, Assistant Secretary, any trust officer or
any other officer of the Indenture Trustee customarily performing functions
similar to those performed by any of the above designated officers, and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject and (ii) when used with respect to the Owner Trustee, any
Vice President, Assistant Vice President, Secretary, Assistant Secretary,
Managing Director, any trust officer or any other officer of the Owner Trustee
customarily performing functions similar to those performed by any of the
above designated officers, and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Restricting Event" means the event that shall be deemed to
occur on a Payment Date on which (a) an Event of Servicing Termination has
occurred under the Servicing Agreement and is not cured within the grace
period set forth in the Servicing Agreement, (b) the Note Insurer makes an
Insured Payment under the Note Insurance Policy, (c) a Net Charge-Off Event
exists, (d) a Delinquency Trigger Event exists, (e) a Subordination Deficiency
Event exists or (f) a Cumulative Loss Event exists.
"Request for Balance" has the meaning set forth in Section
3.01(b)(ii) of the Servicing Agreement.
"Scheduled Payments" means, with respect to a Payment Date
and a Contract, the periodic payment (exclusive of any amounts in respect of
insurance, warranty extensions, service contracts or taxes and reflecting any
adjustment for any partial Prepayment and further reflecting the effect of any
permitted modification to such Contract) set forth in such Contract due from
the Obligor in the related Collection Period; provided, however, that
Scheduled Payments shall not include security deposits, Residual Receipts or
Initial Unpaid Amounts.
"S&P" means Standard & Poor's Ratings Services, a division
of The McGraw Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission and any
successor thereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Servicer" means the Person performing the duties of the
Servicer under the Indenture and the Servicing Agreement, initially American
Business Leasing, Inc., a Pennsylvania corporation.
Ann.A-27
<PAGE>
"Servicer Advance" means any amount paid by the Servicer
with respect to a Delinquent Contract pursuant to Section 4.03 of the
Servicing Agreement.
"Servicer Fee" means the fee payable to the Servicer on each
Payment Date in consideration for the Servicer's performance of its duties
pursuant to Article IV of the Servicing Agreement in an amount equal to the
product of (a) one-twelfth of the Servicer Fee Rate and (b) the Aggregate
Discounted Contract Principal Balance as of the last day of the prior
Collection Period.
"Servicer Fee Rate" means 0.50% percent per annum.
"Servicer Report" means the report of the Servicer provided
pursuant to Section 4.03 of the Servicing Agreement.
"Servicer Termination Notice" means the notice described in
Section 6.01 of the Servicing Agreement.
"Servicer Trigger Event" has the meaning specified in the
Insurance Agreement.
"Servicing Agreement" means the Servicing Agreement, dated
as of June 1, 1999, among the Servicer, the Originator, the Collateral Agent,
the Transferors, the Trust, the Indenture Trustee and the Back-up Servicer.
"Servicing Charges" means the sum of (a) any late payment
charges paid by an Obligor on a Delinquent Contract after application of any
such charges to amounts then due under such Contract and (b) any other
incidental charges or fees received from an Obligor.
"Servicing Officer" means any representative of the Servicer
involved in, or responsible for, the administration and servicing of the
Contracts whose name appears on a list of servicing officers furnished to the
Note Insurer and the Indenture Trustee by the Servicer, as such list may from
time to time be amended.
"Servicing Standard" has the meaning specified in Section
4.01(a) of the Servicing Agreement.
"Software Contract" means any Contract which relates to
items, intangibles, software and services that are not owned by the Originator
and in which no related interest will be transferred to the Transferors,
including, without limitation, architectural software.
"Source" means the third party from whom the Originator
acquired the Contracts.
"Source Agreement" means (x) an agreement between the
Originator and a Source pursuant to which the Originator acquired all right,
title and interest of the Source in and to a Receivable and (y) the agreement,
if any, between the Originator and Federal Leasing Corp. pursuant to which the
Originator acquired all right, title and interest of the Source in and to any
Receivable.
Ann.A-28
<PAGE>
"Source Agreement Rights" means any and all rights of the
Originator under the Source Agreement with respect to such Source Agreement to
the extent such Source Agreement relates to any Contract and any Equipment
covered by the Contracts.
"State" means any state of the United States of America and,
in addition, the District of Columbia and Puerto Rico.
"Subordination Deficiency Event" shall exist on any Payment
Date on which (x) the excess of (i) the sum of (A) the Aggregate Discounted
Contract Principal Balance of the Contracts as of the end of the immediately
preceding Collection Period and (B) the Pre-Funded Collateral Amount as of the
end of the immediately preceding Collection Period, over (ii) the Note
Principal Balance on such Payment Date (after taking into account
distributions which would have been made on such Payment Date), is less than
(y) 3% of the Initial Aggregate Collateral Balance.
"Subsequent Contracts" means the Contracts pledged by the
Transferors to the Trust pursuant to a Subsequent Receivables Pledge
Agreement, on any Subsequent Funding Date.
"Subsequent Conveyed Assets" means, the Conveyed Assets that
relate to, and include, the Subsequent Contracts.
"Subsequent Cut-Off Date" means the last day of the month
immediately preceding the related Subsequent Funding Date.
"Subsequent Equipment" means the Equipment relating to the
Subsequent Contracts.
"Subsequent Funding Date" means the date specified in each
Assignment delivered to the Indenture Trustee pursuant to Section 2.05(c)(i)
of the Indenture for the assignment of the pledge of Subsequent Receivables to
the Indenture Trustee, for the benefit of the Noteholders and the Note Issuer;
provided, that no Subsequent Funding Date shall occur after the Funding
Termination Date.
"Subsequent Receivables" means the Subsequent Contracts and
the ownership interest or security interest in the related Equipment.
"Subsequent Receivables Pledge Agreement" means a written
pledge of Subsequent Receivables from the Transferors to the Trust, in
substantially the form of Exhibit A to the Receivables Pledge Agreement.
"Subsequent Receivables Sale Agreement" means a written
transfer of Subsequent Receivables from the Originator to the Transferors, in
substantially the form of Exhibit A to the Receivables Sale Agreement.
"Subsequent Transfer Agreements" means any Subsequent
Receivables Sale Agreements and any Subsequent Receivables Pledge Agreements.
Ann.A-29
<PAGE>
"Substitute Contract" has the meaning specified in Section
4.02(a) of the Indenture.
"Substitute Contract Cut-Off Date" means, with respect to a
Substitute Contract, the close of business on the last day of the calendar
month immediately preceding the month in which the related Transfer Date
occurs.
"Substitute Equipment" means the Equipment transferred to
the Transferors on each Transfer Date.
"Tape" means the data base with respect to the Contracts
used to calculate the information in the Monthly Statement.
"TIA" means the Trust Indenture Act of 1939.
"Transaction Documents" means the Certificate of Trust, the
Transfer Agreements, the Indenture, the Servicing Agreement, the Trust
Agreement, the Insurance Agreement, the Indemnification Agreement, the
Underwriting Agreement, any Subsequent Transfer Agreements and the other
documents and certificates delivered therewith.
"Transfer Agreements" means the Receivables Sale Agreement
and the Receivables Pledge Agreement.
"Transfer Date" means any date on which a Substitute
Contract is pledged pursuant to Section 4.02 of the Indenture.
"Transferor Collateral" has the meaning specified in
Section 2.01(b) of the Receivables Pledge Agreement.
"Transferor Event of Default" has the meaning specified in
Section 2.04 of the Receivables Pledge Agreement.
"Transferor I" means ABFS Finance.
"Transferor II" means ABFS Residual.
"Transferors" means Transferor I and Transferor II.
"Trust" shall mean the ABFS Equipment Contract Trust 1999-A.
"Trust Agreement" shall mean the Trust Agreement, dated as
of June 1, 1999, among the Transferors, the Depositor and the Owner Trustee.
"Trust Operating Expenses" means, with respect to any
Payment Date, the aggregate amount described in clauses (i) through (vii),
inclusive, of Section 3.04(b) of the Indenture with respect to such Payment
Date.
"Trust Property" means the Pledged Property, and funds from
time to time deposited in the Pre-Funding Account and the Capitalized Interest
Account.
Ann.A-30
<PAGE>
"UCC" means the Uniform Commercial Code as in effect in the
applicable jurisdiction.
"Underwriter" means Prudential Securities Incorporated, a
Delaware corporation.
"Underwriting Agreement" means the Underwriting Agreement,
dated June 24, 1999, among the Originator, the Depositor and the Underwriter.
"United States" means the United States of America and each
of its territories.
"Vehicle Contract" means a Contract relating to Equipment
which is a vehicle.
"Warranty Event" has the meaning provided in Section 4.01(a)
of the Indenture.
"Weighted Average Class A Note Rate" means the weighted
average (weighted by outstanding Note principal Balance of the related Class
of Notes) of the Note Rates of each Class of Class A Notes.
Ann.A-31
<PAGE>
Exhibit 4.2
RECEIVABLES SALE AGREEMENT
by and among
AMERICAN BUSINESS LEASING, INC.,
as Originator,
ABFS FINANCE LLC 1999-A,
as Transferor
and
ABFS RESIDUAL LLC 1999-A,
as Transferor
Dated as of June 1, 1999
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................ 1
SECTION 1.01 Definitions................................................. 1
SECTION 1.02 Other Definitional Provisions............................... 1
ARTICLE II TRANSFER OF CONVEYED ASSETS....................................... 2
SECTION 2.01 Direction; Acquisition; Capital Contribution................ 2
SECTION 2.02 Custody of Contract Files................................... 4
SECTION 2.03 Intention of the Parties; Grant of Security Interest........ 4
ARTICLE III REPRESENTATIONS AND WARRANTIES................................... 4
SECTION 3.01 Representations and Warranties of the Originator............ 4
SECTION 3.02 Representations and Warranties of the Transferors........... 7
SECTION 3.03 Representations and Warranties of the Originator with
respect to the Conveyed Assets........................... 9
SECTION 3.04 Substitution of Contracts and Equipment by the Originator... 10
ARTICLE IV COVENANTS......................................................... 11
SECTION 4.01 Originator Covenants........................................ 11
SECTION 4.02 Transferor Covenants........................................ 13
SECTION 4.03 Transfer of Conveyed Assets................................. 15
ARTICLE V CONDITIONS PRECEDENT............................................... 15
SECTION 5.01 Conditions to Transferors Obligations....................... 15
SECTION 5.02 Conditions to the Originator's Obligations.................. 16
ARTICLE VI TERMINATION; LIABILITIES.......................................... 16
SECTION 6.01 Termination................................................. 16
SECTION 6.02 Effect of Termination....................................... 17
SECTION 6.03 Liabilities................................................. 17
ARTICLE VII MISCELLANEOUS PROVISIONS......................................... 17
SECTION 7.01 Amendment................................................... 17
SECTION 7.02 GOVERNING LAW............................................... 17
i
<PAGE>
SECTION 7.03 Notices..................................................... 17
SECTION 7.04 Severability of Provisions.................................. 18
SECTION 7.05 Assignment....................... ........................ 18
SECTION 7.06 Further Assurances.......................................... 18
SECTION 7.07 No Waiver; Cumulative Remedies.............................. 18
SECTION 7.08 Counterparts................................................ 19
SECTION 7.09 Binding Effect: Third-Party Beneficiaries.................. 19
SECTION 7.10 Merger and Integration...................................... 19
SECTION 7.11 Headings.................................................... 19
SECTION 7.12 Schedules and Exhibits...................................... 19
SECTION 7.13 No Bankruptcy Petition Against the Transferors, the
Manager or the Trust...................................... 19
Schedule I -- List of Initial Contracts
Exhibit A -- Form of Subsequent Receivables Sale Agreement
ii
<PAGE>
This RECEIVABLES SALE AGREEMENT, dated as of June 1, 1999 (this
"Agreement"), by and among AMERICAN BUSINESS LEASING, INC., a Pennsylvania
corporation (the "Originator"), ABFS FINANCE LLC 1999-A, a Delaware limited
liability company ("Transferor I"), and ABFS RESIDUAL LLC 1999-A, a Delaware
limited liability company ("Transferor II" and, together with Transferor I, the
"Transferors").
WITNESSETH:
WHEREAS, the Originator, in the ordinary course of its business,
acquires and originates equipment contracts in the United States; and
WHEREAS, the Originator desires to convey, transfer, contribute and
assign all of its right title and interest in and to (x) Contracts, other than
any Contracts which are "true" or "operating" leases, to Transferor I, and (y)
any Contracts which are "true" or "operating" leases, the ownership interest or
security interest of the Originator in each item of Equipment and any Residual
Receipts to Transferor II, each upon the terms and conditions hereinafter set
forth; and
WHEREAS, the Originator and the Transferors agree that all
representations, warranties, covenants and agreements made by it herein shall be
for the benefit of the Depositor, the Collateral Agent, the Noteholders, the
Residual Holders, the Note Insurer, the Owner Trustee and the Indenture Trustee.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Whenever used in this Agreement, capitalized
terms used herein but not defined herein shall have the meanings set forth in
Annex A to the Indenture, dated as of June 1, 1999 (the "Indenture"), by and
among ABFS Equipment Contract Trust 1999-A, as issuer (the "Issuer"), the
Originator, as servicer (in such capacity, the "Servicer"), and The Chase
Manhattan Bank, as indenture trustee (the "Indenture Trustee") and as back-up
servicer (the "Back-up Servicer").
SECTION 1.02 Other Definitional Provisions.
(a) Terms used in Related Documents. Each term defined in this
Agreement will have the meaning assigned to such term in this Agreement when
used in any certificate or other document made or delivered pursuant to this
Agreement, unless such term is otherwise defined therein.
<PAGE>
(b) Accounting Terms. As used in this Agreement, accounting terms which
are not defined pursuant to Section 1.01 have the respective meanings given to
them under GAAP, as in effect on the date of this Agreement. To the extent that
the definitions of accounting terms in this Agreement are inconsistent with the
meanings of such terms under GAAP, the definitions contained in this Agreement
will control.
(c) "Hereof," etc. The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provision of this Agreement; and Article,
Section, Schedule and Exhibit references contained in this Agreement are
references to Articles, Sections, Schedules and Exhibits in or to this
Agreement, unless otherwise specified.
(d) Number and Gender. Each defined term used in this Agreement has a
comparable meaning when used in its plural or singular form. Each
gender-specific term used in this Agreement has a comparable meaning whether
used in a masculine, feminine or gender-neutral form.
(e) Including. Whenever the term "including" (whether or not that term
is followed by the phrase "but not limited to" or "without limitation" or words
of similar effect) is used in this Agreement in connection with a listing of
items within a particular classification, that listing will be interpreted to be
illustrative only and will not be interpreted as a limitation on, or exclusive
listing of, the items within that classification.
ARTICLE II
TRANSFER OF CONVEYED ASSETS
SECTION 2.01 Direction; Acquisition; Capital Contribution. (a) Subject
to the terms and condition of this Agreement, the Originator hereby agrees to
sell, convey and contribute, on the Closing Date, all of its right, title and
interest in and to the Initial Conveyed Assets to the Transferors, as set forth
in subsection (c) below, which sale, contribution and conveyance shall be
evidenced by the execution of this Agreement. Upon receipt of the consideration
specified in subsection (d) below, the Originator hereby releases all of its
right, title and interest in, to and under the related Initial Conveyed Assets,
such receipt being hereby acknowledged by the execution of this Agreement by the
Originator.
(b) Each sale, conveyance and contribution of Subsequent Conveyed
Assets shall be evidenced by the execution and delivery by the Originator and
Transferors of a Subsequent Receivables Sale Agreement in the form of Exhibit A
hereto. Each such sale, conveyance and contribution shall be effective as of the
related Subsequent Funding Date.
(c) The transfers occurring on each Conveyance Date shall be
consummated such that those Conveyed Assets which are considered "financial
assets" within the meaning of the Statement of Financial Accountings Standards
No. 125 ("FAS 125") (such Conveyed Assets include, without limitation, the
Contracts, other than any Contract which is an "operating" or "true" lease) are
acquired by Transferor I, and such that those Conveyed Assets which are not
considered "financial assets" within the meaning of FAS 125 (such Conveyed
Assets include,
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<PAGE>
without limitation, any Contract which is an "operating" or "true" lease, the
ownership interest or security interest of the Originator in each item of
Equipment and any Residual Receipts) are acquired by Transferor II.
(d) In consideration of (x) the receipt by the Originator of a 99%
membership interest in each of the Transferors, (y) the receipt by the
Originator of $58,806,460.72 and the Class B Notes from the Transferors and (z)
other good and valuable consideration, the Originator hereby conveys to the
applicable Transferor all of its right, title and interest in, to and under the
Initial Conveyed Assets, whether now existing or hereinafter arising, without
recourse, except as may be set forth herein. The purchase price for any
Subsequent Conveyed Assets will be paid by the applicable Transferor to the
Originator in immediately available funds on the related Subsequent Funding Date
in accordance with the terms of the related Subsequent Receivables Sale
Agreement. In connection with the transfers on each Conveyance Date, the
Originator hereby makes a capital contribution to the related Transferor in the
amount by which the fair market value of the related Conveyed Assets exceeds the
cash consideration received by the Originator in connection therewith.
(e) In connection with each sale, contribution and conveyance of
Conveyed Assets, the Originator agrees to record and file, at its own expense,
financing statements (and thereafter will file continuation statements with
respect to such financing statements) with respect to such Conveyed Assets,
meeting the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect and to maintain the perfection of, (x)
the transfer, conveyance and contribution of such Conveyed Assets (subject to
the Filing Requirements with respect to the Equipment) from the Originator to
the related Transferors, (y) the pledge of such Conveyed Assets (subject to the
Filing Requirements with respect to the Equipment) from the Transferors to the
Trust as security for the Pledged Notes, and (z) the pledge of the related
Pledged Property from the Trust to the Indenture Trustee, on behalf of the
Noteholders and the Note Insurer, and to deliver a file-stamped copy of such
financing statements or other evidence of such filings to the related Transferor
(and copies to the Indenture Trustee and the Note Insurer) on or prior to each
Conveyance Date; provided, however, that the Contract Files (including each
original executed Contract) will not be physically delivered to either of the
Transferors, but instead will be held by the Collateral Agent, on behalf of the
Indenture Trustee, as bailee for the Noteholders and the Note Insurer. In
addition, the Originator will assign to the Transferors any UCC-1 financing
statement filed by the Originator against the Source with respect to any
Contract originated by a Source.
(f) In connection with each sale, contribution and conveyance of
Conveyed Assets, the Originator shall, at its own expense, on or prior to the
related Conveyance Date, and with respect to Substitute Contracts, as soon as
possible, but in no event later than two (2) Business Days after the related
Conveyance Date (i) cause the Contract Management System to be marked with a
specified code (the "Contract Management Code") to show that such Conveyed
Assets have been assigned and transferred to the Transferors in accordance with
this Agreement or a Subsequent Receivables Transfer Agreement, as applicable,
subsequently pledged by the Transferors to the Trust in accordance with the
Receivables Pledge Agreement or a Subsequent Receivables Pledge Agreement, as
applicable, and such security interest was assigned by the Trust to the
Indenture Trustee, on behalf of the Noteholders and the Note Insurer, pursuant
to the Indenture or an Assignment, as applicable, and (ii) cause the Servicer to
prepare
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<PAGE>
and hold on behalf of the Transferors and the Indenture Trustee, (x) the
List of Contracts on or prior to the Closing Date and (y) the List of Contracts
as supplemented by the List of Subsequent Contracts on or prior to each
Subsequent Funding Date. Pursuant to Section 3.04, the Originator from time to
time may make capital contributions of (A) Substitute Contracts to Transferor I
and (B) the ownership interest or security interest of the Originator in each
item of Substitute Equipment and any Residual Receipts to Transferor II, at any
time pursuant to Section 3.04. Upon delivery of any such List of Subsequent
Contracts or List of Substitute Contracts, the List of Contracts shall be deemed
amended to incorporate therein the information contained in such List of
Subsequent Contracts or List of Substitute Contracts, as applicable.
(g) Except for the obligations of the Originator pursuant to Section
3.03 and Article IV of the Indenture with respect to any breach of a
representation, warranty or covenant made herein, the sale, contribution and
conveyance of the Contracts will be without recourse to the Originator.
SECTION 2.02 Custody of Contract Files. In connection with the sale,
contribution, assignment, transfer and conveyance of the Conveyed Assets to the
Transferors pursuant to this Agreement, the pledge of the Conveyed Assets to the
Trust, and the pledge of the Pledged Assets to the Indenture Trustee, for the
benefit of the Noteholders and the Note Issuer, the Collateral Agent, on behalf
of the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, will retain the Contract Files, any related evidence of insurance and
payments and original executed counterparts of each Contract in accordance with
the terms of the Indenture.
SECTION 2.03 Intention of the Parties; Grant of Security Interest. It
is the intention of the parties hereto that each transfer of Conveyed Assets to
be made pursuant to the terms hereof shall constitute a sale or capital
contribution of (x) the Contracts by the Originator to Transferor I, and (y) the
ownership interest or security interest of the Originator in each item of
Equipment and any Residual Receipts by the Originator to Transferor II, and, in
either case, not a loan. In the event, however, that a court of competent
jurisdiction were to hold that any such transfer constitutes a loan and not a
sale or capital contribution, it is the intention of the parties hereto that
this Agreement is deemed to be a security agreement and that the Originator
shall be deemed to have granted to the related Transferor as of the date hereof
a first priority perfected security interest in all of the Originator's right,
title and interest in, to and under the related Conveyed Asset, and all income
and proceeds thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of the Originator. The
Originator hereby makes the following representations and warranties for the
benefit of the Indenture Trustee, the Depositor, the Trust, the Owner Trustee,
the Collateral Agent, the Noteholders, the Note Insurer and the Transferors.
Such representations and warranties are made as of the Closing Date (with
respect to Initial Conveyed Assets), any Subsequent Funding Date (with respect
to Subsequent Conveyed Assets transferred to the Transferors on such date) or
any
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Transfer Date (with respect to Substitute Conveyed Assets transferred to the
Transferors on such date) and shall survive each sale, contribution, assignment,
transfer and conveyance by the Originator of the Conveyed Assets to the
Transferors and their respective successors and assigns.
(a) Organization and Good Standing. The Originator
is a corporation duly organized, validly existing and in good standing,
under the laws of the state of its incorporation, with corporate power
and authority to own its properties and to conduct its business as such
properties are currently owned and such business is currently
conducted, and had at all relevant times, and now has, power,
authority, and legal right to acquire and own the Conveyed Assets;
(b) Due Qualification. The Originator is
qualified as a foreign corporation in any state where it is
required to be so qualified to conduct its business and enforce the
Source Agreements to which it is a party, and has obtained all
necessary licenses, consents, approvals, authorizations,
registrations or declarations as required by any Person or any
Governmental Authority under federal and state law, in each case,
where the failure to be so qualified, licensed, consented to,
authorized, registered, declared or approved could reasonably be
expected to materially and adversely affect the ability of the
Originator to execute and deliver, or comply with the terms of, this
Agreement or any other Transaction Document to which it is a party;
(c) Power and Authority. The Originator has the
corporate power and authority to execute and deliver this Agreement,
the Source Agreements to which it is a party, the Contracts and any
other Transaction Document to which it is a party, and to carry out
their respective terms; the Originator has duly authorized the sale,
contribution, assignment, transfer and conveyance to the Transferors of
the Conveyed Assets by all necessary corporate action; and the
execution, delivery, and performance of this Agreement, the Source
Agreements, the Contracts and any other Transaction Document to which
it is a party, has been duly authorized by the Originator by all
necessary corporate action;
(d) Due Execution and Delivery. Each of this
Agreement, the Source Agreements, the Contracts and any other
Transaction Document to which it is a party has been duly executed
and delivered on behalf of the Originator;
(e) Valid Assignment; Binding Obligations.
This Agreement constitutes a valid sale, contribution,
assignment, transfer and conveyance to the Transferors of all
right, title, and interest of the Originator in, to and under the
Conveyed Assets and the Conveyed Assets will be held by the
Transferors free and clear of any Lien of any Person claiming,
through or under the Originator, except for Liens permitted under,
or to be created by the Indenture; and this Agreement, and the
other Transaction Documents to which it is a party, when duly
executed and delivered, will constitute legal, valid, and binding
obligations of the Originator enforceable against the Originator
in accordance with their respective terms subject as to
enforceability to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights
generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
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(f) No Violation. The consummation of the
transactions contemplated by, and the fulfillment of the terms of,
this Agreement, the Source Agreements, the Contracts and the other
Transaction Documents to which it is a party will not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or bylaws of the Originator, or any
material term of any indenture, agreement, mortgage,deed of trust,
or other instrument to which the Originator is a party or by which
it is bound, or result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust, or other instrument,
other than this Agreement, or violate any law or any order,
injunction, writ, rule, or regulation applicable to the Originator of
any court or of any federal or state regulatory body,
administrative agency, or other Governmental Authority having
jurisdiction over the Originator or any of its properties which would
have a material adverse effect on the Conveyed Assets;
(g) No Proceedings. There are no proceedings or
investigations pending, or, to the knowledge of the Originator,
threatened, before any court, regulatory body, administrative agency,
or other tribunal or Governmental Authority (A) asserting the
invalidity of this Agreement, (B) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement, or (C)
seeking any determination or ruling that might (in the reasonable
judgment of the Originator) materially and adversely affect the
performance by the Originator of its obligations under, or the validity
or enforceability of, this Agreement;
(h) Tax Returns. The Originator has filed on a
timely basis all tax returns (federal, state and local) required to be
filed and has paid or made adequate provisions for the payment of all
taxes, assessments and other governmental charges due from the
Originator;
(i) Pensions. Each pension plan or profit sharing
plan to which the Originator is a party has been fully funded in
accordance with the obligations of the Originator set forth in such
plan;
(j) Valid Business Reasons. The Originator has
valid business reasons for selling its interests in the Conveyed Assets
rather than obtaining a loan with the Conveyed Assets as collateral;
(k) Insolvency. The Originator is not insolvent nor
will it be rendered insolvent by the transactions contemplated by this
Agreement and the Originator has an adequate amount of capital to
conduct its business in the ordinary course and to carry out its
obligations hereunder and under each Transaction Document to which it
is a party;
(l) Principal Place of Business. The principal
place of business and chief executive office of the Originator is
located at the respective addresses set forth herein and, there are now
no, and during the past four months there have not been, any other
locations where the Originator is located (as that term is used in the
UCC in the state of such location) except that, with respect to such
changes occurring after the date of this
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Agreement, as shall have been specifically disclosed to the Servicer,
the Depositor, the Collateral Agent, the Note Insurer and the
Indenture Trustee in writing;
(m) Accounting and Tax Treatment. The Originator
will treat the assignment of the related Conveyed Assets to the
Transferors pursuant to Article II as a sale and contribution of the
Conveyed Assets to the capital of the related Transferor for Federal
income tax purposes, and as a contribution for financial reporting and
accounting purposes; the Originator will respond to any inquiries from
third parties by indicating that the Conveyed Assets are owned by the
Transferors;
(n) Legal Name. The legal name of the Originator is
as set forth in the signature line of this Agreement and the Originator
has not changed its name since its incorporation and since its
incorporation, the Originator has not used, nor does the Originator now
use, any trade names, fictitious names, assumed names or "doing
business as" names;
(o) Material Adverse Change. Since March 31, 1999,
no event has occurred and is continuing which materially and adversely
affects the Originator's operations, including, without limitation, the
ability of the Originator to perform the transactions contemplated
hereunder; and
(p) Fair Consideration. The consideration received
by the Originator as set forth herein is fair consideration having
value reasonably equivalent to or in excess of the value of the related
Conveyed Assets conveyed by it and the performance of the Originator's
obligations hereunder.
SECTION 3.02 Representations and Warranties of the Transferors. Each
of the Transferors hereby makes the following representations and warranties for
the benefit of the Originator, the Note Insurer, the Depositor, the Collateral
Agent, the Trust, the Owner Trustee, the Indenture Trustee and the Noteholders.
Such representations and warranties speak as of the Closing Date, each
Subsequent Funding Date and each Transfer Date.
(a) Organization and Good Standing. Each of the
Transferors is a limited liability company duly organized and validly
existing in good standing under the laws of the State of Delaware, with
full power and authority to own its properties and to conduct its
business as presently conducted and has the power, authority and legal
right to acquire and own the related Conveyed Assets;
(b) Due Qualification. Each of the Transferors 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 qualification, except to the
extent that the failure to be so qualified, licensed or approved would
not, in the aggregate, materially and adversely affect the ability of
such Transferor to comply with the terms of this Agreement and the
other Transaction Documents to which it is a party;
(c) Power and Authority. Each of the Transferors
has the power and authority to execute and deliver this Agreement and
the other Transaction Documents to which it is
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a party and to carry out their respective terms; and the execution,
delivery, and performance of this Agreement and other Transaction
Documents to which it is a party have been duly authorized by such
Transferor by all necessary action;
(d) Due Execution and Delivery. This Agreement and
the other Transaction Documents to which it is a party have been duly
executed and delivered on behalf of each Transferor;
(e) Binding Obligations. This Agreement and the
other Transaction Documents to which it is a party constitute legal,
valid, and binding obligations of each Transferor and are enforceable
in accordance with their respective terms subject as to enforceability
to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law);
(f) No Violation. The consummation of the
transactions contemplated by and the fulfillment of the terms of this
Agreement and other Transaction Documents to which it is a party will
not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice of lapse of
time) a default under, the Certificate of Formation or Limited
Liability Company Agreement of either Transferor, or any material
term to any indenture to which either Transferor is a party or
violate any law or any order, injunction, writ, rule or regulation
applicable to either Transferor of any court or of any federal or
state regulatory body, administrative agency or other Governmental
Authority having jurisdiction over either Transferor or any of its
properties which would have a material adverse effect on the Conveyed
Assets;
(g) Membership Interests. The Originator is the
registered owner of 99% of the membership interests of each of the
Transferors, each of which are owned of record, free and clear of all
mortgages, assignments and pledges, and security interests;
(h) No Proceedings. There are no proceedings or
investigations pending or, to the knowledge of each of the Transferors,
threatened, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality (A) asserting the
invalidity of or any of the Transaction Documents, (B) seeking to
prevent the consummation of any of the transactions contemplated by any
of the Transaction Documents or (C) seeking any determination or ruling
that would materially and adversely affect the performance by either
Transferor of its obligations under, or the validity or enforceability
of, any of the Transaction Documents;
(i) Approvals and Compliance. All approvals,
authorizations, consents, orders or other actions of any person,
corporation or other organization, or of any court, governmental
agency or body or official, required in connection with the execution
and delivery of the Transaction Documents, have been or will be
taken or obtained on or prior to the Closing Date and each
Transferor is in compliance with all applicable laws, rules,
regulations and orders with respect to such Transferor, its
business and properties and all Conveyed Assets, except to the
extent that non-compliance, or failure to be so approved,
authorized or consented to, would not, in the aggregate, materially
and adversely affect
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the ability of such Transferor to comply with the terms of this
Agreement and the other Transaction Documents to which it is a party;
(j) Solvency. Each Transferor is solvent and will
not be rendered insolvent by the transactions contemplated by this
Agreement and the other Transaction Documents and each Transferor has
an adequate amount of capital to conduct its business in the ordinary
course and to carry out its obligations under this Agreement and the
other Transaction Documents;
(k) Subsidiaries. Neither of the Transferors has
any subsidiaries other than the Trust;
(l) Tax Returns. Each Transferor has filed on a
timely basis all tax returns (federal, state and local) required to be
filed and has paid or made adequate provisions for the payment of all
taxes, assessments and other governmental charges due from such
Transferor;
(m) Principal Place of Business. The principal
place of business and chief executive office of each Transferor are
located at the address of such Transferor set forth herein and, there
are now no, and during the past four months there have not been, any
other locations where such Transferor is located (as that term is used
in the UCC in the state of such location) except that, with respect to
such changes occurring after the date of this Agreement, as shall have
been specifically disclosed to the Servicer, the Note Insurer and the
Indenture Trustee in writing;
(n) Accounting and Tax Treatment. Each Transferor
will treat the assignment of the related Conveyed Assets from the
Originator to the Transferors pursuant to this Agreement as a
contribution of such Conveyed Assets for Federal income tax purposes,
and as a sale and contribution for financial reporting and accounting
purposes; each Transferor will respond to any inquiries by third
parties by indicating that the Conveyed Assets are owned by the
Transferors; and
(o) Legal Name. The legal name of each Transferor
is as set forth in the related signature line of this Agreement and
neither Transferor has changed its name since its incorporation and
since its incorporation, such Transferor did not use, nor does such
Transferor now use, any trade names, fictitious names, assumed names or
"doing business as" names.
SECTION 3.03 Representations and Warranties of the Originator with
respect to the Conveyed Assets. (a) With respect to each Contract, the
Originator hereby remakes to the Transferors the representations, warranties and
covenants set forth in Section 2.02 of the Servicing Agreement. Such
representations, warranties and covenants are made or deemed to be made, (x)
with respect to the Initial Conveyed Assets, as of the Cut-Off Date, (y) with
respect to the Subsequent Conveyed Assets, as of the Subsequent Cut-Off Date,
and (z) with respect to the Substitute Conveyed Assets, as of the related
Transfer Date.
(b) Upon the discovery by the Originator, either
Transferor, the Collateral Agent, the Depositor, the Indenture Trustee or the
Note Insurer of a breach of any of the
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representations or warranties set forth in Section 2.02 of the Servicing
Agreement that materially and adversely affects any Contract, the related
Equipment or the related Contract File, as the case may be, or if the Servicer
fails to cause delivery of evidence of filing or copies of any UCC financing
statement in accordance with the Servicing Agreement (any such event, a
"Warranty Event"), the party discovering such breach shall give prompt written
notice to the other parties hereto, the Indenture Trustee, the Trust and the
Note Insurer, and the Originator shall be required to reacquire or replace
such Contract in accordance with Article IV of the Indenture.
SECTION 3.04 Substitution of Contracts and Equipment by the
Originator. (a) With respect to a substitution of Contracts in accordance with
the provisions of this Section 3.04, each proposed Substitute Contract must (i)
be an Eligible Contract, (ii) satisfy all of the representations and warranties
set forth in Section 2.02 of the Servicing Agreement, (iii) have a Discounted
Contract Principal Balance of not less than the Discounted Contract Principal
Balance of the Contract being replaced, (iv) have a Booked Residual Value of not
less than the Booked Residual Value of the Contract being replaced, and (v)
satisfy the requirements of Section 4.02(d) of the Indenture. For purposes of
determining compliance with clauses (iii) and (iv) of the preceding sentence, if
more than one Substitute Contract is being provided on any date, the Discounted
Contract Principal Balances and Booked Residual Values of the Substitute
Contracts and the Contracts being replaced shall be determined on an aggregate
basis.
(b) Any substitution of a Contract pursuant to this
Agreement will be effected by (i) delivery to the Collateral Agent, on behalf of
the Indenture Trustee, of the Contract File for each such Substitute Contracts,
(ii) filing of any UCC financing statements necessary to comply with the Filing
Requirements and to perfect the interest of the Indenture Trustee in the
Substitute Contracts, (iii) delivery to the Indenture Trustee and the Collateral
Agent of a supplement to the List of Contracts reflecting such substitution and
(iv) delivery to the Collateral Agent, on behalf of the Indenture Trustee, of a
release request for the replaced Contract and the originally executed trust
receipt relating thereto.
(c) The parties hereto agree that in addition to the
obligation of the Originator to reacquire or to substitute any Contract and the
related Equipment as to which a breach of the representations set forth in the
Servicing Agreement has occurred and is continuing, the Originator will enforce
its remedies, if any, against any Source under any Source Agreement. In
consideration of the reacquisition of the Equipment and the Contract, the
Originator shall remit the Reacquisition Amount to the Servicer for allocation
of such Reacquisition Amount pursuant to the terms of the Indenture. Except as
may be set forth in the Transaction Documents, it is understood and agreed that
the obligations of the Originator with respect to a breach as provided in this
Section 3.04 and Section 4.01 of the Indenture constitute the sole remedy
against the Originator for such breach available to the Transferor, the Note
Insurer, the Depositor, the Collateral Agent, the Indenture Trustee and
Noteholders, except to the extent that such breach is proven by final judgment
of a court of law having due jurisdiction to be the result of any fraud or
wilfull misconduct on the part of such Obligor. The representations and
warranties set forth in Sections 3.01, 3.02 and 3.03 shall survive the
assignment of the Conveyed Assets to the Transferors, the pledge of the Conveyed
Assets to the Trust and the pledge of the Pledged Property to the Indenture
Trustee.
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ARTICLE IV
COVENANTS
SECTION 4.01 Originator Covenants. The Originator hereby covenants
and agrees with the Transferor, the Trust, the Owner Trustee, the Note Insurer,
the Depositor, the Collateral Agent, the Noteholders and the Indenture Trustee
with respect to itself as follows:
(a) Preservation of Security Interest. The
Originator shall execute and file such financing statements and cause
to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve,
maintain, and protect the respective right, title and interest of the
Transferors, the Trust and the Indenture Trustee in the Conveyed
Assets. The Originator shall deliver (or cause to be delivered) to the
Transferors file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such
filing.
(b) Preservation of Name, etc. The Originator will
not change its name, identity or corporate structure in any manner that
would, could, or might make any financing statement or continuation
statement filed by the Originator in accordance with paragraph (a)
above or under any Transaction Document seriously misleading within the
meaning of Section 9-402(7) of the UCC, unless it shall have given the
Transferors, the Note Insurer, the Depositor, the Collateral Agent and
the Indenture Trustee at least 60 days' prior written notice thereof.
(c) Preservation of Office. The Originator will
give the Transferors, the Depositor, the Collateral Agent, the Note
Insurer and the Indenture Trustee at least 60 days' prior written
notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing
or continuation statement or of any new financing statement.
(d) Obligations with Respect to Conveyed Assets.
The Originator will duly fulfill all obligations on its part to be
fulfilled under or in connection with each Contract and each Source
Agreement, and will do nothing to impair the rights of the Transferors,
the Trust, the Note Insurer or the Indenture Trustee in any of the
Conveyed Assets.
(e) Compliance with Law. The Originator will
comply, in all material respects, with all acts, rules, requisitions,
orders, decrees and directions of any Governmental Authority applicable
to its business and to the Conveyed Assets or any part thereof;
provided, however, that the Originator may contest any act, regulation,
order, decree or direction in any reasonable manner which shall not
materially and adversely affect the rights of the Transferors, the
Indenture Trustee, the Note Insurer or the Trust in any of the Conveyed
Assets.
(f) Conveyance of Conveyed Assets; Security
Interests. Except for the transfers and conveyances hereunder, or
under any Transaction Document, the Originator will not sell, pledge,
assign or transfer to any other Person, or grant, create, incur,
assume
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or suffer to exist any Lien, on any Conveyed Asset, or any
interest therein and the Originator shall defend the right, title,
and interest of the Transferors, the Trust, the Indenture Trustee,
the Note Insurer and their respective successors and assigns in, to,
and under the Conveyed Assets, against all claims of third
parties claiming, through or under the Originator; provided,
however, that nothing in this Section 4.01(f) shall prevent or
be deemed to prohibit the Originator from suffering to exist upon any
of the Conveyed Assets any Liens for municipal or other local taxes if
such taxes shall not at the time be due and payable or if the
Originator shall concurrently be contesting the validity thereof in
good faith by appropriate proceedings and shall have set aside on
its books adequate reserves with respect thereto and such
contests pose no risk of forfeiture.
(g) Notification of Breach. The Originator will
advise the Transferors, the Indenture Trustee, the Collateral Agent,
the Depositor, the Trust and the Note Insurer promptly, in reasonable
detail, upon discovery of the occurrence of any breach by the
Originator of any of its representations, warranties and covenants
contained herein.
(h) Further Assurances. The Originator will
make, execute or endorse, acknowledge and file or deliver to the
Transferors, the Trust, the Collateral Agent, the Depositor, the
Note Insurer and the Indenture Trustee from time to time such
schedules, confirmatory assignments, conveyances, transfer
endorsements, powers of attorney, certificates, reports and other
assurances or instruments and take such further steps relating to
the Conveyed Assets and other rights covered by this Agreement, as
the Transferors, the Trust, the Indenture Trustee, the Collateral
Agent, the Depositor and the Note Insurer may request and reasonably
require; provided, that no UCC filing will be required with respect
to the Equipment, except as required by the Filing Requirements.
(i) Indemnification. The Originator agrees to
indemnify, defend and hold the Transferors, the Trust, the Owner
Trustee, the Indenture Trustee, the Collateral Agent, the Depositor
and the Note Insurer harmless from and against any and all loss,
liability, damage, judgment, claim, deficiency, or expense (including
interest, penalties, reasonable attorneys' fees and amounts paid in
settlement) to which any of them may become subject insofar as such
loss, liability, damage, judgment, claim, deficiency, or expense
arises out of or is based upon a breach by the Originator of its
representations and warranties contained in Article III, its
covenants contained in Section 4.01, or in any certificate or in any
schedule delivered by the Originator hereunder, being untrue in
any material respect at any time; provided, that the obligations
of the Originator with respect to the representations and
warranties set forth in Section 3.03(a) shall be limited as set forth
in Section 3.04(c). The obligations of the Originator under this
Section 4.01(i) shall be considered to have been relied upon by the
Transferors, the Indenture Trustee, the Trust, the Owner Trustee,
the Collateral Agent, the Depositor and the Note Insurer and shall
survive the execution, delivery, and performance of this Agreement
regardless of any investigation made by the Transferors, the
Indenture Trustee, the Trust, the Owner Trustee, the Collateral
Agent, the Depositor and the Note Insurer or on their respective
behalf. THE INDEMNIFICATION OBLIGATIONS OF THE ORIGINATOR PURSUANT
TO THE PRECEDING PROVISIONS OF THIS PARAGRAPH SHALL APPLY REGARDLESS
OF ANY NEGLIGENCE OR OTHER FAULT ON THE PART OF THE TRANSFERORS, THE
INDENTURE TRUSTEE, THE DEPOSITOR, THE
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TRUST, THE OWNER TRUSTEE, THE COLLATERAL AGENT, THE NOTE INSURER
OR ANY OF THEIR RESPECTIVE OFFICERS, EMPLOYEES OR AGENTS.
(j) Notice of Liens. The Originator shall notify
the Transferors, the Depositor, the Collateral Agent, the Indenture
Trustee and the Note Insurer promptly after becoming aware of any Lien
(other than any Permitted Liens) on any Conveyed Asset.
(k) Taxes. The Originator shall promptly pay all
applicable taxes required to be paid in connection with the assignment
of the Conveyed Assets and acknowledges that the Transferors shall have
no responsibility with respect thereto. The Originator shall promptly
pay and discharge, or cause the payment and discharge of, all federal
income taxes (and all other material taxes) when due and payable by
the Originator, except (i) such as may be paid thereafter without
penalty or (ii) such as may be contested in good faith by appropriate
proceedings and for which an adequate reserve has been established and
is maintained in accordance with GAAP. The Originator shall promptly
notify the Transferors, the Depositor, the Collateral Agent, the
Indenture Trustee, the Noteholders and the Note Insurer of any
material challenge, contest or proceeding pending by or against the
Originator before any taxing authority.
(l) Taxes and Other Liabilities. The Originator
shall promptly pay and discharge all material taxes, assessments, fees,
claims and other governmental charges when due and payable by the
Originator, except (i) such as may be paid thereafter without penalty
or (ii) such as may be contested in good faith by appropriate
proceedings and for which an adequate reserve has been established and
is maintained in accordance with GAAP. The Originator shall promptly
notify the Transferors, the Depositor, the Collateral Agent, the Note
Insurer, the Rating Agencies and the Indenture Trustee of any material
challenge, contest or proceeding pending by or against the Originator
before any taxing authority.
(m) Non-Consolidation. The Originator shall take
all action necessary to ensure that neither of the Transferors nor the
Manager would be substantially consolidated with the Originator, such
that the separate corporate existence of the Originator and either
Transferor or the Manager would be ignored in the event of a bankruptcy
of the Originator.
SECTION 4.02 Transferor Covenants. Each of the Transferors hereby
covenants and agrees with the Originator, the Depositor, the Trust, the Owner
Trustee, the Collateral Agent, the Note Insurer and the Indenture Trustee as
follows:
(a) Transferor Certificate. Prior to each date as
of which Contracts and the Equipment subject to such Contracts are to
be reacquired by the Originator pursuant to the Indenture, the
Transferors shall submit to the Originator a certificate signed by the
president, executive vice president, any vice president or the
treasurer of the Manager of each of the Transferors (a "Transferors
Certificate") and completed as to its date and the date of this
Agreement. Each Transferors Certificate shall operate as an assignment,
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without recourse, representation, or warranty, to the Originator of all
of the Transferors' respective right, title and interests in and to
such Contracts and Equipment, and all security and documents relating
thereto, such assignment being an assignment outright and not for
security; and upon payment of the Reacquisition Amount, the Originator
will thereupon own such Contract, such interest in the related
Equipment and all such security and documents, free of any further
obligation to the Transferors with respect thereto. 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 holder entitled to enforce the Contract, the
Transferors shall, at the Servicer's expense, take such steps as the
Servicer deems necessary to enforce the Contract, including bringing
suit in a Transferor's name.
(b) Obligor's Quiet Enjoyment. Transferor II hereby
acknowledges and agrees that its rights in the Equipment are expressly
subject to the rights of the related Obligors in such Equipment
pursuant to the applicable Contracts. Transferor II covenants and
agrees that, so long as an Obligor shall not be in default of any of
the provisions of the applicable Contract, neither Transferor II nor
any assignee of Transferor II will disturb the Obligor's quiet and
peaceful possession of such Equipment and the Obligor's use thereof for
its intended purpose.
(c) Operation of Transferor. Each of the
Transferors shall be operated in such a manner that it should not be
substantively consolidated in the trust estate of another Person (that
is, such that the separate legal existence of such Transferor and such
Person should be disregarded) and in that regard, each Transferor
shall:
(i) not engage in any action that would
cause the separate legal identity of such Transferor not to be
respected, including, without limitation, (x) holding itself out
as being liable for the debts of any other party or (y) acting
other than through its duly authorized agents;
(ii) not incur, assume or guarantee any
indebtedness except for such indebtedness as may be incurred by
such Transferor in connection with the issuance of the Pledged
Notes or as otherwise permitted by the Note Insurer;
(iii) not commingle its funds with those of
any other entity;
(iv) act solely in its name in the conduct
of its business and shall conduct its business so as not to
mislead others as to the identity of the entity with which they
are concerned;
(v) maintain company records and books of
account and shall not commingle its company records and books of
account with the records and books of account of any entity;
(vi) not engage in any business or activity
other than in connection with or relating to the activities
allowed by its Certificate of Formation and/or Limited Liability
Company Agreement;
14
<PAGE>
(vii) not form, or cause to be formed, any
subsidiaries;
(viii) comply with all restrictions and
covenants in, and shall not fail to comply with the corporate
formalities established in, the Certificate of Formation and/or
Limited Liability Company Agreement;
(ix) maintain separate bank accounts, if
any;
(x) not act as an agent of the Originator;
and
(xi) have as its managing member a limited
purpose corporation who maintains at all times one independent
director as required by the Certificate of Incorporation and/or
Bylaws.
SECTION 4.03 Transfer of Conveyed Assets. The Originator understands
that the Transferors intend to pledge the Conveyed Assets and their respective
rights under this Agreement to the Indenture Trustee, on behalf of the Trust, as
collateral security for its obligations on the Pledged Notes, and that the Trust
intends to pledge the Pledged Property to the Indenture Trustee, on behalf of
the Note Insurer and the Noteholders, pursuant to the Indenture. The Originator
agrees that any such assignee of the Transferors may exercise the rights of the
Transferors hereunder, without any consent or action by either Transferor, and
shall be entitled to all of the benefits of the Transferors hereunder to the
extent provided for in such assignment.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions to Transferors Obligations. The obligations of
the Transferors to accept the transfer of the Initial Conveyed Assets on the
Closing Date shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of the Originator contained in
this Agreement shall be true and correct on the Closing Date with the same
effect as though such representations and warranties had been made on such
date;
(b) All information concerning the Initial Conveyed Assets provided to
the Transferors shall be true and correct as of the Cut-Off Date in all
material respects;
(c) The Originator shall have delivered to the Transferors a List of
Contracts with respect to its respective Contracts as of the Cut-Off Date
and shall have substantially performed all other obligations required to be
performed by the provisions of this Agreement;
(d) The Originator shall have recorded and filed, at its expense, any
financing statement with respect to the Initial Conveyed Assets to be
transferred from time to time to the related Transferor from the Originator
pursuant to this Agreement meeting the requirements of applicable state law
in such manner in such jurisdictions as are necessary
15
<PAGE>
to perfect the transfer of the Initial Conveyed Assets from the Originator
to the related Transferor, and shall deliver a file-stamped copy of such
financing statements or other evidence of such filings to the related
Transferor;
(e) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Transferors, and the Transferors
shall have received from the Originator copies of all documents (including,
without limitation, records of corporate proceedings) relevant to the
transactions herein contemplated as the Transferors may reasonably have
requested; and
(f) All respective conditions necessary to vest in the Originator good
title, free and clear of all Liens (other than Liens permitted in the
proviso contained in Section 4.01(f) hereof), to its respective Contracts
and interests in Equipment shall have been satisfied.
SECTION 5.02 Conditions to the Originator's Obligations. The
obligations of the Originator to convey and contribute the Initial Conveyed
Assets to the Transferors on the Closing Date shall be subject to the
satisfaction of the following conditions:
(a) All representations and warranties of the Transferors contained in
this Agreement shall be true and correct with the same effect as though such
representations and warranties had been made on such date; and
(b) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Originator, and the Originator
shall have received from the Transferors copies of all documents (including,
without limitation, records of corporate proceedings) relevant to the
transactions herein contemplated as the Originator may reasonably have
requested.
ARTICLE VI
TERMINATION; LIABILITIES
SECTION 6.01 Termination. The respective obligations and
responsibilities of the Originator and the Transferors created by this Agreement
shall terminate upon the latest of (i) the maturity or other liquidation of the
last Contract and the disposition of any amounts received upon disposition of
any Defaulted Contracts and any Equipment leased thereunder; (ii) the
distribution to the Transferors of all amounts required to be paid thereto
pursuant to this Agreement; (iii) the termination of the Indenture in accordance
with the terms thereof and (iv) the payment in full of all amounts owed to the
Note Insurer under the Transaction Documents; provided, however, that (A) the
indemnifications contained in Section 4.01(i) herein and (B) the covenant
contained in Section 7.13 hereof, shall survive the termination of this
Agreement.
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<PAGE>
SECTION 6.02 Effect of Termination. No termination or rejection or
failure to assume the executory obligations of this Agreement in the bankruptcy
of the Originator or the Transferors shall be deemed to impair or affect the
obligations pertaining to any executed contribution or executed obligations,
including, without limitation, pre-termination breaches of representations and
warranties by the Originator or the Transferors. Without limiting the foregoing,
prior to termination, neither the failure of the Transferors to deliver a
Transferors Certificate pursuant to Section 4.02, nor the failure of the
Originator to pay a Reacquisition Amount shall render such transfer or
obligation executory, nor shall the continued duties of the parties pursuant to
Article IV or Section 7.06 of this Agreement render an executed contribution
executory.
SECTION 6.03 Liabilities. By entering into this Agreement, the
Transferors agree to be liable, directly to each of the Issuer, the Indenture
Trustee, the Owner Trustee, the Note Insurer, the Collateral Agent, the
Depositor and each Noteholder, for the entire amount of any losses, claims,
damages or liabilities (other than those incurred by a Noteholder in the
capacity of an investor in the Notes or those which arise from any action or
omission by any Noteholder) of the Trust (to the extent Trust Assets remaining
after the Noteholders have been paid in full are insufficient to pay such
losses, claims, damages or liabilities).
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01 Amendment. This Agreement may be amended from time to
time by the parties hereto only with (x) the prior written consent of the
Servicer, the Indenture Trustee and the Note Insurer (or, in the event of a Note
Insurer Default, the Majority Holders), (y) satisfaction of the Rating Agency
Condition and (z) prior written notice to the Owner Trustee.
SECTION 7.02 GOVERNING LAW. THIS AGREEMENT AND ANY AMENDMENT HEREOF
PURSUANT TO SECTION 7.01 SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW
PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN AND THE
OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 7.03 Notices. All demands, notices, and communications under
this Agreement shall be in writing and shall be deemed to have been duly given,
made and received (i) when delivered against receipt of registered or certified
mail or upon actual receipt of registered or certified mail, postage prepaid,
return receipt requested; (ii) when delivered by courier with appropriate
evidence of receipt; or (iii) upon transmission via facsimile or telex with
appropriate evidence of receipt (a) in the case of the Originator, at the
following address: Balapointe Office Centre, 111 Presidential Boulevard, Suite
127, Bala Cynwyd, Pennsylvania 19004, Attention: General Counsel, telecopy (610)
668-1468, (b) in the case of the Indenture Trustee, 450 West 33rd Street, New
York, New York 10001, Attention: Global Trust Services,
17
<PAGE>
telecopy (212) 946-8191; (c) in the case of Transferor I, c/o American Business
Leasing, Inc., Balapointe Office Centre, 111 Presidential Boulevard, Suite 127,
Bala Cynwyd, Pennsylvania 19004, Attention: General Counsel, telecopy (610)
668-1468, (d) in the case of Transferor II, c/o American Business Leasing, Inc.,
Balapointe Office Centre, 111 Presidential Boulevard, Suite 127, Bala Cynwyd,
Pennsylvania 19004, Attention: General Counsel, telecopy (610) 668-1468, (e) in
the case of the Collateral Agent, at the address set forth in the Servicing
Agreement, (f) in the case of the Depositor, as the address set forth in the
Receivables Pledge Agreement, and (g) in the case of the Note Insurer, the
Rating Agencies or the Owner Trustee at their respective addresses set forth in
Section 11.06 of the Indenture. Either party may alter the address to which
communications are to be sent by giving notice of such change of address in
conformity with the provisions of this Section 7.03 for giving notice and by
otherwise complying with any applicable terms of this Agreement, including, but
not limited to, subsections 4.01(b) and (c).
SECTION 7.04 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.
SECTION 7.05 Assignment. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may not be assigned by the
Originator, without the prior written consent of the Transferors, the Note
Insurer (or, in the event of a Note Insurer Default, the Majority Holders) and
the Indenture Trustee (acting upon the written direction of the Controlling
Party) and, except as provided in Section 4.03, this Agreement may not be
assigned by the Transferors without the prior written consent of the Originator,
the Note Insurer (or, in the event of a Note Insurer Default, the Majority
Holders) and the Indenture Trustee. Whether or not expressly stated, all
representations, warranties, covenants and agreements of the Originator and the
Transferors in this Agreement, or in any document delivered by any of them in
connection with this Agreement, shall be for the benefit of, and shall be
exercisable by, the Indenture Trustee for the benefit of the Noteholders and the
Note Insurer.
SECTION 7.06 Further Assurances. Each of the parties hereto agrees
to do such further acts and things and to execute and deliver to the Indenture
Trustee such additional assignments, agreements, powers and instruments as are
required by the Indenture Trustee or the Note Insurer to carry into effect the
purposes of this Agreement or to better assure and confirm unto the Indenture
Trustee or the Note Insurer its rights, powers and remedies hereunder.
SECTION 7.07 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of either Transferor or the Originator,
any right, remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise hereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privilege provided by law.
18
<PAGE>
SECTION 7.08 Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which shall constitute one and the same
instrument.
SECTION 7.09 Binding Effect: Third-Party Beneficiaries. This
Agreement will inure to the benefit of and be binding upon the parties hereto.
The Indenture Trustee, the Owner Trustee, the Trust, the Note Insurer, the
Collateral Agent, the Depositor and the Noteholders are intended third party
beneficiaries of this Agreement.
SECTION 7.10 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
SECTION 7.11 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 7.12 Schedules and Exhibits. The schedules and exhibits
attached hereto and referred to herein shall constitute a part of this Agreement
and are incorporated into this Agreement for all purposes.
SECTION 7.13 No Bankruptcy Petition Against the Transferors, the
Manager or the Trust. Each of the parties hereto agrees that, prior to the date
that is one year and one day after the payment in full of (a) the of the latest
maturing Notes issued by the Trust and (b) all amounts owed to the Note Insurer
under the Transaction Documents, it will not institute against any of the
Transferors, the Manager or the Trust, or join any other Person in instituting
against any of the Transferors, the Manager or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
proceedings under the laws of the United States or any state of the United
States. This Section 7.13 shall survive the termination of this Agreement.
[Remainder of Page Intentionally Left Blank]
19
<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.
AMERICAN BUSINESS LEASING, INC.,
as Originator
By:
------------------------------
Name:
Title:
ABFS FINANCE LLC 1999-A, as Transferor I
By: ABFS Special Purpose Management, Inc.,
as Managing Member
By:
------------------------------
Name:
Title:
ABFS RESIDUAL LLC 1999-A, as Transferor II
By: ABFS Special Purpose Management, Inc.,
as Managing Member
By:
------------------------------
Name:
Title:
[Signature Page for Receivables Sale Agreement]
<PAGE>
SCHEDULE I
LIST OF INITIAL CONTRACTS
<PAGE>
EXHIBIT A
FORM OF SUBSEQUENT
RECEIVABLES SALE AGREEMENT
This SUBSEQUENT RECEIVABLES SALE AGREEMENT, dated as of ____________
(the "Subsequent Funding Date"), by and among AMERICAN BUSINESS LEASING, INC., a
Pennsylvania corporation (the "Originator"), ABFS FINANCE LLC 1999-A, a Delaware
limited liability company ("Transferor I"), and ABFS RESIDUAL LLC 1999-A, a
Delaware limited liability company ("Transferor II", and, together with
Transferor I, the "Transferors").
WITNESSETH:
Reference is hereby made to that certain Receivables Sale Agreement,
dated as of June 1, 1999 (the "Receivables Sale Agreement"), by and among the
Originator and the Transferors. Pursuant to the Receivables Sale Agreement, the
Originator agreed to sell, convey and contribute, and the Transferors agreed to
accept, from time to time, Subsequent Conveyed Assets. The Receivables Sale
Agreement provides that each such sale, conveyance and contribution of
Subsequent Conveyed Assets be evidenced by the execution and delivery of a
Subsequent Receivables Sale Agreement such as this Subsequent Receivables Sale
Agreement (this "Agreement").
The "Subsequent Contracts" are those listed on the List of Subsequent
Contracts attached hereto.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For the purposes of this Agreement,
capitalized terms used herein but not otherwise defined shall have the
respective meanings assigned to such terms in the Receivables Sale Agreement or
in Annex A to the Indenture.
Section 2. Direction; Acquisition; Capital Contribution. (a) Subject
to the terms and conditions of this Agreement, the Originator hereby agrees to
sell, convey and contribute, on the Subsequent Funding Date, all of the
Subsequent Conveyed Assets to the Transferors, as set forth in subsection (b)
below. Upon receipt of the consideration specified in subsection (c) below, the
Originator hereby releases all of its right, title and interest in, to and under
the Subsequent Conveyed Assets, such receipt being hereby acknowledged by the
execution of this Agreement by the Originator.
(b) The transfers occurring on the Subsequent Funding Date shall be
consummated such that those Conveyed Assets which are considered "financial
assets" within the meaning of the Statement of Financial Accounting Standards
No. 125 ("FAS 125") (such
A-1
<PAGE>
Conveyed Assets include, without limitation, the Contracts, other than any
Contract which is a "true" or "operating" lease) are acquired by Transferor I,
and such that those Conveyed Assets which are not considered "financial assets"
within the meaning of FAS 125 (such Conveyed Assets include, without limitation,
any Contract which is a "true" or "operating" lease, the ownership or security
interest of the Originator in each item of Equipment and any Residual Receipts)
are acquired by Transferor II.
(c) In consideration for (x) the receipt by the Originator of
$__________ from the Transferors and (y) other good and valuable consideration,
the Originator hereby conveys to the applicable Transferor all of its right,
title and interest in, to and under the Subsequent Conveyed Assets, whether now
existing or hereinafter arising, without recourse, except as may be set forth
herein. In connection with the transfers on Subsequent Funding Date, the
Originator hereby makes a capital contribution to the related Transferor in the
amount by which the fair market value of the Subsequent Conveyed Assets exceeds
the cash consideration received by the Originator in connection therewith.
(d) In connection with the sale, contribution and conveyance of the
Subsequent Conveyed Assets, the Originator shall, at its own expense, on or
prior to the Subsequent Funding Date (i) cause the Contract Management System to
be marked with a specified code (the "Contract Management Code") to show that
such Subsequent Conveyed Assets have been transferred and contributed to the
Transferors in accordance with this Agreement, subsequently pledged to the
Trust, as collateral security for the Pledged Notes in accordance with the
related Subsequent Receivables Pledge Agreement, and such security interest was
assigned to the Indenture Trustee, on behalf of the Noteholders and the Note
Insurer, pursuant to the related Assignment, and (ii) cause the Servicer to
prepare and hold on behalf of the Transferors and the Indenture Trustee the List
of Contracts as supplemented by the List of Subsequent Contracts on or prior to
the Subsequent Funding Date.
(e) Except for the obligations of the Originator pursuant to Section
3 hereof, Section 3.03 of the Receivables Sale Agreement and Article IV of the
Indenture with respect to any breach of a representation, warranty or covenant
made herein, the sale and contribution of the Subsequent Contracts will be
without recourse to the Originator.
Section 3. Representations and Warranties of the Originator. (a) With
respect to each Subsequent Contract, the Originator hereby remakes to the
Transferors the representations, warranties and covenants set forth in Section
2.02 of the Servicing Agreement.
(f) Upon the discovery by the Originator, either Transferor, the
Depositor, the Collateral Agent, the Indenture Trustee or the Note Insurer of a
breach of any of the representations or warranties set forth in Section 2.02 of
the Servicing Agreement that materially and adversely affects any Contract, the
related Equipment or the related Contract File, as the case may be, or if the
Servicer fails to cause delivery of evidence of filing or copies of any UCC
financing statement in accordance with the Servicing Agreement (any such event,
a "Warranty Event"), the party discovering such breach shall give prompt written
notice to the other parties hereto, the Indenture Trustee, the Trust and the
Note Insurer, the Depositor, the Collateral Agent and the Originator shall be
required to reacquire or replace such Contract in accordance with Article IV of
the Indenture.
A-2
<PAGE>
(g) The Originator understands that the Transferors intend to pledge
the Subsequent Conveyed Assets and their respective rights under this Agreement
to the Trust, as collateral security for its obligations on the Pledged Notes,
and that the Trust intends to pledge the Pledged Property to the Indenture
Trustee, on behalf of the Note Insurer and the Noteholders, pursuant to the
Indenture. The Originator agrees that any such assignee of the Transferors may
exercise the rights of the Transferors hereunder, without any consent or action
by either Transferor, and shall be entitled to all of the benefits of the
Transferors hereunder to the extent provided for in such assignment.
Section 4. Amendment. This Agreement may be amended from time to
time by the parties hereto only with (x) the prior written consent of the
Servicer, the Indenture Trustee and the Note Insurer (or, in the event of a Note
Insurer Default, the Majority Holders) and (y) satisfaction of the Rating Agency
Condition.
Section 5. GOVERNING LAW. THIS AGREEMENT AND ANY AMENDMENT HEREOF
PURSUANT TO SECTION 4 SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW
PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN AND THE
OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 6. Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each
of which shall be an original, but all of which shall constitute one and the
same instrument.
Section 7. Binding Effect; Third-Party Beneficiaries. This Agreement
will inure to the benefit of and be binding upon the parties hereto. The
Indenture Trustee, the Owner Trustee, the Trust, the Depositor, the Collateral
Agent, the Note Insurer and the Noteholders are intended third party
beneficiaries of this Agreement.
Section 8. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 9. Exhibits. The schedules and exhibits attached hereto and
referred to herein shall constitute a part of this Agreement and are
incorporated into this Agreement for all purposes.
Section 10. Intent of Parties; Security Agreement. It is the
intention of the parties hereto that the transfer of the Subsequent Conveyed
Assets to be made pursuant to the terms hereof shall constitute a sale or
capital contribution of (x) the Contracts by the Originator to Transferor I, and
(y) the ownership interest or security interest of the Originator in each item
of Equipment and any Residual Receipts by the Originator to Transferor II, and,
in either case, not a loan. In the event, however, that a court of competent
jurisdiction were to hold that any such transfer constitutes a loan and not a
sale or capital contribution, it is the intention of the parties hereto that
this Agreement is deemed to be a security agreement and that the Originator
shall be deemed to have granted to the related Transferor as of the date hereof
a first priority perfected
A-3
<PAGE>
security interest in all of the Originator's right, title and interest in, to
and under the related Subsequent Conveyed Asset, and all income and proceeds
thereof.
[Remainder of Page Intentionally Left Blank]
A-4
<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.
AMERICAN BUSINESS LEASING, INC.,
as Originator
By:
---------------------------------
Name:
Title:
ABFS FINANCE LLC 1999-A, as Transferor I
By: ABFS Special Purpose Management, Inc.,
as Managing Member
By:
---------------------------------
Name:
Title:
ABFS RESIDUAL LLC 1999-A, as Transferor II
By: ABFS Special Purpose Management, Inc.,
as Managing Member
By:
---------------------------------
Name:
Title:
A-5
<PAGE>
Exhibit 4.3
RECEIVABLES PLEDGE AGREEMENT
by and among
ABFS FINANCE LLC 1999-A,
as Transferor
ABFS RESIDUAL LLC 1999-A,
as Transferor
PRUDENTIAL SECURITIES
SECURED FINANCING CORPORATION,
as Depositor
ABFS EQUIPMENT CONTRACT TRUST 1999-A,
as Issuer
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
Dated as of June 1, 1999
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................ 2
SECTION 1.01 Definitions................................................. 2
SECTION 1.02 Other Definitional Provisions............................... 2
ARTICLE II PLEDGE OF CONVEYED ASSETS......................................... 3
SECTION 2.01 Designation; Pledge; Acceptance............................. 3
SECTION 2.02 Custody of Contract Files................................... 4
SECTION 2.03 Terms of the Pledged Notes.................................. 4
SECTION 2.04 Events of Default........................................... 5
SECTION 2.05 Acceleration of Maturity, Rescission and Annulment.......... 7
SECTION 2.06 Remedies.................................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES................................... 8
SECTION 3.01 Representations and Warranties of the Transferors........... 8
SECTION 3.02 Representations and Warranties of the Originator with respect
to the Conveyed Assets...................................... 10
SECTION 3.03 Representations and Warranties of the Depositor............. 11
SECTION 3.04 Substitution of Contracts and Equipment by the Originator... 12
ARTICLE IV COVENANTS......................................................... 12
SECTION 4.01 Transferor Covenants........................................ 12
SECTION 4.02 Pledge of Pledged Property...................................16
ARTICLE V CONDITIONS PRECEDENT............................................... 16
SECTION 5.01 Conditions to Issuer's Obligations.......................... 16
SECTION 5.02 Conditions to the Transferors' Obligations.................. 17
ARTICLE VI TERMINATION....................................................... 18
SECTION 6.01 Termination................................................. 18
SECTION 6.02 Effect of Termination....................................... 18
ARTICLE VII MISCELLANEOUS PROVISIONS......................................... 18
SECTION 7.01 Amendment................................................... 18
SECTION 7.02 GOVERNING LAW............................................... 18
SECTION 7.03 Notices..................................................... 19
SECTION 7.04 Severability of Provisions.................................. 19
SECTION 7.05 Assignment.................................................. 19
i
<PAGE>
SECTION 7.06 Further Assurances.......................................... 20
SECTION 7.07 No Waiver; Cumulative Remedies.............................. 20
SECTION 7.08 Counterparts................................................ 20
SECTION 7.09 Binding Effect: Third-Party Beneficiaries................... 20
SECTION 7.10 Merger and Integration...................................... 20
SECTION 7.11 Headings.................................................... 20
SECTION 7.12 Schedules and Exhibits...................................... 20
SECTION 7.13 No Bankruptcy Petition Against the Transferors, the Manager
or the Trust................................................ 20
Schedule I - List of Initial Contracts
Exhibit A - Form of Subsequent Receivables Pledge Agreement
Exhibit B - Form of Pledged Notes
ii
<PAGE>
This RECEIVABLES PLEDGE AGREEMENT, dated as of June 1, 1999 (this
"Agreement"), by and among ABFS FINANCE LLC 1999-A, a Delaware limited liability
company ("Transferor I"), ABFS RESIDUAL LLC 1999-A, a Delaware limited liability
company ("Transferor II", and, together with Transferor I, the "Transferors"),
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a Delaware corporation (the
"Depositor"), ABFS EQUIPMENT CONTRACT TRUST 1999-A, a Delaware statutory
business trust, as issuer (the "Trust" or the "Issuer"), and THE CHASE MANHATTAN
BANK, a New York banking corporation, as indenture trustee (the "Indenture
Trustee").
WITNESSETH:
WHEREAS, pursuant to a Receivables Sale Agreement, dated as of June 1,
1999 (the "Receivables Sale Agreement"), by and among the Transferors and
American Business Leasing, Inc. (the "Originator"), Transferor I acquired the
Originator's right, title and interest in and to certain Contracts and
Transferor II acquired the Originator's right, title and interest in and to the
ownership interest or security interest of the Originator in each item of
Equipment and any Residual Receipts; and
WHEREAS, the Issuer is a Delaware statutory business trust formed
pursuant to the Trust Agreement, dated as of June 1, 1999 (the "Trust
Agreement"), among the Transferors, the Depositor and First Union Trust Company,
National Association, as owner trustee (the "Owner Trustee"); and
WHEREAS, the Transferors desire to issue the Pledged Notes to the Trust,
and as collateral security therefor, pledge to the Trust, all of their
respective rights and interests in and to such Conveyed Assets, upon the terms
and conditions hereinafter set forth; and
WHEREAS, the Trust intends to pledge all of its right, title and
interest in and to the Pledged Property to The Chase Manhattan Bank, as
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer,
under the Indenture, dated as of June 1, 1999 (the "Indenture"), among the
Issuer, the Originator, as Servicer (the "Servicer"), and The Chase Manhattan
Bank, as indenture trustee (the "Indenture Trustee") and back-up Servicer (the
"Back-up Servicer"); and
WHEREAS, the Transferors desire to pledge to the Trust, all of their
respective rights, and interests in, to and under the Receivables Sale Agreement
and this Agreement; and
WHEREAS, each of the Transferors and the Trust agree that all
representations, warranties, covenants and agreements made by it herein shall be
for the benefit of the Noteholders, the Depositor, the Residual Holders, the
Note Insurer, the Collateral Agent, the Owner Trustee and the Indenture
Trustee.
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NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Whenever used in this Agreement, capitalized
terms used herein but not defined herein shall have the meanings set forth in
Annex A to the Indenture.
SECTION 1.02 Other Definitional Provisions.
(a) Terms used in Related Documents. Each term defined in this Agreement
will have the meaning assigned to such term in this Agreement when used in any
certificate or other document made or delivered pursuant to this Agreement,
unless such term is otherwise defined therein.
(b) Accounting Terms. As used in this Agreement, accounting terms which
are not defined pursuant to Section 1.01 have the respective meanings given to
them under GAAP, as in effect on the date of this Agreement. To the extent that
the definitions of accounting terms in this Agreement are inconsistent with the
meanings of such terms under GAAP, the definitions contained in this Agreement
will control.
(c) "Hereof," etc. The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provision of this Agreement; and Article,
Section, Schedule and Exhibit references contained in this Agreement are
references to Articles, Sections, Schedules and Exhibits in or to this
Agreement, unless otherwise specified.
(d) Number and Gender. Each defined term used in this Agreement has a
comparable meaning when used in its plural or singular form. Each
gender-specific term used in this Agreement has a comparable meaning whether
used in a masculine, feminine or gender-neutral form.
(e) Including. Whenever the term "including" (whether or not that term
is followed by the phrase "but not limited to" or "without limitation" or words
of similar effect) is used in this Agreement in connection with a listing of
items within a particular classification, that listing will be interpreted to be
illustrative only and will not be interpreted as a limitation on, or exclusive
listing of, the items within that classification.
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ARTICLE II
PLEDGE OF CONVEYED ASSETS
SECTION 2.01 Designation; Pledge; Acceptance. (a) There is hereby
created two notes to be issued pursuant to this Agreement to be known as the
"ABFS Pledged Notes", Class A (the "Class A Pledged Notes") and Class B (the
"Class B Pledged Notes" and, together with the Class A Pledged Notes, the
"Pledged Notes"). The obligors with respect to the Pledged Notes are ABFS
Finance and ABFS Residual jointly and severally. The Pledged Notes shall be in
the form set forth in Exhibit B hereto.
(b) Subject to the terms and condition of this Agreement, in
consideration of the receipt by the Transferors of $58,806,460.72 and the Class
B Notes, the Depositor, as sponsor of the Trust, hereby directs the Transferors
to pledge, and the Transferors hereby agree to pledge, on the Closing Date, all
of their respective right, and interest in and to (i) the Receivables Sale
Agreement and all Subsequent Receivables Sale Agreements entered into from time
to time pursuant to the terms of the Receivables Sale Agreement and (ii) the
Initial Conveyed Assets and all Substitute Conveyed Assets acquired by the
Transferors from time to time to the Trust (collectively, the "Transferor
Collateral"), to secure the obligations under the Pledged Notes.
(c) Subject to the terms and conditions of this Agreement, the
Transferors may pledge Subsequent Conveyed Assets to the Trust. Each such pledge
of Subsequent Conveyed Assets shall be evidenced by the execution and delivery
by the Transferors, the Depositor, the Issuer and the Indenture Trustee of a
Subsequent Receivables Pledge Agreement in the form of Exhibit A hereto. Each
such pledge shall be effective as of the related Subsequent Funding Date. In
consideration for the pledge of such Subsequent Conveyed Assets, the Trust shall
make an additional advance of funds under the Pledged Notes on the related
Subsequent Funding Date in an amount equal to 95.3% of the Discounted Contract
Principal Balance of the related Subsequent Contracts, such advance of funds to
be allocated as follows: the Class A Accelerated Percentage of such amount to be
allocated to the Class A Pledged Note and the Class B Accelerated Percentage of
such amount to be allocated to the Class B Pledged Note.
(d) It is the intention of the Transferors, which intention is
acknowledged by the Indenture Trustee, that this Agreement shall be deemed to be
a security agreement within the meaning of Article 8 and Article 9 of the UCC,
and the pledge provided for by this Section 2.01 and elsewhere herein shall be
deemed to be a grant by the Transferors to the Trust, of (i) a valid
first-priority perfected security interest in all of the Transferors' rights and
interests in and to the Conveyed Assets, Subsequent Conveyed Assets and
Substitute Conveyed Assets except that (A) such security interest is not granted
with respect to Equipment not owned by the Transferors and (B) with respect to
the Equipment owned by the Transferors, the priority of such security interest
is limited to the extent that UCC financing statements have been filed in
accordance with the Filing Requirements, and (ii) a valid assignment of the
security interests of the Transferors in the Equipment not owned by the
Transferors. The Transferors hereby grant and assign such interest, in each case
to the Trust, to secure the obligations of the
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Transferors to the Indenture Trustee and the Trust under this Agreement and
the Pledged Notes. That portion of the Conveyed Assets owned by each
Transferor shall secure the obligations of the Transferor under both
of the Pledged Notes.
(e) In connection with each pledge of Conveyed Assets, each Transferor
agrees to record and file, at its own expense, financing statements (and
thereafter will file continuation statements with respect to such financing
statements) with respect to such Conveyed Assets, meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect and to maintain the perfection of, (x) the transfer, conveyance and
contribution of such Conveyed Assets (subject to the Filing Requirements with
respect to the Equipment) from the Originator to the Transferors, (y) the pledge
of such Conveyed Assets (subject to the Filing Requirements with respect to the
Equipment) from the Transferors to the Trust, and (z) the pledge of the related
Pledged Property from the Trust to the Indenture Trustee, on behalf of the
Noteholders and the Note Insurer, and to deliver a file-stamped copy of such
financing statements or other evidence of such filings to the Issuer (and copies
to the Indenture Trustee and the Note Insurer) on or prior to each Conveyance
Date.
(f) The Transferors and the Originator represent that as of the Closing
Date, UCC-1 financing statements will have been filed against the Obligor and in
favor of the related Source or the Originator in respect of each item of
Equipment having an Original Equipment Cost greater than $25,000. In addition,
the Transferors represent that as of the Closing Date or immediately thereafter,
UCC 1 financing statements naming (i) the Originator as "debtor", Transferor II,
as "secured party" and the Indenture Trustee, as "assignee", and (ii) Transferor
II, as "debtor" and the Indenture Trustee, as "secured party", will be filed
with respect to the Conveyed Assets with the Secretary of State of each of the
50 States, other than Georgia, Louisiana, Maryland, Oklahoma and Tennessee.
(g) The Trust acknowledges its acceptance, simultaneously with the
execution and delivery of this Agreement, of the pledge of (i) the Transferor
Collateral and (ii) the Initial Conveyed Assets and all Subsequent Conveyed
Assets and the assignment of the Transferors' security interest in all right,
title and interest in and to the Conveyed Assets as collateral security for the
Pledged Notes and declares that the Indenture Trustee holds and will continue to
hold the pledge of the foregoing and the assignment of the Transferors' security
interest in such right, title and interest in and to the Conveyed Assets for the
use and purpose and subject to the terms and provisions of this Agreement.
SECTION 2.02 Custody of Contract Files. In connection with the pledge of
the Contracts to the Trust, pursuant to this Agreement, the Originator will
physically convey the Contract Files and the original executed counterparts of
each Contract to the Collateral Agent, on behalf of the Indenture Trustee, as
bailee on behalf of the Noteholders and the Note Insurer, in accordance with the
terms of the Indenture.
SECTION 2.03 Terms of the Pledged Notes. (a) The Class A Pledged Note
represents the right to receive repayment of an amount equal to (x) Class A
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Accelerated Percentage of the Aggregate Discounted Contract Principal Balance of
the Contracts then pledged to the Indenture Trustee, on behalf of the Trust, as
collateral security for the Pledged Notes, (y) interest on such amount at the
sum of (i) Weighted Average Class A Note Rate, (ii) the Servicer Fee Rate, (iii)
the Back-up Servicer Fee Rate, (iv) the Indenture Trustee Fee Rate and (v) the
Premium Rate times a fraction, the numerator of which is the Class A Percentage,
and the denominator of which is the Class A Accelerated Percentage (such sum of
(i) through (v), the "Class A Pledged Note Rate") and (z) until the Class A Note
Principal Balance has been reduced to zero, 100% of the sum of (A) any Residual
Receipts (up to the Booked Residual Value of the related Contract),
Reacquisition Amounts and Prepayment Amounts actually collected during the
preceding Collection Period and (B) any Defaulted Contract Amounts relating to
such Collection Period. On each Payment Date, a portion of such amount equal to
the sum of (x) the Class A Pledged Percentage of the amounts set forth in
Section 3.04(b)(i), (ii), (iii), (iv), (vi), (vii), (xv), (xvi) and (xvii) of
the Indenture and (y) 100% of the amounts set forth in Section 3.04(b)(v),
(viii), (x) and (xi) of the Indenture, shall be due on the Class A Pledged Note.
(b) The Class B Pledged Note represents the right to receive repayment
of an amount equal to (x) Class B Accelerated Percentage of the Aggregate
Discounted Contract Principal Balance of the Contracts then pledged to the
Indenture Trustee, on behalf of the Trust, as collateral security for the
Pledged Notes, (y) interest on such amount at the sum of (i) Class B Note Rate,
(ii) the Servicer Fee Rate, (iii) the Back-up Servicer Fee Rate and (iv) the
Indenture Trustee Fee Rate (such sum of (i) through (iv), the "Class B Pledged
Note Rate") and (z) after the Class A Note Principal Balance has been reduced to
zero, and until the Class B Note Principal Balance has been reduced to zero,
100% of the sum of (A) any Residual Receipts (up to the Booked Residual Value of
the related Contract), Reacquisition Amounts and Prepayment Amounts actually
collected during the preceding Collection Period and (B) any Defaulted Contract
Amounts relating to such Collection Period. On each Payment Date, a portion of
such amount equal to the sum of (x) the Class B Pledged Percentage of the
amounts set forth in Section 3.04(b)(i), (ii), (iii), (iv), (vi), (vii), (xv),
(xvi) and (xvii) of the Indenture and (y) 100% of the amounts set forth in
Section 3.04(b)(ix), (xii), (xiii) and (xiv) of the Indenture, shall be due on
the Class B Pledged Note.
(c) Interest on any amount owed pursuant to Sections 2.03(a) and (b)
that is not timely paid when due shall accrue interest until paid at the Class A
Note Rate or the Class B Note Rate, as applicable, plus 1%.
(d) In no event shall the amount payable on any Payment Date in respect
of the Class A Pledged Note and the Class B Pledged Note be less than the
aggregate amount of Available Funds for such Payment Date.
SECTION 2.04 Events of Default. "Transferor Event of Default" wherever
used herein means any one of the following events (whatever the reason for such
Transferor Event of Default and without regard to whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or
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order of any court or any order, rule or regulation of any administrative
or governmental body):
(a) failure to distribute or cause to be distributed to the
Trust, all or part of any payment required to be made on each Payment Date
under the terms of such Pledged Notes or this Agreement when due and
payable; or
(b) default in the performance, or breach, or any other
covenant of the Transferors in this Agreement, and continuance of such
default or breach for a period of thirty (30) days after the earliest of (i)
any officer of either of the Transferors first acquiring the knowledge
thereof, (ii) the Indenture Trustee's giving written notice thereof to the
Transferors, or (iii) the Note Insurer or the Holders of the Pledged Notes
giving written notice thereof to the Transferors and the Indenture Trustee;
or
(c) any representation or warranty of the Transferors made in
this Agreement or any other writing provided to the Depositor, the Note
Insurer, the Issuer or the Indenture Trustee proves to be incorrect in any
material respect as of the time when the same has been made; provided,
however, that the breach of any representation or warranty made by the
Agreement will be deemed to be "material" only if it negatively affects the
Issuer, the Note Insurer, the enforceability of this Indenture or the
Pledged Notes; or
(d) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of either of the
Transferors in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization, or other similar
law or (B) a decree or order adjudging either of the Transferors as
bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in
respect of either of the Transferors under any applicable federal or
state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of the Transferors or of
any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(e) the commencement by either the Transferors of a
voluntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or of any
other case or preceding to be adjudicated as bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in respect
of either the Transferor in an involuntary case or proceeding under
any applicable federal or state bankruptcy, insolvency, reorganization,
or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable federal or state law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee,
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sequestrator, or similar official of any such Person or of any substantial
part or its property, or the making by it of an assignment for the benefit
of creditors, or the failure of any such Person to pay is debts
generally as they become due, or the taking of corporate action by any such
Person in furtherance of any such action; or
(f) an event of default shall have occurred and be continuing
under the Insurance Agreement; or
(g) an Event of Default shall have occurred and be continuing
under the Indenture.
SECTION 2.05 Acceleration of Maturity, Rescission and Annulment. (a) If
a Transferor Event of Default occurs and is continuing, then and in every such
case the Indenture Trustee, at the written direction of the Controlling Party
shall declare the principal of all of the Pledged Notes to be immediately due
and payable, by a notice in writing to the Transferors and the Servicer, and
upon any such declaration such principal (together with all accrued and
previously unpaid interest) shall become immediately due and payable; provided,
that, with respect to Transferor Events of Default enumerated in Section 2.04
(d) and (e), the principal of all Pledged Notes shall become immediately due and
payable without further action of any person. The Indenture Trustee shall give
notice to each Noteholder, the Depositor, the Collateral Agent, the Note Insurer
and the Rating Agencies of such declaration.
(b) At any time, after such a declaration of acceleration has been
made, but before any sale of the Transferor Collateral has been made or a
judgment or decree for payment of the money due has been obtained by the
Indenture Trustee as hereinafter in this Article II provided, the Controlling
Party, by written notice to the Servicer and the Indenture Trustee, may rescind
and annul such declaration and its consequence if monies have been paid or
deposited with the Indenture Trustee in a sum sufficient to pay all overdue
installments due on all Pledged Notes.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Subsequent to any such declaration of acceleration and so long as such
declaration and its consequences have not been rescinded and annulled, prior to
the exercise by the Indenture Trustee of the remedies set forth in Section 2.06
hereof, the Indenture Trustee shall give the Issuer, the Depositor, the
Collateral Agent, the Noteholders and the Note Insurer ten days' notice of its
intention to take such actions.
SECTION 2.06 Remedies. If a Transferor Event of Default shall have
occurred and be continuing, the Trust (or a subsequent holder of a Pledged
Note), at the written direction of the Controlling Party, shall do one or more
of the following as shall be directed by the Controlling Party:
(a) institute, in its own name, proceedings for the collection of
the entire amount of remaining unpaid on the Pledged Notes, or under this
agreement
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in respect of the Notes, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Conveyed Assets securing
the Pledged Notes the monies adjudged due;
(b) sell the Conveyed Assets or any portion thereof or rights or
interest therein, at one or more sales called and conducted in any
commercially reasonable manager permitted by law;
(c) institute Proceedings from time to time for the complete or
partial foreclosure of this Agreement with respect to the Conveyed Assets
securing the Pledged Notes; or
(d) exercise any remedies of a secured party under the UCC or
other applicable law and take any other appropriate action to protect and
enforce the rights and remedies of the Issuer the Indenture Trustee, the
Depositor, the Collateral Agent, the Note Insurer or the Noteholders
hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of the Transferors. Each of
the Transferors hereby makes the following representations and warranties for
the benefit of the Owner Trustee, the Depositor, the Note Insurer, the
Collateral Agent, the Indenture Trustee and the Noteholders. Such
representations and warranties speak as of the Closing Date, each Subsequent
Funding Date and each Transfer Date.
(a) Organization and Good Standing. Each of the Transferors is a
limited liability company duly organized and validly existing in good
standing under the laws of the State of Delaware, with full power and
authority to own its properties and to conduct its business as presently
conducted and has the power, authority and legal right to acquire and own
the Conveyed Assets;
(b) Due Qualification. Each of the Transferors 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 qualification, except to the extent that the failure to be so
qualified, licensed or approved would not, in the aggregate, materially and
adversely affect the ability of such Transferor to comply with the terms of
this Agreement and the other Transaction Documents to which it is a party;
(c) Power and Authority. Each of the Transferors has the power
and authority to execute and deliver this Agreement and the other
Transaction Documents to which it is a party and to carry out their
respective terms; and the execution, delivery, and performance of this
Agreement and other Transaction
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Documents to which it is a party have been duly authorized by such
Transferor by all necessary action;
(d) Due Execution and Delivery. This Agreement and the other
Transaction Documents to which it is a party have been duly executed and
delivered on behalf of each Transferor;
(e) Binding Obligations. This Agreement and the other Transaction
Documents to which it is a party constitute legal, valid, and binding
obligations of each Transferor and are enforceable in accordance with their
respective terms subject as to enforceability to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
(f) No Violation. The consummation of the transactions
contemplated by and the fulfillment of the terms of this Agreement and
other Transaction Documents to which it is a party will not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice of lapse of time) a default under,
the Certificate of Formation or Limited Liability Company Agreement of
either Transferor, or any material term to any indenture to which either
Transferor is a party or violate any law or any order, injunction, writ,
rule or regulation applicable to either Transferor of any court or of any
federal or state regulatory body, administrative agency or other
Governmental Authority having jurisdiction over either Transferor or any
of its properties which would have a material adverse effect on the
Conveyed Assets;
(g) Membership Interests. The Originator is the owner of 99% of
the membership interests of each of the Transferors, each of which are owned
of record, free and clear of all mortgages, assignments, pledges and
security interests;
(h) No Proceedings. There are no proceedings or investigations
pending or, to the knowledge of each of the Transferors, threatened, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality (A) asserting the invalidity of or any of the
Transaction Documents, (B) seeking to prevent the consummation of any of the
transactions contemplated by any of the Transaction Documents or (C) seeking
any determination or ruling that would materially and adversely affect the
performance by either Transferor of its obligations under, or the validity
or enforceability of, any of the Transaction Documents;
(i) Approvals and Compliance. All approvals, authorizations,
consents, orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or official,
required in connection with the execution and delivery of the Transaction
Documents, have been or will be taken or obtained on or prior to the Closing
Date and each Transferor is in
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compliance with all applicable laws, rules, regulations and orders with
respect to such Transferor, its business and properties and all
Conveyed Assets;
(j) Solvency. Each Transferor is solvent and will not be rendered
insolvent by the transactions contemplated by this Agreement and the other
Transaction Documents and each Transferor has an adequate amount of capital
to conduct its business in the ordinary course and to carry out its
obligations under this Agreement and the other Transaction Documents;
(k) Subsidiaries. Neither of the Transferors has any subsidiaries
other than the Trust;
(l) Tax Returns. Each Transferor has filed on a timely basis all
tax returns (federal, state and local) required to be filed and has paid or
made adequate provisions for the payment of all taxes, assessments and other
governmental charges due from such Transferor;
(m) Principal Place of Business. The principal place of business
and chief executive office of each Transferor is located at the address of
such Transferor set forth herein and, there are now no, and during the past
four months there have not been, any other locations where such Transferor
is located (as that term is used in the UCC in the state of such location)
except that, with respect to such changes occurring after the date of this
Agreement, as shall have been specifically disclosed to the Servicer, the
Note Insurer, the Depositor and the Indenture Trustee in writing; and
(n) Legal Name. The legal name of each Transferor is as set forth
in the related signature line of this Agreement and neither Transferor has
changed its name since its incorporation and since its incorporation, such
Transferor did not use, nor does such Transferor now use, any trade names,
fictitious names, assumed names or "doing business as" names.
SECTION 3.02 Representations and Warranties of the Originator with
respect to the Conveyed Assets. (a) With respect to each Contract, the related
Transferor hereby assigns to the Issuer the representations, warranties and
covenants of the Originator set forth in Section 3.03 of the Receivables Sale
Agreement and Section 2.02 of the Servicing Agreement. Such representations,
warranties and covenants are made or deemed to be made, (x) with respect to the
Initial Conveyed Assets, as of the Cut-Off Date, (y) with respect to the
Subsequent Conveyed Assets, as of the Subsequent Cut-Off Date, and (z) with
respect to the Substitute Conveyed Assets, as of the related Transfer Date.
(b) Upon the discovery by the Issuer, the Depositor, either Transferor,
the Originator, the Indenture Trustee, the Collateral Agent or the Note Insurer
of a breach of any of the representations or warranties set forth in Section
2.02 of the Servicing Agreement that materially and adversely affects any
Contract, the related Equipment or the related Contract File, as the case may
be, or if the Servicer fails to cause delivery of
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evidence of filing or copies of any UCC financing statement in accordance with
the Servicing Agreement (any such event, a "Warranty Event"), the party
discovering such breach shall give prompt written notice to the other parties
hereto, the Originator, the Depositor, the Indenture Trustee, the Collateral
Agent, the Servicer and the Note Insurer, and the Originator shall be required
to reacquire or replace such Contract in accordance with Article IV of the
Indenture.
SECTION 3.03 Representations and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the Originator,
Transferors, the Trust, the Owner Trustee, the Collateral Agent, the Note
Insurer and the Indenture Trustee, as of the date of execution of this Agreement
and the Closing Date, that:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to
execute, deliver and perform, and to enter into and consummate all the
transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized, executed
and delivered by the Depositor, and, assuming the due authorization,
execution and delivery hereof by the Transferors, the Trust and the
Indenture Trustee, constitutes the legal, valid and binding agreement of the
Depositor, enforceable against the Depositor in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in
equity or at law);
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or
court is required for the execution, delivery and performance of or
compliance by the Depositor with this Agreement or the consummation by the
Depositor of any of the transactions contemplated hereby, except such as
have been made on or prior to the Closing Date; and
(e) None of the execution and delivery of this Agreement,
the consummation of the other transactions contemplated hereby, or
thefulfillment of or compliance with the terms and conditions of
this Agreement, (i) conflicts or will conflict with the charter or
bylaws of the Depositor or conflicts or will conflict with or results or
will result in a breach of, or constitutes or will constitute a default or
results or will result in an acceleration under, any term, condition or
provision of any indenture, deed of trust, contract or other agreement or
other instrument to which the Depositor is a party or by which it is bound
and which is material to the Depositor, or (ii) results or will result in
a violation of any law, rule, regulation, order, judgment or decree of
any court or governmental authority having jurisdiction over the
Depositor.
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SECTION 3.04 Substitution of Contracts and Equipment by the Originator.
(a) With respect to a substitution of Contracts in accordance with the
provisions of this Section 3.04, each proposed Substitute Contract must (i) be
an Eligible Contract, (ii) satisfy all of the representations and warranties set
forth in Section 2.02 of the Servicing Agreement, (iii) have a Discounted
Contract Principal Balance of not less than the Discounted Contract Principal
Balance of the Contract being replaced, (iv) have a Booked Residual Value of not
less than the Booked Residual Value of the Contract being replaced, and (v)
satisfy the requirements of Section 4.02(d) of the Indenture. For purposes of
determining compliance with clauses (iii) and (iv) of the preceding sentence, if
more than one Substitute Contract is being provided on any date, the Discounted
Contract Principal Balances and Booked Residual Values of the Substitute
Contracts and the Contracts being replaced shall be determined on an aggregate
basis.
(b) Any substitution of a Contract pursuant to this Agreement will be
effected by (i) delivery to the Collateral Agent, on behalf of the Indenture
Trustee, of the Contract File for each such Substitute Contracts, (ii) filing of
any UCC financing statements necessary to comply with the Filing Requirements
and to perfect the interest of the Indenture Trustee in the Substitute
Contracts, (iii) delivery to the Indenture Trustee of a supplement to the List
of Contracts reflecting such substitution, and (iv) delivery to the Transferor
and the Collateral Agent and the Indenture Trustee of a release request for the
replaced Contract and the originally executed trust receipt relating thereto.
(c) Upon completion of any substitution in accordance with this Section
3.04, the Substitute Contract, the related Equipment and any other related
Conveyed Assets will constitute part of the collateral for the Pledged Notes.
ARTICLE IV
COVENANTS
SECTION 4.01 Transferor Covenants. Each of the Transferors hereby
covenant and agree with the Issuer, the Owner Trustee, the Note Insurer, the
Depositor, the Collateral Agent, the Noteholders and the Indenture Trustee with
respect to itself as follows:
(a) Preservation of Security Interest. Each of the Transferors
shall execute and file such financing statements and cause to be executed
and filed such continuation statements, all in such manner and in such
places as may be required by law fully to preserve, maintain, and protect
the respective right, title and interest of the Issuer, the Note Insurer and
the Indenture Trustee in the Conveyed Assets. The Transferors shall deliver
(or cause to be delivered) to the Collateral Agent, on behalf of the
Indenture Trustee, file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such
filing.
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(b) Preservation of Name, etc. Neither of the Transferors will
change its name, identity or corporate structure in any manner that would,
could, or might make any financing statement or continuation statement filed
by such Transferor in accordance with paragraph (a) above or under any
Transaction Document seriously misleading within the meaning of Section
9-402(7) of the UCC, unless it shall have given the Issuer, the Note
Insurer, the Depositor, the Collateral Agent and the Indenture Trustee at
least 60 days' prior written notice thereof.
(c) Preservation of Office. Each of the Transferors will give the
Issuer, the Depositor, the Collateral Agent, the Note Insurer and the
Indenture Trustee at least 60 days' prior written notice of any relocation
of its principal executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement.
(d) Obligations with Respect to Conveyed Assets. Each of the
Transferors will duly fulfill all obligations on its part to be fulfilled
under or in connection with each Contract and each Source Agreement, and
will do nothing to impair the rights of the Issuer, the Note Insurer, the
Depositor, the Collateral Agent or the Indenture Trustee in any of the
Conveyed Assets.
(e) Compliance with Law. Each of the Transferors will comply, in
all material respects, with all acts, rules, requisitions, orders, decrees
and directions of any Governmental Authority applicable to its business and
to the Conveyed Assets or any part thereof; provided, however, that either
of the Transferors may contest any act, regulation, order, decree or
direction in any reasonable manner which shall not materially and adversely
affect the rights of the Indenture Trustee, the Note Insurer, the Depositor,
the Collateral Agent or the Issuer in any of the Conveyed Assets.
(f) Conveyance of Conveyed Assets; Security Interests. Except
for the transfers and conveyances hereunder, or under any Transaction
Document, the Transferors will not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist any
Lien, on the Transferor Collateral, or any interest therein and the
Transferors shall defend the right, title, and interest of the Issuer,
the Indenture Trustee, the Note Insurer, the Depositor, the
Collateral Agent and their respective successors and assigns in, to,
and under the Conveyed Assets, against all claims of third parties
claiming, through or under the Originator; provided, however, that nothing
in this Section 4.01(f) shall prevent or be deemed to prohibit the
Transferors from suffering to exist upon any of the Conveyed Assets any
Liens for municipal or other local taxes if such taxes shall not at the
time be due and payable or if the related Transferor shall concurrently
be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with
respect thereto and such contests pose no risk of forfeiture.
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(g) Notification of Breach. The related Transferor will advise
the Issuer, the Indenture Trustee, the Depositor, the Collateral Agent and
the Note Insurer promptly, in reasonable detail, upon discovery of the
occurrence of any breach by such Transferor of any of its representations,
warranties and covenants contained herein.
(h) Further Assurances. Each of the Transferors will make,
execute or endorse, acknowledge and file or deliver to the Issuer, the
Note Insurer, the Depositor, the Collateral Agent and the Indenture
Trustee from time to time such schedules, confirmatory assignments,
conveyances, transfer endorsements, powers of attorney, certificates,
reports and other assurances or instruments and take such further
steps relating to the Conveyed Assets and other rights covered by this
Agreement, as the Issuer, the Indenture Trustee, the Depositor, the
Collateral Agent and the Note Insurer may request and reasonably require;
provided, that no UCC filing will be required with respect to the
Equipment, except as required by the Filing Requirements.
(i) Indemnification. Each of the Transferors agrees to
indemnify, defend and hold the Issuer, the Owner Trustee, the Depositor,
the Collateral Agent, the Indenture Trustee and the Note Insurer harmless
from and against any and all loss, liability, damage, judgment, claim,
deficiency, or expense (including interest, penalties, reasonable
attorneys' fees and amounts paid in settlement) to which any of them may
become subject insofar as such loss, liability, damage, judgment, claim,
deficiency, or expense arises out of or is based upon a breach by such
Transferor of its representations and warranties contained in Article
III, its covenants contained in Section 4.01, or in any certificate or in
any schedule delivered by such Transferor hereunder, being untrue in any
material respect at any time. The obligations of the Transferors under
this Section 4.01(i) shall be considered to have been relied upon by the
Issuer, the Owner Trustee, the Indenture Trustee, the Depositor, the
Collateral Agent and the Note Insurer and shall survive the execution,
delivery, performance and termination of this Agreement regardless of
any investigation made by the Issuer, the Depositor, the Collateral
Agent, the Indenture Trustee and the Note Insurer or on their respective
behalf. THE INDEMNIFICATION OBLIGATIONS OF THE TRANSFERORS PURSUANT TO
THE PRECEDING PROVISIONS OF THIS PARAGRAPH SHALL APPLY REGARDLESS OF ANY
NEGLIGENCE OR OTHER FAULT ON THE PART OF THE ISSUER, THE DEPOSITOR, THE
COLLATERAL AGENT, THE INDENTURE TRUSTEE, THE NOTE INSURER OR ANY OF THEIR
RESPECTIVE OFFICERS, EMPLOYEES OR AGENTS.
(j) Notice of Liens. The related Transferor shall notify the
Issuer, the Indenture Trustee, the Depositor, the Collateral Agent and the
Note Insurer promptly after becoming aware of any Lien on any Conveyed
Asset.
(k) Taxes. Each Transferor shall promptly pay all applicable
taxes required to be paid in connection with the pledge of the Conveyed
Assets and acknowledges that the Issuer shall have no responsibility
with respect thereto.
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Each Transferor shall promptly pay and discharge, or cause the payment and
discharge of, all federal income taxes (and all other material taxes) when
due and payable by each such Transferor, except (i) such as may be paid
thereafter without penalty or (ii) such as may be contested in good faith by
appropriate proceedings and for which an adequate reserve has been
established and is maintained in accordance with GAAP. Each Transferor shall
promptly notify the Issuer, the Indenture Trustee, the Depositor, the
Collateral Agent, the Noteholders, the Rating Agencies and the Note Insurer
of any material challenge, contest or proceeding pending by or against such
Transferor before any taxing authority.
(l) Taxes and Other Liabilities. Each Transferor shall promptly
pay and discharge all material taxes, assessments, fees, claims and other
governmental charges when due and payable by such Transferor, except (i)
such as may be paid thereafter without penalty or (ii) such as may be
contested in good faith by appropriate proceedings and for which an adequate
reserve has been established and is maintained in accordance with GAAP. Each
Transferor shall promptly notify the Issuer, the Note Insurer, the Rating
Agencies and the Indenture Trustee of any material challenge, contest or
proceeding pending by or against such Transferor before any taxing
authority.
(m) Non-Consolidation. Each Transferor shall take all action
necessary to maintain the separate existence of such Transferor and the
Manager on the one hand, and the Originator on the other hand, so that the
separate existence of such Transferor and the Manager would not be ignored
in the event of a bankruptcy of the Originator.
(n) Indebtedness. Neither Transferor shall incur any Indebtedness
other than the Pledged Notes.
(o) Operation of Transferor. Each of the Transferors shall be
operated in such a manner that it should not be substantively consolidated
in the trust estate of another Person (that is, such that the separate legal
existence of such Transferor and such Person should be disregarded) and in
that regard, each Transferor shall:
(i) not engage in any action that would cause the
separate legal identity of such Transferor not to be respected,
including, without limitation, (x) holding itself out as being liable
for the debts of any other party or (y) acting other than through its
duly authorized agents;
(ii) not incur, assume or guarantee any indebtedness
except for such indebtedness as may be incurred by such Transferor in
connection with the issuance of the Pledged Notes, the Notes or as
otherwise permitted by the Note Insurer;
(iii) not commingle its funds with those of any other
entity;
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(iv) act solely in its name in the conduct
of its business and shall conduct its business so as not to mislead
others as to the identity of the entity with which they are concerned;
(v) maintain company records and books of account and
shall not commingle its company records and books of account with the
records and books of account of any entity;
(vi) not engage in any business or activity other than
in connection with or relating to the activities allowed by its
Certificate of Formation and/or Limited Liability Company Agreement;
(vii) not form, or cause to be formed, any
subsidiaries;
(viii) comply with all restrictions and covenants in,
and shall not fail to comply with the corporate formalities established
in, the Certificate of Formation and/or Limited Liability Company
Agreement;
(ix) maintain separate bank accounts, if any;
(x) not act as an agent of the Originator; and
(xi) have as its managing member a limited purpose
corporation who maintains at all times one independent director as
required by its Certificate of Incorporation and/or Bylaws.
SECTION 4.02 Pledge of Pledged Property. Each Transferor understands
that the Issuer intends to pledge its interest in the Pledged Notes, the
Transferor Collateral and its rights under this Agreement to the Indenture
Trustee, on behalf of the Note Insurer and the Noteholders, pursuant to the
Indenture. Each Transferor agrees that any such assignee of the Issuer may
exercise the rights of the Issuer hereunder without any consent or action by the
Issuer and shall be entitled to all of the benefits of the Issuer hereunder to
the extent provided for in such assignment.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions to Issuer's Obligations. The obligation of the
Issuer to accept the pledge of the Initial Conveyed Assets on the Closing Date
shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of each Transferor and
the Depositor contained in this Agreement shall be true and correct on the
Closing Date with the same effect as though such representations and
warranties had been made on such date;
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(b) All information concerning the Initial Conveyed Assets
provided to the Issuer shall be true and correct as of the Cut-Off Date in
all material respects;
(c) Each Transferor shall have delivered to the Issuer a List of
Contracts with respect to its respective Contracts as of the Cut-Off Date
and shall have substantially performed all other obligations required to be
performed by the provisions of this Agreement;
(d) Each Transferor shall have recorded and filed, at its expense,
any financing statement with respect to the Initial Conveyed Assets to be
pledged from time to time to the Indenture Trustee, on behalf of the Issuer,
from each Transferor pursuant to this Agreement meeting the requirements of
applicable state law in such manner in such jurisdictions as are necessary
to perfect the pledge of the Initial Conveyed Assets from each Transferor to
the Indenture Trustee, on behalf of the Issuer, and shall deliver a
file-stamped copy of such financing statements or other evidence of such
filings to the Indenture Trustee;
(e) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Issuer, and the Issuer shall have
received from each Transferor copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Issuer may reasonably have requested; and
(f) All respective conditions necessary to vest in each Transferor
good title, free and clear of all Liens (other than Liens permitted in the
proviso contained in Section 4.01(f) hereof), to the Contracts and
Equipment, as applicable, shall have been satisfied.
SECTION 5.02 Conditions to the Transferors' Obligations. The
obligations of each Transferor to pledge the Initial Conveyed Assets and the
Transferor Collateral to the Issuer on the Closing Date shall be subject to the
satisfaction of the following conditions:
(a) All representations and warranties of the Issuer and the
Depositor contained in this Agreement shall be true and correct with the
same effect as though such representations and warranties had been made on
such date; and
(b) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to each Transferor, and each Transferor
shall have received from the Issuer copies of all documents (including,
without limitation, records of corporate proceedings) relevant to the
transactions herein contemplated as each Transferor may reasonably have
requested;
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provided, however, that upon the issuance of the Pledged Notes to the Issuer,
the Transferors shall be deemed to have accepted or waived all of the
conditions precedent set forth above.
ARTICLE VI
TERMINATION
SECTION 6.01 Termination. The respective obligations and
responsibilities of each of the Transferors, the Depositor, and the Issuer
created by this Agreement shall terminate upon the latest of: (i) the maturity
or other liquidation of the last Contract and the disposition of any amounts
received upon disposition of any Defaulted Contracts and any Equipment leased
thereunder; (ii) the distribution to the Issuer of all amounts required to be
paid thereto pursuant to the Pledged Notes and this Agreement; (iii) the
termination of the Indenture in accordance with the terms thereof and (iv) the
payment of all amounts owing to the Note Insurer under the Transaction
Documents; provided, however, that (A) the indemnifications contained in Section
4.01(i) herein and (B) the covenant contained in Section 7.13 hereof, shall
survive the termination of this Agreement.
SECTION 6.02 Effect of Termination. No termination or rejection or
failure to assume the executory obligations of this Agreement in the bankruptcy
of either of the Transferors, the Depositor, or the Issuer shall be deemed to
impair or affect the obligations pertaining to any executed contribution or
executed obligations, including, without limitation, pre-termination breaches of
representations and warranties by either of the Transferors, the Depositor, or
the Issuer. Without limiting the foregoing, prior to termination, neither the
failure of the Transferors to deliver a Transferors Certificate pursuant to
Section 4.02, nor the failure of the Originator to pay a Reacquisition Amount
shall render such transfer or obligation executory, nor shall the continued
duties of the parties pursuant to Article IV or Section 7.06 of this Agreement
render an executed contribution executory.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01 Amendment. This Agreement may be amended from time to time
by the parties hereto only with (x) the prior written consent of the Servicer,
the Indenture Trustee and the Note Insurer (or, in the event of a Note Insurer
Default, the Majority Holders) and (y) satisfaction of the Rating Agency
Condition.
SECTION 7.02 GOVERNING LAW. THIS AGREEMENT AND ANY AMENDMENT HEREOF
PURSUANT TO SECTION 7.01 SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW
PRINCIPLES) APPLICABLE TO AGREEMENTS MADE
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AND TO BE PERFORMED THEREIN AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 7.03 Notices. All demands, notices, and communications under
this Agreement shall be in writing and shall be deemed to have been duly given,
made and received (i) when delivered against receipt of registered or certified
mail or upon actual receipt of registered or certified mail, postage prepaid,
return receipt requested; (ii) when delivered by courier with appropriate
evidence of receipt; or (iii) upon transmission via facsimile or telex with
appropriate evidence of receipt (a) in the case of the Issuer, c/o First Union
Trust Company, National Association, at One Rodney Square, 920 King Street,
Suite 102, Wilmington, Delaware 19801, Attention: Corporate Trust
Administration, telecopy (302) 888-7544, (b) in the case of the Indenture
Trustee, 450 West 33rd Street, New York, New York, 10001, Attention: Global
Trust Services, telecopy (212) 946-8191; (c) in the case of Transferor I, c/o
American Business Financial Services, Inc., Balapointe Office Centre, 111
Presidential Boulevard, Suite 127, Bala Cynwyd, Pennsylvania 19004, Attention:
General Counsel, telecopy (610) 668-1468, (d) in the case of Transferor II, c/o
American Business Financial Services, Inc., Balapointe Office Centre, 111
Presidential Boulevard, Suite 127, Bala Cynwyd, Pennsylvania 19004, Attention:
General Counsel, telecopy (610) 668-1468, (e) in the case of the Depositor, One
New York Plaza, New York, New York 10292, Attention: Managing Director--Asset
Backed Finance, telecopy (212) 778-7401, (f) in the case of the Collateral
Agent, at the address set forth in the Servicing Agreement, and (g) in the case
of the Note Insurer, the Rating Agencies or the Owner Trustee, at their
respective addresses set forth in Section 11.06 of the Indenture. Either party
may alter the address to which communications are to be sent by giving notice of
such change of address in conformity with the provisions of this Section 7.03
for giving notice and by otherwise complying with any applicable terms of this
Agreement, including, but not limited to, subsections 4.01(b) and (c).
SECTION 7.04 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.
SECTION 7.05 Assignment. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may not be assigned by the
Transferors, without the prior written consent of the Issuer, the Depositor, the
Note Insurer (or, in the event of a Note Insurer Default, the Majority Holders)
and the Indenture Trustee (acting upon the written direction of the Controlling
Party) and, except as provided in Section 4.03, this Agreement may not be
assigned by the Issuer without the prior written consent of the Transferors, the
Depositor, the Note Insurer (or, in the event of a Note Insurer Default, the
Majority Holders) and the Indenture Trustee. Whether or not expressly stated,
all representations, warranties, covenants and agreements of the Issuer, the
Depositor, and the Transferors in this Agreement, or in any
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document delivered by any of them in connection with this Agreement, shall be
for the benefit of, and shall be exercisable by, the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer.
SECTION 7.06 Further Assurances. Each of the parties hereto agrees to
do such further acts and things and to execute and deliver to the Indenture
Trustee or the Collateral Agent, acting on its behalf, such additional
assignments, agreements, powers and instruments as are required by the Indenture
Trustee or the Collateral Agent, acting on its behalf, or the Note Insurer to
carry into effect the purposes of this Agreement or to better assure and confirm
unto the Indenture Trustee or the Note Insurer its rights, powers and remedies
hereunder.
SECTION 7.07 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of either Transferor, the Depositor or the
Issuer, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise hereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privilege provided by law.
SECTION 7.08 Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which shall constitute one and the same
instrument.
SECTION 7.09 Binding Effect: Third-Party Beneficiaries. This Agreement
will inure to the benefit of and be binding upon the parties hereto. The Owner
Trustee, the Collateral Agent, the Note Insurer and the Noteholders are intended
third party beneficiaries of this Agreement.
SECTION 7.10 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
SECTION 7.11 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 7.12 Schedules and Exhibits. The schedules and exhibits
attached hereto and referred to herein shall constitute a part of this Agreement
and are incorporated into this Agreement for all purposes.
SECTION 7.13 No Bankruptcy Petition Against the Transferors, the
Manager or the Trust. Each of the parties hereto agrees that, prior to the date
that is one year and one day after the payment in full of the of the latest
maturing Notes issued by the Trust, it will not institute against any of the
Transferors, the Manager or the Trust, or
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join any other Person in instituting against any of the Transferors, the Manager
or the Trust, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other proceedings under the laws of the United States
or any state of the United States. This Section 7.13 shall survive the
termination of this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers as of the day and year first
above written.
ABFS EQUIPMENT CONTRACT TRUST
1999-A, as Issuer
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Owner
Trustee under the Trust Agreement
By:_____________________________
Name:
Title:
ABFS FINANCE LLC 1999-A,
as Transferor I
By: ABFS Special Purpose Management,
Inc., as Managing Member
By:_____________________________
Name:
Title:
ABFS RESIDUAL LLC 1999-A,
as Transferor II
By: ABFS Special Purpose Management,
Inc., as Managing Member
By:_____________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as indenture trustee
By:_____________________________
Name:
Title:
[Signature Page for Receivables Pledge Agreement]
<PAGE>
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION,
as Depositor
By:_____________________________
Name:
Title:
[Signature Page for Receivables Pledge Agreement]
<PAGE>
SCHEDULE I
LIST OF INITIAL CONTRACTS
<PAGE>
EXHIBIT A
FORM OF SUBSEQUENT
RECEIVABLES PLEDGE AGREEMENT
This SUBSEQUENT RECEIVABLES PLEDGE AGREEMENT, dated as of ____________
(the "Subsequent Funding Date"), by and among ABFS Finance LLC 1999-A, a
Delaware limited liability company ("Transferor I"), and ABFS Residual LLC
1999-A, a Delaware limited liability company ("Transferor II" and, together with
Transferor I, the "Transferors"), Prudential Securities Secured Financing
Corporation, as depositor (the "Depositor"), ABFS EQUIPMENT CONTRACT TRUST
1999-A, a Delaware business trust, as issuer (the "Trust" or the "Issuer"), and
THE CHASE MANHATTAN BANK, a New York banking corporation, as indenture trustee
(the "Indenture Trustee").
WITNESSETH:
Reference is hereby made to that certain Receivables Pledge Agreement,
dated as of June 1, 1999 (the "Receivables Pledge Agreement"), by and among the
Issuer, the Transferors, the Depositor and the Indenture Trustee. Pursuant to
the Receivables Pledge Agreement, the Transferors agreed to sell, convey and
transfer, and the Trust agreed to accept, from time to time, Subsequent Conveyed
Assets. The Receivables Pledge Agreement provides that each such sale,
conveyance and transfer of Subsequent Conveyed Assets be evidenced by the
execution and delivery of a Subsequent Receivables Pledge Agreement such as this
Subsequent Receivables Pledge Agreement (this "Agreement").
The "Subsequent Contracts" are those listed on the List of Subsequent
Contracts attached hereto.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For the purposes of this Agreement,
capitalized terms used herein but not otherwise defined shall have the
respective meanings assigned to such terms in the Receivables Pledge Agreement
or in Annex A to the Indenture.
Section 2. Designation; Pledge; Acceptance. (a) Subject to the terms
and condition of this Agreement, the Depositor, as sponsor of the Trust, hereby
directs the Transferors to pledge, and the Transferors hereby agree to pledge,
on the Subsequent Funding Date, all of their respective rights and interests in
and to the Subsequent Conveyed Assets to the Trust, to secure the obligations
under the Pledged Notes.
(b) It is the intention of the Transferors, which intention is
acknowledged by the Trust, the Depositor and the Indenture Trustee, that this
Agreement shall be deemed to be a security agreement within the meaning of
Article 8 and Article 9 of the UCC, and the pledge provided for by this Section
2 shall be deemed to be a grant
A-1
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by the Transferors to the Trust, of (i) a valid first-priority perfected
security interest in all of the Transferors' rights and interests in and to the
Subsequent Conveyed Assets, except that (A) such security interest is not
granted with respect to Equipment not owned by the Transferors and (B) with
respect to the Equipment, owned by the Transferors, the priority of such
security interest is limited to the extent that UCC financing statements have
been filed in accordance with the Filing Requirements, and (ii) a valid
assignment of the security interests of the Transferors in the Equipment not
owned by the Transferors. The Transferors hereby grant and assign such interest,
in each case to the Trust, to secure the obligations of the Transferors to the
Indenture Trustee and the Trust under this Agreement and the Pledged Notes. That
portion of the Subsequent Conveyed Assets owned by each Transferor shall secure
the obligations of the Transferor under both the Pledged Notes.
(c) The Indenture Trustee acknowledges its acceptance, simultaneously
with the execution and delivery of this Agreement, of the pledge of and security
interest in all right, title and interest in and to the Subsequent Conveyed
Assets and declares that the Indenture Trustee holds and will continue to hold
the pledge of and security interest in all of Transferors' such right and
interest in and to the Subsequent Conveyed Assets for the benefit of the Issuer
as owner of the Pledged Notes for the use and purpose and subject to the terms
and provisions of this Agreement.
Section 3. Representations and Warranties of the Transferors. (a) With
respect to each Subsequent Contract, the related Transferor hereby assigns to
the Issuer the representations, warranties and covenants of the Originator set
forth in Section 3.02 of the Receivables Pledge Agreement and Section 2.02 of
the Servicing Agreement.
Upon the discovery by the Issuer, either Transferor, the Originator,
the Depositor, the Collateral Agent, the Indenture Trustee or the Note Insurer
of a breach of any of the representations or warranties set forth in Section
2.02 of the Servicing Agreement that materially and adversely affects any
Contract, the related Equipment or the related Contract File, as the case may
be, or if the Servicer fails to cause delivery of evidence of filing or copies
of any UCC financing statement in accordance with the Servicing Agreement (any
such event, a "Warranty Event"), the party discovering such breach shall give
prompt written notice to the other parties hereto, the Originator, the Indenture
Trustee, the Trust, the Depositor, the Collateral Agent and the Note Insurer,
and the Originator shall be required to reacquire or replace such Contract in
accordance with Article IV of the Indenture.
Each Transferor understands that the Issuer intends to pledge its
interest in the Pledged Notes, the Transferor Collateral and its rights under
this Agreement to the Indenture Trustee, on behalf of the Noteholders and the
Note Insurer, pursuant to the Indenture. Each Transferor agrees that any such
assignee of the Issuer may exercise the rights of the Issuer hereunder without
any consent or action by the Issuer and shall be entitled to all of the benefits
of the Issuer hereunder to the extent provided for in such assignment.
A-2
<PAGE>
Section 4. Amendment. This Agreement may be amended from time to time
by the parties hereto only with (x) the prior written consent of the Servicer,
the Indenture Trustee and the Note Insurer (or, in the event of a Note Insurer
Default, the Majority Holders) and (y) satisfaction of the Rating Agency
Condition.
Section 5. GOVERNING LAW. THIS AGREEMENT AND ANY AMENDMENT HEREOF
PURSUANT TO SECTION 4 SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW
PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN AND THE
OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 6. Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which shall
constitute one and the same instrument.
Section 7. Binding Effect; Third-Party Beneficiaries. This Agreement
will inure to the benefit of and be binding upon the parties hereto. The
Indenture Trustee, the Owner Trustee, the Note Insurer, the Collateral Agent and
the Noteholders are intended third party beneficiaries of this Agreement.
Section 8. Headings. The headings herein are for purposes
of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
Section 9. Exhibits. The schedules and exhibits attached
hereto and referred to herein shall constitute a part of this Agreement and are
incorporated into this Agreement for all purposes.
[Remainder of Page Intentionally Left Blank]
A-3
<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.
ABFS EQUIPMENT CONTRACT TRUST
1999-A, as Issuer
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Owner
Trustee under the Trust Agreement
By:_____________________________
Name:
Title:
ABFS FINANCE LLC 1999-A, as
Transferor I
By: ABFS Special Purpose Management,
Inc., as Managing Member
By:_____________________________
Name:
Title:
ABFS RESIDUAL LLC 1999-A, as
Transferor II
By: ABFS Special Purpose Management,
Inc., as Managing Member
By:_____________________________
Name:
Title:
A-4
<PAGE>
THE CHASE MANHATTAN BANK, as
indenture trustee
By:_____________________________
Name:
Title:
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION, as
Depositor
By:_____________________________
Name:
Title:
A-5
<PAGE>
EXHIBIT B
FORM OF PLEDGED NOTES
CLASS [A][B] PLEDGED NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (B) TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A OR (C) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT SUBJECT, IN THE CASE OF CLAUSES (B) OR (C)
ABOVE, TO COMPLIANCE BY THE HOLDER AND THE TRANSFEREE WITH THE PROVISIONS OF
THE INDENTURE APPLICABLE TO SUCH TRANSFER.
-----------------------------
ABFS FINANCE LLC 1999-A, a Delaware limited liability company ("ABFS
Finance"), and ABFS RESIDUAL LLC 1999-A, a Delaware limited liability company
("ABFS Residual", and together with ABFS Finance, the "Transferors"), hereby
agree to pay, jointly and severally, to ABFS EQUIPMENT CONTRACT TRUST 1999-A
(the "Trust"), (a) the principal sum of the Class [A][B] Accelerated Percentage
of the Aggregate Discounted Contract Principal Balance of all Contracts owned by
the Transferors from time to time (such amount, the "Class [A][B] Pledged
Principal Amount"), (b) interest monthly in arrears on the unpaid portion of
said principal sum (and, to the extent that the payment of such interest shall
be legally enforceable, on any overdue installment, of interest on this Note) on
the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (each, a "Payment Date"), commencing in July
1999, for the period commencing on and including the immediately preceding
Payment Date (or, with respect to the initial Payment Date, on June 15, 1999)
and ending on and including the day immediately preceding such Payment Date,
until such unpaid principal is fully paid, at a rate per annum equal to the sum
of (i) the [Weighted Average Class A Note Rate][Class B Note Rate], (ii) the
Servicer Fee Rate, (iii) the Back-up Servicer Fee Rate, [and] (iv) the Indenture
Trustee Fee Rate [[Class A Pledged Note] and (v) the Premium Rate times a
fraction, the numerator of which is the Class A Percentage, and the denominator
of which is the Class A
B-1
<PAGE>
Accelerated Percentage] (such sum of (i) through [(v)]
[(iv)], the Class [A][B] Pledged Note Rate"), and (c) [Class A Pledged Note --
until the Class A Note Principal Balance has been reduced to zero, 100%][Class B
Pledged Note -- after the Class A Note Principal Balance has been reduced to
zero, and until the Class B Note Principal Balance has been reduced to zero,
100%] of the sum of (i) any Residual Receipts (up to the Booked Residual Value
of the related Contract), Reacquisition Amounts and Prepayment Amounts actually
collected during the preceding Collection Period and (ii) any Defaulted Contract
Amounts relating to such Collection Period; provided, however, that, interest on
any amount of principal or interest that is not timely paid when due shall
accrue interest until paid at the Class [A][B] Note Rate plus 1%; and provided,
further, that, in no event shall the amount payable on any Payment Date in
respect of the Class A Pledged Note and the Class B Pledged Note be less than
the amount payable on the Class A Note and the Class B Note on such Payment
Date.
This Class [A][B] Pledged Note has been issued pursuant to the terms of
the Receivables Pledge Agreement, dated as of June 1, 1999 (the "Agreement"),
among the Transferors, the Trust, Prudential Securities Secured Financing
Corporation, as Depositor (the "Depositor"), and The Chase Manhattan Bank, as
Indenture Trustee (the "Indenture Trustee"). The property pledged by the
Transferors to the Trust as security for the Class A Pledged Note and the Class
B Pledged Note includes, among other things, the Contracts, certain interest in
the related Equipment, all Scheduled Payments, Final Scheduled Payments,
Residual Receipts (up to the Booked Residual Value with respect to the related
Contract), Defaulted Contract Recoveries and other monies due thereunder after
the close of business on May 31, 1999 (the "Initial Cut-Off Date"), and other
property.
Payments made on the Class [A][B] Pledged Note will be used by the
Indenture Trustee to make certain payments required under the Indenture, dated
as of June 1, 1999 (the "Indenture"), by and among the Trust, American Business
Leasing, Inc., as Servicer (the "Servicer") and The Chase Manhattan Bank, as
Indenture Trustee and as Back-up Servicer (the "Back-up Servicer"). To the
extent not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in Annex A to the Indenture.
This Class [A][B] Pledged Note is limited in right of payment to
certain collections and recoveries respecting the Contracts, all as more
specifically set forth in the Agreement and in the Indenture. The holder hereof,
by its acceptance of this Class [A][B] Pledged Note, agrees to look solely to
the funds in the Collection Account to the extent available for payment to the
holder hereof for payment hereunder. [The amount due on this Class A Pledged
Note on each Payment Date will equal the sum of (x) the Class A Pledged
Percentage of the amounts due under Section 3.04(b)(i), (ii), (iii), (iv), (vi),
(vii), (xv), (xvi) and (xvii) of the Indenture and (y) 100% of the amounts due
under Section 3.04(b)(v), (viii), (x) and (xi) of the Indenture, for such
Payment Date.] [The amount due on this Class B Pledged Note on each Payment Date
will equal the sum of (x) the Class B Pledged Percentage of the amounts due
under Section 3.04(b)(i), (ii), (iii), (iv), (vi), (vii), (xv), (xvi) and (xvii)
of the Indenture and (y) 100% of the amounts due under Section 3.04(b)(ix),
(xii), (xiii) and (xiv) of the Indenture, for such Payment Date.]
B-2
<PAGE>
This Class [A][B] Pledged Note is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the holder
of this Class A Pledged Note, by virtue of the acceptance hereof, assents and by
which such holder is bound. Pursuant to the Agreement, the Transferors shall, in
addition to the Class [A][B] Pledged Note, issue the Class [A][B] Pledged Note
(the "Class [A][B] Pledged Note" and, together with the Class [A][B] Pledged
Notes, the "Pledged Notes"). This Class [A][B] Note does not purport to
summarize the Agreement and reference is made to the Agreement for information
with respect to the interests, rights, benefits, obligations, proceeds and
duties evidenced hereby and the rights, duties and immunities of the
Transferors.
Unless earlier declared, or they otherwise become, due and payable by
reason of a Transferor Event of Default, the Pledged Notes are payable only at
the time and in the manner provided in the Agreement and are not redeemable or
prepayable before such time except that the Servicer will have the option,
subject to certain conditions set forth in the Agreement and in the Indenture,
including the deposit of the sum specified in the Indenture, to cause early
retirement of the Pledged Notes as of any Payment Date on which the Offered
Notes are redeemed. If a Transferor Event of Default, as defined in the
Agreement, shall occur and be continuing, the principal of all of the Pledged
Notes may become or be declared immediately due and payable in the manner and
with the effect provided in the Agreement.
The Servicer, the Transferors, the Trust, the Note Issuer, the
Depositor, the Collateral Agent and the Indenture Trustee and any agent of any
of the foregoing may treat the person in whose name this Class [A][B] Pledged
Note is registered as the owner hereof for all purposes, and none of the
foregoing shall be affected by any notice to the contrary.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
B-3
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Class
[A][B] Pledged Note to be duly executed.
ABFS FINANCE LLC 1999-A
By: ABFS Special Purpose Management, Inc., as
Managing Member
By:_____________________________
Name:
Title:
ABFS RESIDUAL LLC 1999-A
By: ABFS Special Purpose Management, Inc., as
Managing Member
By:_____________________________
Name:
Title:
Dated: June __, 1999
B-4
<PAGE>
Exhibit 4.4
SERVICING AGREEMENT
by and among
AMERICAN BUSINESS LEASING, INC.,
as Servicer and as Originator,
ABFS FINANCE LLC 1999-A,
as a Transferor,
ABFS RESIDUAL LLC 1999-A,
as a Transferor,
ABFS EQUIPMENT CONTRACT TRUST 1999-A,
as Issuer,
CHASE BANK OF TEXAS, N.A.
as Collateral Agent
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee and as Back-up Servicer
Dated as of June 1, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS..........................................................1
Section 1.01 Definitions...................................................1
Section 1.02 General Interpretive Principles...............................1
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS...........................2
Section 2.01 Representations, Warranties and Covenants of the Servicer.....2
Section 2.02 Representations and Warranties of the Originator with
Respect to the Contracts.....................................7
Section 2.03 Representations and Warranties of the Back-up Servicer.......16
Section 2.04 Representations, Warranties and Covenants of the
Collateral Agent...........................................17
ARTICLE III PERFECTION OF TRANSFER............................................18
Section 3.01 Filing; Custody of Files; Contract Files.....................18
Section 3.02 Name Change or Relocation....................................20
Section 3.03 Chief Executive Offices......................................20
Section 3.04 Costs and Expenses...........................................20
Section 3.05 Possession of Contract Files; Access to Contract Files.......21
Section 3.06 Acceptance of the Trust Property; Certification by the
Collateral Agent...........................................21
ARTICLE IV ADMINISTRATION AND SERVICING OF THE CONTRACTS......................22
Section 4.01 Acceptance of Appointment; Duties of Servicer................22
Section 4.02 Collection of Payments.......................................24
Section 4.03 Servicer Advances............................................25
Section 4.04 Realization Upon Defaulted Contracts.........................26
Section 4.05 Maintenance of Insurance Policies; Fidelity Policies.........27
Section 4.06 Servicing Compensation; Payment of Certain Expenses
by Servicer................................................27
Section 4.07 Monthly Statement............................................28
Section 4.08 Quarterly Certificates as to Compliance......................28
Section 4.09 Annual Independent Public Accountant's Servicing Reports.....28
Section 4.10 Access to Certain Documentation and Information Regarding
the Pledged Property.......................................28
Section 4.11 Financial Statements and Other Necessary Data................30
Section 4.12 Responsibilities of the Back-up Servicer.....................31
Section 4.13 Back-up Servicer Compensation................................32
Section 4.14 Merger or Consolidation of, or Assumption of the
Obligations of,Back-up Servicer............................33
Section 4.15 Back-up Servicer's Waiver of Set-off.........................33
Section 4.16 Retention and Termination of the Servicer....................33
i
<PAGE>
ARTICLE V THE SERVICER AND THE BACK-UP SERVICER...............................34
Section 5.01 Liability of Servicer; Indemnities...........................34
Section 5.02 Merger, Consolidation, or Assumption of the Obligations
of Servicer................................................35
Section 5.03 Limitation on Liability of Servicer and Others...............36
Section 5.04 Servicer Not to Resign.......................................36
Section 5.05 Limitation on Liability of Back-up Servicer and Others.......36
Section 5.06 Back-up Servicer Not to Resign...............................37
Section 5.07 Indemnity for Liability Claims...............................38
ARTICLE VI SERVICING TERMINATION; BACK-UP SERVICING TERMINATION...............38
Section 6.01 Events of Servicing Termination..............................38
Section 6.02 Back-up Servicer to Act; Appointment of Successor............41
Section 6.03 Notification to Noteholders..................................42
Section 6.04 Waiver of Past Defaults......................................42
Section 6.05 Effects of Termination of Servicer...........................42
Section 6.06 Events of Back-up Servicing Termination......................43
Section 6.07 Waiver of Defaults...........................................45
ARTICLE VII THE COLLATERAL AGENT..............................................45
Section 7.01 Duties of the Collateral Agent...............................45
Section 7.02 Certain Matters Affecting the Collateral Agent...............46
Section 7.03 Collateral Agent Not Liable for Notes or Contracts...........48
Section 7.04 Collateral Agent May Own Notes...............................48
Section 7.05 Collateral Agent's Fees and Expenses; Indemnity..............48
Section 7.06 Eligibility Requirements for Collateral Agent................48
Section 7.07 Resignation and Removal of the Collateral Agent..............49
Section 7.08 Successor Collateral Agent...................................49
Section 7.09 Merger or Consolidation of Collateral Agent..................50
ARTICLE VIII MISCELLANEOUS PROVISIONS.........................................50
Section 8.01 Amendment....................................................50
Section 8.02 Counterparts.................................................51
Section 8.03 GOVERNING LAW................................................51
Section 8.04 Notices......................................................51
Section 8.05 Severability of Provisions...................................52
Section 8.06 Third Party Beneficiary......................................52
Section 8.07 Assignment...................................................52
Section 8.08 Binding Effect...............................................52
Section 8.09 Survival of Agreement........................................53
Section 8.10 Captions.....................................................53
Section 8.11 Exhibits.....................................................53
ii
<PAGE>
Section 8.12 Calculations.................................................53
Section 8.13 No Proceedings...............................................53
EXHIBITS
- --------
Exhibit A -- Form of Contract
Exhibit B -- Form of Monthly Statement
Exhibit C -- Form of Source Agreement
Exhibit D -- Collateral Agent's Acknowledgement of Receipt
Exhibit E -- Indenture Trustee's Acknowledgement of Receipt
Exhibit F -- Form of Request for Release of Documents
iii
<PAGE>
This SERVICING AGREEMENT, dated as of June 1, 1999 (this
"Agreement"), by and among AMERICAN BUSINESS LEASING INC., a Pennsylvania
corporation ("ABL"), as Servicer (the "Servicer") and as Originator (the
"Originator"), ABFS FINANCE LLC 1999-A, a Delaware limited liability company,
as a Transferor ("Transferor I"), ABFS RESIDUAL LLC 1999-A, a Delaware limited
liability company, as a Transferor ("Transferor II" and, together with
Transferor I, the "Transferors"), ABFS Equipment Contract Trust 1999-A, a
Delaware statutory business trust, as Issuer (the "Trust" or the "Issuer"),
CHASE BANK OF TEXAS, N.A., a national banking association, as Collateral Agent
(the "Collateral Agent"), and THE CHASE MANHATTAN Bank, a New York banking
corporation, not in its individual capacity but solely as the Indenture Trustee
(the "Indenture Trustee") and as Back-up Servicer (the "Back-up Servicer").
WITNESSETH:
WHEREAS, the Issuer has entered into a Receivables Pledge
Agreement, dated as of June 1, 1999 (the "Receivables Pledge Agreement"), with
the Transferors, the Indenture Trustee and Prudential Securities Secured
Financing Corporation, as depositor (the "Depositor"), pursuant to which the
Transferors have issued the Pledged Notes to the Issuer, which Pledged Notes
are secured by a pledge by the Transferors to the Trust of the Conveyed Assets;
and
WHEREAS, the Issuer has entered into an Indenture, dated as
of June 1, 1999 (the "Indenture"), with the Servicer, the Back-up Servicer and
the Indenture Trustee, pursuant to which the Issuer has pledged the Pledged
Property to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer; and
WHEREAS, it is contemplated that following such pledge the
Servicer will service the Receivables pursuant to this Agreement for the
benefit of the Issuer, the Noteholders, the Transferors and the Note Insurer;
and
WHEREAS, each of the Servicer, the Back-up Servicer and the
Originator agree that all of the respective representations, warranties,
covenants and agreements made by it herein shall also be for the benefit of the
Issuer, the Owner Trustee, the Indenture Trustee, the Depositor, the Collateral
Agent, the Noteholders and the Note Insurer;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, and of other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Capitalized terms used herein but
not defined herein shall have the meanings specified in Annex A to the
Indenture.
SECTION 1.02 General Interpretive Principles. For purposes of
this Agreement except as otherwise expressly provided or unless the context
otherwise requires:
<PAGE>
(a) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as
the singular, and the use of any gender herein shall be deemed to
include the other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP as in effect on the
date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "Paragraphs" and other subdivisions without reference
to a document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement;
(d) a reference to a Subsection without further reference to
a Section is a reference to such Subsection as contained in the same
Section in which the reference appears, and this rule shall also apply
to Paragraphs and other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 2.01 Representations, Warranties and Covenants of the
Servicer. The Servicer hereby makes the following representations, warranties
and covenants to the Indenture Trustee, the Owner Trustee, the Issuer, the
Collateral Agent, the Transferors, the Depositor, the Back-up Servicer, the
Note Insurer and the Noteholders on which the Indenture Trustee relies in
accepting the Pledged Property in trust and authenticating the Notes, on which
the Note Insurer relies in executing and delivering the Note Insurance Policy
and on which the Back-up Servicer relies in executing and delivering this
Agreement. Such representations, warranties and covenants are made as of the
Closing Date, shall be deemed to be reaffirmed on each Subsequent Funding Date
and on each Transfer Date, and shall survive the pledge of any Pledged Property
to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer.
(a) The Servicer represents and warrants as to itself:
(i) Organization and Good Standing. The Servicer is a
corporation duly organized, validly existing in good standing under
the laws of the Commonwealth of Pennsylvania, has the power to own its
assets and to transact the business in which it is presently engaged,
and had at all relevant times and now has the power, authority and
legal right to service the Contracts and perform its obligations
hereunder and under the other Transaction Documents to which it is a
party.
(ii) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation and is in good standing, and has
obtained all necessary licenses and
2
<PAGE>
approvals, in all jurisdictions where the failure to be so qualified
and in good standing or obtain such licenses or approvals would have a
material adverse effect on the Servicer's business and operations or
in which the servicing of the Contracts as required by this Agreement
or the performance of its obligations under the Transaction Documents
to which it is a party requires or will require such qualification,
licenses or approvals.
(iii) Authorization. The Servicer has the power, authority
and legal right to execute, deliver and perform this Agreement and the
other Transaction Documents to which it is a party, and the execution,
delivery and performance of this Agreement and the other Transaction
Documents to which it is a party have been duly authorized by the
Servicer by all necessary corporate action.
(iv) Binding Obligation. Each of this Agreement and the other
Transaction Documents to which it is a party, assuming due
authorization, execution and delivery by the other parties thereto,
constitutes a legal, valid and binding obligation of the Servicer,
enforceable against the Servicer in accordance with its terms, except
that (A) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws (whether statutory,
regulatory or decisional) now or hereafter in effect relating to
creditors' rights generally and (B) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought, whether in a proceeding
at law or in equity.
(v) No Violation. The consummation by the Servicer of the
transactions contemplated by this Agreement and the other Transaction
Documents and the fulfillment of the terms hereof and thereof will not
conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice, lapse of time or both) a
default under, the articles of incorporation or by-laws of the
Servicer, or any material indenture, agreement, mortgage, deed of
trust or other instrument to which the Servicer is a party or by which
it is bound, or result in the creation or imposition of any Lien upon
any of its material properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument,
other than as contemplated in any Transaction Document, or violate any
material law or, to the best of the Servicer's knowledge, any order,
rule or regulation applicable to the Servicer of any court or of any
Federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or
any of its properties.
(vi) No Proceedings. There are no proceedings or
investigations to which the Servicer, or any of the Servicer's
Affiliates, is a party pending or, to the best of the Servicer's
knowledge, threatened before any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality (A) asserting the invalidity of this Agreement or the
other Transaction Documents or the Notes, (B) seeking to prevent the
issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or the other Transaction Documents or
(C) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, this Agreement or the
other Transaction documents to which it is a party.
3
<PAGE>
(vii) Approvals. All approvals, authorizations, consents,
orders or other actions of any Person or court required on the part of
the Servicer in connection with the execution and delivery of this
Agreement and the other Transaction Documents to which it is a party
have been or will be taken or obtained on or prior to the Closing
Date.
(viii) Event of Servicing Termination. No Event of Servicing
Termination has occurred and no condition exists, which, upon the
issuance of the Notes would constitute an Event of Servicing
Termination or a default or event of default under any Transaction
Document.
(b) The Servicer additionally covenants as follows as to the
Pledged Property:
(i) Contract Management System. (A) The Servicer will, at its
own cost and expense, (I) retain the Contract Management System, or an
alternative system of equal capability, used by the Servicer to
maintain a master record of the Contracts and any Contract Files held
by the Servicer (except the original executed contract for each
Contract which shall be held by the Collateral Agent, on behalf of the
Indenture Trustee) and (II) note on the Contract Management System and
mark on the original of each Contract, or other physical records of
the Contracts to the effect that the Contracts and the related
Equipment listed thereon (x) have been sold to the Transferors
pursuant to the Receivables Sale Agreement, (y) pledged by the
Transferors to the Trust, pursuant to the Receivables Pledge
Agreement, and (z) such security interest therein has been assigned by
the Trust to the Indenture Trustee, on behalf of the Noteholders and
the Note Insurer, pursuant to the Indenture, and (B) the Servicer does
not rely upon any third party for data processing capability with
respect to the Contract Management System.
(ii) Compliance with Law. The Servicer will comply, in all
material respects, with all acts, rules, regulations, orders, decrees
and directions of any Governmental Authority applicable to the
Contracts, the Equipment (or any part thereof) or any other portion of
the Conveyed Assets; provided, however, that the Servicer may contest
any act, regulation, order, decree or direction in any reasonable
manner which shall not materially and adversely affect the rights of
the Transferors, the Issuer, the Indenture Trustee, the Noteholders,
the Collateral Agent or the Note Insurer in any Contract and the
related Equipment; provided, however, that such contests shall be in
good faith by appropriate proceedings and as to which adequate
reserves in accordance with GAAP have been established, but only so
long as such proceedings shall not individually or in the aggregate
subject the Note Insurer or the Indenture Trustee to any civil or
criminal liability.
(iii) Preservation of Security Interest. The Servicer shall
execute and file such continuation statements and any other documents
reasonably requested by the Indenture Trustee or the Note Insurer
(unless a Note Insurer Default has occurred and is continuing) or
which may be required by law to fully preserve and protect the
interest of the Indenture Trustee, on behalf of the Noteholders and
the Note Insurer, in and to the Pledged Property and the interests of
the Indenture Trustee, on behalf of the Issuer, in and to the Conveyed
Assets; provided, that, in the event of the implementation of a
revised Article 9 of the UCC, neither the Indenture Trustee nor the
Note Insurer shall require
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compliance with such revised Article 9 if compliance with the current
Article 9 is allowed thereunder and is still effective to maintain the
perfection and priority of the Indenture Trustee, on behalf of the
Noteholders and the Note Insurer, in and to the Pledged Property.
(iv) Obligations with Respect to Contracts. The Servicer will
use commercially reasonable best efforts to duly fulfill and comply,
in all material respects, with all obligations, if any, on the part of
the "lessor" to be fulfilled under or in connection with each Contract
and the Servicer will do nothing to impair the rights of the Indenture
Trustee in the Contracts and the Equipment. The Servicer will use such
efforts and will not change or modify the Contracts, except insofar as
any change or failure to so comply or conform would not materially and
adversely affect the rights of the Transferors, the Depositor, the
Issuer, the Indenture Trustee, the Collateral Agent, the Note Insurer
or the Noteholders; provided, however, that any successor Servicer
will be obligated to use commercially reasonable best efforts to
fulfill and comply with the obligations, if any, on the part of the
"lessor" under each Contract only to the extent that any out-of-pocket
costs associated with such compliance or fulfillment are reimbursed by
the Transferors or such other Person as may be acceptable to the
successor Servicer.
(v) Notification. The Servicer agrees to notify the Issuer,
the Owner Trustee, the Note Insurer, each Rating Agency, the
Collateral Agent, the Depositor and the Indenture Trustee as soon as
practicable, but in no event later than five (5) Business Days after
the earlier of the Servicer's discovery or its receipt of notice
thereof, of a breach of any representation or warranty contained
herein, or the failure of the Servicer to perform its duties
hereunder.
(vi) Lien in Force. The Servicer shall not release or assign
any Lien in favor of the Indenture Trustee on any Contract or item of
Equipment related to any such Contract in whole or in part, except as
provided herein. The Servicer shall use its best efforts to remove, or
to cause the related Obligor to remove, any Liens on the Conveyed
Assets, other than the Lien created by the Receivables Pledge
Agreement, and any Liens on the Pledged Property, other than the Lien
created by the Indenture.
(vii) Fulfill Obligations. The Servicer will in all material
respects duly fulfill all obligations on the Servicer's part to be
fulfilled under or in connection with the Conveyed Assets, the Trust
Property and the Receivables. The Servicer will not amend, rescind,
cancel or modify any Contract or term or provision thereof, except as
contemplated herein, and the Servicer will not do anything that would
impair the rights of the Noteholders or the Note Insurer in the
Conveyed Assets, the Trust Property or the Receivables.
(viii) Preservation of the Equipment. As more specifically
set forth in this Agreement, in performing its servicing duties
hereunder, the Servicer shall, in accordance with the Servicing
Standard, use its commercially reasonable best efforts to collect all
payments required to be made by the Obligors under the Contracts,
enforce all material rights of the Issuer under the Contracts and
defend the Equipment against all Persons, claims and demands
whatsoever. The Servicer shall not assign, sell, pledge, or exchange,
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or in any way encumber or otherwise dispose of the Equipment, except
as permitted under this Agreement, the Receivables Pledge Agreement
and the Indenture.
(ix) Requests for Information. The Servicer shall deliver to
the Issuer, the Depositor, the Collateral Agent, the Note Insurer,
each Noteholder, the Indenture Trustee, the Back-up Servicer and the
Rating Agencies:
(A) Notice of Event of Servicing Termination.
Immediately upon becoming aware of the existence of any
condition or event which constitutes an Event of Servicing
Termination or an Event of Default, or any event (other than
any payments which have not yet come due), which with the
lapse of time and/or the giving of notice would constitute an
Event of Servicing Termination or an Event of Default or a
written notice describing its nature and period of existence
and, in the case of an Event of Servicing Termination, which
action the Servicer is taking or proposes to take with
respect thereto; and
(B) Requested Information. With reasonable
promptness, any other data and information which may be
reasonably requested in writing from time to time.
(x) Delivery of Contracts. Upon an Event of Servicing
Termination, the Servicer shall promptly deliver possession of any
Contracts Files that may have been delivered to the Servicer pursuant
to Section 3.01(b) hereof to, or at the direction of, the successor
Servicer appointed by the Note Insurer or, if none has been so
appointed, to the Back-up Servicer.
(xi) No Forgiveness. The Servicer shall not forgive any
Scheduled Payment or Final Scheduled Payment with respect to any
Contract.
(xii) No Modification. Subject to the provisions of Section
4.01(f), unless an Obligor is in payment or monetary default, the
Servicer shall not permit any modification with respect to a Contract
which would defer or change the timing or amount of any Scheduled
Payment or Final Scheduled Payment or change the final maturity date
on any Contract; provided, however, that no change in the final
maturity date of any Contract shall be permitted under any
circumstances if such new maturity date is later than the latest
maturity date of any other Contract then pledged to the Indenture
Trustee, on behalf of the Trust.
(xiii) Prepayments. The Servicer may accept Prepayment in
part or in full; provided, that (1) in the event of Prepayment in
full, the Servicer may consent to such Prepayment only in an amount
not less than the Prepayment Amount and (2) in the event of a partial
Prepayment, the Servicer may consent to such partial Prepayment only
if (x) following such partial Prepayment there are no delinquent
Scheduled Payments then due from the Obligor, (y) such partial
Prepayment is paid along with an amount equal to the product of (i)
one-twelfth, (ii) the Discount Rate, and (iii) the Discounted Contract
Principal Balance of the Contract prior to such partial Prepayment and
(z) such partial
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Prepayment will not reduce the Discounted Contract Principal Balance
by more than the amount of such partial Prepayment.
(xiv) Partial Prepayment. In the event of a partial
Prepayment, the Servicer shall recalculate the Discounted Contract
Principal Balance of such Contract based on the revised schedule of
Scheduled Payments and any Final Scheduled Payment after first giving
effect to such partial Prepayment.
(xv) Delivery of Computer Tapes. On each Determination Date,
the Servicer shall deliver a computer tape to the Back-up Servicer to
enable the Back-up Servicer to confirm the information contained in
the Monthly Statement. Such computer tape shall be in the format
agreed to by such parties.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.01 shall survive delivery
of the respective Contract Files to the Collateral Agent, on behalf of the
Indenture Trustee, or to another Custodian, as the case may be, and shall inure
to the benefit of the Indenture Trustee, on behalf of the Noteholders and the
Note Insurer.
SECTION 2.02 Representations and Warranties of the Originator
with Respect to the Contracts. With respect to each Contract, the Originator
hereby makes the following representations, warranties and covenants to the
Indenture Trustee, the Issuer, the Collateral Agent, the Depositor, the Back-up
Servicer, the Note Insurer and the Noteholders on which the Indenture Trustee
relies in accepting the Pledged Property in trust and authenticating the Notes,
on which the Note Insurer relies in executing and delivering the Note Insurance
Policy and on which the Back-up Servicer relies in executing and delivering
this Agreement. Such representations, warranties and covenants are made or
deemed to be made, (x) with respect to the Initial Contracts and Initial
Equipment, as of the Initial Cut-Off Date, (y) with respect to the Subsequent
Contracts and Subsequent Equipment, as of the Subsequent Cut-Off Date, and (z)
with respect to the Substitute Contracts and Substitute Equipment, as of the
related Transfer Date, and shall survive the pledge of any Conveyed Assets by
the Transferors to the Trust, and the pledge of any Pledged Property to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer:
(a) Each Contract is for the Equipment identified therein and
only the Equipment relating to the Vehicle Contracts is of a type
which requires issuance of a certificate of title to evidence
ownership thereof or a security interest therein.
(b) The information with respect to each Contract and the
Equipment subject to each Contract in the List of Contracts is true
and correct.
(c) No provision of any Contract has been waived, altered or
modified in any respect, except by instrument or documents contained
in its Contract File and identified by the Originator, no Contract has
been rewritten or extended other than with respect to non-credit
related matters (i.e., change in day of the month for payment or
change due to damage to Equipment) and any document evidencing any
such change has been included in the related Contract File, and no
modification or amendment of any Contract would individually or in the
aggregate materially and adversely affect the Issuer's or the
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Indenture Trustee's rights thereunder or has reduced the amount of any
Scheduled Payment (or the aggregate amount of Scheduled Payments) or
Final Scheduled Payment owing thereunder or extended the expiration
date thereof.
(d) Each Contract is a valid and binding payment obligation
of the related Obligor and is enforceable in accordance with its terms
(except as may be limited by applicable insolvency, bankruptcy,
moratorium, reorganization, or other similar laws affecting
enforceability of creditors' rights generally and the availability of
equitable remedies) and is in full force and effect.
(e) Each Contract contains a "hell or high water" clause
under which the Obligor's obligations are non-cancelable and
unconditional and not subject to any valid right of set-off, defense,
abatement, counterclaim, reduction or recoupment; no Contract is or
will be subject to valid rights of rescission, set-off, counterclaim
or defense; each Contract provides for acceleration of the Scheduled
Payments upon default by the Obligor; and, with respect to each
Contract which relates to Equipment which is surveillance Equipment,
the Originator is not obligated to engage in any activity in the event
that the Obligor surveillance provider fails to perform its third
party obligations.
(f) The Contracts do not violate any material laws of any
applicable state or of the United States, including, without
limitation, usury, truth-in-lending and equal credit opportunities
laws applicable to such Contract.
(g) Each Contract requires the Obligor to pay any
maintenance, taxes, insurance or other expenses and each Contract
contains provisions requiring the Obligor to maintain the Equipment,
at its sole expense, at all times during the term of the Contract, in
good operating order, repair, condition and appearance, and protect
the Equipment from deterioration (except for normal wear and tear)
and, maintain an Insurance Policy with respect to the Equipment in an
amount at least equal to the replacement value thereof, naming the
Originator as loss payee (if the Original Equipment Cost was greater
than $100,000, a copy of such Insurance Policy or a certificate
evidencing such Insurance Policy shall be included in the Contract
File delivered to or on behalf of the Indenture Trustee), and upon the
occurrence of a casualty, to pay any difference between the proceeds
of such insurance and the implicit principal balance of such Contract
(which implicit principal balance is equal to or greater than the
Discounted Contract Principal Balance of such Contract) and to pay all
sales, use, rental, property or similar taxes or fees, fines and
penalties with respect to the Equipment and to assume all risk of loss
or malfunction of the related Equipment.
(h) As of the Closing Date or the related Conveyance Date, as
the case may be, all action shall have been taken by the Originator to
convey all of its right, title and interest in and to (i) the
Contracts to Transferor I and (ii) the ownership or security interest
of the Originator in each item of Equipment and any Residual Receipts
to Transferor II.
(i) Any party executing a Contract on behalf of the
Originator had the legal capacity and authority to execute such
Contract and, to the best of the Originator's
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knowledge, all other parties to such Contract had the legal capacity
to execute such Contract.
(j) The right, title and interest of the Originator in and to
each Contract and the related Equipment (or any other property
conveyed pursuant to the Receivables Sale Agreement) has not been
sold, transferred, assigned or pledged by the Originator to any other
Person (or any such pledge has been released as evidenced by releases
of collateral). At the time of the conveyance of such Contracts and
the related Equipment to the Transferors, the Originator was the owner
of, and had good and marketable title to, such Contract and either the
owner of, or the holder of a first priority security interest (in
accordance with the Filing Requirements) in, the related Equipment.
The Originator had the power to convey such Contract and assign its
interest in the related Equipment free and clear of any Liens (other
than any Lien released and/or assigned simultaneously with the
execution of the Transaction Documents). With respect to each
Contract, the Equipment does not secure any other Contract or other
obligation of the Obligor to the Originator or its affiliates now or
in the future.
(k) No Contract provides for the substitution, addition or
exchange of any item of Equipment which would result in any reduction
of payments due under such Contract.
(l) All of the Contracts permit the Originator to accelerate
Scheduled Payments and any Final Scheduled Payment if an Obligor is in
default under the Contract and the amount payable as a result of any
such acceleration shall not be less than the Prepayment Amount for
such Contract.
(m) At the time of origination, all the Contracts materially
met the Originator's Credit Policies and Procedures.
(n) Each Contract conveyed includes only the remaining, in
the event the Contract does not include all original Scheduled
Payments under the Contract, non-cancelable Scheduled Payments and any
Final Scheduled Payment.
(o) As of the Cut-Off Date or the related Conveyance Date, as
the case may be, no Obligor will have been released, in whole or in
part, from any of its obligations in respect of any such Contract; no
such Contract will have been satisfied, canceled, extended or
subordinated, in whole or in part, or rescinded, and no Equipment
covered by any such Contract will have been released from such
Contract, in whole or in part, nor will any instrument have been
executed that would effect any such satisfaction, release,
cancellation, subordination or rescission.
(p) Each Contract is either "chattel paper" or an
"instrument" for purposes of Section 9-105(1)(b), 9-105(1)(i) or 9-308
of the UCC and there is not more than one counterpart of each
Contract; any such counterpart that contitutes "chattel paper" has
been or will be legended to reflect the security interest of the
Indenture Trustee and all such counterparts have been or shall be
delivered to, or on behalf of, the Collateral Agent,
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on behalf of the Indenture Trustee, on the Closing Date or the related
Conveyance Date, as the case may be.
(q) The Originator has duly fulfilled all material
obligations on its part to be fulfilled under or in connection with
each Contract and the related Equipment, including, without
limitation, giving any notices or consents necessary to effect the
contribution, assignment, transfer, and conveyance from the Originator
of the Contracts and the related Equipment to the related Transferor,
and has done nothing to materially impair the rights of the
Transferors, the Indenture Trustee, the Collateral Agent, the Issuer,
the Noteholders or the Note Insurer in such Contract, the related
Equipment or the proceeds with respect thereto.
(r) No Contract has been amended after the Cut-Off Date, the
Subsequent Cut-Off Date or the Substitute Contract Cut-Off Date, as
the case may be, such that the amount of any Scheduled Payment (or the
aggregate Scheduled Payments) or Final Scheduled Payment has been
reduced or the maturity date thereof has been extended, except as
otherwise permitted hereunder.
(s) No proceedings or, to the best of the Originator's
knowledge, investigations, are pending, or have been threatened
asserting the invalidity of any Contract, or seeking any determination
or ruling that might adversely and materially affect the validity or
enforceability of any Contract.
(t) All filings (including UCC filings) necessary to (i)
evidence the pledge of the Pledged Notes to the Indenture Trustee, for
the benefit of the Noteholders and the Note Insurer, and to perfect
the first priority perfected security interest of the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer, in
the Contracts and related Equipment, (ii) evidence the pledge of the
Conveyed Assets to the Trust, and to perfect the first priority
perfected security interest of the Trust, in the Contracts and related
Equipment, and (iii) evidence the sale, contribution and transfer of
the Contracts and the Equipment to the related Transferor and to
perfect the first priority perfected security interest of the
Transferors in the Contracts and related Equipment (each, in
accordance with the Filing Requirements), have been made in all
appropriate jurisdictions and are in full force and effect.
(u) No Obligor is, to the best of the Originator's knowledge,
subject to bankruptcy or other insolvency proceedings.
(v) Each Obligor is a Person domiciled in the United States,
each item of Equipment is located in the United States, and each
Obligor's billing address is in the United States.
(w) All payments under each Contract are required to be made
in United States dollars.
(x) No Contract requires the prior written consent of an
Obligor or contains another restriction relating to the transfer or
assignment of such Contract (except such as have been obtained).
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(y) No Contract permits the prepayment thereof at the option
of the Obligor for an amount that is less than the Prepayment Amount
related to such Contract from time to time.
(z) No Contract is the subject of litigation or has been
referred to counsel, and the Originator has no knowledge of any
challenge or dispute by any Obligor under any Contract.
(aa) With respect to each Contract for which the Originator
collects maintenance payments, the Originator remits such maintenance
payments to the related maintenance providers.
(bb) No Contract is a "consumer lease" as defined in Article
2A of the UCC or a "consumer credit lease" subject to the FTC Rule (16
C.F.R., Part 433).
(cc) Each Contract is a "finance lease" under U.S. GAAP;
(dd) Each Contract will commence no later than (x) for
Initial Contracts, the Closing Date, (y) for Subsequent Contracts, the
Subsequent Funding Date, and (z) for Substitute Contracts, the
Transfer Date, and no Contract had a final payment date later than
twelve months prior to the Class A-4 Maturity Date.
(ee) No more than 1% of the Initial Aggregate Collateral
Balance is attributable to Obligors that are governments or
municipalities; and no Obligor is an affiliate of the Originator.
(ff) Each Contract is either a contract "intended as
security" within the meaning of UCC Section 1-201(37) or a "Lease"
within the meaning of UCC Section 2A-103(1)(j).
(gg) As of the Cut-Off Date, the Subsequent Cut-Off Date and
the Substitute Contract Cut-Off Date, as the case may be, each
Contract provides for monthly Scheduled Payments; provided, that less
than 1% of the Initial Aggregate Collateral Balance is attributable to
Contracts which provide for non-monthly Scheduled Payments; no
Contract has a Final Scheduled Payment which is greater than five
times its Scheduled Payment; and the weighted average life of the
remaining Scheduled Payments comprising the Aggregate Discounted
Contract Principal Balance does not exceed 24 months.
(hh) In the event of a Casualty Loss, the Originator may
require the Obligor, at the Obligor's expense, to (i) replace the
Equipment with like equipment in equivalent condition, acceptable to
the Originator, or (ii) pay the Discounted Contract Principal Balance
and the Booked Residual Value of the related Equipment.
(ii) No Contract permits the Obligor to utilize any security
deposit to offset any Scheduled Payment or Final Scheduled Payment.
(jj) To the best knowledge of the Originator, any guarantees
required at the time of origination of a Contract remain in full force
and effect.
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(kk) No Contract was selected on any adverse basis which
would have any material effect on the Noteholders or the Note Insurer.
(ll) Each Source has entered into a valid sale and assignment
of each Contract originated by such Source to the Originator utilizing
a form of Source Agreement that complies in all material respects to
form attached hereto as Exhibit C; the related Source Agreement does
not provide for (A) recourse to the Source with respect to payment or
monetary defaults by the Obligor or (B) the sharing of residual
payments with respect to the Source.
(mm) No one broker Source (including its Affiliates) has
originated more than 5% of the Initial Aggregate Collateral Balance
and no one vendor Source (including its Affiliates) has originated
more than 8% of the Initial Aggregate Collateral Balance, except, in
either case, if the Note Insurer shall have given its prior written
consent.
(nn) Each Contract agreement conforms, in all material
respects, to the form of Contract contained in Exhibit A hereto.
(oo) As of the related Cut-Off Date, no one Obligor
(including its Affiliates) is the Obligor under Contracts for which
the sum of the Discounted Contract Principal Balances exceeds 1% of
the Initial Aggregate Collateral Balance; no more than 17% of the
Initial Aggregate Collateral Balance is attributable to Contracts
relating to Obligors (including their respective Affiliates) in any
one state, except for the state of California, in which Obligors
(including their respective Affiliates) under Contracts representing
no more than 25% of the Initial Aggregate Collateral Balance are
located; no more than 6% of the Initial Aggregate Collateral Balance
is attributable to Contracts relating to Obligors (including their
respective Affiliates) in the states of Maryland, Tennessee,
Louisiana, Georgia and Oklahoma.
(pp) The transfer, assignment and contribution to the
Transferors of the Contracts and the Originator's right, title and
interest in and to any item of Equipment will not violate the terms or
provisions of any such Contract or any other material agreement to
which the Originator then is a party or by which it is bound.
(qq) After giving effect to each pledge contemplated by the
Receivables Pledge Agreement, the Trust will be the holder of a valid
perfected first priority security interest in the Contracts and the
related Equipment.
(rr) At the time that any item of Equipment (or any security
interest therein) is pledged pursuant to the terms of the Receivables
Pledge Agreement or the Indenture, the Originator will have no
knowledge that such Equipment has suffered any loss or damage except
for such Equipment that has been restored to its original value,
ordinary wear and tear excepted.
(ss) (A) To the best of the Originator's knowledge after due
inquiry, no event has occurred and is continuing which with notice,
the lapse of time or both would constitute a default under any
Contract, and (B) the Originator has not waived any of the foregoing.
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(tt) No Contract by its terms permits early termination for
an amount less than the Prepayment Amount.
(uu) As of the Initial Cut-Off Date, the aggregate of the
Booked Residual Values relating to the Contracts is $2,743,055.06.
(vv) All of the Equipment relating to the Contracts which are
"true" or "operating" leases, if any, is owned by Transferor II, and,
subject to the Filing Requirements, Transferor II has a security
interest in all of the Equipment relating to the Contracts which are
"finance" leases.
(ww) No Contract has been originated in or is subject to the
laws of any jurisdiction whose laws would make the assignment and
transfer thereof pursuant to the terms hereof or any transaction
contemplated by the Transaction Documents unlawful.
(xx) Each Contract provides that the Originator has no
obligation to assemble, install, test, adjust or service the Equipment
subject to a Contract.
(yy) To the best of the Originator's knowledge, no item of
Equipment has been relocated from the jurisdiction set forth in the
Contract or, if the Originator has knowledge of any such relocation,
all UCC filings necessary to continue the first priority security
interest in such Equipment have been made in a manner consistent with
the Filing Requirements.
(zz) Each Obligor has accepted the related Equipment, and
each Contract file contains an executed delivery and acceptance
certificate.
(aaa) The Contracts were originated or acquired by the
Originator in the ordinary course of its business. The Credit Policies
and Procedures used by the Originator with respect to the origination
of each Contract have been legal in all respects except where the
failure to do so would not result in a material adverse effect on the
Contracts.
(bbb) The Initial Aggregate Discounted Contract Principal
Balance of all Contracts is equal to $69,676,194.41.
(ccc) As of the Cut-Off Date, the Subsequent Cut-Off Date or
the Substitute Contract Cut-Off Date, as the case may be, no item of
Equipment, Subsequent Equipment, or Substitute Equipment, as
applicable, has been repossessed.
(ddd) The Originator has the right under each Contract to
exercise appropriate remedies with respect to the related Equipment
without obtaining the consent of any third parties.
(eee) The Originator will cause its records to be marked to
reflect (i) the transfer, assignment and contribution of (A) the
Contracts to Transferor I and (B) the ownership or security interest
of the Originator in each item of Equipment and any Residual Receipts
(up to the Booked Residual Value) to Transferor II, (ii) the pledge of
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the Conveyed Assets to the Trust, and (iii) the assignment of such
pledge of the Conveyed Assets to the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer.
(fff) The Originator purchased each item of Equipment from
either (i) the manufacturer or other supplier following receipt of an
invoice from such manufacturer or supplier or (ii) an Obligor
following confirmation that such item of Equipment was on such
Obligor's premises.
(ggg) The sale, transfer, assignment and conveyance
contemplated by the Receivables Sale Agreement is not subject to and
will not result in any tax, fee or governmental charge payable to any
federal, state or local government ("Transfer Taxes") other than
Transfer Taxes which have been or will be paid by the Originator as
due. In the event that the Indenture Trustee receives actual notice of
any Transfer Taxes arising out of such transfer, assignment and
conveyance, on written demand by the Indenture Trustee, the
Noteholders or upon the Originator otherwise being given notice
thereof, the Originator shall pay, and otherwise indemnify and hold
the Indenture Trustee and the Note Insurer harmless, on an after-tax
basis, from and against any and all such Transfer Taxes (it being
understood that the Noteholders, the Indenture Trustee and the Note
Insurer shall have no obligation to pay such Transfer Taxes).
(hhh) Each Contract has a remaining term of at least 3 months
but not greater than 60 months, except for 7% of the Contracts, by
Initial Aggregate Collateral Balance, which have a remaining term of
greater than 60 months but less than 84 months, and at least one
Scheduled Payment has been received on each Contract prior to the
related Cut-Off Date. With respect to Subsequent Contracts and
Substitute Contracts, the remaining term is no greater than one year
prior to the Class A Maturity Date.
(iii) The Originator has filed UCC-1 financing statements in
accordance with the Filing Requirements.
(jjj) As of the Closing Date, the related Subsequent Funding
Date and the related Transfer Date, as the case may be, the Originator
had no actual knowledge that any Contract would not be paid in full.
(kkk) Each Contract was either originated by the Originator
or acquired by the Originator from a Source; not more than 5.5% of the
Initial Aggregate Collateral Balance of the Contracts will result from
Software Contracts.
(lll) Each Contract constitutes an Eligible Contract.
(mmm) If obtained during the original Contract approval, the
Contract File contains a guarantee of the Obligor's obligations under
the Contract.
(nnn) With respect to each Contract, the Contract File for
such Contract has been delivered to, or on behalf of, the Collateral
Agent, on behalf of the Indenture Trustee, on or prior to (i) the
Closing Date, with respect to the Initial Contracts, (ii) the
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Subsequent Funding Date, with respect to Subsequent Contracts, and
(iii) the Transfer Date, with respect to the Substitute Contracts.
(ooo) Each Source has received the purchase price for the
related Contract.
(ppp) Each Contract that is a master lease or loan agreement
shall contain only one schedule per agreement, or if more than one
schedule exists, each schedule and the related master agreement
constitute a separate contract. (qqq) As of the Cut-Off Date, the
Subsequent Cut-Off Date or the Substitute Contract Cut-Off Date, as
the case may be, no Contract has a Final Scheduled Payment which is
more than five times the amount of the regular Scheduled Payments on
such Contract.
(rrr) To the best knowledge of the Originator, no Obligor is
a Person involved in the business of selling equipment of the same
type as the Equipment subject to the related Contract.
(sss) To the best knowledge of the Originator, no Contract is
a refinancing due to delinquencies under a prior lease, security
agreement or loan with the same Obligor relating to the Equipment.
(ttt) None of the Contracts relating to surveillance
Equipment are Contracts for which the Originator is responsible for
the provision of maintenance services to or on behalf of the related
Obligor.
(uuu) To the best knowledge of the Originator, no error,
omission, misrepresentation, negligence, fraud or similar occurrence
with respect to a Contract has taken place on the party of any person,
including, without limitation, the Source or the Originator, or any
other party involved in the origination of the Contract or in the
application of any insurance in relation to such Contract.
(vvv) As of the related Cut-Off Date, no more than 7% of the
Contracts by Initial Aggregate Collateral Balance relate to Equipment
which are signs, restaurant equipment or used equipment.
(www) As of the related Cut-Off Date, no Contract has
Scheduled Payments which are more than 60 days delinquent.
(xxx) As of the related Cut-Off Date, no more than 0.50% of
the Contracts by Initial Aggregate Collateral Balance are Vehicle
Contracts.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.02 shall survive the
execution and delivery of the Agreement, the delivery of the respective
Contract Files to the Collateral Agent, on behalf of the Indenture Trustee, or
to another custodian, as the case may be, and shall inure to the benefit of the
Indenture Trustee, on behalf of the Noteholders and the Note Insurer.
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SECTION 2.03 Representations and Warranties of the Back-up
Servicer. The Back-up Servicer hereby makes the following representations and
warranties for the benefit of the Issuer, the Indenture Trustee, the Servicer,
the Collateral Agent, the Depositor, the Owner Trustee, the Note Insurer and
the Noteholders. Such representations and warranties are made as of the Closing
Date, and shall be deemed to be reaffirmed on each Subsequent Funding Date and
on each Transfer Date.
The Back-up Servicer represents and warrants as to itself:
(a) Organization and Good Standing. The Back-up Servicer is a
New York banking corporation duly organized, validly existing and in
good standing under the laws of the state of New York and has the
power, authority and legal right to perform its obligations hereunder.
(b) Due Qualification. The Back-up Servicer has obtained all
necessary licenses and approvals, where the failure to be so qualified
and in good standing or obtain such licenses or approvals would have a
material adverse effect on the Back-up Servicer's business and
operations or in which the performance of its obligations hereunder
requires or will require such qualification, licenses or approvals.
(c) Authorization. The Back-up Servicer has the power,
authority and legal right to execute, deliver and perform this
Agreement, and the execution, delivery and performance of this
Agreement has been duly authorized by the Back-up Servicer by all
necessary corporate action.
(d) Binding Obligation. This Agreement, assuming due
authorization, execution and delivery by the other parties hereto,
constitutes a legal, valid and binding obligation of the Back-up
Servicer, enforceable against the Back-up Servicer in accordance with
its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws (whether statutory, regulatory or decisional) now or hereafter in
effect relating to creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought, whether in a proceeding at law or in equity.
(e) No Violation. The consummation by the Back-up Servicer of
the transactions contemplated by this Agreement and the fulfillment of
the terms hereof will not conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without notice,
lapse of time or both) a default under, the charter documents or
by-laws of the Back-up Servicer.
(f) No Proceedings. There are no proceedings or
investigations to which the Back-up Servicer, or any of the Back-up
Servicer's Affiliates, is a party pending or, to the best of such
Responsible Officer's knowledge, threatened before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality (A) asserting the invalidity of this
Agreement or the Notes, (B) seeking to prevent the
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issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or (C) seeking any determination or
ruling that might materially and adversely affect the performance by
the Back-up Servicer of its obligations under, or the validity or
enforceability of, this Agreement.
(g) Approvals. All approvals, authorizations, consents,
orders or other actions of any Person or court required on the part of
the Back-up Servicer in connection with the execution and delivery of
this Agreement in the State of New York have been or will be taken or
obtained on or prior to the Closing Date.
(h) Event of Back-up Servicing Termination. No Event of
Back-up Servicing Termination has occurred and no condition exists,
which, upon the issuance of the Notes or the giving of notice or
passage of time or both, would constitute an Event of Back-up
Servicing Termination.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.03 shall survive the
execution and delivery of this Agreement, the delivery of the respective
Contract Files to the Collateral Agent, on behalf of the Indenture Trustee or
to another custodian, as the case may be, and shall inure to the benefit of the
Indenture Trustee, on behalf of the Noteholders and the Note Insurer.
SECTION 2.04 Representations, Warranties and Covenants of the
Collateral Agent. The Collateral Agent hereby makes the following
representations and warranties for the benefit of the Indenture Trustee, the
Issuer, the Servicer, the Back-up Servicer, the Depositor, the Owner Trustee,
the Note Insurer and the Noteholders. Such representations and warranties are
made as of the Closing Date, and shall be deemed to be reaffirmed on each
Subsequent Funding Date and on each Transfer Date.
The Collateral Agent represents and warrants as to itself:
(a) Organization and Good Standing. The Collateral Agent is a
national banking association duly organized, validly existing and in
good standing under the laws of the United States of America and has
the power, authority and legal right to perform its obligations
hereunder.
(b) Authorization. The Collateral Agent has the power,
authority and legal right to execute, deliver and perform this
Agreement, and the execution, delivery and performance of this
Agreement have been duly authorized by the Collateral Agent by all
necessary corporate action.
(c) Binding Obligation. This Agreement has been duly and
validly authorized, executed and delivered by the Collateral Agent,
all requisite corporate action having been taken, and, assuming the
due authorization, execution and delivery hereof by the other parties
hereto, constitutes or will constitute the legal, valid and binding
agreement of the Collateral Agent, enforceable against the Collateral
Agent in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of
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creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law).
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.04 shall survive the
execution and delivery of this Agreement, the delivery of the respective
Contract Files to the Collateral Agent, on behalf of the Indenture Trustee or
to another custodian, as the case may be, and shall inure to the benefit of the
Indenture Trustee, on behalf of the Noteholders and the Note Insurer.
ARTICLE III
PERFECTION OF TRANSFER
SECTION 3.01 Filing; Custody of Files; Contract Files. (a) On
the Closing Date with respect to the Initial Contracts, on the related
Subsequent Funding Date with respect to the Subsequent Contracts, and on the
related Transfer Date with respect to Substitute Contracts, the Servicer shall
submit the Financing Statements for filing in the respective filing offices
named therein. From time to time thereafter, the Servicer shall take or cause
to be taken such actions and execute such documents as are necessary to perfect
and protect the Issuer's, the Indenture Trustee's, the Collateral Agent's, the
Noteholders' and the Note Insurer's interests, as such interests may appear, in
the Receivables against all other Persons, including, without limitation, the
filing of financing statements, amendments thereto and continuation statements,
the execution of transfer instruments and the making of notations on or taking
possession of all records or documents of title.
(b) (i) Pursuant to (A) the Receivables Pledge Agreement, the
Trust acknowledges the pledge of the Transferor Collateral by the
Transferors to the Trust, as security for the Pledged Notes, and (B)
the Indenture, the Indenture Trustee, on behalf of the Noteholders and
the Note Insurer, acknowledges the pledge of the Pledged Property by
the Trust and declares that the Indenture Trustee, will hold such
Pledged Property, and the Collateral Agent will hold the Conveyed
Assets, including the Contract Files, on behalf of the Indenture
Trustee, in trust, for the use and benefit of the Issuer and all the
Noteholders and the Note Insurer, as their interests may appear,
subject to the terms and provisions thereof.
(ii) From time to time and as appropriate for the foreclosure
or servicing of any of the Contracts, the Collateral Agent is hereby
authorized, upon receipt of a written request and receipt provided by
the Servicer acknowledged by the Indenture Trustee and the Note
Insurer, in substantially the form annexed as Exhibit F hereto (a
"Request for Release"), to release to the Servicer within five (5)
Business Days --------- of receipt of such Request for Release, the
related Contract File or the documents from a Contract File set forth
in such Request for Release. All documents so released to the Servicer
shall be held by the Servicer in trust for the benefit of Indenture
Trustee. The Servicer shall return to the Collateral Agent each and
every document previously requested from the Contract File when the
Servicer's need therefor in connection with such foreclosure or
servicing no longer exists, unless the Contract has been liquidated,
is a Reacquired Contract or is a Substituted Contract, in which case,
upon receipt of a certification to this effect from the
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Servicer, as set forth in the Request for Release, the Servicer's
Request for Release shall be returned by the Collateral Agent to the
Servicer.
(iii) Notwithstanding the foregoing or any other provision of
the other Transaction Documents, the following limitations shall apply
with respect to the ability of the Servicer to obtain custody of any
Contract File:
(A) except with the prior written consent of the Note
Insurer in each instance, the Servicer shall not be
entitled to obtain possession of the original
counterpart of any Contract;
(B) except with the prior written consent of the Note
Insurer in each instance, the Servicer shall not be
entitled to be in possession at any point in time of
Contract Files for Contracts (other than Contract
Files relating to Defaulted Contracts, Substituted
Contracts or Reacquired Contracts) representing more
than five percent (5%) of the then Aggregate
Discounted Contract Principal Balance; and;
(C) in no event shall the Servicer permit any Person
(other than the Collateral Agent and the Servicer and
its employees and agents) to maintain possession of
any Contract File;
(iv) Within five Business Days after the end of each month,
the Collateral Agent shall provide to the Indenture Trustee and the
Note Insurer (x) a list of all the Contracts for which the Collateral
Agent holds a Contract File pursuant to this Agreement which has been
released to the Servicer and remain in the possession of the Servicer
as of the last day of such month and (y) a calculation of the
Discounted Contract Principal Balance of the Contracts for which the
related Contact File is then in possession of the Servicer.
(v) To the extent the Servicer, as agent of the Indenture
Trustee and the Transferors, holds any Contract File or other Conveyed
Asset or Pledged Property, it shall do so in accordance with the
Servicing Standard as such standard applies to servicers acting as
custodial agents. The Servicer shall promptly report to the Collateral
Agent and the Indenture Trustee any failure by it to hold the complete
Contract Files previously provided by the Collateral Agent, on behalf
of the Indenture Trustee, as herein provided and shall promptly take
appropriate action to remedy any such failure but only to the extent
(A) any such failure is caused by the acts or omissions of the
Servicer and (B) such remedial action is otherwise within its
capabilities or control. As custodian, the Servicer shall have and
perform the following powers and duties:
(A) hold the Contract Files (exclusive of the original
counterpart of the Contract) that it may from time to
time receive hereunder from the Collateral Agent, on
behalf of the Indenture Trustee, maintain accurate
records pertaining to each Contract to enable it to
comply with the terms and conditions of the Indenture
and this Agreement, and maintain a current inventory
thereof;
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(B) with respect to the handling and custody of such
Contract Files, implement policies and procedures in
accordance with the Servicing Standard so that the
integrity and physical possession of such Contract
Files will be maintained; and
(C) attend to all details in connection with maintaining
custody of such Contract Files on behalf of the
Indenture Trustee.
(vi) In so acting as custodian of such Contract Files
pursuant to Section 3.01(b)(ii), the Servicer agrees further that it
does not and will not have or assert any beneficial ownership interest
in the Contracts or the Contract Files. Promptly upon the Transferor's
acquisition thereof, the Servicer on behalf of the Indenture Trustee
shall mark conspicuously each Contract with a legend and note in its
Contract Management System that the related Transferor has acquired
the Contracts and all right and title thereto and interest therein as
provided herein and the pledge thereof to the Indenture Trustee, on
behalf of the Issuer.
(vii) The Servicer agrees to maintain any Contract Files that
it may from time to time receive from the Indenture Trustee at its
office located in Bala Cynwyd, Pennsylvania or at such other offices
of the Servicer as shall from time to time be identified by prior
written notice to the Indenture Trustee, the Collateral Agent and the
Note Insurer. Subject to the foregoing, the Servicer may temporarily
move individual Contract Files or any portion thereof without notice
as necessary to conduct collection and other servicing activities in
accordance with the Servicing Standard.
SECTION 3.02 Name Change or Relocation. If any change in the
Issuer's name, identity, structure or the location of its principal place of
business or chief executive office occurs, then the Servicer, on behalf of the
Issuer, shall deliver thirty (30) days' prior written notice of such change or
relocation to the Depositor, the Collateral Agent, the Note Insurer and the
Indenture Trustee. No later than five (5) days after the effective date of such
change or relocation, the Servicer, on behalf of the Issuer, shall file such
amendments or statements as may be required to preserve and protect the
Issuer's, the Depositor's and the Collateral Agent's, the Noteholders', the
Indenture Trustee's and the Note Insurer's respective interests in the Pledged
Property, the Conveyed Assets and the Receivables and deliver copies thereof to
the Indenture Trustee.
SECTION 3.03 Chief Executive Offices. During the term of this
Agreement, the Indenture and the Trust Agreement, the Owner Trustee, on behalf
of the Issuer, will maintain the Issuer's chief executive office and principal
places of business in one of the states of the United States.
SECTION 3.04 Costs and Expenses. The Servicer agrees to pay
all costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Issuer's, the
Indenture Trustee's, the Depositor's, the Collateral Agent's, the Noteholders'
and the Note Insurer's respective rights and interests in and to the Pledged
Property, the Conveyed Assets and the Receivables (other than with respect to
the Equipment, any cost in excess of that necessary to comply with the Filing
Requirements). The
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Servicer agrees to pay all taxes (other than net income taxes or taxes imposed
in lieu thereof), if any, owed in connection with ownership of the Equipment.
SECTION 3.05 Possession of Contract Files; Access to Contract
Files. (a) In accordance with the Transaction Documents, the Transferors shall
on or before the Closing Date, with respect to the Initial Contracts, and shall
on or before the Subsequent Transfer Date or Transfer Date with respect to
Subsequent Contracts or Substitute Contracts, as applicable, deliver, or cause
the Originator to deliver, to the Collateral Agent, on behalf of the Indenture
Trustee (as pledgee of the Trust pursuant to the Indenture) the Contract File
related to each Initial Contract, Subsequent Contract, or Substitute Contract,
as the case may be.
(b) The Collateral Agent will be the custodian, on behalf of
the Indenture Trustee, to hold the Contract Files in trust for the benefit of
all present and future Noteholders and the Note Insurer. In the event the
Collateral Agent resigns or is removed, the Indenture Trustee shall either (x)
hold the Contract Files, or (y) appoint a successor Collateral Agent to hold
the Contract Files as set forth in Section 7.08 hereof.
(c) The Collateral Agent shall afford the Depositor, the
Trust, the Note Insurer, the Back-up Servicer and the Servicer reasonable
access to all records and documentation regarding the Contracts relating to
this Agreement, such access being afforded at customary charges, upon
reasonable prior written request and during normal business hours at the
offices of the Collateral Agent. Notwithstanding the foregoing, the ability of
the Servicer (or the Back-up Servicer) to obtain actual possession of a
Contract File (or any of its contents) shall be determined under Section
3.01(a) hereof.
SECTION 3.06 Acceptance of the Trust Property; Certification
by the Collateral Agent. (a) The Indenture Trustee agrees to execute and
deliver to the Depositor, the Note Insurer, the Collateral Agent and the
Servicer on or prior to the Closing Date an acknowledgement of receipt of the
Note Insurance Policy and the Pledged Notes in the form attached as Exhibit E
hereto.
(b) The Servicer will cause Norwest Bank Minnesota, National
Association, as bailee, on behalf of the Collateral Agent, to execute and
deliver to the Depositor, the Note Insurer, the Indenture Trustee and the
Servicer, on or prior to the Closing Date, an acknowledgement and receipt of
the Contract File for each of the Initial Contracts, in the substantially the
form attached as Exhibit D hereto. The Collateral Agent, on behalf of the
Indenture Trustee, agrees to execute and deliver to the Depositor, the Note
Insurer, the Indenture Trustee and the Servicer, within thirty days of the
Closing Date or on or prior to any Subsequent Transfer Date or Transfer Date,
as applicable, with respect to each Contract transferred on such date, an
acknowledgement of receipt of the Contract File for such Contract in the form
attached as Exhibit D hereto.
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ARTICLE IV
ADMINISTRATION AND SERVICING OF THE CONTRACTS
SECTION 4.01 Acceptance of Appointment; Duties of Servicer.
(a) The Servicer shall service, administer and enforce the Contracts as
Servicer and shall have full power and authority to do any and all things in
connection with such servicing and administration which it may deem necessary
or desirable in accordance with this Agreement. The Servicer will manage,
service, administer, and make collections on the Contracts in accordance with
the terms of this Agreement, the Contracts, the Credit Policies and Procedures
and applicable law and, to the extent consistent with such terms, in the same
manner in which, and with the same care, skill, prudence and diligence with
which, it services and administers leases of similar credit quality for itself
or others, if any, giving due consideration to customary and usual standards of
practice of prudent institutional small ticket equipment finance lease
servicers (the "Servicing Standard"). The Servicer's duties shall include
collection and posting of all payments, responding to inquiries of Obligors on
the Contracts, investigating delinquencies, accounting for collections and
furnishing statements as provided in Sections 4.07, 4.08 and 4.09, making
Servicer Advances and using commercially reasonable best efforts to maintain
the first priority perfected security interest of the Indenture Trustee, for
the benefit of the Noteholders and the Note Insurer, in the Pledged Notes, the
Contracts and the Equipment, including, but not limited to, the filing of any
financing or continuation statements required to be filed pursuant to the UCC,
which continuation statements shall be filed on or before the 60th day prior to
the expiration date of such financing statement; and promptly delivering
evidence of all such filings to the Indenture Trustee, the Collateral Agent and
the Note Insurer which evidence shall be satisfactory in form and substance to
the Indenture Trustee, the Collateral Agent and the Note Insurer, with evidence
of the filing of continuation statements being delivered on or before the 30th
day before the expiration of such financing statements. The Servicer shall
follow its customary standards, policies, and procedures as set forth in its
Credit Policies and Procedures and shall have full power and authority, acting
alone, to do any and all things in connection with such managing, servicing,
administration, and collection that it may deem necessary or desirable;
provided, however, that the Servicer shall not allow any optional termination
of any Contract prior to its scheduled expiration unless the Obligor shall have
paid an amount not less than the Prepayment Amount. The Servicer may waive,
modify or vary any term of a Contract if the Servicer, in its reasonable and
prudent judgment, determines that it will not be materially adverse to the
Noteholders or the Note Insurer. If the Servicer commences a legal proceeding
to enforce a Defaulted Contract pursuant to Section 4.04 hereof or participates
in a legal proceeding (including, without limitation, a bankruptcy proceeding
relating to or involving a Contract or Defaulted Contract), the Indenture
Trustee shall thereupon be deemed to have automatically assigned such Contract
to the Servicer for purposes of commencing or participating in any such
proceeding as a party or claimant, and the Servicer is authorized and empowered
by the Indenture Trustee, pursuant to this Section 4.01, to execute and
deliver, on behalf of itself or the Indenture Trustee, 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. The Indenture
Trustee shall furnish the Servicer, and the Servicer shall 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. If in any
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enforcement suit or legal proceeding it shall be held that the Servicer may not
enforce a Contract on the ground that it shall not be a real party-in-interest
or a holder entitled to enforce the Contract, the Servicer, on behalf of the
Issuer, shall, at the Servicer's expense and direction, take steps to enforce
the Contract, including bringing suit in its name or the name of the Indenture
Trustee (prior written notice of which shall be given to the Indenture
Trustee).
(b) Consent to Assignment or Replacement. At the request of
an Obligor, the Servicer may in its sole discretion, consent to the assignment
or sublease of a unit of the Equipment under a Contract; provided, that (i) the
Obligor will remain liable for all of its obligations under such Contract, (ii)
that such assignee or sub-lessee satisfies the credit criteria set forth in the
Credit Policies and Procedures and (iii) in the case of an assignment,
financing statements are filed naming the assignees, as debtors, and the
related Transferor, as secured party. Upon the request of any Obligor, the
Servicer may, in its sole discretion, provide for additions and upgrades to a
Contract, and the substitution or replacement of any unit of Equipment for a
substantially similar unit of additional equipment having substantially the
same fair market value as the unit of Equipment that will be replaced or
substituted.
(c) Maintenance of Credit Files. The Servicer (i) shall
maintain the Credit Files in a manner consistent with the Servicing Standard
and the performance of its obligations as Servicer pursuant to this Agreement
and will not dispose of any documents constituting the Contract Files in any
manner which is inconsistent with the performance of its obligations as the
Servicer pursuant to this Agreement and (ii) will not permit any lien upon, any
Contract File (other than Contract Files which relate solely to an Early
Termination Contract, an Expired Contract or a Reacquired Contract and, to the
extent applicable, the related Equipment) except for those liens contemplated
by the Transaction Documents.
(d) Subservicers. The Servicer may enter into servicing
agreements with one or more subservicers acceptable to the Note Insurer (unless
a Note Insurer Default has occurred and is continuing) in its reasonable
discretion to perform all or a portion of the servicing functions on behalf of
the Servicer; provided, that the Servicer will remain obligated and be liable
to the Indenture Trustee and the Issuer for servicing and administering the
Contracts 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 the Contracts. The fees
and expenses of the subservicer (if any) will be as agreed between the Servicer
and its subservicer and none of the Indenture Trustee, the Issuer, the
Depositor, the Noteholders, the Collateral Agent or the Note Insurer will have
any responsibility therefor. All actions of a subservicer taken pursuant to
such a subservicer agreement will be taken as an agent of the Servicer with the
same force and effect as though performed by the Servicer.
(e) Further Assurances. The Indenture Trustee will furnish
the Servicer, and the Servicer will furnish any subservicer, with any powers of
attorney and other documents necessary or appropriate to enable the Servicer or
a subservicer, as applicable, to carry out its servicing and administrative
duties under this Agreement.
(f) Modification of Contracts. In performing its obligations
hereunder, the Servicer may, acting in the name of the Issuer and without the
necessity of obtaining the prior
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consent of the Issuer, the Note Insurer, the Collateral Agent or the Indenture
Trustee, enter into and grant modifications, waivers and amendments to the
terms of any Contract, except for modifications, waivers or amendments that (i)
are inconsistent with the Servicing Standard, (ii) would extend the date of the
last Scheduled Payment or any Final Scheduled Payment on any Contract beyond
the Class A Maturity Date, (iii) would reduce or adversely affect, individually
or in the aggregate, the Obligor's obligation to maintain, service, insure and
care for the Equipment or would permit the permanent alteration of any item of
Equipment in any way which could adversely affect its present or future value,
(iv) are affected on any Contract that is either 90 days or more delinquent or
a Defaulted Contract or (v) otherwise could adversely affect, individually or
in the aggregate, the interest of any of the Indenture Trustee, the Depositor,
the Collateral Agent, the Note Insurer or the Noteholders. Notwithstanding the
provisions of clause (ii) of the preceding sentence, the Servicer may (1)
permit any of the actions set forth in clause (ii) of the preceding sentence,
which in the Servicer's sole discretion, in accordance with the Servicing
Standard, would maximize Defaulted Contract Recoveries, or (2) permit
termination of a Contract which does not otherwise provide for termination by
requiring, in the case of either clause (1) or (2), that the Obligor pay, or,
if the terms of such extension or termination do not provide for such payment
by the Obligor that the Servicer deposit, in lieu of all future Scheduled
Payments and any Final Scheduled Payment with respect to such Contract, an
amount which equals or exceeds the related Prepayment Amount for such Contract
as of 3:00 p.m. New York time on the Determination Date prior to the Payment
Date next succeeding the making of such payment into the Collection Account;
provided, however, that the Servicer will not be permitted to allow prepayment
by an Obligor if there are any amounts due under the related Contract after
such prepayment.
In the event of any modification, waiver or amendment of any
Contract in accordance with this Section 4.01, the Servicer will promptly
furnish the Issuer, the Depositor, the Collateral Agent, the Indenture Trustee
and the Note Insurer with a copy thereof, together with a certificate of the
Servicer signed by Servicing Officer stating that such modification, waiver or
amendment is not prohibited by the provisions of this Section 4.01.
SECTION 4.02 Collection of Payments. (a) The Servicer shall
use its commercially reasonable best efforts to collect all payments called for
under the terms and provisions of the Contracts as and when the same shall
become due, and shall use collection procedures consistent with the Servicing
Standard as it follows with respect to all comparable equipment leases that it
services for itself or others in a manner consistent with the Servicing
Standard. The Servicer may waive any prepayment charge, late payment charge, or
any other fees that may be collected in the ordinary course of servicing a
Contract if, in the Servicer's reasonable and prudent determination, such
waiver is not materially adverse to the Noteholders or the Note Insurer.
(b) Notwithstanding the terms of any Contract, the Servicer
may in its discretion (if in the Servicer's reasonable determination, such
action is not materially adverse to the Noteholders or the Note Insurer) allow
full Prepayments of a Contract by or on behalf of the Obligor. Any Prepayments
shall be in an amount no less than the Prepayment Amount with respect to the
prepaid Contract. All Prepayments shall be deposited in the Collection Account.
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(c) To the extent provided for in any Contract, the Servicer
shall make all reasonable efforts to collect all payments with respect to
amounts due for maintenance, taxes or assessments on the Equipment or the
Contracts and shall remit such amounts to the appropriate maintenance provider
or governmental entity on or prior to the date such payments are due.
(d) The Servicer shall deposit all Collections received by it
by wire transfer into the Collection Account no later than the second Business
Day following the date of receipt of such Collections by the Servicer and the
Servicer's determination that such amounts relate to the Contracts, but in no
event later than three Business Days following receipt thereof. The Servicer
shall notify the Indenture Trustee in writing of all amounts transferred into
the Collection Account. The Indenture Trustee shall retain all Advance Payments
(except to the extent that such Advance Payment relates to a Scheduled Payment
which has been invoiced by the Servicer) in the Collection Account until the
last day of the Collection Period in which such Advance Payment or portion
thereof is due in accordance with the provisions of the related Contract and
such Advance Payment will not be included as Available Funds until such later
Collection Period. The Servicer shall deposit into the Collection Account all
Collections received during the period from (x) the Cut-Off Date through the
Closing Date, (y) the Subsequent Cut-Off Date through the Subsequent Funding
Date, or (z) the Substitute Contract Cut-Off Date through the Transfer Date, as
the case may be.
(e) Based upon the amounts set forth on the Monthly
Statement, the Indenture Trustee shall cause the distribution of Available
Funds in the Collection Account according to the priority set forth in Section
3.04(b) of the Indenture.
(f) In the event that Servicer acquires title to any item of
Equipment in the enforcement of any Contract or otherwise at the expiration of
the term of a Contract, the Servicer shall use its best efforts to sell or
otherwise dispose promptly of such item of Equipment, consistent with the
Servicing Standard. The Servicer shall not lease, operate or otherwise manage
any such items of Equipment unless prior thereto, the Servicer remits the
related Prepayment Amount with respect to such Contract.
(g) Any payments (net of Excluded Amounts, except taxes)
received from a Contract will be allocated first to any sales, use, property or
ad valorem taxes due or payable to any taxing authority, second to any
Scheduled Payments due on the related Contract (allocating such payments in the
order that Scheduled Payments become due), and third to all other amounts then
payable under the Contract.
SECTION 4.03 Servicer Advances. If on any Determination Date
occurring prior to the repayment in full of the Notes, the Servicer determines
that any Scheduled Payments or Final Scheduled Payments due on the Contracts
(other than Defaulted Contracts) with respect to the related Collection Period
have not been received by such Determination Date, the Servicer, to the extent
that in its reasonable discretion it determines that it can recoup such
Servicer Advance from subsequent collections or recoveries under the related
Contract, will make a Servicer Advance up to an amount equal to the amount of
such delinquent Scheduled Payments or Final Scheduled Payments not received by
such Determination Date. The Servicer shall deposit any Servicer Advances into
the Collection Account on or prior to 3:00 p.m. (New York time) on such
Determination Date in next day funds. On each Determination Date, the
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Servicer shall deliver to the Indenture Trustee, the Note Insurer and the
Rating Agencies a report listing the aggregate amount of Scheduled Payments and
Final Scheduled Payments not received for the immediate prior Collection Period
as of the related Determination Date which it has determined in its sole
discretion and in accordance with the Servicing Standard is likely to be
recoverable from the related Obligors (such report, the "Servicer Report"). If
the Servicer determines that any Servicer Advance it has made, or is
contemplating making, would be a non-recoverable advance, the Servicer shall
deliver to the Indenture Trustee and the Note Insurer a certificate of a
Servicing Officer stating the basis for such determination.
The Servicer shall be reimbursed for Servicer Advances on
each Payment Date from amounts on deposit in the Collection Account as follows:
(i) for any Servicer Advance made with respect to a Delinquent Contract, from
subsequent Collections on such Delinquent Contract, Prepayment Amounts or
Reacquisition Amounts and (ii) for any non-recoverable Servicer Advance, from
all Collections received on all of the Contracts.
SECTION 4.04 Realization Upon Defaulted Contracts. (a) The
Servicer shall use commercially reasonable best efforts consistent with the
Servicing Standard to (i) accelerate, repossess, or otherwise comparably
convert the ownership of any Equipment that it has reasonably determined should
be repossessed or otherwise converted following a default under the related
Contract, (ii) remarket, either through sale or re-lease, the Equipment upon
the expiration of the term of the related Contract; provided, that upon any
such re-lease, the final maturity of such re-leased Contract shall not be later
than the final maturity of the latest maturing Contract then pledged to the
Issuer and (iii) act as sales and processing agent for Equipment which it
repossesses. The Servicer shall follow such practices and procedures as are
consistent with the Servicing Standard and as it shall deem necessary or
advisable and as shall be customary and usual in its servicing of equipment
leases and other actions by the Servicer in order to realize upon such a
Contract, which may include reasonable efforts to enforce any recourse
obligations of Obligors and repossessing and selling the Equipment at public or
private sale. The foregoing is subject to the provision that, in any case in
which the Equipment shall have suffered damage, the Servicer shall not be
required to expend funds in connection with any repair or towards the
repossession of such Equipment unless it shall determine in its discretion that
such repair and/or repossession will increase the Liquidation Proceeds by an
amount greater than the amount of such expenses.
(b) Notwithstanding the foregoing, the Servicer shall take
action to (i) enforce the obligations of the related Source and/or (ii)
accelerate all amounts due under any Contract immediately after such Contract
becomes a Defaulted Contract and shall, in accordance with its Credit Policies
and Procedures, bring an action against the Source under the Source Agreement
or the Obligor for all amounts due under the Contract and, to the extent
applicable, institute proceedings to repossess and sell or re-lease the
Equipment; provided, however, that the Servicer will not accelerate any
Scheduled Payment unless permitted to do so by the terms of the Contract or
under applicable law; and provided, further, that the Servicer shall not
declare an Obligor to be in default under a Contract nor exercise any other
remedies under such Contract based solely on a default by such Obligor under
any other obligation of such Obligor to the Originator if such Obligor is not
also in default under such Contract unless it concludes that declaring such
default is in the best interest of the Noteholders and the Note Insurer.
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(c) The Servicer shall remit to the Collection Account within
two (2) Business Days of receipt thereof all Liquidation Proceeds, except those
which constitute Excluded Amounts.
SECTION 4.05 Maintenance of Insurance Policies; Fidelity
Policies. (a) In connection with its activities as Servicer of the Contracts,
the Servicer agrees to present, on behalf of itself, the Indenture Trustee, the
Issuer, the Noteholders and the Note Insurer claims to the insurer under each
Insurance Policy, and to settle, adjust and compromise such claims, in each
case, consistent with the terms of each Contract.
(b) The Servicer shall maintain, at its own expense, (i) a
blanket insurance policy with respect to claims relating to the Obligors and
the Contracts and (ii) a blanket fidelity bond and an errors and omissions
insurance policy, in each case, with coverage appropriate and customary in the
industry with responsible companies on all officers, employees, or other
persons acting in any capacity with regard to the Contracts to handle funds,
money, documents and papers relating to the Contracts. Any such fidelity bond
and errors and omissions insurance shall protect and insure the Servicer
against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons and shall be maintained in a form
and amount that would meet the requirements of a prudent institutional
servicer. No provision of this Section 4.05 requiring such fidelity bond and
errors and omissions insurance shall diminish or relieve the Servicer from its
duties and obligations as set forth in this Agreement. Any such fidelity bond
or insurance policy shall not be cancelled or modified in a materially adverse
manner without ten (10) days' prior written notice to the Note Insurer and the
Rating Agencies. Promptly upon receipt of any notice from the surety or the
insurer that such fidelity bond or insurance policy has been terminated or
materially modified, the Servicer shall notify the Note Insurer, the Indenture
Trustee and the Rating Agencies of any such termination or modification.
SECTION 4.06 Servicing Compensation; Payment of Certain
Expenses by Servicer. As compensation for its activities, the Servicer shall be
entitled to receive the Servicer Fee and any Servicing Charges. The Servicer
shall be required to pay all expenses incurred by it in connection with its
activities hereunder, including, without limitation, (a) fees and disbursements
of the Independent Public Accountants, taxes imposed on the Servicer or the
Issuer (but excluding any sales taxes or other taxes imposed on any Obligor,
the Originator, the Servicer, the Transferors, the Depositor, the Collateral
Agent, the Indenture Trustee, the Note Insurer, the Back-up Servicer, any
Noteholder or any other Person), (b) expenses incurred in connection with
distributions and reports to Noteholders and the Note Insurer and (c) all other
fees and expenses not expressly stated hereunder to be for the account of the
Noteholders or the Note Insurer. The Servicer shall be entitled to retain, out
of any amounts actually recovered by the Servicer in the performance of its
obligations under Sections 4.02 and 4.04 hereof with respect to any Contract or
the Equipment subject thereto, the Servicer's actual out-of-pocket expenses
reasonably incurred in the course of such performance with respect to such
Contract or Equipment. (For all purposes of this Section 4.06, the Servicer's
"out-of-pocket expenses" means only those expenses incurred to non-Affiliated
third parties (e.g., outside counsel in a collection suit) and shall not
include salaries, operating costs, overtime wages and other such "overhead"
costs or expenses of the Servicer or its Affiliates, and shall not include
expenses of or payments to an agent or subservicer allowed hereunder, except
that out-of-pocket expenses for the fees and
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expenses of an agent used to remarket Equipment subject to Contracts shall be
included as "out-of-pocket expenses").
SECTION 4.07 Monthly Statement. With respect to each Payment
Date and the related Collection Period, the Servicer will provide to the
Indenture Trustee, the Note Insurer and the Rating Agencies, not less than
three (3) Business Days prior to such Payment Date, a monthly statement (a
"Monthly Statement"), signed by a Responsible Officer of the Servicer and
substantially in the form of Exhibit B.
SECTION 4.08 Quarterly Certificates as to Compliance. The
Servicer will provide to the Indenture Trustee, the Note Insurer, the
Depositor, the Collateral Agent and the Rating Agencies, no later than fifty
(50) days following the end of each fiscal quarter, an Officer's Certificate
stating that (a) a review of the activities of the Servicer, and the Servicer's
performance pursuant to this Agreement, for the period ending on the last day
of the immediately preceding fiscal quarter has been made under such Person's
supervision and (b) to the best of such Person's knowledge, based on such
review, the Servicer has performed or has caused to be performed in all
material respects all of its obligations under this Agreement throughout such
period and no Event of Servicing Termination has occurred and is continuing
(or, if an Event of Servicing Termination has so occurred and is continuing,
specifying each such event, the nature and status thereof and the steps
necessary to remedy such event, and, if an Event of Servicing Termination
occurred during such fiscal quarter and no notice thereof has been given to the
Indenture Trustee and the Note Insurer, specifying such Event of Servicing
Termination and the steps taken to remedy such event).
SECTION 4.09 Annual Independent Public Accountant's Servicing
Reports. The Servicer will cause an Independent Public Accountant (who may also
render other services to the Servicer) to furnish to the Indenture Trustee, the
Note Insurer, the Depositor, the Collateral Agent and the Rating Agencies, no
later than April 30 of each year, commencing April 30, 2000, a report relating
to the previous calendar year to the effect that (a) such firm has reviewed
certain documents and records relating to the servicing of the Contracts, and
(b) based on such examination, such firm is of the opinion that the Monthly
Statements for such calendar year were prepared in compliance with this
Agreement, except for such exceptions as it believes to be immaterial and such
other exceptions as will be set forth in such firm's report. In the event such
firm requires the Indenture Trustee to agree to the procedures performed by
such firm, the Servicer shall direct the Indenture Trustee in writing to so
agree; it being understood and agreed that the Indenture Trustee will deliver
such letter of agreement in conclusive reliance upon the direction of the
Servicer, and the Indenture Trustee makes no independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures.
SECTION 4.10 Access to Certain Documentation and Information
Regarding the Pledged Property. (a) The Servicer shall provide the Indenture
Trustee, the Collateral Agent, the Note Insurer (unless a Note Insurer Default
has occurred and is continuing) and their respective duly authorized
representatives, attorneys or accountants access to any and all documentation
regarding the Pledged Property, the Conveyed Assets or the Receivables
(including the List of Contracts) that the Servicer may possess, such access
being afforded without charge but only upon reasonable advance written request
and during normal business
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hours, so as not to interfere unreasonably with the Servicer's normal
operations or customer or employee relations, at offices of the Servicer
designated by the Servicer.
(b) At all times during the term hereof, the Servicer shall
either (i) keep available in physical form at its principal executive office
for inspection by the Indenture Trustee, the Collateral Agent, any Noteholder,
the Note Insurer (unless a Note Insurer Default has occurred and is continuing)
or their respective duly authorized representatives, attorneys or accountants a
list of all Contracts then held on behalf of the Issuer, together with a
reconciliation of such list to the List of Contracts and each of the Monthly
Statements, indicating the cumulative removals and additions of Contracts from
the Trust or (ii) maintain electronic facilities which allow such list and
reconciliation to be generated.
(c) The Servicer will maintain accounts and records as to
each respective Contract serviced by the Servicer that are accurate and
sufficiently detailed as to permit (i) the reader thereof to know the status of
such Contract, including payments and recoveries made and payments owing (and
the nature of each), and (ii) reconciliation between payments or recoveries on
(or with respect to) each Contract and the amounts from time to time deposited
in the Collection Account in respect of such Contract.
(d) The Servicer will maintain its Contract Management System
and other computerized records so that, from and after the time of the pledge
under the Receivables Pledge Agreement of each Contract and the related
Equipment to the Trust and subsequent assignment of such pledge by the Trust to
the Indenture Trustee, on behalf of the Noteholders and the Note Insurer, the
Servicer's accounts and records (including any back-up computer archives) that
refer to any Contract indicate clearly that the Contract has been so pledged.
Indication of a Contract being pledged will be deleted from or modified on the
Servicer's accounts and records when, and only when such Contract is an Early
Termination Contract, an Expired Contract or a Reacquired Contract.
(e) Nothing in this Section 4.10 shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Obligors, and the failure, as a result of such
obligation of the Servicer, to provide access as provided in this Section 4.10
shall not constitute a breach of this Section 4.10.
(f) The Indenture Trustee, the Collateral Agent, and the
Noteholders shall use their respective best efforts to maintain in confidence
all information which has been described as "confidential" and obtained by any
of them regarding the Obligors and the Contracts, whether upon exercise of
their respective rights under this Section 4.10 or otherwise. Notwithstanding
anything herein to the contrary, the foregoing shall not be construed to
prohibit (i) disclosure of any and all information that is or becomes publicly
known, or information obtained by the Indenture Trustee or the Collateral Agent
from sources other than the Servicer or the Issuer, (ii) disclosure of any and
all information (A) if required to do so by any applicable statute, law, rule
or regulation, (B) to any government agency or regulatory body having or
claiming authority to regulate or oversee any respects of the Indenture
Trustee's or the Collateral Agent's business or that of its affiliates, (C)
pursuant to any subpoena, civil investigative demand or similar demand or
request of any court, regulatory authority, arbitrator or arbitration to which
the Indenture Trustee, the Collateral Agent, or an affiliate or an officer,
director, employer or shareholder
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thereof is a party, (D) in any preliminary or final prospectus supplement,
registration statement or contract or other document pertaining to the
transactions contemplated herein approved in advance by the Servicer and the
Note Insurer or (E) to any affiliate, independent or internal auditor, agent,
employee or attorney of the Indenture Trustee or the Collateral Agent having a
need to know the same, provided that the Indenture Trustee or the Collateral
Agent, as applicable, advise such recipient of the confidential nature of the
information being disclosed, or (iii) any other disclosure authorized by the
Servicer, the Note Insurer or the Issuer. No person entitled to receive copies
of such reports or tapes shall use the information therein for the purpose of
soliciting the customers of the Servicer or any Obligor, or for any other
purpose except as set forth in this Agreement.
SECTION 4.11 Financial Statements and Other Necessary Data.
(a) The Servicer shall provide to the Note Insurer, the Indenture Trustee and
the Rating Agencies:
(i) Annual Statements-- within 120 days after the end of each
fiscal year of ABFS, a copy of:
(A) consolidated (and consolidating) balance sheets of
ABFS and its consolidated subsidiaries, at the end of
such fiscal year, and
(B) consolidated (and consolidating) statements of income
of ABFS and consolidated retained earnings and cash
flows of ABFS and its consolidated subsidiaries for
such fiscal year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and accompanied by an
opinion of a firm of independent certified public accountants of
recognized national standing, stating that such financial statements
present fairly the financial condition of ABFS and its consolidated
subsidiaries and have been prepared in accordance with generally
accepted accounting principles consistently applied (except for
changes in application in which such accountants concur and footnote),
and that the examination of such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards.
(ii) Quarterly Statements-- within 45 days after the end of
each fiscal quarter of ABFS, a copy of:
(A) consolidated balance sheets of ABFS and its
consolidated subsidiaries, a the end of such fiscal
quarter, and
(B) consolidated statements of income of ABFS and
consolidated retained earnings and cash flows of ABFS
and its consolidated subsidiaries for such fiscal
quarter,
setting forth in each case in comparative form the figures for (i) the
comparable fiscal quarter in the prior fiscal year and (ii) the
year-to-date period then ended;
(iii) Notice of Event of Servicing Termination. Immediately
upon becoming aware of the existence of any condition or event which
constitutes an Event of Servicing
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Termination or which, with notice and lapse of time, would become and
Event of Servicing Termination, a written notice describing its nature
and period of existence and what action the Servicer is taking or
propose to take with respect thereto;
(A) consolidated balance sheets of ABFS and its
consolidated subsidiaries, a the end of such fiscal
quarter, and
(B) consolidated statements of income of ABFS and
consolidated retained earnings and cash flows of ABFS
and its consolidated subsidiaries for such fiscal
quarter,
(iv) Report on Proceedings -- promptly upon the Servicer's
becoming aware of any pending court or administrative proceeding which
individually or in the aggregate involves the possibility of
materially and adversely affecting Pledged Property or Transferor
Collateral or the business or conditions (financial or otherwise) of
the Servicer, a written notice specifying the nature of such
investigation or proceeding and what action the Servicer is taking or
proposes to take with respect thereto and evaluating its merits; and
(b) The Servicer shall, on request of the Indenture Trustee,
the Collateral Agent, the Note Insurer (unless a Note Insurer Default has
occurred and is continuing) or the Owner Trustee, furnish the Indenture
Trustee, the Note Insurer or the Owner Trustee, as the case may be, such data
reasonably necessary for the administration of the Trust, or with respect to
the Pledged Property or the Conveyed Assets, as can be generated by the
Servicer's existing data processing systems; to the extent that the Servicer's
existing data processing systems cannot generate such data, the Servicer will
cooperate with the Indenture Trustee, the Collateral Agent, the Note Insurer or
the Owner Trustee, as the case may be, in finding a method of furnishing such
data.
SECTION 4.12 Responsibilities of the Back-up Servicer. (a)
Until the receipt by the Servicer of a written notice of termination from the
Indenture Trustee in accordance with Section 6.01 hereof (a "Servicer
Termination Notice"), the Back-up Servicer shall perform, on behalf of the Note
Insurer, the Issuer, the Depositor, the Collateral Agent and the Indenture
Trustee, as their interests may appear, the following duties and obligations:
(i) The Servicer shall deliver to the Back-up Servicer, and
the Back-up Servicer shall accept from the Servicer delivery of (x)
the information required to prepare the Monthly Statement, (y) the
Monthly Statement, on tape (including, without limitation, the
Computer Tape); provided, however, the Tape is in an MS-DOS, PC
readable ASCII format or format to be agreed upon by the Back-up
Servicer and the Servicer prior to closing.
(ii) (x) Not later than (2) Business Days prior to each
Determination Date, the Back-up Servicer shall accept delivery on tape
from the Servicer of the database with respect to the Contracts used
to verify the mathematical accuracy of the Monthly Statements (the
"Tape"), and (y) quarterly, a tape containing such lease level
information
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as may be reasonably agreed upon by the Servicer and the Back-up
Servicer from time to time.
(iii) The Back-up Servicer shall convert the database
received on Tape from the Servicer to the database used by the Back-up
Servicer and validate that the data therein matches the same received
on the Tape.
(iv) Prior to the related Payment Date, the Back-up Servicer
shall review the Monthly Statement for completeness.
(v) Within thirty (30) days after each Payment Date,
beginning with the Payment Date occurring in July 1999, the Back-up
Servicer shall verify the mathematical accuracy of the related Monthly
Statement. The Back-up Servicer shall notify the Indenture Trustee,
the Note Insurer and the Servicer in writing of any material
inconsistencies between the related Monthly Statement and the Tape and
of any information that is missing from such Monthly Statement and
shall confirm conformity of actual Servicer remittances to such
Monthly Statement.
(vi) If the Servicer disagrees with the computations provided
under paragraph (v) above by the Back-up Servicer or if the Servicer
or any subservicer has not reconciled such discrepancy, the Back-up
Servicer agrees to confer with the Servicer to resolve such
disagreement on or prior to the next succeeding Determination Date and
shall settle such discrepancy with the Servicer, and notify the
Indenture Trustee and the Note Insurer of the resolution thereof. The
Servicer hereby agrees to cooperate, at its own expense, with the
Back-up Servicer in reconciling any discrepancies herein. If within
thirty (30) days of notice to the Servicer, the Note Insurer and the
Indenture Trustee, such discrepancy is not resolved, the Back-up
Servicer shall promptly notify the Indenture Trustee and the Note
Insurer of such discrepancy. Following receipt of such notice from the
Indenture Trustee, the Servicer shall deliver to the Rating Agencies,
the Noteholders, the Note Insurer, the Back-up Servicer and the
Indenture Trustee no later than the related Payment Date a certificate
describing the nature and cause of such discrepancies and the actions
the Servicer proposes to take with respect thereto.
With respect to the foregoing, the Back-up Servicer, in the
performance of its duties and obligations hereunder, is entitled to rely in
good faith on the contents of each Tape, including, but not limited to, the
completeness and accuracy thereof, provided by the Servicer.
(b) After the receipt of an effective Servicer Termination
Notice by the Servicer in accordance with this Agreement, all authority, power,
rights and responsibilities of the Servicer, under this Agreement, whether with
respect to the Contracts or otherwise shall pass to and be vested in the
Back-up Servicer as long as the Back-up Servicer is not prohibited by an
applicable provision of law from fulfilling the same, as evidenced by an
Opinion of Counsel to such effect addressed to the Indenture Trustee and the
Note Insurer (unless a Note Insurer Default has occurred and is continuing).
SECTION 4.13 Back-up Servicer Compensation. (a) As
compensation for its performance under Section 4.12(a) above, the Issuer agrees
that the Back-up Servicer shall be
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paid the following amounts: (A) due upon Closing Date, the sum of $5,000
(including the acceptance fee for services as Indenture Trustee) and (B) as a
monthly fee payable on each Payment Date from the Collection Account, the
product of (1) one-twelfth (1/12), (2) the Back-up Servicer Fee Rate and (3)
the Aggregate Discounted Contract Principal Balance on the first day of the
immediately preceding Collection Period.
(b) As compensation for its performance under Section 4.12(b)
above, the Back-up Servicer shall be entitled to such Back-up Servicer Fee and
other amounts (whether payable out of the Collection Account or otherwise) as
the Servicer would have been entitled to under this Agreement as if no Servicer
Termination Notice has been given to the Servicer; provided, that the Back-up
Servicer shall not be entitled to receive any compensation in excess of that
which the Servicer was entitled to under this Agreement.
(c) In the event of an Event of Servicing Termination
hereunder, the Servicer, on behalf of the Issuer, shall pay to the Back-up
Servicer a fee in an amount agreed to by the Servicer and the Back-up Servicer
for conversion to the Back-up Servicer's software system, such fee to be
included as an Indenture Trustee Expense.
SECTION 4.14 Merger or Consolidation of, or Assumption of the
Obligations of, Back-up Servicer. Any Person (a) into which the Back-up
Servicer may be merged or consolidated, (b) which may result from any merger or
consolidation to which the Back-up Servicer shall be a party, or (c) which may
succeed to the properties and assets of the Back-up Servicer substantially as a
whole, which Person in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Back-up Servicer hereunder, shall
be the successor to the Back-up Servicer under this Agreement without further
act on the part of any of the parties to this Agreement. In the event that the
resulting entity is not acceptable to the Note Insurer in its reasonable
judgment, the Back-up Servicer, upon the written request of the Note Insurer
(unless a Note Insurer Default has occurred and is continuing), shall resign
from its obligations and duties under this Agreement.
SECTION 4.15 Back-up Servicer's Waiver of Set-off. The
Back-up Servicer, solely in its capacity as Back-up Servicer hereunder, hereby
irrevocably and unconditionally waives all right of set-off that it may have
under contract (including this Agreement), applicable law or otherwise with
respect to any funds or monies of the Trust, the Originator, the Transferors,
the Depositor, the Collateral Agent, the Servicer or the Note Insurer, at any
time held by or in the possession of the Back-up Servicer.
SECTION 4.16 Retention and Termination of the Servicer. The
Servicer hereby covenants and agrees to act as Servicer under this Agreement
for an initial term commencing on the Closing Date and expiring on September
30, 1999 (the "Initial Term"). Thereafter, the Initial Term shall be extendible
in the sole discretion of the Note Insurer by written notice (each, a "Servicer
Extension Notice") of the Note Insurer (or the Indenture Trustee if revocable
written standing instructions of the Note Insurer have been previously
delivered to the Indenture Trustee) to the Servicer, for any specified number
of three-month terms. Each such Servicer Extension Notice, if any, shall be
delivered by the Note Insurer (or the Indenture Trustee, as applicable) to the
other parties to this Agreement. The Servicer hereby agrees that, as of the
date hereof and upon its receipt of any Servicer Extension Notice, the Servicer
shall be
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bound for the duration of the Initial Term and the term covered by any such
Servicer Extension Notice to act as the Servicer, subject to and in accordance
with the other provisions of this Agreement. The Servicer agrees that if, as of
the fifteenth day prior to the last day of any such servicing term, the
Servicer shall not have received a Servicer Extension Notice from the Note
Insurer (or Indenture Trustee, as applicable), the Servicer shall, within five
(5) days thereafter, give written notice of such non-receipt to the Note
Insurer and the Indenture Trustee. The failure of the Note Insurer or the
Indenture Trustee, as applicable, to deliver a Servicer Extension Notice by the
end of any such three-month term shall result in the automatic termination of
the Servicer; provided, that, if a Note Insurer Default has occurred and is
continuing, the term of the Servicer shall automatically be extended until such
time as the Note Insurer Default has been cured.
The Servicer may not resign from its obligations and duties
as Servicer hereunder, except (i) with the prior written consent of the
Controlling Party or (ii) upon a determination that the Servicer's performance
of such duties is no longer permissible under applicable law. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an opinion of independent counsel, in form and substance reasonably
satisfactory to the Note Insurer, to such effect delivered to the Indenture
Trustee and the Note Insurer. No such resignation will become effective until
the Back-up Servicer, or a successor thereto has assumed the Servicer's
servicing obligations and duties under this Agreement in accordance with the
terms hereof.
ARTICLE V
THE SERVICER AND THE BACK-UP SERVICER
SECTION 5.01 Liability of Servicer; Indemnities. (a) The
Servicer shall be liable in accordance herewith only to the extent of the
following obligations specifically undertaken by the Servicer herein:
(i) The Servicer shall indemnify, defend and hold harmless
the Indenture Trustee (which shall include any of its directors,
employees, officers and agents), the Owner Trustee (which shall
include any of its directors, employees, officers and agents), the
Issuer, the Originator, the Transferors, the Depositor, the Collateral
Agent, the Back-up Servicer (which shall include any of its directors,
employees, officers and agents), the Noteholders and the Note Insurer
(which shall include any of its directors, employees, officers and
agents) against and from any and all costs, expenses, losses, damages,
claims and liabilities arising out of or resulting from the use,
repossession or operation of the Equipment by the Servicer or any of
its Affiliates; and
(ii) The Servicer shall indemnify, defend and hold harmless
the Indenture Trustee (which shall include any of its directors,
employees, officers and agents), the Owner Trustee (which shall
include any of its directors, employees, officers and agents), the
Collateral Agent (which shall include any of its directors, employees,
officers and agents), the Noteholders, the Note Insurer (which shall
include any of its directors, employees, officers and agents), the
Issuer, the Transferors, the Depositor, the Back-up Servicer (which
shall include any of its directors, employees, officers and agents)
and the Originator against and from any and all costs, losses,
expenses (including the reasonable fees and expenses of counsel)
claims, damages and liabilities to the extent that such
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losses, claims, damages or liabilities arose out of, or were imposed
upon the Indenture Trustee, the Owner Trustee, the Collateral Agent,
the Noteholders, the Note Insurer, the Originator, the Transferors,
the Depositor, the Issuer or the Back-up Servicer in connection with
or by reason of (x) the failure by the Servicer to perform its duties
under this Agreement or errors or omissions of the Servicer related to
such duties including the making of any inaccurate representations or
warranties hereunder; (y) in the case of the Indenture Trustee, the
Collateral Agent, the Depositor or the Back-up Servicer, the
performance of their respective duties hereunder or under the other
Transaction Documents, except to the extent that such loss, expense,
claim or liability resulted from the Indenture Trustee's, the
Collateral Agent's, the Depositor's or the Back-up Servicer's
respective breach of this Agreement, negligence or willful misconduct;
or (z) in case of the Owner Trustee, the performance of its duties
hereunder or under the Transaction Documents, except to the extent
that such loss, expense, claim or liability resulted from the Owner
Trustee's breach of this Agreement, gross negligence or willful
misconduct. The provisions of this Section 5.01 shall run directly to
and be enforceable by an injured party subject to the limitations
hereof, and the indemnification provided to the Indenture Trustee, the
Owner Trustee, the Collateral Agent, the Note Insurer, the Issuer, the
Transferors, the Depositor, the Noteholders and the Back-up Servicer
pursuant to this Article V by the Servicer shall survive the payment
in full of the Notes, the termination of the Indenture, and the
resignation of the Indenture Trustee, the Owner Trustee, the
Collateral Agent or the Back-up Servicer or removal of the Indenture
Trustee, the Owner Trustee, the Collateral Agent or the Back-up
Servicer.
(b) The Servicer shall pay any amounts owing pursuant to
Section 5.01(a) hereof directly to the indemnified Person, and such amounts
shall not be deposited in the Collection Account.
(c) Indemnification under this Section 5.01 shall include,
without limitation, reasonable fees and expenses of counsel and expenses of
litigation reasonably incurred. If the Servicer has made any indemnity payments
to the Indenture Trustee, the Owner Trustee, the Collateral Agent, the Issuer,
the Transferors, the Depositor, the Noteholders, the Note Insurer or the
Originator pursuant to this Section 5.01 and such party thereafter collects any
of such amounts from others, such party will promptly repay such amounts
collected to the Servicer, without interest.
SECTION 5.02 Merger, Consolidation, or Assumption of the
Obligations of Servicer. Any corporation (i) into which the Servicer may be
merged or consolidated, (ii) resulting from any merger or consolidation to
which the Servicer shall be a party or (iii) succeeding to the business of the
Servicer (including, without limitation, by sale of all or substantially all of
the assets of the Servicer in one or more transactions), shall be the successor
to the Servicer hereunder provided that the surviving corporation of such
merger or consolidation or the purchaser of such assets shall have received the
prior written consent of the Note Insurer (unless a Note Insurer Default has
occurred and is continuing), without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding, and such corporation in any of the foregoing
cases shall execute an agreement of assumption, in a form reasonably
satisfactory to the Note Insurer (unless a Note Insurer Default has occurred
and is continuing) and the Indenture Trustee, agreeing to perform
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every obligation of the Servicer hereunder; provided, however, that the
Servicer shall not merge or consolidate with any other corporation nor sell all
or substantially all of its assets in one or more related transactions until
(x) the Note Insurer shall have given its prior written consent and (y) the
Indenture Trustee and the Note Insurer have received confirmation from the
Rating Agencies that such action shall satisfy the Rating Agency Condition. The
Servicer shall provide prompt written notice of any such event to the Indenture
Trustee, the Note Insurer and the Rating Agencies.
SECTION 5.03 Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Indenture Trustee,
the Collateral Agent, the Originator, the Transferors, the Depositor, the Note
Insurer, the Issuer or the Noteholders for any action taken or for refraining
from the taking of any action pursuant to this Agreement or the Indenture or
for errors in judgment; provided, however, that this provision shall not
protect the Servicer against any liability that would otherwise be imposed by
reason of willful misconduct, bad faith or negligence in the performance of
duties hereunder or under the Indenture. The Servicer and any director or
officer or employee or agent of the Servicer 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 or under the Indenture. Except as
provided herein, the Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties to
service the Trust Property in accordance with this Agreement and that in its
opinion may involve it in any expense or liability; provided, however, that the
Servicer may take any such non-incidental action that is reasonable and that
may be necessary or desirable in respect of this Agreement and the rights and
duties of the parties hereto and the interests of the Noteholders and the Note
Insurer hereunder, provided that the Servicer shall notify the Indenture
Trustee and the Note Insurer of such proposed action and the Servicer may
thereafter commence such action only with the consent of the Note Insurer
(unless a Note Insurer Default has occurred and is continuing), unless the
Indenture Trustee shall have disapproved the proposed action by so notifying
the Servicer within five (5) Business Days. In the event the Servicer takes
such action, the reasonably incurred legal expenses and costs of such action
and any liabilities resulting therefrom shall be expenses, costs and
liabilities of the Issuer, and the Servicer shall be entitled to be reimbursed
therefor pursuant to Section 3.04(b)(iii) of the Indenture.
SECTION 5.04 Servicer Not to Resign. Subject to the
provisions of Section 5.02 hereof, the Servicer shall not resign from the
obligations and duties hereby imposed on it as Servicer except upon the prior
written consent of the Note Insurer (unless a Note Insurer Default has occurred
and is continuing) or determination that the performance of its duties
hereunder is no longer permissible under applicable law. Any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Indenture Trustee, the Note Insurer and
to the Rating Agencies. No such resignation shall become effective until a
successor Servicer acceptable to the Note Insurer (unless a Note Insurer
Default has occurred and is continuing) shall have assumed the responsibilities
and obligations of the Servicer in accordance with Section 6.02 hereof and the
Rating Agency Condition shall be satisfied.
SECTION 5.05 Limitation on Liability of Back-up Servicer and
Others. (a) Neither the Back-up Servicer nor any of the directors, officers or
employees or
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agents of the Back-up Servicer shall be under any liability to the Servicer,
the Indenture Trustee, the Issuer, the Owner Trustee, the Transferors, the
Depositor, the Collateral Agent, the Noteholders or the Note Insurer except as
provided herein, for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment not
involving willful misconduct, bad faith or negligence; provided, however, that
this provision shall not protect the Back-up Servicer against any liability
resulting from its breach of any representation or warranty made herein, nor
shall this provision protect the Back-up Servicer against any liability that
would otherwise be imposed by reason of willful misconduct, bad faith or
negligence in the performance of its duties hereunder. Neither the Back-up
Servicer nor any of its directors, officers or employees or agents shall be
under any liability of any kind or type to any Person arising from the
incomplete or inaccurate contents of any Tape provided by the Servicer. The
Back-up Servicer and any director, officer, employee or agent of the Back-up
Servicer 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 or in connection with the transactions contemplated herein. The
Back-up Servicer shall not be under any obligation to appear in, prosecute or
defend any legal motion that is not incidental to its duties to service the
Contracts in accordance with this Agreement and that in its reasonable opinion
may involve it in any expense or liability; provided, however, that the Back-up
Servicer may, but shall not be obligated to, take any such action that is
reasonable and that may be necessary or desirable in respect of this Agreement
and the rights and duties of the parties hereto and the interest of the
Noteholders and the Note Insurer; provided, that the Back-up Servicer shall
notify the Issuer, the Noteholders, the Note Insurer and the Indenture Trustee
of such proposed action and the Back-up Servicer may thereafter commence such
action; provided, the Note Insurer (unless a Note Insurer Default has occurred
and is continuing) has consented to such action, unless the Issuer, the
Noteholders or the Indenture Trustee shall have disapproved the proposed action
by so notifying the Back-up Servicer within five (5) Business Days. If any such
proposed action is commenced, the reasonably incurred legal expenses and costs
of such action and any liabilities resulting therefrom shall be expenses, costs
and liabilities of the Noteholders, and the Back-up Servicer shall be entitled
to be reimbursed therefor pursuant hereto.
(b) The Servicer shall indemnify the Back-up Servicer its
officers, directors, employees and agents for, and to hold it harmless against,
any loss, liability or expense incurred, except to the extent that such loss,
liability or expense was incurred through breach of this Agreement, negligence
or willful misconduct on its part, arising out of or in connection with the
performance of its duties hereunder, including the costs and expenses of
defending against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
SECTION 5.06 Back-up Servicer Not to Resign. The Back-up
Servicer shall not resign from the obligations and duties hereby imposed on it
as Back-up Servicer except (a) with the prior written consent of the Note
Insurer (unless a Note Insurer Default has occurred and is continuing), or (b)
upon determination that the performance of its duties hereunder is no longer
permissible under applicable law, as provided in Section 6.06 hereof. Any such
determination permitting the resignation of the Back-up Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Indenture
Trustee, the Note Insurer (unless a Note Insurer Default has occurred and is
continuing) and to the Rating Agencies. Upon the Back-up Servicer resignation
or termination pursuant to Section 6.06 hereof, the Back-up
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Servicer shall comply with the provisions of this Agreement until the
acceptance of appointment by a successor Back-up Servicer. Any such successor
Back-up Servicer shall be appointed by the Indenture Trustee subject to the
approval of the Note Insurer (unless a Note Insurer Default has occurred and is
continuing) and satisfying of the Rating Agency Condition.
SECTION 5.07 Indemnity for Liability Claims. The Transferors
on behalf of the Issuer shall indemnify, defend and hold harmless the Indenture
Trustee, the Back-up Servicer (which, in each case, shall include any of their
respective directors, employees, officers and agents), the Noteholders and the
Note Insurer against and from any and all costs, expenses, losses, damages,
claims and liabilities arising out of or resulting from the use, repossession
or operation of the Equipment to the extent not covered by the Servicer's
indemnity provided by Section 5.01 hereof.
ARTICLE VI
SERVICING TERMINATION; BACK-UP SERVICING TERMINATION
SECTION 6.01 Events of Servicing Termination. (a) If any of
the following events (each an "Event of Servicing Termination") shall occur and
be continuing:
(i) If there occurs a change of "control" of the Servicer
("control" having the meaning ascribed to it in the Rules and
Regulations under the Securities Exchange Act of 1934, as amended),
unless the Note Insurer (unless a Note Insurer Default has occurred
and is continuing) has determined that such change in control does not
have a material adverse effect on the interests of the Note Insurer;
(ii) Any failure by the Servicer to make (x) any Servicer
Advance within two Business Days of the related Determination Date as
required hereunder or (y) any other payment, deposit, transfer or
delivery required to be made hereunder (other than with respect to the
Monthly Statement, as to which the remedy is set forth in Section
6.01(a)(iii) hereof) that continues unremedied for a period of three
(3) Business Days after the date such payment, deposit, transfer or
delivery is required to be made; provided, that the Servicer shall be
granted a three (3) Business Day grace period on not more than one
occasion during each Collection Period;
(iii) Any failure by the Servicer to submit a Monthly
Statement pursuant to Section 4.07 hereof that continues unremedied
for a period of two (2) Business Days (but in no event later than the
related Payment Date) after the earliest of the date upon which (A)
the Note Insurer or a Noteholder provides written notification to the
Servicer of such failure, (B) the Issuer becomes aware that the Note
Insurer and the Noteholders have not received a copy of the Monthly
Statement in accordance with the provisions hereof or (C) the date on
which an Authorized Officer obtains actual knowledge of such failure;
(iv) Any failure on the part of the Servicer duly to observe
or perform in any material respect any other covenants or agreements
of the Servicer set forth in the Notes or in this Agreement, as the
case may be, or any breach of a representation or warranty of the
Servicer set forth in Section 2.01 of this Agreement, which failure or
breach (A)
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materially and adversely affects the rights of the Indenture Trustee,
the Depositor, the Collateral Agent, the Noteholders, the Note Insurer
or the Issuer and (B) continues unremedied for a period of 30 days
after the earlier to occur of (x) the date on which written notice of
such failure or breach, requiring the situation giving rise to such
failure or breach to be remedied, shall have been given to a Servicing
Officer by the Indenture Trustee or to a Servicing Officer or a
Responsible Officer of the Indenture Trustee by the Issuer, the Note
Insurer or any Noteholders or (y) the date on which any Servicing
Officer is required pursuant to the terms of this Agreement to provide
notice to the Noteholders and the Note Insurer, of any such failure or
breach pursuant to Section 2.01(b)(ix)(A);
(v) The Servicer shall consent to the appointment of a
custodian, receiver, trustee or liquidator (or other similar official)
of itself, or of a substantial part of its property, or shall admit in
writing its inability to pay its debts generally as they come due, a
court of competent jurisdiction shall determine that the Servicer is
generally not paying its debts as they come due or the Servicer shall
make a general assignment for the benefit of creditors;
(vi) The Servicer shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in
effect) or an answer admitting the material allegation of a petition
filed against the Servicer in any such proceeding, or the Servicer
shall, by voluntary petition, answer or consent, seek relief under the
provisions of any now existing or future bankruptcy or other similar
law providing for the reorganization or winding up of debtors, or
providing for an agreement, composition, extension or adjustment with
its creditors;
(vii) An order, judgment or decree in excess of $1,000,000,
individually or in the aggregate, shall be entered in any proceeding
and any such order, judgment or decree or appointment or sequestration
shall remain in force undismissed, unstayed or unresolved for a period
of 90 days after the date of entry thereof;
(viii) A petition against the Servicer in a proceeding under
applicable bankruptcy laws or other insolvency laws, as now or
hereafter in effect, shall be filed and shall not be stayed, withdrawn
or dismissed within 90 days thereafter, or if, under the provisions of
any law providing for reorganization or winding-up of debtors which
may apply to the Servicer, any court of competent jurisdiction shall
assume jurisdiction, custody or control of the Servicer, or any
substantial part of its property, and such jurisdiction, custody or
control shall remain in force unrelinquished, unstayed or unterminated
for a period of 90 days;
(ix) Any assignment by the Servicer to a delegate of its
duties or rights hereunder, except as specifically permitted
hereunder, or any attempt to make such an assignment;
(x) The occurrence of an event of default under the Insurance
Agreement;
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(xi) (a) the average Delinquency Trigger Ratio for any
Payment Date and the two immediately preceding Payment Dates exceeds
4.0%, or (b) the average Net Charge-Off Ratio for any Payment Date and
the immediately preceding two Payment Dates exceeds 3.5%;
(xii) ABFS shall fail to have a GAAP net worth (excluding
goodwill) of at least $20,000,000;
(xiii) The sum (expressed as a percentage of the Initial
Aggregate Collateral Balance) of the Defaulted Contract Amounts
(measured as of the first Payment Date for which such Contract is
classified as a Defaulted Contract) of all Contracts which have become
Defaulted Contracts from the Closing Date through any of the dates set
forth below under the column "Measurement Period" exceed the percentage
set forth opposite such Measurement Period in the column entitled
"Maximum Cumulative Net Losses," unless the Note insurer shall have
waived the Event of Servicing Termination set forth in this clause
(xiii):
Maximum Cumulative
Measurement Period Net Losses
------------------------- ------------------
through November 30, 1999 1.00%
through April 30, 2000 2.00%
through October 31, 2000 3.00%
through April 30, 2001 4.00%
and thereafter 6.00%
then, and in each and every case, so long as an Event of Servicing Termination
shall not have been remedied within any applicable period set forth above,
subject to suspension during the occurrence of Force Majeure, as applicable,
the Indenture Trustee shall, at the direction of the Note Insurer (or, if a
Note Insurer Default has occurred and is continuing, the Majority Holders) or
may, with the prior written consent of the Note Insurer (or, if a Note Insurer
Default has occurred and is continuing, the Majority Holders), by Servicer
Termination Notice then given in writing to the Servicer, terminate all, but
not less than all, of the rights and obligations of the Servicer under this
Agreement. The Indenture Trustee shall furnish a copy of any Servicer
Termination Notice to the Rating Agencies.
(b) On and after the time the Servicer receives a Servicer
Termination Notice pursuant to this Section 6.01, or, if a Servicer Extension
Notice has not been received pursuant to Section 4.16 hereof, all authority and
power of the Servicer under this Agreement, whether with respect to the Notes
or the Contracts or otherwise, shall pass to and be vested in the successor
Servicer acceptable to the Note Insurer (unless a Note Insurer Default has
occurred and is continuing) and appointed pursuant to Section 6.02 hereof and,
without limitation, such successor Servicer is hereby 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 or accomplish
all other acts or things necessary or appropriate to effect the purposes of
such Servicer Termination Notice, whether to complete the transfer of the
Contracts and related documents or otherwise.
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The Servicer agrees to cooperate with the Indenture Trustee
and the successor Servicer in effecting the termination of the responsibilities
and rights of the Servicer hereunder, including, without limitation, the
transfer to the successor Servicer for administration by it of all cash amounts
that shall at the time be held by the Servicer for deposit, or have been
deposited by the Servicer, in the Collection Account, or thereafter received
with respect to Contracts. To assist the successor Servicer in enforcing all
rights under Insurance Policies to the extent that they relate to the
Contracts, the Servicer, at its own expense, shall transfer its electronic
records relating to such Contracts to the successor Servicer in such electronic
form as the successor Servicer may reasonably request and shall transfer the
related Contract Files and all other records, correspondence and documents
relating to the Contracts that it may possess to the successor Servicer in the
manner and at such times as the successor Servicer shall reasonably request. In
addition to any other amounts that are then payable to the Servicer under this
Agreement (which amount shall be reduced for any transition costs payable to
the Back-up Servicer in accordance with Section 4.13(c) hereof), the Servicer
shall be entitled to receive reimbursement for any unreimbursed Servicer
Advances made during the period prior to the delivery of a Servicer Termination
Notice pursuant to this Section 6.01.
SECTION 6.02 Back-up Servicer to Act; Appointment of
Successor. (a) On and after the time the Servicer receives a Servicer
Termination Notice pursuant to Section 6.01 or, if a Servicer Extension Notice
has not been received pursuant to Section 4.16 hereof, a successor Servicer
shall be appointed by the Note Insurer, or, if none hs been so appointed, the
Back-up Servicer shall without further action be the successor in all respects
to the Servicer in its capacity as Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof; provided, however, that the
Back-up Servicer shall not be liable for any acts or omissions of the
predecessor Servicer or for any breach by either the predecessor Servicer or
the Originator of any of their respective representations and warranties
contained herein or in any related document or agreement. As compensation for
acting as Servicer hereunder, the Back-up Servicer shall be entitled to the
Servicer Fees, Servicing Charges and other compensation (whether payable out of
the Collection Account or otherwise) as the Servicer would have been entitled
to hereunder if no such Servicer Termination Notice had been given.
(b) Notwithstanding the foregoing, if the Back-up Servicer is
not legally permitted to act as Servicer under any applicable law and provides
to the Note Insurer (unless a Note Insurer Default has occurred and is
continuing) and the Indenture Trustee an Opinion of Counsel to such effect, the
Indenture Trustee shall without further action be the successor in all respects
to the Servicer in its capacity as Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof; provided, however, that (i) the
Indenture Trustee shall not assume any obligations of the Servicer pursuant to
Article IV of the Indenture and Article V hereof, (ii) the Indenture Trustee
shall not be required to make any Servicer Advance if such Servicer Advance
would be prohibited by applicable law or if the Indenture Trustee in the
exercise of its sole discretion determines that such Servicer Advance would not
be reimbursed and (iii) the Indenture Trustee shall not be liable for any acts
or omissions of the Servicer or for any breach by either the Servicer, the
Transferors, the Depositor, the Collateral Agent or the Originator of any of
their respective representations and warranties
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contained herein or in any related document or agreement. As compensation for
acting as Servicer hereunder, the Indenture Trustee shall be entitled to the
Servicer Fees, Servicing Charges and other compensation (whether payable out of
the Collection Account or otherwise) as the Servicer would have been entitled
to hereunder if no such Servicer Termination Notice had been given.
(c) Notwithstanding the above, the Indenture Trustee may
appoint, or petition a court of competent jurisdiction to appoint, any
established financial institution reasonably acceptable to the Note Insurer
(unless a Note Insurer Default has occurred and is continuing) and which
satisfies the Rating Agency Condition, which has a net worth of, or is a member
of a consolidated group of entities which has a net worth of, not less than
$10,000,000 and whose regular business includes the servicing of receivables of
a similar nature to the Contracts, as the successor to the Servicer hereunder
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer hereunder. The Indenture Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary
to effectuate any such succession. The Indenture Trustee shall inform the
Rating Agencies of the identity of the successor Servicer
(d) Notwithstanding the foregoing, if the Indenture Trustee
is not legally permitted to act as Servicer under any applicable law and
provides to the Issuer, the Note Insurer (unless a Note Insurer Default has
occurred and is continuing) and the Noteholders an Opinion of Counsel to such
effect, then the Indenture Trustee and the Issuer collectively shall use their
best efforts to identify a successor Servicer, other than the Indenture
Trustee, which is acceptable to the Note Insurer (unless a Note Insurer Default
has occurred and is continuing) and satisfies the Rating Agency Condition and
which is willing to act as Servicer under the terms and conditions specified
herein and for a fee equal to or less than the Servicer Fee. In any event the
Indenture Trustee shall, pursuant to Section 6.02(b) hereof, act as successor
Servicer until a different successor Servicer is appointed.
SECTION 6.03 Notification to Noteholders. The Servicer shall
promptly notify the Indenture Trustee, the Note Insurer and the Back-up
Servicer in writing of any Event of Servicing Termination upon actual knowledge
thereof by a Servicing Officer. Upon any termination of, or appointment of a
successor to, the Servicer pursuant to this Article VI, the Indenture Trustee
shall give prompt written notice thereof to the Noteholders at their respective
addresses appearing in the Register, the Issuer, the Note Insurer, the
Depositor, the Collateral Agent and the Rating Agencies.
SECTION 6.04 Waiver of Past Defaults. The Note Insurer
(unless a Note Insurer Default has occurred and is continuing) may, on behalf
of the Noteholders, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Servicing
Termination arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly waived.
SECTION 6.05 Effects of Termination of Servicer. (a) Upon the
appointment of the successor Servicer, the Servicer shall immediately remit any
Scheduled
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Payments, Final Scheduled Payments, Residual Receipts or other payments that it
may receive pursuant to any Contract or otherwise to the successor Servicer for
the benefit of the Issuer after such date of appointment.
(b) After the delivery of a Servicer Termination Notice, the
former Servicer shall have no further obligations with respect to the
management or servicing of the Trust Property or the enforcement, custody or
collection of the Contracts, and the successor Servicer shall have all of such
obligations, except that the former Servicer will transmit or cause to be
transmitted directly to the successor Servicer for the benefit of the
Noteholders and the Note Insurer, promptly upon receipt and in the same form in
which received, any amounts held by the former Servicer (properly endorsed
where required for the successor Servicer to collect them) received as payments
upon or otherwise in connection with the Contracts. The former Servicer's
indemnification obligations pursuant to Section 5.01 hereof will survive the
termination of the Servicer hereunder but will not extend to any acts or
omissions of a successor Servicer.
(c) An Event of Servicing Termination shall not affect the
rights and duties of the parties hereunder (including, but not limited to, the
obligations and indemnities of the Servicer pursuant to Article IV of the
Indenture and Sections 5.01 hereof) other than those relating to the
management, servicing, custody or collection of the Contracts.
SECTION 6.06 Events of Back-up Servicing Termination. (a) If
any one or more of the following events (each an "Event of Back-up Servicing
Termination") shall occur and be continuing:
(i) Any failure on the part of the Back-up Servicer duly to
observe or perform in any material respect any other covenants or
agreements of the Back-up Servicer set forth in this Agreement (other
than as a result of the failure by the Servicer to provide the Back-up
Servicer with the Tape or the Monthly Statement in accordance with the
provisions of this Agreement), which failure or breach (A) materially
and adversely affects the rights of the Issuer, the Indenture Trustee,
the Note Insurer or the Noteholders and (B), if such failure is
curable, continues unremedied for a period of thirty (30) days after
the earlier to occur of (1) knowledge of such failure or breach by a
Responsible Officer and (2) the date on which the written notice of
such failure or breach, requiring the situation giving rise to such
breach or non-conformity to be remedied, shall have been given to the
Back-up Servicer by the Servicer, the Note Insurer or the Indenture
Trustee; or,
(ii) After the receipt of an effective Servicer Termination
Notice by the Indenture Trustee and the passing and vesting of the
authority, power, rights and responsibilities described in Section
6.02(a) above in the Back-up Servicer, an Event of Servicing
Termination described in Section 6.01 hereof with the Back-up Servicer
then being considered the Servicer;
(iii) The Back-up Servicer shall consent to the appointment
of a custodian, receiver, trustee or liquidator (or other similar
official) of itself, or of a substantial part of its property, or
shall admit in writing its inability to pay its debts generally as
they come due, a court of competent jurisdiction shall determine that
the Back-up Servicer is
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generally not paying its debts as they come due or the Back-up
Servicer shall make a general assignment for the benefit of creditors;
(iv) The Back-up Servicer shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in
effect) or an answer admitting the material allegation of a petition
filed against the Back-up Servicer in any such proceeding, or the
Back-up Servicer shall, by voluntary petition, answer or consent, seek
relief under the provisions of any now existing or future bankruptcy
or other similar law providing for the reorganization or winding up of
debtors, or providing for an agreement, composition, extension or
adjustment with its creditors;
(v) Any representation or warranty made by the Back-up
Servicer in this Agreement proves to have been incorrect in any
material respect when made, which has a material adverse effect on the
Noteholders or the Note Insurer and which continues to have a material
adverse effect or be incorrect in any material respect for a period of
30 days after the Back-up Servicer has knowledge of such inaccuracy or
written notice of such inaccuracy requiring it to be remedied has been
given by the Note Insurer or the Indenture Trustee;
(vi) A petition against the Back-up Servicer in a proceeding
under applicable bankruptcy laws or other insolvency laws, as now or
hereafter in effect, shall be filed and shall not be stayed, withdrawn
or dismissed within 60 days thereafter, or if, under the provisions of
any law providing for reorganization or winding-up of debtors which
may apply to the Back-up Servicer, any court of competent jurisdiction
shall assume jurisdiction, custody or control of the Back-up Servicer,
or any substantial part of its property, and such jurisdiction,
custody or control shall remain in force unrelinquished, unstayed or
unterminated for a period of 60 days;
(vii) Any assignment by the Back-up Servicer to a delegate of
its duties or rights hereunder, except as specifically permitted
hereunder, or any attempt to make such an assignment;
then, and in each and every such case, so long as such Event of Back-up
Servicing Termination shall not have been remedied within the applicable grace
period set forth above, the Indenture Trustee shall, at the direction of the
Note Insurer (or, if a Note Insurer Default has occurred and is continuing, the
Majority Holders), or may, with the consent of the Note Insurer (or, if a Note
Insurer Default has occurred and is continuing, the Majority Holders), by
notice (the "Back-up Servicer Termination Notice") then given in writing to the
Back-up Servicer, terminate all, but not less than all, of the rights and
obligations of the Back-up Servicer under this Agreement. Such notice shall
state the effective date of the termination, which shall not be prior to the
acceptance of the appointment by the successor Back-up Servicer. On and after
the time the Back-up Servicer receives a Back-up Servicer Termination Notice
pursuant to this Section 6.06, all authority and power of the Back-up Servicer
under this Agreement, whether with respect to the Notes or the Contracts or
otherwise, shall pass to and be vested in the Indenture Trustee or a successor
Back-up Servicer appointed pursuant to Section 6.02 hereof and, without
limitation, such successor Back-up Servicer is hereby authorized and empowered
to execute and deliver, on
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behalf of the Back-up Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such Back-up Servicer
Termination Notice, whether to complete the transfer of the Contracts and
related documents or otherwise.
(b) If a Back-up Servicer Termination Notice is received by
the Back-up Servicer while it is performing under Section 4.12(a) above, the
Back-up Servicer agrees to cooperate with the Issuer, the Indenture Trustee,
the Note Insurer, the Collateral Agent, the successor Servicer or the successor
Back-up Servicer in effecting the termination of the Back-up Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the successor Servicer or the successor Back-up Servicer of all
data then in the possession of the Back-up Servicer; all at the Back-up
Servicer's expense.
SECTION 6.07 Waiver of Defaults. The Indenture Trustee with
the prior written consent of the Note Insurer (unless a Note Insurer Default
has occurred and is continuing), or the Note Insurer (unless a Note Insurer
Default has occurred and is continuing) may waive any events permitting removal
of the Back-up Servicer under Section 6.06 hereof. Upon any waiver of a past
default, such default shall cease to exist, and any Event of Back-up Servicing
Termination arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived.
ARTICLE VII
THE COLLATERAL AGENT
Section 7.01 Duties of the Collateral Agent. (a) The
Collateral Agent, prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or
waived, the Collateral Agent shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
its exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) The Collateral Agent, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Collateral Agent which are specifically required
to be furnished pursuant to any provision of this Agreement, shall examine them
to determine whether they conform on their face to the requirements of this
Agreement; provided, however, that the Collateral Agent shall not be
responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by
any Person hereunder.
(c) No provision of this Agreement shall be construed to
relieve the Collateral Agent from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct; provided, however,
that:
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(i) prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default which may have occurred, the
duties and obligations of the Collateral Agent shall be determined
solely by the express provisions of this Agreement, the Collateral
Agent shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Collateral Agent and, in the absence of bad faith on the
part of the Collateral Agent, the Collateral Agent may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Collateral Agent and conforming to the requirements
of this Agreement;
(ii) the Collateral Agent shall not be personally liable for
an error of judgment made in good faith by a Responsible Officer or
other officers of the Collateral Agent, unless it shall be proved that
the Collateral Agent was negligent in ascertaining the pertinent
facts;
(iii) the Collateral Agent shall not be personally liable
with respect to any action taken, suffered or omitted to be taken by
it in good faith in accordance with the written direction of the Note
Insurer or the Indenture Trustee provided that the prior written
consent of the Note Insurer shall have been obtained in each instance;
(iv) the Collateral Agent shall not be required to expend or
risk its own funds or otherwise incur financial liability for the
performance of any of its duties hereunder or the exercise of any of
its rights or powers if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it and none of the provisions
contained in this Agreement shall in any event require the Collateral
Agent to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer or the Indenture Trustee under
this Agreement; and
(v) subject to the other provisions of this Agreement and
without limiting the generality of this Section 7.01, the Collateral
Agent shall have no duty (A) to see to any recording, filing, or
depositing of this Agreement or any agreement referred to herein or
any financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such recording
or filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any insurance, (C) to see
to the payment or discharge of any tax, assessment, or other
governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Trust, the
Trust Property, the Noteholders or the Contracts, (D) to confirm or
verify the contents of any reports or certificates of any Person
delivered to the Collateral Agent pursuant to this Agreement believed
by the Collateral Agent to be genuine and to have been signed or
presented by the proper party or parties.
Section 7.02 Certain Matters Affecting the Collateral Agent.
Except as otherwise provided in Section 7.01 hereof:
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(a) the Collateral Agent may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, Opinion of Counsel, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(b) the Collateral Agent may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of
Counsel;
(c) the Collateral Agent shall be under no obligation to
exercise any of the trusts or powers vested in it by this Agreement or
to institute, conduct or defend by litigation hereunder or in relation
hereto at the request, order or direction of the Note Insurer (or, if
a Note Insurer Default is then continuing, the Majority Holders),
pursuant to the provisions of this Agreement, unless such Noteholders
or the Note Insurer, as applicable, shall have offered to the
Indenture Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein by the
Collateral Agent or thereby; nothing contained herein shall, however,
relieve the Collateral Agent of the obligation, upon the occurrence of
an Event of Default (which has not been cured), to exercise such of
the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in its exercise as a prudent person
would exercise or use under the circumstances in the conduct of such
person's own affairs;
(d) the Collateral Agent shall not be personally liable for
any action taken, suffered or omitted by it in good faith and believed
by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(e) prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, the
Collateral Agent 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 requested in writing
to do so by the Note Insurer or Holders of Notes evidencing Percentage
Interests aggregating not less than 25%; provided, however, that if
the payment within a reasonable time to the Collateral Agent of the
costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Collateral
Agent, not reasonably assured to the Collateral Agent by the security
afforded to it by the terms of this Agreement, the Collateral Agent
may require reasonable indemnity against such expense or liability as
a condition to taking any such action. The reasonable expense of every
such examination shall be paid by the Servicer or, if paid by the
Collateral Agent, shall be repaid by the Servicer upon demand from the
Servicer's own funds;
(f) the right of the Collateral Agent to perform any
discretionary act enumerated in this Agreement shall not be construed
as a duty, and the Collateral Agent shall not be answerable for
anything other than its negligence or willful misconduct in the
performance of such act;
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(g) the Collateral Agent may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys; provided, that Collateral Agent will
remain obligated and be liable to the Indenture Trustee and the Issuer
for its duties in accordance with the provisions of this Agreement
without diminution of such obligation and liability by virtue of the
appointment of such agents, to the same extent and under the same
terms and conditions as if the Collateral Agent alone were performing
such duties.
Section 7.03 Collateral Agent Not Liable for Notes or
Contracts. The recitals contained herein shall be taken as the statements of
the Trust and the Servicer, as the case may be, and the Collateral Agent
assumes no responsibility for their correctness. The Collateral Agent makes no
representations as to the validity or sufficiency of this Agreement or of any
Contract or related document. The Collateral Agent shall not be accountable for
the use or application of any funds paid to the Servicer in respect of the
Contract or deposited in or withdrawn from the Collection Account by the
Servicer. The Collateral Agent shall not be responsible for the legality or
validity of the Agreement or the validity, or sufficiency of the Notes issued
or intended to be issued under the Indenture.
Section 7.04 Collateral Agent May Own Notes. The Collateral
Agent in its individual or any other capacity may become the owner or pledgor
of Notes with the same rights it would have if it were not Collateral Agent,
and may otherwise deal with the parties hereto.
Section 7.05 Collateral Agent's Fees and Expenses; Indemnity.
(a) The Collateral Agent acknowledges that in consideration of the performance
of its duties hereunder it is entitled to receive its fees and expenses from
the Servicer, as separately agreed between the Servicer and the Collateral
Agent. The Trust, the Depositor, the Indenture Trustee and the Note Insurer
shall not pay any of the Collateral Agent fees and expenses in connection with
this transaction. The Collateral Agent shall not be entitled to compensation
for any expense, disbursement or advance as may arise from its negligence or
bad faith, and the Collateral Agent shall have no lien on the Trust Property
for the payment of its fees and expenses.
(b) The Collateral Agent and any director, officer, employee
or agent of the Collateral Agent shall be indemnified by the Servicer and held
harmless against any loss, liability, claim, damage or expense arising out of,
or imposed upon the Collateral Agent as a direct result of the Servicer's acts
or omissions in violation of this Agreement, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence of
the Collateral Agent or by reason of the Collateral Agent 's reckless disregard
of obligations and duties hereunder. The obligations of the Servicer under this
Section 7.05 arising prior to any resignation or termination of the Servicer
hereunder shall survive termination of the Servicer and payment of the Notes.
Section 7.06 Eligibility Requirements for Collateral Agent.
The Collateral Agent hereunder shall at all times be a banking entity (a)
organized and doing business under the laws of any state or the United States
of America subject to supervision or examination by federal or state authority,
(b) authorized under such laws to exercise corporate trust powers, including
taking title to the Trust Property on behalf of the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer, (c) having a combined capital
and surplus of at least
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$50,000,000, (d) whose long-term deposits, if any, shall be rated at least BBB-
by S&P and Baa3 by Moody's (except as provided herein) or such lower long-term
deposit rating as may be approved in writing by the Note Insurer, and (e)
acceptable to the Note Insurer as evidenced in writing. If such banking entity
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of determining an entity's combined capital and surplus for clause (c)
of this Section 7.06, the amount set forth in its most recent report of
condition so published shall be deemed to be its combined capital and surplus.
In case at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of this Section 7.06, the Collateral Agent shall
resign immediately in the manner and with the effect specified in Section 7.07.
Section 7.07 Resignation and Removal of the Collateral Agent.
(a) The Collateral Agent may at any time resign and be discharged from the
trusts hereby created by giving thirty (30) days' written notice thereof to the
Indenture Trustee, the Servicer, and the Note Insurer.
(d) If at any time the Collateral Agent shall cease to be
eligible in accordance with the provisions of Section 7.06 and shall fail to
resign after written request therefor by the Indenture Trustee, the Servicer or
the Note Insurer, or if at any time the Collateral Agent shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Collateral Agent or of its property shall be appointed, or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Indenture Trustee or the Servicer, with the consent of the Note Insurer, or
the Note Insurer may remove the Collateral Agent.
(e) If the Collateral Agent fails to perform in accordance
with the terms of this Agreement, the Indenture Trustee, the Servicer or the
Majority Noteholders, with the consent of the Note Insurer, or the Note Insurer
may remove the Collateral Agent.
(f) Upon removal or receipt of notice of resignation of the
Collateral Agent, the Indenture Trustee shall either (i) take possession of the
Contract Files and assume the duties of the Collateral Agent hereunder or (ii)
with the prior written consent of the Note Insurer, appoint a successor
Collateral Agent pursuant to Section 7.08. If the Indenture Trustee shall
assume the duties of the Collateral Agent hereunder, it shall notify the Trust,
the Depositor, the Servicer, the Rating Agencies and Note Insurer in writing.
Section 7.08 Successor Collateral Agent. Upon the resignation
or removal of the Collateral Agent, the Indenture Trustee may or shall, at the
written direction of the Note Insurer, appoint a successor Collateral Agent,
which successor shall, in each instance, have been approved in writing by the
Note Insurer, the Note Insurer; provided, however, that the successor
Collateral Agent so appointed shall in no event be the Originator, the
Depositor, either Transferor or the Servicer or any Person known to a
Responsible Officer of the Indenture Trustee to be an Affiliate of the
Originator, the Depositor, either Transferor or the Servicer and shall be
approved by the Note Insurer. The Indenture Trustee or such custodian, as the
case may be, shall assume the duties of the Collateral Agent hereunder. Any
successor Collateral Agent appointed as provided in this Section 7.08 shall
execute, acknowledge and deliver to the Trust, the Depositor, the Note Insurer,
the Servicer, the Indenture Trustee and to its predecessor Collateral
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Agent an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Collateral Agent shall become
effective and such successor Collateral Agent, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as Collateral Agent herein. The predecessor Collateral Agent shall
deliver to the successor Collateral Agent all Contract Files and related
documents and statements held by it hereunder, and the Servicer and the
predecessor Collateral Agent shall execute and deliver such instruments and do
such other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor Collateral Agent all such rights,
powers, duties and obligations. The cost of any such transfer to the successor
Collateral Agent shall be for the account of the Collateral Agent in the event
of the resignation of the Collateral Agent, and shall be for the account of the
Servicer in the event of the removal of the Collateral Agent. No successor
Collateral Agent shall accept appointment as provided in this Section 7.08
unless at the time of such acceptance such successor Collateral Agent shall be
eligible under the provisions of Section 7.06. Upon acceptance of appointment
by a successor Collateral Agent as provided in this Section 7.08, the Servicer
shall mail notice of the succession of such Collateral Agent hereunder to all
Noteholders at their addresses as shown in the Note Register and to the Rating
Agencies. If the Servicer fails to mail such notice within ten (10) days after
acceptance of appointment by the successor Collateral Agent, the successor
Collateral Agent shall cause such notice to be mailed at the expense of the
Servicer.
Section 7.09 Merger or Consolidation of Collateral Agent. Any
Person into which the Collateral Agent may be merged or converted or with which
it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation or national banking association
succeeding to the business of the Collateral Agent, shall be the successor of
the Collateral Agent hereunder; provided, that such corporation or national
banking association (i) shall have been approved in writing by the Servicer and
(ii) be eligible under the provisions of Section 7.06, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.01 Amendment. (a) This Agreement may be amended
from time to time by the Issuer, the Servicer, the Originator, the Transferors,
the Collateral Agent, the Back-up Servicer and the Indenture Trustee, without
the consent of any of the Noteholders but with the prior written consent of the
Controlling Party, to cure any ambiguity herein; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel acceptable to the
Indenture Trustee, adversely affect in any respect the interests of any
Noteholder.
(b) This Agreement may also be amended from time to time by
the Servicer, the Back-up Servicer, the Issuer, the Originator, the Collateral
Agent, the Transferors and the Indenture Trustee with the prior written consent
of the Controlling Party for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Noteholders; provided, however,
that
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no such amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Contracts or
distributions that are required to be made on any Note without the consent of
the Holder of such Note or (ii) reduce the aforesaid percentage required to
consent to any such amendment, without the consent of the Holders of all Notes
then outstanding.
(c) Prior to the effectiveness of any amendment under Section
8.01(a) or (b) hereof, the Rating Agencies shall have confirmed in writing
their respective ratings of the Notes.
(d) Promptly after the execution of any such amendment, the
Servicer shall furnish a written copy of the text of such amendment (and any
consent required with respect thereto) to each Noteholder, the Note Insurer,
and the Rating Agencies.
(e) Approval of the particular form of any proposed amendment
or consent shall not be necessary for the consent of the Noteholders under
Section 8.01(b) hereof, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by the Noteholders shall
be subject to such reasonable requirements as the Indenture Trustee may
prescribe.
(f) The Indenture Trustee, the Collateral Agent, the Rating
Agencies and the Note Insurer (unless a Note Insurer Default has occurred and
is continuing) shall be entitled to receive an officer's certificate and an
Opinion of Counsel to the effect that all conditions precedent to the amendment
of this Agreement have been satisfied. The Indenture Trustee may, but shall not
be obligated to, execute and deliver any such amendment which affects that
Indenture Trustee's rights, powers, immunities or indemnifications hereunder.
SECTION 8.02 Counterparts. For the purpose of facilitating
the execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 8.03 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS
OF ANY STATE.
SECTION 8.04 Notices. All demands, notices, instructions,
directions and communications (other than periodic communications of a routine
nature made in connection with the dissemination of information regarding the
Trust Property, the Servicer and the Trust required to be delivered hereunder,
which shall be delivered or mailed by first class mail or facsimile
transmission) hereunder shall be in writing, personally delivered or mailed by
overnight courier, and shall be deemed to have been duly given upon receipt (a)
in the case of the Servicer, the Originator or the Transferors, c/o American
Business Leasing, Inc., at Balapointe Office Centre, 111 Presidential
Boulevard, Suite 127, Bala Cynwyd, Pennsylvania 19004, Attention: General
Counsel, telephone (610) 668-2440, telecopy (610) 668-1468, (b) in the case
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of the Issuer, c/o First Union Trust Company, National Association at One
Rodney Square, 920 King Street, Suite 102, Wilmington, Delaware 19801,
Attention: Corporate Trust Administration, telephone (302) 888-7539, telecopy
(302) 888-7544, (c) in the case of the Indenture Trustee, c/o The Chase
Manhattan Bank, 450 West 33rd Street, New York, New York 10001, Attention:
Capital Markets Fiduciary Services, telephone (212) 946-3246, telecopy (212)
946-8191, (d) in the case of S&P, at 55 Water Street, New York, NY 10041,
Attention: Asset Backed Surveillance, telephone (212) 208-1278, telecopy (212)
208-8208, (e) in the case of Moody's, at 99 Church Street, New York, NY
10007-2701, telephone (212) 553-1402, telecopy (212) 533-3856, (f) in the case
of the Note Insurer, at 350 Park Avenue, New York, New York 10022 Attention:
Surveillance Department (in each case in which notice or other communication to
the Note Insurer refers to an Event of Default, a claim on the Note Insurance
Policy or with respect to which failure on the part of the Note Insurer to
respond shall be deemed to constitute consent or acceptance, then a copy of
such notice or other communication should also be sent to the attention of each
of the General Counsel and the Head -- Financial Guaranty Group and shall be
marked to indicate "URGENT MATERIAL ENCLOSED"), (g) in the case of DCR, at 55
East Monroe Street, Suite 3800 Chicago, Illinois 60603, Attention: Asset Backed
Monitoring Department (Equipment Leasing), telecopy (312) 368-2069, (h) in the
case of the Back-up Servicer, at 450 West 33rd Street, New York, New York
10001, Attention: Global Trust Services, telephone (212) 946-3216, telecopy
(212) 946-8191 and (i) in the case of the Collateral Agent, at 800 West Greens
Road, Suite 200, Houston, Texas 77067, Attention: Document Custody Manager,
telephone (281) 775-5400, telecopy (281) 775-5449. Any notice required or
permitted to be mailed to a Noteholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the Note Register.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given on the fifth Business Day
following mailing, whether or not the Noteholder receives such notice.
SECTION 8.05 Severability of Provisions. If any one or more
of the covenants, agreements, provisions, or terms of this Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or of
the Notes or the rights of the Holders thereof.
SECTION 8.06 Third Party Beneficiary. The parties hereto
acknowledge and agree that the Note Insurer and the Owner Trustee are express
third party beneficiaries of this Agreement.
SECTION 8.07 Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Section 5.02 hereof, this
Agreement may not be assigned by the Servicer except with prior written consent
of the Controlling Party. Notice of any such assignment received by a
Responsible Officer of the Indenture Trustee shall be given to the Rating
Agencies by the Indenture Trustee.
SECTION 8.08 Binding Effect. This Agreement shall inure to
the benefit of, and shall be binding upon the Servicer, the Issuer, the
Indenture Trustee, the Owner Trustee, the Back-up Servicer and the Noteholders
and their respective successors and permitted assigns, subject, however, to the
limitations contained in this Agreement. This Agreement shall not inure
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to the benefit of any Person other than the Issuer, the Servicer, the Indenture
Trustee, the Collateral Agent, the Back-up Servicer, the Owner Trustee, the
Note Insurer and the Noteholders.
SECTION 8.09 Survival of Agreement. All covenants,
agreements, representations and warranties made herein and in the other
documents delivered pursuant hereto shall survive the pledge of the Pledged
Property and the issuance of the Notes and shall continue in full force and
effect until terminated pursuant to Section 9.01 of the Indenture.
SECTION 8.10 Captions. The captions or headings in this
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Agreement.
SECTION 8.11 Exhibits. The exhibits to this Agreement are
hereby incorporated herein and made a part hereof and are an integral part of
this Agreement.
SECTION 8.12 Calculations. Except as otherwise provided in
this Agreement, all interest rate calculations under this Agreement, including
those with respect to the Contracts, will be made on the basis of a 360-day
year and twelve 30-day months (i.e., each Interest Accrual Period shall be
deemed to be equal to 30 day periods) and will be carried out to at least seven
decimal places.
SECTION 8.13 No Proceedings. The Servicer, the Originator,
the Back-up Servicer, the Collateral Agent, the Owner Trustee, the Transferors,
and the Indenture Trustee each hereby agrees, and each Noteholder, by its
acceptance of its Note, shall be deemed to agree, that it will not directly or
indirectly institute, or cause to be instituted, against any of the
Transferors, the Managers or the Trust any bankruptcy or insolvency proceeding
so long as there shall not have elapsed one year plus one day since the
maturity date of the latest maturing securities of the Issuer.
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[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Servicer, the Originator, the
Transferors, the Back-Up Servicer, the Collateral Agent, the Issuer and the
Indenture Trustee have caused this Agreement to be duly executed by their
respective officers, all as of the day and year first above written.
ABFS EQUIPMENT CONTRACT TRUST 1999-A, as
Issuer
By: FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION not in its individual
capacity but solely as Owner
Trustee under the Trust Agreement
By:
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Indenture Trustee and as Back-up
Servicer
By:
------------------------------------
Name:
Title:
AMERICAN BUSINESS LEASING, INC., as
Servicer and as
Originator
By:
------------------------------------
Name: Anthony J. Santilli, Jr
Title: Chairman
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Collateral Agent
By:
------------------------------------
Name:
Title:
[Signature Page for Servicing Agreement]
<PAGE>
ABFS FINANCE LLC 1999-A, as Transferor
By: ABFS SPECIAL PURPOSE MANAGEMENT,
INC., its Managing Member
By:
------------------------------------
Name: Jeffrey Ruben
Title: Senior Vice President
ABFS RESIDUAL LLC 1999-A, as Transferor
By: SPECIAL PURPOSE MANAGEMENT, INC.,
its Managing Member
By:
------------------------------------
Name: Jeffrey Ruben
Title: Senior Vice President
[Signature Page for Servicing Agreement]
<PAGE>
EXHIBIT A
FORM OF CONTRACT
<PAGE>
EXHIBIT B
FORM OF MONTHLY STATEMENT
<PAGE>
EXHIBIT C
FORM OF SOURCE AGREEMENT
<PAGE>
EXHIBIT D
COLLATERAL AGENT'S ACKNOWLEDGEMENT OF RECEIPT
June __, 1999
Prudential Securities Secured American Business Leasing, Inc.
Financing Corporation BalaPointe Office Centre
One New York Plaza 111 Presidential Boulevard, Suite 127
New York, New York 10292 Bala Cynwyd, Pennsylvania 19004
The Chase Manhattan Bank, Financial Security Assurance Inc.
as Indenture Trustee 350 Park Avenue
450 West 33rd Street New York, New York 10022
New York, New York 10001
Ladies and Gentlemen:
Chase Bank of Texas, N.A., in its capacity as collateral
agent (the "Collateral Agent") on behalf of The Chase Manhattan Bank, as
indenture trustee (the "Indenture Trustee"), under that certain Servicing
Agreement, dated as of June 1, 1999 (the "Servicing Agreement"), among ABFS
Equipment Contract Trust 1999-A, as issuer (the "Issuer"), American Business
Leasing, Inc., as Servicer (the "Servicer") and originator, ABFS Residual LLC
1999-A, as a transferor, ABFS Finance LLC 1999-A, as a transferor, the
Collateral Agent, and The Chase Manhattan Bank, as Indenture Trustee and
back-up servicer, hereby acknowledges receipt of the Collateral Agent's
Contract Files with respect to each Contract on the List of Contracts
The List of Contracts is attached to this Receipt.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in Annex A to the Indenture, dated as of
June 1, 1999, by and between the Issuer, the Servicer and the Indenture
Trustee.
CHASE BANK OF TEXAS, N.A.,
as Collateral Agent
By:
-----------------------------
Name:
Title:
D-1
<PAGE>
EXHIBIT E
INDENTURE TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
June ___, 1999
Prudential Securities Secured American Business Leasing, Inc.
Financing Corporation BalaPointe Office Centre
One New York Plaza 111 Presidential Boulevard, Suite 127
New York, New York 10292 Bala Cynwyd, Pennsylvania 19004
Chase Bank of Texas, N.A. Financial Security Assurance Inc.
as Collateral Agent 350 Park Avenue
800 West Greens Road New York, New York 10022
Houston, Texas 77067
Ladies and Gentlemen:
The Chase Manhattan Bank, it its capacity as indenture
trustee (the "Indenture Trustee") under that certain Indenture, dated as of
June 1, 1999 (the "Indenture"), among ABFS Equipment Contract Trust 1999-A, as
issuer (the "Issuer"), American Business Leasing, Inc., as servicer (the
"Servicer"), and the Indenture Trustee, hereby acknowledges receipt of (x) the
Note Insurance Policy and (y) the Pledged Notes.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in Annex A to the Indenture.
THE CHASE MANHATTAN BANK
as Indenture Trustee
By:
----------------------------
Name:
Title:
E-1
<PAGE>
EXHIBIT F
FOR OF REQUEST FOR RELEASE OF DOCUMENTS
________________,
Chase Bank of Texas, N.A.,
as Collateral Agent
801 West Greens Road, Suite 200
Houston, Texas 77067
The Chase Manhattan Bank,
as Indenture Trustee
450 W. 33rd Street
New York, NY 10001
Re: Servicing Agreement, dated as of June 1, 1999 among ABFS
Equipment Contract Trust 1999-A, American Business
Leasing, Inc., as Servicer, ABFS Residual LLC 1999-A and
ABFS Finance LLC 1999-A, as Transferors, The Chase
Manhattan Bank, as Indenture Trustee, and Chase Bank of
Texas, N.A., as Collateral Agent
In connection with the administration of the pool of
Contracts held by Chase Bank of Texas, N.A., as Collateral Agent, on behalf of
The Chase Manhattan Bank, as Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer, we request the release, and acknowledge
receipt, of the (Collateral Agent's Contract File/[specify document]) for the
Contract described below, for the reason indicated.
Obligor's Name, Address & Zip Code:
Contract Number:
Reason for Requesting Documents (check one)
____ 1. Contract Paid in Full
(Servicer hereby certifies that all amounts received in connection
therewith have been credited to the Collection Account.)
____ 2. Contract Liquidated
(Servicer hereby certifies that all proceeds of foreclosure,
insurance or other liquidation have been finally received and
credited to the Collection Account.)
F-1
<PAGE>
____ 3. Contract in Foreclosure.
____ 4. Contract Reacquired.
____ 5. Contract Reacquired or Substituted (Servicer hereby certifies that the
Reacquisition Amount or Substitution Adjustment has been credited
to the Collection Account)
____ 6. Other (explain)____________________________________________________
If box 1 or 2 above is checked, and if all or part of the
Collateral Agent's Contract was previously released to us, please release to us
our previous receipt on file with you, as well as any additional documents in
your possession relating to the above specified Contract.
If box 3, 4, 5 or 6 above is checked, upon our return of all
of the above documents to the Collateral Agent, please acknowledge your receipt
by signing in the space indicated below, and returning this form.
AMERICAN BUSINESS LEASING, INC.,
as Servicer
By:
---------------------------------
Name:
Title:
Documents returned to Collateral Agent:
CHASE BANK OF TEXAS, N.A.,
as Collateral Agent
By:
------------------------------
Name:
Title:
Date:
F-2
<PAGE>
Exhibit 8.1
June 28, 1999
To the Parties Listed on
the Attached Schedule I:
Re: ABFS Equipment Contract Trust 1999-A,
Equipment Contract-Backed Notes, Series 1999-A
----------------------------------------------
Ladies and Gentlemen:
We have acted as special tax counsel in connection with the
issuance and delivery of certain equipment contract backed notes denominated as
the ABFS Equipment Contract Trust 1999-A, Equipment Contract-Backed Notes, Class
A-1, Class A-2, Class A-3, Class A-4 (collectively, the "Class A Notes") and
Class B (the "Class B Notes" and, together with the Class A Notes, the "Notes").
The Notes will be issued pursuant to an Indenture, dated as of June 1, 1999 (the
"Indenture"), among the ABFS Equipment Contract Trust 1999-A, as issuer (the
"Trust" or the "Issuer"), American Business Leasing, Inc., as servicer (the
"Servicer"), and The Chase Manhattan Bank, as indenture trustee (the "Indenture
Trustee") and as back-up servicer (the "Back-up Servicer"). Capitalized terms
used herein but not defined herein shall have the meanings ascribed thereto in
Annex A to the Indenture.
Certain "finance" leases, "true" or "operating" leases, if
any, and commercial loans (collectively, the "Contracts") and certain interests
in the underlying equipment or other property securing such contracts
(collectively, the "Equipment" and, together with the Contracts, the
"Receivables") have been originated by American Business Leasing, Inc. (the
"Originator"), and sold by the Originator to ABFS Finance LLC 1999-A and ABFS
Residual LLC 1999-A (together, the "Transferors"). The Receivables have been
pledged to the Indenture Trustee, on behalf of the Issuer, as security for two
notes issued to the Issuer (the "Pledged Notes"), one of which provides amounts
payable on the Class A Notes and its respective portion of the expenses of the
Issuer (the "Class A Pledged Note"), and the other of which provides amounts
payable on the Class B Notes and its respective portion of the expenses of the
Issuer (the "Class B Pledged Note").
As special tax counsel, we have examined such documents as
deemed appropriate for the purposes of rendering the opinions set forth below,
including the following: (a) an executed copy of the Indenture and the exhibits
attached thereto and (b)
<PAGE>
To the Parties Listed on
the Attached Schedule I;
June 28, 1999;
Page 2
certain representations and warranties made to us by the Originator and
Prudential Securities Incorporated (the "Underwriter").
In our examination we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such latter
documents.
We have examined the question of whether the Notes will be
treated as indebtedness for federal income tax purposes. Our analysis is based
on the provisions of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder as in effect on the date hereof and
on existing judicial and administrative interpretations thereof. These
authorities are subject to change and to differing interpretations, which could
apply retroactively. The opinion of special tax counsel is not binding on the
courts or the Internal Revenue Service (the "IRS").
In general, whether a transaction constitutes the issuance of
indebtedness for federal income tax purposes is a question of fact, the
resolution of which is based primarily upon the economic substance of the
instruments and the transaction pursuant to which they are issued rather than
the form of the transaction or the manner in which the instruments are labeled.
The IRS and the courts have set forth various factors to be taken into account
in determining whether or not a transaction constitutes the issuance of
indebtedness for federal income tax purposes, which we have reviewed as they
apply to this transaction.
Based on the foregoing, and such legal and factual
investigations as we have deemed appropriate, while no transaction closely
comparable to that contemplated has been the subject of any Treasury regulation,
revenue ruling or judicial decision, and therefore the matter is subject to
interpretation, we are of the opinion that for federal income tax purposes:
(1) The Class A Notes will properly be treated as (a)
indebtedness either of the Transferors or of the Trust (if the Trust is
treated as a partnership for federal income tax purposes) or (b) an
undivided ownership interest in the Class A Pledged Note.
(2) The Class B Notes will be treated as (a) indebtedness
either of the Transferors or of the Trust (if the Trust is treated as a
partnership for federal income tax purposes) or (b) an undivided
ownership interest in the Class B Pledged Note.
<PAGE>
To the Parties Listed on
the Attached Schedule I;
June 28, 1999;
Page 3
(3) None of the Transferors or the Trust will constitute an
association (or a publicly traded partnership) taxable as a
corporation.
(4) The Class A Pledged Note and the Class B Pledged Note will
each be treated as indebtedness.
We express no opinion on any matter not discussed in this
letter. This opinion is rendered as of the Closing Date, for the sole benefit of
the addressees hereof and it may not be relied on by any other party or quoted
without our express consent in writing.
Very truly yours,
<PAGE>
SCHEDULE I
American Business Leasing, Inc.
Balapointe Office Centre
111 Presidential Boulevard
Bala Cynwyd, Pennsylvania 19004
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Prudential Securities Secured Financing
Corporation
One New York Plaza
New York, New York 10092
ABFS Equipment Contract Trust 1999-A
c/o First Union Trust Company,
National Association, as Owner Trustee
One Rodney Square
920 King Street, Suite 102
Wilmington, Delaware 19801
Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
The Chase Manhattan Bank,
as Indenture Trustee
450 West 33rd Street
New York, New York 10001
First Union Trust Company,
National Association,
as Owner Trustee
One Rodney Square
920 King Street, Suite 102
Wilmington, Delaware 19801
Standard & Poor's Ratings Services
55 Water Street
New York, New York 10041
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Duff & Phelps Credit Rating Co.
55 East Monroe Street, Suite 3800
Chicago, Illinois 60603
Chase Bank of Texas, N.A.
as Collateral Agent
800 West Greens Road
Houston, Texas 77067
<PAGE>
Exhibit 10.1
FINANCIAL FINANCIAL GUARANTY
SECURITY INSURANCE POLICY
ASSURANCE(R)
Obligor: ABFS Equipment Contract Trust 1998-A Policy No.: 50828-N
Obligations: $72,160,000 ABFS Equipment Contrast Date of Issuance: 6/28/99
Trust 1999-A 5.3925% Equipment Contracts-Backed
Notes, Class A-1; 6.025% Equipment Contract-Backed
Notes, Class A-2; 6.650% Equipment Contract-Backed
Notes, Class A-3; and 6.650% Equipment
Contract-Backed Notes, Class A-4.
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to
each Holder, subject only to the terms of this Policy (which includes each
endorsement hereto), the full and complete payment by the Obligor of Scheduled
Payments of principal of, and interest on, the Obligations.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees:
(a) payment of the amount of any distribution of principal of, or
interest on, the Obligations made during the Term of this Policy to
such Holder that is subsequently avoided in whole or in part as a
preference payment under applicable law (such payment to be made by
Financial Security in accordance with Endorsement No. 1 hereto).
(b) payment of any amount required to be paid under this Policy
by Financial Security following Financial Security's receipt of notice
as described in Endorsement No. 1 hereto.
Financial Security shall be subrogated to the rights of each
Holder to receive payments under the Obligations to the extent of any payment by
Financial Security hereunder.
Except to the extent expressly modified by an endorsement
hereto, the following terms shall have the meanings specified for all purposes
of this Policy. "Holder" means the registered owner of any Obligation as
indicated on the registration books maintained by or on behalf of the Obligor
for such purpose or, if the Obligation is in bearer form, the holder of the
Obligation. Scheduled Payments" means payments which are scheduled to be made
during the Term of this Policy in accordance with the original terms of the
Obligations when issued and without regard to any amendment or modification of
such Obligations thereafter; payments which become due on an accelerated basis
as a result of (a) a default by the Obligor, (b) an election by the Obligor to
pay principal on an accelerated basis or (c) any other cause, shall not
constitute "Scheduled Payments" unless Financial Security shall elect, in its
sole discretion, to
<PAGE>
pay such principal due upon such acceleration together with any accrued interest
to the date of acceleration. "Term of this Policy" shall have the meaning set
forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial
Security, and shall not be modified, altered or affected by any other agreement
or instrument, including any modification or amendment thereto, or by the
merger, consolidation or dissolution of the Obligor. Except to the extent
expressly modified by an endorsement hereto, the premiums paid in respect of
this Policy are nonrefundable for any reason whatsoever, including payment, or
provision being made for payment, of the Obligations prior to maturity. This
Policy may not be canceled or revoked during the Term of this Policy. THIS
POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED
IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused
this Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By:
---------------------------------
AUTHORIZED OFFICER
A subsidiary of Financial Security Assurance
Holdings Ltd.
350 Park Avenue, New York, N.Y. 10022-6022 (212) 826-0100
<PAGE>
ENDORSEMENT NO. 1 TO
FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
OBLIGOR: ABFS Equipment Contract Trust 1999-A
POLICY NO.: 50828-N
OBLIGATIONS: ABFS Equipment Contract Trust 1999-A
$15,000,000 5.3925% Equipment
Contract-Backed Notes, Class A-1;
$13,000,000 6.025% Equipment Contract-Backed
Notes, Class A-2; $34,160,000 6.650%
Equipment Contract-Backed Notes, Class A-3;
and $10,000,000 6.650% Equipment
Contract-Backed Notes, Class A-4.
DATE OF ISSUANCE: June 28, 1999
1. Definitions. For all purposes of this Policy, the terms specified
below shall have the meanings or constructions provided below. Capitalized terms
used herein and not otherwise defined herein shall have the meanings provided in
the Indenture unless the context shall otherwise require.
"Business Day" means any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in New York, New York or the city in
which the Corporate Trust Office is located are authorized or obligated by law,
executive order or governmental decree to be closed.
"Holder" shall not include the Obligor or any affiliates or successors
thereof in the event the Obligor, or any such affiliate or successor, is a
registered or beneficial owner of the Obligation.
"Indenture" means the Indenture, with respect to the Obligations, dated
as of June 1, 1999 by and among ABFS Equipment Contract Trust 1999-A, as issuer,
American Business Leasing, Inc. as Servicer and The Chase Manhattan Bank, as
indenture trustee and backup servicer, as amended from time to time with the
consent of Financial Security.
"Policy" means this Financial Guaranty Insurance Policy and includes
each endorsement thereto.
"Receipt" and "Received" mean actual delivery to Financial Security and
to the Fiscal Agent (as defined below), if any, at or prior to 12:00 noon, New
York City time, on a Business Day; delivery either on a day that is not a
Business Day, or after 12:00 noon, New York City time, shall be deemed to be
Received on the next succeeding Business Day. If any notice or certificate given
hereunder by the Trustee is not in proper form or is not properly completed,
executed or delivered, it shall be deemed not to have been Received, and
Financial Security or its Fiscal Agent shall promptly so advise the Trustee and
the Trustee may submit an amended notice.
<PAGE>
"Scheduled Payments" means for each Payment Date the amount due to
Holders in respect of the Class A Insured Distribution Amount on such Payment
Date in accordance with the original terms of the Obligations without regard to
any amendment or modification of the Obligations or the Indenture except
amendments or modifications to which Financial Security has given its prior
written consent. Scheduled Payments shall not include amounts which become due
on an accelerated basis, unless Financial Security elects, in its sole
discretion, to pay in whole or in part such principal due upon acceleration,
together with any accrued interest to the date of acceleration. In the event
Financial Security does not so elect, this Policy will continue to guarantee
payment of the Class A Insured Distribution Amount on each Payment Date.
Scheduled Payments shall not include any portion of the Class A Note Interest
due to Holders because a notice and certificate in proper form as required by
paragraph 2 hereof was not timely Received by Financial Security. Scheduled
Payments shall not include any amounts due in respect of the Obligations
attributable to any increase in interest rate, penalty or other sum payable by
the Obligor by reason of any default or event of default in respect of the
Obligations, or by reason of any deterioration of the creditworthiness of the
Obligor, nor shall Scheduled Payments include, nor shall coverage be provided
under this Policy in respect of, any taxes, withholding or other charge imposed
with respect to any Holder by any governmental authority.
"Term of This Policy" means the period from and including the Date of
Issuance to and including the date on which (i) all Scheduled Payments have been
paid or an amount sufficient to pay and discharge the Obligations in full has
been irrevocably deposited with the Trustee, (ii) any period during which any
payment on the Obligations could have been avoided in whole or in part as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law has expired, and (iii) if any proceedings requisite to avoidance as
a preference payment have been commenced prior to the occurrence of (i) and
(ii), a final and non-appealable order in resolution of each such proceeding has
been entered.
"Trustee" means The Chase Manhattan Bank, in its capacity as Indenture
Trustee under the Indenture and any successor in such capacity.
1. Notices and Conditions to Payment in Respect of Scheduled
Payments. Following Receipt by Financial Security of a notice and certificate
from the Trustee in the form attached as Exhibit A to this Endorsement,
Financial Security will pay any amount payable hereunder in respect of Scheduled
Payments out of the funds of Financial Security on the later to occur of (a)
12:00 noon, New York City time, on the third Business Day following such
Receipt; and (b) 12:00 noon, New York City time, on the Payment Date to which
such claim relates. Payments due hereunder in respect of Scheduled Payments will
be disbursed by wire transfer of immediately available funds.
Financial Security shall be entitled to pay any amount hereunder in
respect of Scheduled Payments on the Obligations, including any amount due on
the Obligations on an accelerated basis, whether or not any notice and
certificate shall have been Received by Financial Security as provided above;
provided, however that by acceptance of this Policy the Trustee agrees to
provide upon request to Financial Security a notice and certificate in respect
of any such payment made by Financial Security. Financial Security shall be
entitled to pay hereunder any amount due on the Obligations on an accelerated
basis at any time or from time to time, in whole or in part, prior to the
scheduled date of payment thereof; Scheduled Payments insured hereunder
<PAGE>
shall not include interest, in respect of principal paid hereunder on an
accelerated basis, accruing from after the date of such payment of principal.
Financial Security's obligations hereunder in respect of Scheduled Payments
shall be discharged to the extent such amounts are paid by the Issuer in
accordance with the Indenture or disbursed by Financial Security as provided
herein whether or not such funds are properly applied by the Trustee except as
otherwise provided in paragraph 3 of this Endorsement.
1. Notices and Conditions to Payment in Respect of Scheduled
Payments Avoided as Preference Payments. If any Scheduled Payment is avoided as
a preference payment under applicable bankruptcy, insolvency, receivership or
similar law, Financial Security will pay such amount out of the funds of
Financial Security on the later of (a) the date when due to be paid pursuant to
the Order referred to below or (b) the first to occur of (i) the fourth Business
Day following Receipt by Financial Security from the Trustee of (A) a certified
copy of the order of the court or other governmental body which exercised
jurisdiction to the effect that the relevant Holder is required to return
principal or interest paid on the Obligations during the Term of this Policy
because such distributions were avoidable as preference payments under
applicable bankruptcy law (the "Order"), (B) a certificate of the Holder that
the Order has been entered and is not subject to any stay and (C) an assignment
duly executed and delivered by the Holder, in such form as is reasonably
required by Financial Security and provided to the Holder by Financial Security,
irrevocably assigning to Financial Security all rights and claims of the Holder
relating to or arising under the Obligations against the estate of the Obligor
or otherwise with respect to such preference payment or (ii) the date of Receipt
by Financial Security from the Trustee of the items referred to in clauses (A),
(B) and (C) above if, at least four Business Days prior to such date of Receipt,
Financial Security shall have Received written notice from the Trustee that such
items were to be delivered on such date and such date was specified in such
notice. Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order and not to the
Trustee or any Holder directly (unless a Holder has previously paid such amount
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order, in which case such payment shall be disbursed to the Trustee
for distribution to such Holder upon proof of such payment reasonably
satisfactory to Financial Security). In connection with the foregoing, Financial
Security shall have the rights provided pursuant to Section 3.03 of the
Indenture.
1. Governing Law. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
1. Fiscal Agent. At any time during the Term of this Policy,
Financial Security may appoint a fiscal agent (the "Fiscal Agent") for purposes
of this Policy by written notice to the Trustee at the notice address specified
in the Indenture specifying the name and notice address of the Fiscal Agent.
From and after the date of receipt of such notice by the Trustee, (i) copies of
all notices and documents required to be delivered to Financial Security
pursuant to this Policy shall be simultaneously delivered to the Fiscal Agent
and to Financial Security and shall not be deemed Received until Received by
both and (ii) all payments required to be made by Financial Security under this
Policy may be made directly by Financial Security or by the Fiscal Agent on
behalf of Financial Security. The Fiscal Agent is the agent of Financial
Security only and the Fiscal Agent shall in no event be liable to any Holder for
any acts of
<PAGE>
Financial Security or any failure of Financial Security to deposit, or cause to
be deposited, sufficient funds to make payments due under this Policy.
2. Waiver of Defenses. To the fullest extent permitted by applicable
law, Financial Security agrees not to assert, and hereby waives, for the benefit
of each Holder, all rights (whether by counterclaim, setoff or otherwise) and
defenses (including, without limitation, the defense of fraud), whether acquired
by subrogation, assignment or otherwise, to the extent that such rights and
defenses may be available to Financial Security to avoid payment of its
obligations under this Policy in accordance with the express provisions of this
Policy.
1. Notices. All notices to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security as
follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President
- Surveillance Department
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Trustee.
1. Priorities. In the event any term or provision of the face of
this Policy is inconsistent with the provisions of this Endorsement, the
provisions of this Endorsement shall take precedence and shall be binding.
1. Exclusions From Insurance Guaranty Funds. This Policy is not
covered by the Property/Casualty Insurance Security Fund specified in Article 76
of the New York Insurance Law. This Policy is not covered by the Florida
Insurance Guaranty Association created under Part II of Chapter 631 of the
Florida Insurance Code. In the event Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage by
the California Insurance Guaranty Association, established pursuant to Article
14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.
1. Surrender of Policy. The Trustee shall surrender this Policy to
Financial Security for cancellation upon expiration of the Term of this Policy.
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By:
------------------------------------
Authorized Officer
<PAGE>
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
The undersigned, a duly authorized officer of The Chase Manhattan Bank
(the "Trustee"), hereby certifies to Financial Security Assurance Inc.
("Financial Security"), with reference to Financial Guaranty Insurance Policy
No. 50828-N dated June 28, 1999 (the "Policy") issued by Financial Security in
respect of ABFS Equipment Contract Trust 1999-A $15,000,000 5.3925% Equipment
Contract-Backed Notes, Class A-1; $13,000,000 6.025% Equipment Contract-Backed
Notes, Class A-2; $34,160,000 6.650% Equipment Contract-Backed Notes, Class A-3;
and $10,000,000 6.650% Equipment Contract-Backed Notes, Class A-4 that:
(i) The Trustee is the Indenture Trustee under the Indenture for the
Holders.
(ii) the sum of all amounts on deposit (or scheduled to be on deposit)
in the Collection Account and the Capitalized Interest Account
and available for distribution to the Holders of the Notes (the
"Obligations") pursuant to the Indenture will be $______________
(the "Shortfall") less than the Scheduled Payments with respect
to the Payment Date.
(iii) The Trustee is making a claim under the Policy for the Shortfall
to be applied to distributions of principal or interest or both
with respect to the Scheduled Payments.
(iv) The Trustee agrees that, following receipt of funds from
Financial Security, it shall (a) hold such amounts in trust and
apply the same directly to the payment of Scheduled Payments on
the Obligations when due; (b) not apply such funds for any other
purpose; (c) not commingle such funds with other funds held by
the Trustee and (d) maintain an accurate record of such payments
with respect to each Obligation and the corresponding claim on
the Policy and proceeds thereof and, if the Obligation is
required to be surrendered for such payment, shall stamp on each
such Obligation the legend "$[insert applicable amount] paid by
Financial Security and the balance hereof has been cancelled and
reissued" and then shall deliver such Obligation to Financial
Security.
(v) The Trustee, on behalf of the Holders, hereby assigns to
Financial Security the rights of the Holders with respect to the
Obligations to the extent of any payments under the Policy,
including, without limitation, any amounts due to the Holders in
respect of securities law violations arising from the offer and
sale of the Obligations. The foregoing assignment is in addition
to, and not in limitation of,
<PAGE>
rights of subrogation otherwise available to Financial Security
in respect of such payments. Payments to Financial Security in
respect of the foregoing assignment shall in all cases be subject
to and subordinate to the rights of the Holders to receive all
Scheduled Payments in respect of the Obligations. The Trustee
shall take such action and deliver such instruments as may be
reasonably requested or required by Financial Security to
effectuate the purpose or provisions of this clause (v).
(vi) The Trustee, on its behalf and on behalf of the Holders, hereby
appoints Financial Security as agent and attorney-in-fact for the
Trustee and each such Holder in any legal proceeding with respect
to the Obligations. The Trustee hereby agrees that Financial
Security may at any time during the continuation of any
proceeding by or against either Transferor under the United
States Bankruptcy Code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an
"Insolvency Proceeding") direct all matters relating to such
Insolvency Proceeding, including without limitation, (A) all
matters relating to any claim in connection with an Insolvency
Proceeding seeking the avoidance as a preferential transfer of
any payment with respect to the Obligations (a "Preference
Claim"), (B) the direction of any appeal of any order relating to
any Preference Claim at the expense of Financial Security but
subject to reimbursement as provided in the Insurance Agreement
and (C) the posting of any surety, supersedeas or performance
bond pending any such appeal. In addition, the Trustee hereby
agrees that Financial Security shall be subrogated to, and the
Trustee on its behalf and on behalf of each Holder, hereby
delegates and assigns, to the fullest extent permitted by law,
the rights of the Trustee and each Holder in the conduct of any
Insolvency Proceeding, including, without limitation, all rights
of any party to an adversary proceeding or action with respect to
any court order issued in connection with any such Insolvency
Proceeding.
(vii) Payment should be made by wire transfer directed to the [SPECIFY
INSURANCE ACCOUNT].
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
<PAGE>
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
of Claim and Certificate as of the _______ day of _____________________, _____.
THE CHASE MANHATTAN BANK,
as Trustee
By:
------------------------
Title:
---------------------
- --------------------------------------------------------------------------------
For Financial Security or Fiscal Agent Use Only
Wire transfer sent _____________ by _____________________________________
Confirmation Number ___________________________________________
<PAGE>
Exhibit 23.1
[PricewaterhouseCoopers LLP Letterhead]
CONSENT OF INDEPENDENT ACCOUNTANTS
-------------
We consent to the incorporation by reference in the Prospectus Supplement of
Prudential Securities Secured Financing Corporation relating to ABFS Equipment
Contract Loan Trust 1999-A of our report dated January 26, 1999 on our audits of
the consolidated financial statements of Financial Security Assurance Inc. and
Subsidiaries as of December 31, 1998 and 1997, and for each of the three years
in the period ended December 31, 1998. We also consent to the reference to our
Firm under the caption "Experts".
PricewaterhouseCoopers LLP
June 25, 1999
