<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 10, 1997
REGISTRATION NO. 333-38687-01
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
GREEN TREE FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 41-1807858
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
GREEN TREE LEASE FINANCE II, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MINNESOTA APPLIED FOR
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
GREEN TREE LEASE FINANCE 1997-1, LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE NONE
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
----------------
1100 LANDMARK TOWERS
345 ST. PETER STREET
ST. PAUL, MINNESOTA 55102-1639
(612) 293-3400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOEL H. GOTTESMAN, ESQ.
1100 LANDMARK TOWERS
345 ST. PETER STREET
ST. PAUL, MINNESOTA 55102-1639
(612) 293-3400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO: COPIES TO:
CHARLES F. SAWYER, ESQ. SIEGFRIED P. KNOPF, ESQ.
DORSEY & WHITNEY LLP BROWN & WOOD LLP
220 SOUTH SIXTH STREET ONE WORLD TRADE CENTER
MINNEAPOLIS, MINNESOTA 55402 NEW YORK, NEW YORK 10048
(612) 343-7986 (212) 839-5300
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
(continued on next page)
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- -------------------------------------------------------------------------------
<PAGE>
(continued from previous page)
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
----------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES AMOUNT TO BE AGGREGATE PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lease-Backed Notes..... $550,000,000 100% $550,000,000 $162,258.03
Class C Limited
Guaranty.............. (2) (2) (2) (2)
Total................ $550,000,000 100% $550,000,000 $162,258.03(3)
- ---------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457.
(2) No additional consideration will be received for the Class C Limited
Guaranty; accordingly, no separate filing fee is being paid herewith
pursuant to Rule 457(n).
(3) Previously paid.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses to be incurred in connection
with the offering of the Lease-Backed Notes, other than underwriting discounts
and commissions, described in this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............. $162,258
Printing and Engraving.......................................... *
Legal Fees and Expenses......................................... *
Blue Sky Filing and Counsel Fees................................ *
Accounting Fees and Expenses.................................... *
Trustee Fees and Expenses....................................... *
Rating Agencies' Fees........................................... *
Miscellaneous Expenses.......................................... *
--------
Total......................................................... $ *
========
</TABLE>
- --------
* To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Green Tree Lease Finance 1997-1, LLC is a limited liability company formed
under the laws of Delaware. Section 18-108 of the Delaware Limited Liability
Company Act provides that a Delaware limited liability company may indemnify
any member or manager or other person from and against any and all claims and
demands whatsoever. The Limited Liability Company Agreement of Green Tree
Lease Finance 1997-1, LLC provides, in effect, that, subject to certain
limited exceptions, such company will indemnify its managers and named
officers to the extent permitted by the Delaware Limited Liability Company
Act.
Green Tree Lease Finance II, Inc. is incorporated under the laws of
Minnesota. Section 302A.521 of the Minnesota Statutes provides that a
corporation shall indemnify any person made or threatened to be made a party
to a proceeding by reason of the former or present official capacity of such
person against judgments, penalties, fines (including, without limitation,
excise taxes assessed against such person with respect to any employee benefit
plan), settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of such person complained of in the
proceeding, such person (1) has not been indemnified therefor by another
organization or employee benefit plan for the same judgments, penalties or
fines; (2) acted in good faith; (3) received no improper personal benefit and
Section 302A.255 (with respect to director conflicts of interest), if
applicable, has been satisfied; (4) in the case of a criminal proceeding, had
no reasonable cause to believe the conduct was unlawful; and (5) in the case
of acts or omissions in such person's official capacity for the corporation,
reasonably believed that the conduct was in the best interests of the
corporation, or in the case of acts or omissions in such person's official
capacity for other affiliated organizations, reasonably believed that the
conduct was not opposed to the best interests of the corporation. Section
302A.521 also requires payment by a corporation, upon written request, of
reasonable expenses in advance of final disposition of the proceeding in
certain instances. A decision as to required indemnification is made by a
disinterested majority of the Board of Directors present at a meeting at which
a disinterested quorum is present, or by a designated committee of the Board,
by special legal counsel, by the shareholders or by a court.
The Bylaws of Green Tree Lease Finance II, Inc. provide, in effect, that,
subject to certain limited exceptions, such corporation will indemnify its
officers and directors to the extent permitted by the Minnesota Business
Corporation Act.
Green Tree Financial Corporation is incorporated under the laws of Delaware.
Section 145 of the Delaware General Corporation Law provides that a Delaware
corporation may indemnify any persons, including officers
II-1
<PAGE>
and directors, who are, or are threatened to be made, parties to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation, by reason of the fact that such person was an
officer, director, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise).
The indemnity may include expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding, provided such
person acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, for criminal proceedings,
had no reasonable cause to believe that his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the
right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where and officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses
which such officer or director actually and reasonably incurred.
The Certificate of Incorporation and Bylaws of Green Tree Financial
Corporation provide, in effect, that, subject to certain limited exceptions,
such corporation will indemnify its officers and directors to the extent
permitted by the Delaware General Corporation Law.
ITEM 16. EXHIBITS.
The Exhibits filed as part of this Registration Statement are:
<TABLE>
<C> <S>
1.1* --Form of Underwriting Agreement.
3.1** --Certificate of Formation of Green Tree Lease Finance 1997-1, LLC.
3.2 --LLC Agreement of Green Tree Lease Finance 1997-1, LLC.
3.3** --Articles of Incorporation of Green Tree Lease Finance II, Inc.
3.4** --By-Laws of Green Tree Lease Finance II, Inc.
3.5** --Certificate of Incorporation of Green Tree Financial Corporation
(incorporated by reference to Exhibit 1.2 to Green Tree Financial
Corporation's Registration Statement No. 33-60869.)
3.6** --By-Laws of Green Tree Financial Corporation (incorporated by
reference to Exhibit 3.2 to Green Tree Financial Corporation's
Registration Statement No. 33-60869).
4.1 --Form of Transfer Agreement.
4.2 --Form of Contribution and Servicing Agreement.
4.3 --Form of Indenture.
5.1 --Opinion and consent of Dorsey & Whitney LLP with respect to
legality.
8.1* --Opinion and consent of Dorsey & Whitney LLP with respect to tax
matters.
23.1 --Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1).
23.2* --Consent of Dorsey & Whitney LLP (included as part of Exhibit 8.1).
23.3 --Consent of Dorsey & Whitney LLP (true sale and nonconsolidation
opinions).
24.1** --Power of attorney from officers and directors of Green Tree Lease
Finance II, Inc.
24.2** --Power of attorney from officers and directors of Green Tree
Financial Corporation.
25.1* --Statement of eligibility of Trustee.
99.1 --Form of Opinion of Dorsey & Whitney LLP with respect to true sale
of the Leases.
99.2 --Form of Opinion of Dorsey & Whitney LLP with respect to
nonconsolidation.
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
ITEM 17. UNDERTAKINGS.
Each of the undersigned, Green Tree Lease Finance 1997-1, LLC, Green Tree
Lease Finance II, Inc. and Green Tree Financial Corporation (collectively, the
"Registrants"), hereby undertakes that, for purposes of
II-2
<PAGE>
determining any liability under the Securities Act of 1933, each filing of any
Registrant 's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrants of expenses incurred or paid by a director, officer or
controlling person of the Registrants in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrants
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Registrants hereby undertake:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The Registrants hereby undertake to file an application for the purpose of
determining the eligibility of the trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, GREEN TREE LEASE
FINANCE 1997-1, LLC CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT
IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED
THIS AMENDMENT NO. 3 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ST. PAUL, STATE
OF MINNESOTA, ON THE 9TH DAY OF DECEMBER, 1997.
Green Tree Lease Finance 1997-1, LLC
By: Green Tree Lease Finance II,
Inc.
/s/ Joel H. Gottesman
By: _________________________________
Joel H. Gottesman
Senior Vice President and
Secretary
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, GREEN TREE LEASE
FINANCE II, INC. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
AMENDMENT NO. 3 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ST. PAUL, STATE OF
MINNESOTA, ON THE 9TH DAY OF DECEMBER, 1997.
Green Tree Lease Finance II, Inc.
/s/ Joel H. Gottesman
By: _________________________________
Joel H. Gottesman
Senior Vice President and
Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 3 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED.
SIGNATURE TITLE DATE
* Chairman of the
- ------------------------------------- Board and President December 9,
ROBERT D. POTTS (Principal 1997
Executive Officer
and Director)
*
- ------------------------------------- Executive Vice
EDWARD L. FINN President December 9,
(Principal 1997
Financial and
Accounting Officer)
/s/ Joel H. Gottesman Director
- ------------------------------------- December 9,
JOEL H. GOTTESMAN 1997
* Director
- ------------------------------------- December 9,
PAUL A. BOYUM 1997
/s/ Joel H. Gottesman
*By: ________________________________
JOEL H. GOTTESMAN
Attorney-in-fact
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, GREEN TREE
FINANCIAL CORPORATION CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT
IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED
THIS AMENDMENT NO. 3 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ST. PAUL, STATE
OF MINNESOTA, ON THE 9TH DAY OF DECEMBER, 1997.
Green Tree Financial Corporation
/s/ Scott T. Young
By __________________________________
SCOTT T. YOUNG
VICE PRESIDENT AND CONTROLLER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 3 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED.
SIGNATURE TITLE DATE
* Chairman of the
- ------------------------------------- Board and Chief December 9,
LAWRENCE M. COSS Executive Officer 1997
(Principal
Executive Officer
and Director)
*
- ------------------------------------- Executive Vice
EDWARD L. FINN President and Chief December 9,
Financial Officer 1997
/s/ Scott T. Young
- ------------------------------------- Vice President and
SCOTT T. YOUNG Controller December 9,
(Principal 1997
Accounting Officer)
*
- ------------------------------------- Director
RICHARD G. EVANS December 9,
1997
* Director
- ------------------------------------- December 9,
W. MAX MCGEE 1997
* Director
- ------------------------------------- December 9,
ROBERT S. NICKOLOFF 1997
* Director
- ------------------------------------- December 9,
ROBERT D. POTTS 1997
/s/ Scott T. Young
*By: ________________________________
SCOTT T. YOUNG
ATTORNEY-IN-FACT
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1* --Form of Underwriting Agreement.
3.1** --Certificate of Formation of Green Tree Lease Finance 1997-1, LLC.
3.2 --LLC Agreement of Green Tree Lease Finance 1997-1, LLC.
3.3** --Articles of Incorporation of Green Tree Lease Finance II, Inc.
3.4** --By-Laws of Green Tree Lease Finance II, Inc.
3.5** --Certificate of Incorporation of Green Tree Financial Corporation
(incorporated by reference to Exhibit 1.2 to Green Tree Financial
Corporation's Registration Statement No. 33-60869.)
3.6** --By-Laws of Green Tree Financial Corporation (incorporated by
reference to Exhibit 3.2 to Green Tree Financial Corporation's
Registration Statement No. 33-60869.
4.1 --Form of Transfer Agreement.
4.2 --Form of Contribution and Servicing Agreement.
4.3 --Form of Indenture.
5.1 --Opinion and consent of Dorsey & Whitney LLP with respect to legality.
8.1* --Opinion and consent of Dorsey & Whitney LLP with respect to tax
matters.
23.1 --Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1).
23.2* --Consent of Dorsey & Whitney LLP (included as part of Exhibit 8.1).
23.3* --Consent of Dorsey & Whitney LLP (true sale and nonconsolidation
opinions).
24.1** --Power of attorney from officers and directors of Green Tree Lease
Finance II, Inc.
24.2** --Power of attorney from officers and directors of Green Tree Financial
Corporation.
25.1* --Statement of eligibility of Trustee.
99.1 --Form of Opinion of Dorsey & Whitney LLP with respect to true sale of
the Leases.
99.2 --Form of Opinion of Dorsey & Whitney LLP with respect to
nonconsolidation.
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
<PAGE>
GREEN TREE LEASE FINANCE 1997-1, LLC
LIMITED LIABILITY COMPANY AGREEMENT
OCTOBER 22, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
Article I.
General................................................. 1
Section 1.1. Name..................................... 1
Section 1.2. Principal Place of Business.............. 1
Section 1.3. Name and Address of the Member........... 2
Section 1.4. Term of Existence........................ 2
Section 1.5. Agent for Service of Process............. 2
Section 1.9. Duties of Managers....................... 3
Article II.
Definitions............................................. 3
Article III.
Purpose and Character of the Business................... 5
Article IV.
The Member.............................................. 5
Article V.
New Members............................................. 5
Article VI.
Management and Operation of Company Business............ 5
Section 6.1. Board of Managers........................ 5
Section 6.2. Number, Qualification; Term of Office; Vote 5
Section 6.3. Initial Board............................ 6
Section 6.4. Place of Meetings........................ 6
Section 6.5. Special Meetings......................... 6
Section 6.6. Adjournments............................. 6
Section 6.7. Notice of Meetings....................... 6
Section 6.8. Quorum................................... 6
Section 6.9. Absent Members........................... 6
Section 6.10. Conference Communications................ 7
Section 6.11. Proxies.................................. 7
Section 6.12. Removal.................................. 7
Section 6.13. Acts of Managers......................... 7
Section 6.15. Committees............................... 8
Section 6.16. No Fiduciary Duty........................ 8
Section 6.17. Compensation............................. 8
Section 6.19. Unanimous Vote........................... 8
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<PAGE>
Article VII.
Indemnification......................................... 9
Section 7.1. Indemnification.......................... 9
Section 7.2. Indemnification Procedures; Survival..... 10
Article VIII.
Certificates............................................ 11
Article IX.
Books of Account; Reports and Fiscal Matters............ 11
Article X.
Amendment............................................... 12
Article XI.
Liability; Tax Status................................... 12
Section 11.1. Liability of the Member.................. 12
Section 11.2. Tax Status............................... 12
Article XII.
Dissolution and Liquidation............................. 13
Section 12.1. Events of Dissolution.................... 13
Section 12.3. Liquidation and Winding Up............... 13
Article XIII.
Capital................................................. 14
Section 13.1. Capital Contributions.................... 14
Section 13.3. Creditor's Interest in the Company....... 14
Article XIV.
Allocation of Income, Gains and Losses;
Distributions........................................... 14
Article XV.
Miscellaneous Provisions................................ 14
Section 15.1. Pronouns................................. 14
Section 15.2. Headings................................. 14
Section 15.3. Governing Law............................ 15
-ii-
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
GREEN TREE LEASE FINANCE 1997-1, LLC
This Limited Liability Company Agreement, dated as of October 22, 1997,
made and entered into by Green Tree Lease Finance II, Inc. ("Lease Finance" or
the "Member").
WITNESSETH THAT:
WHEREAS, the Delaware Limited Liability Company Act, as amended (the
"Act"), permits the formation of a limited liability company with a single
member; and
WHEREAS, the undersigned has caused the formation of Green Tree Lease
Finance 1997-1, LLC, a Delaware limited liability company (the "Company"), of
which the undersigned constitutes the sole member.
NOW, THEREFORE, the undersigned hereby adopts the following Articles
which shall constitute the "limited liability company agreement" of the Company
within the meaning of Section 18-101(7) of the Act.
Article I.
General
-------
The Member hereby adopts, approves and ratifies the execution and
filing in the office of the Secretary of State of the State of Delaware of the
certificate of formation (the "Certificate of Formation") of the Company by
Charles F. Sawyer and acknowledges, approves and ratifies his designation as an
"authorized person" of the Company in the Certificate of Formation as
contemplated by Section 18-201(a) of the Act. This Agreement shall be effective
as of the date of filing of the Certificate of Formation in the office of the
Secretary of State of Delaware, and the Act shall govern the rights, duties and
obligations of the Member, except as otherwise expressly stated herein.
Section 1.1. Name. The name of the Company shall be and the business
shall be conducted under the name of "Green Tree Lease Finance 1997-1, LLC."
The Member shall have the power at any time to change the name of the Company.
Section 1.2. Principal Place of Business. The principal business
office of the Company shall be at 1100 Landmark Towers, 345 St. Peter Street,
St. Paul, Minnesota 55102-1639 or such other place as the Board of Managers may
from time to time determine (the "Principal Office").
<PAGE>
Section 1.3. Name and Address of the Member. The name and address of
the Member is Green Tree Lease Finance II, Inc., 1100 Landmark Towers, 345 St.
Peter Street, St. Paul, Minnesota 55102-1639.
Section 1.4. Term of Existence. The Company shall be formed as of
the time of the filing of the Certificate of Formation in the Office of the
Secretary of State of Delaware and its existence shall continue until the
fiftieth anniversary of the filing of the Certificate of Formation of the
Company, unless earlier terminated, dissolved or liquidated in accordance with
the provisions of this Agreement.
Section 1.5. Agent for Service of Process. The name and address of
the agent for service of process is, until changed by the Board of Managers, The
Corporate Trust Company, located at Corporation Trust Center, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801.
Section 1.6. Purpose of Company. The purpose to be conducted or
promoted by the Company is to engage in the following activities:
(a) to acquire a pool of equipment lease contracts ("Leases") and
certain rights to the proceeds of disposition of the equipment
("Equipment") subject to such Leases ("Residual Realizations") from
Lease Finance and to hold, sell, transfer or pledge such Leases and
Residual Realizations, and other related rights and assets
(collectively, "Assets");
(b) to issue and sell Lease-Backed Notes, Series 1997-1 (the
"Notes") in one or more classes, and to pledge the Assets to secure
repayment of the Notes;
(c) to enter into and perform its obligations under a Contribution
and Servicing Agreement among the Company, Lease Finance and Green
Tree Vendor Services Corporation, and an Indenture between the Company
and [First Trust National Association], as Trustee;
(d) to enter into and perform its obligations under any intercompany
services agreement or management agreement with the Member or any
affiliates thereof; and
(e) to engage in any transactions, to enter into any agreement and
to exercise any powers permitted to limited liability companies under
the laws of the State of Delaware that are related or incidental to
the foregoing and necessary, convenient or advisable to accomplish the
foregoing.
Section 1.7. Percentage Interest. The Member shall hold a 100%
interest in the Company.
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<PAGE>
Section 1.8. Duties of the Member. The only duties of the Member to
the Company shall be those established in this Agreement, and there shall be no
other express or implied duties of the Member to the Company.
Section 1.9. Duties of Managers. Each Manager shall owe duties of
care and loyalty to the Company and the Member. A Manager shall not be
personally liable to the Company or the Member for monetary damages for breach
of fiduciary duty as a Manager except (a) for any breach of the Manager's duty
of loyalty to the Company or the Member; (b) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law; or
(c) for any transaction from which such Manager derived an improper personal
benefit.
Article II.
Definitions
-----------
Unless the context otherwise specifies or requires, the terms defined
in this Article II shall, for the purposes of this Agreement, have the meanings
herein specified. Certain other capitalized terms used herein are defined
elsewhere in the Agreement.
"Act" is defined in the introduction to Article I.
"Agreement" means this Limited Liability Company Agreement, as it may
be amended or supplemented from time to time.
"Board of Managers" means the Board of Managers of the Company
established pursuant to Article VI.
"Capital Contribution" means the amount of money or the fair market
value of any property contributed to the Company by the Member pursuant to
Section 13.1.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder. All references in this Agreement
to a section of the Code or the Treasury Regulations shall be considered to
include any subsequent amendment or replacement of that section.
"Company" means Green Tree Lease Finance 1997-1, LLC, the Delaware
limited liability company formed pursuant to the filing of the Certificate of
Formation in Delaware and the terms of this Agreement.
"Assets" means all assets and property, whether tangible or intangible
and whether real, personal or mixed, at any time owned by the Company.
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<PAGE>
"Contributed Assets" shall mean the assets contributed, transferred,
conveyed and assigned by the Member as a capital contribution to the Company
pursuant to the Contribution Agreement.
"Contribution Agreement" shall mean the Contribution and Servicing
Agreement dated as of December 1, 1997 between the Company, Lease Finance and
Green Tree Vendor Services Corporation, as the same may be amended from time to
time in accordance with its terms.
"Manager" or "Managers" means the Person or Persons appointed to the
Board of Managers pursuant to Section 6.2.
"Member" means Green Tree Lease Finance II, Inc.
"Person" means any natural person, corporation, limited liability
company, association, partnership (whether general or limited), joint venture,
proprietorship, governmental agency, trust, estate, association, custodian,
nominee or any other individual or entity, whether acting in an individual,
fiduciary, representative or other capacity.
"Principal Office" is defined in Section 1.2.
"Reorganization" means (x) any consolidation or merger of the Company
with or into any other Person, whether or not the Company is the surviving
entity or (y) any sale, transfer or other disposition of all or substantially
all of the Company's assets in a single transaction or a series of related
transactions. A dissolution or liquidation of the Company pursuant to Article
XII will not constitute a "Reorganization" within the meaning of this Agreement.
"Treasury Regulations" or "Treas. Reg." refers to the regulations
promulgated by the United States Treasury Department under the Code.
"Units" means the ten units representing the ownership interest of the
Member in the Company.
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Article III.
Purpose and Character of the Business
-------------------------------------
The purpose and character of the business of the Company shall be to
undertake and carry on any lawful business, purpose or activity described in
Section 1.6 that is permitted under the Act and approved by the Board of
Managers.
Article IV.
The Member
----------
Green Tree Lease Finance II, Inc. shall be the sole Member of the
Company and shall have all of the rights, powers and privileges of a member
under the Act.
Article V.
New Members
-----------
No Person other than Lease Finance may be admitted to the Company as
an additional member.
Article VI.
Management and Operation of Company Business
--------------------------------------------
Section 6.1. Board of Managers. The business and affairs of the
Company shall be managed by or under the authority of the Board of Managers,
except as otherwise required by the Act or this Agreement.
Section 6.2. Number, Qualification; Term of Office; Vote. The
number of members of the Board of Managers shall be up to four (4). Each
Manager shall be appointed from time to time by the Member. A Manager shall
hold office until such Manager's successor shall have been elected, or until the
earlier death, resignation, removal or disqualification of such Manager. The
Member may increase the number of Managers at any time or from time to time. At
any time at which there is more than one Manager, each Manager shall have one
vote in all matters to come before the Board of Managers. The provisions of
Sections 6.4 through 6.11 apply (i) when more than one Manager is serving and
(ii) with respect to any committee established by the Board of Managers.
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Section 6.3. Initial Board. The initial Board of Managers shall be
comprised of the following individual(s):
Joel H. Gottesman (Chair)
Edward L. Finn
Robert D. Potts
Section 6.4. Place of Meetings. Meetings of the Board of Managers
shall be held at the principal executive office of the Company or at such other
place as may be agreed by the Managers from time to time.
Section 6.5. Special Meetings. A special meeting of the Board of
Managers may be called for any purpose or purposes at any time by the Chair or
by the Member.
Section 6.6. Adjournments. Any meeting of the Board of Managers may
be adjourned from time to time to another date, time and place. If any meeting
of the Board of Managers is so adjourned, no notice as to such adjourned meeting
need be given if the date, time and place at which the meeting will be
reconvened are announced at the time of adjournment.
Section 6.7. Notice of Meetings. Unless otherwise required by law,
written notice of each meeting of the Board of Managers, stating the date, time
and place and, in the case of a special meeting, the purpose or purposes, shall
be given at least five (5) days and not more than ninety (90) days prior to the
meeting to every member of the Board of Managers. A member of the Board of
Managers may waive notice of the date, time, place and purpose or purposes of a
meeting of the Board of Managers. A waiver of notice is effective whether given
before, at or after the meeting, and whether given in writing, orally or by
attendance. Attendance by a member of the Board of Managers at a meeting is a
waiver of notice of that meeting, unless the member objects at the beginning of
the meeting to the transaction of business because the meeting is not lawfully
called or convened, or objects before a vote on an item of business because the
item may not lawfully be considered at that meeting and does not participate in
the consideration of the item at that meeting.
Section 6.8. Quorum. Members of the Board of Managers representing
51% of all votes held by the members of the Board of Managers shall constitute a
quorum for the transaction of business at each meeting of the Board of Managers.
Section 6.9. Absent Members. A member of the Board of Managers may
give advance written consent or opposition to a proposal to be acted on at a
meeting of the Board of Managers. If such member is not present at the meeting,
such consent or opposition to a proposal does not constitute presence for
purposes
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of determining the existence of a quorum, but such consent or opposition shall
be counted as a vote in favor of or against the proposal and shall be entered in
the minutes or other record of action at the meeting, if the proposal acted on
at the meeting is substantially the same or has substantially the same effect as
the proposal to which the member has consented or objected.
Section 6.10. Conference Communications. Any or all of the members
of the Board of Managers may participate in any meeting of the Board of
Managers, or of any duly constituted committee thereof, by any means of
communication through which such members may simultaneously hear each other
during such meeting. For the purposes of establishing a quorum and taking any
action at the meeting, members of the Board of Managers participating pursuant
to this Section 6.10 shall be deemed present in person at the meeting, and the
place of the meeting shall be the place of origination of the conference
telephone conversation or other comparable communication technique.
Section 6.11. Proxies. A member of the Board of Managers may cast
or authorize the casting of a vote by filing a written appointment of a proxy
with the Chair at or before the meeting at which the appointment is to be
effective. The member may sign or authorize the written appointment by
telegram, cablegram or other means of electronic transmission setting forth or
submitted with information sufficient to determine that the member authorized
such transmission. Any copy, facsimile, telecommunication or other reproduction
of the original of either the writing or transmission may be used in lieu of the
original, provided that it is a complete and legible reproduction of the entire
original.
Section 6.12. Removal. Any Manager may be removed from office at
any time, with or without cause, by the action of the Member; provided, however,
that any such removal shall be without prejudice to any contract rights of such
member of the Board of Managers pursuant to any employment or other agreement
between such member and the Members or the Company.
Section 6.13. Acts of Managers. Except as otherwise provided
herein, the Board of Managers shall take action by the affirmative vote of (i)
the sole Manager or (ii) those Managers who have the power to vote 51% of all
votes held by the Managers, as the case may be, and any such act shall be deemed
to be the action of the Board of Managers for all purposes of this Agreement and
the Act.
Section 6.14. Written Action. Any action which might be taken by
the sole Manager or at a meeting of the Board of Managers, or any duly
constituted committee thereof, may be taken without a meeting if done in writing
and signed by, as the case may be, the sole Manager or a number of the members
of the Board of Managers, or committee members, whose approval would be
sufficient to approve
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the action at a meeting at which all of the members of the Board of Managers (or
such committee) were present.
Section 6.15. Committees. (a) A resolution approved by the
Board of Managers may establish committees having the authority of the Board of
Managers in the management of the business of the Company to the extent provided
in the resolution. A committee shall consist of one or more Persons, who need
not be members of the Board of Managers. Committees are subject to the
direction and control of, and vacancies in the membership thereof shall be
filled by, the Board of Managers.
(b) A majority of the members of a committee present at a meeting is
a quorum for the transaction of business, unless a larger or smaller proportion
or number is provided in the resolution of the Board of Managers creating the
committee.
(c) No committee of the Board of Managers shall have the power or
authority in reference to any of the actions requiring a unanimous vote of the
Board of Managers or the consent of the Members as described herein, including
the actions described in Section 5.20 and amendment of this Agreement as
described in Article X.
Section 6.16. No Fiduciary Duty. No Person serving on the Board of
Managers shall incur any personal liability in such capacity to the Members or
the creditors of the Company.
Section 6.17. Compensation. Members of the Board of Managers shall
not be compensated by the Company for serving in such capacity. The Company
shall bear the expenses, if any, incurred by each Member's respective
representatives in attending meetings of the Board of Managers.
Section 6.18. Binding Authority. Except as otherwise provided
herein, only the Board of Managers shall have the authority to bind the Company.
Section 6.19. Unanimous Vote.
The following actions of the Company shall require the unanimous vote
of the Board of Managers and the approval or authorization of the Member:
(i) the approval of any Reorganization, any other merger or
consolidation to which the Company is a party;
(ii) the assignment of any Assets for the benefit of the Company's
creditors or the granting of any material lien, charge or encumbrance
upon
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any of the Company's Assets, other than liens to secure
indebtedness incurred pursuant to the transactions set forth in
Section 1.6;
(iii) the incurring of any indebtedness, or the assumption or
guaranty of any indebtedness of any other entity, other than
indebtedness incurred pursuant to transactions set forth in Section
1.6;
(iv) the appointment of the certified public accountants and any
attorneys for the Company; and
(v) a decision to dissolve or liquidate, in whole or in part (except
as set forth in Article XII), file a voluntary petition that commences
a case under Title 11 of the United States Code (or any successor
statutes) with respect to the Company, or consent to the institution
of bankruptcy or insolvency proceedings against the Company or file a
petition seeking, or consent to, relief under any applicable Federal
or state law relating to bankruptcy, or commence or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Company or a substantial part of
the property of the Company, or make any assignment for the benefit of
creditors, or admit in writing its inability to pay the debts of the
Company generally as they become due, or take action in furtherance of
any such action.
Article VII.
Indemnification
---------------
Section 7.1. Indemnification.
(a) To the fullest extent permitted by law, each Manager
(individually, an "Indemnitee") shall be indemnified, held harmless and defended
by the Company from and against any and all losses, claims, damages,
liabilities, whether joint or several, expenses (including legal fees and
expenses), judgments, fines and other amounts paid in settlement, incurred or
suffered by such Indemnitee, as a party or otherwise, in connection with any
threatened, pending or completed claim, demand, action, suit or proceeding,
whether civil, criminal, administrative or investigative, and whether formal or
informal, arising out of or in connection with the business or the operation of
the Company and by reason of the Indemnitee's status as a Manager regardless of
whether the Indemnitee continues to be a Manager of the Company at the time any
such loss, claim, damage, liability or other expense is paid or incurred if (i)
the Indemnitee acted in good faith and in a manner he or she reasonably believed
to be in the best interests of the Company and, with respect to any criminal
proceeding, had no reasonable cause to believe that his or her conduct was
unlawful, (ii) the Indemnitee's conduct did not constitute intentional
misconduct or a material breach of the terms of this Agreement and (iii) the
Indemnitee's conduct did not involve a transaction from
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which the Manager derived an improper personal benefit. The termination of any
action, suit or proceeding by judgment, order, settlement or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
the Indemnitee acted in a manner contrary to the standards specified in clauses
(i), (ii) or (iii) of this Section 7.1(a).
(b) To the fullest extent permitted by law, expenses incurred by an
Indemnitee in defending any claim, demand, action, suit or proceeding subject to
this Section 7.1 shall, from time to time, be advanced by the Company prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Company of an undertaking by or on behalf of the Indemnitee to
repay such amount unless it is determined that such Indemnitee is entitled to be
indemnified therefor pursuant to this Section 7.1.
(c) The indemnification provided by this Section 7.1 shall be in
addition to any other rights to which any Indemnitee may be entitled under any
other agreement, pursuant to any vote of the Managers, as a matter of law or
otherwise, and shall inure to the benefit of the heirs, legal representatives,
successors, assigns and administrators of the Indemnities.
(d) Any indemnification under this Section 7.1 shall be satisfied
solely out of the assets of the Company and no Indemnitee shall have any
recourse against the Member with respect to such indemnification.
(e) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.1 merely because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies, if the
transaction was not otherwise prohibited by the terms of this Agreement and the
conduct of the Indemnitee satisfied the conditions set forth in Section 7.1(a).
(f) The Company may, but shall have no obligation to, purchase and
maintain insurance covering any potential liability of the Indemnitees for any
actions or omissions for which indemnification is permitted hereunder, including
such types of insurance (including extended coverage liability and casualty and
workers' compensation) as would be customary for any person engaged in a similar
business, and may name the Indemnitees as additional insured parties thereunder.
Section 7.2. Indemnification Procedures; Survival.
(a) An Indemnitee shall notify the Company in writing within 30 days
after receipt by the Indemnitee of notice of the commencement of any action that
may result in a claim for indemnification pursuant to Section 7.1; provided,
however, that any omission so to notify the Company will not relieve it of any
liability for indemnification hereunder as to the particular item for which
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<PAGE>
indemnification may then be sought (except to the extent that the failure to
give notice shall have been materially prejudicial to the Company) nor from any
other liability that it may have to any Indemnitee.
(b) An Indemnitee shall have the right to employ separate counsel in
any action as to which indemnification may be sought under any provision of this
Agreement and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnitee unless (i) the
Company has agreed in writing to pay such fees and expenses, (ii) the Company
has failed to assume the defense thereof and employ counsel within a reasonable
period of time after being given the notice required above or (iii) the
Indemnitee shall have been advised by its counsel that representation of such
Indemnitee and other parties by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to actual or potential differing
interests between them. It is understood, however, that the Company shall, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
only one separate firm of attorneys at any time for all such Indemnitees having
actual or potential differing interests with the Company, unless but only to the
extent, the Indemnitees have actual or potential differing interests with each
other.
(c) The Company shall not be liable for any settlement of any such
action effected without its written consent, but if settled with such written
consent, or if there is a final judgment against the Indemnitee in any such
action, the Company agrees to indemnify and hold harmless the Indemnitee to the
extent provided above from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(d) The indemnification obligations set forth in Section 7.1 and this
Section 7.2 shall survive the termination of this Agreement.
Article VIII.
Certificates
------------
The Units of the Company shall not be represented by certificates.
Article IX.
Books of Account; Reports and Fiscal Matters
--------------------------------------------
The Company shall maintain such books of account and such financial
information as may be required by the Member and the Act. The Member or a
designee shall retain a copy of this Agreement and all written actions of the
Member
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and the Board of Managers at the Principal Office or at such other place as the
Member may designate.
Article X.
Amendment
---------
The Certificate of Formation and this Agreement may be amended by the
Member. Any amendment of this Agreement shall be in writing and a copy thereof
shall be kept with a copy of this Agreement at the Principal Office of the
Company.
Article XI.
Liability; Tax Status
---------------------
Section 11.1. Liability of the Member. Except as otherwise provided
in the Act, the Member, as such, shall have no personal liability whatsoever to
the Company or any of the creditors of the Company for the debts, liabilities,
contracts or other obligations of the Company or any of the Company's losses
beyond the Member's Capital Contribution and, solely to the extent and for the
period required by applicable law, the amount of the Member's Capital
Contribution, if any, which is returned to it. Each Unit, on issuance, shall be
fully paid and not subject to assessment for additional Capital Contributions.
The Member shall not be required to lend any funds to the Company. It is the
intent of the Member that (i) no distribution to the Member (other than a
distribution upon the dissolution and liquidation of the Company) shall be
deemed a withdrawal of capital, even if such distribution represents, for
federal income tax purposes or otherwise (in full or in part), a distribution of
depreciation or any other non-cash item accounted for as a loss or deduction
from or offset to the Company's income, and (ii) the Member shall not be
obligated to pay any such amount to or for the account of the Company or any
creditor of the Company. However, if any court of competent jurisdiction holds
that, notwithstanding the provisions of this Agreement, any distribution made by
the Company to the Member constitutes a withdrawal of capital, any obligation
under applicable law to return the same or any portion thereof to or for the
account of the Company or its creditors shall be the obligation of the Member.
Section 11.2. Tax Status. The Member intends that the Company will
be classified solely for federal income tax purposes as an "eligible entity"
that is disregarded as an entity separate from its owner as provided in Treasury
Regulations Section 301.7701-3(a).
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Article XII.
Dissolution and Liquidation
---------------------------
Section 12.1. Events of Dissolution. The Company shall be dissolved
upon the occurrence of any of the following events:
(a) the written consent of the Member; or
(b) the entry of a decree of judicial dissolution under (S) 18-802
of the Act.
Section 12.2. Continuation of Business. Upon the occurrence of any
event described in Section 18-801(4) of the Act, or any successor provision, the
Company shall continue unless dissolved by the Member pursuant to Section
12.1(a).
Section 12.3. Liquidation and Winding Up. If dissolution of the
Company should be caused by reason of (i) any of the events set forth in
paragraphs (a) or (b) of Section 12.1 hereof, the Company shall be liquidated
and the Person designated at such time by the Board of Managers (or other Person
or Persons designated by a decree of court) shall wind up the affairs of the
Company. The Person or Persons winding up the affairs of the Company shall
promptly proceed to the liquidation of the Assets and, in settling the accounts
of the Company, the Assets shall be distributed in the following order of
priority:
(a) To creditors to the extent otherwise permitted by law, in
satisfaction of liabilities of the Company (whether by payment or the making of
reasonable provision for payment thereof), other than liabilities for which
reasonable provision for payment has been made and liabilities for distributions
to the Member;
(b) To the repayment of outstanding loans from the Member to the
Company;
(c) The balance, if any, to the Member.
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Article XIII.
Capital
-------
Section 13.1. Capital Contributions. Lease Finance has contributed
all of its right, title and interest in, to and under the Contributed Assets as
a Capital Contribution to the Company.
Section 13.2. No Right to Return of Contribution. The Member shall
have no right to the withdrawal or to the return of its Capital Contribution,
except upon the dissolution and liquidation of the Company pursuant to Article
XII.
Section 13.3. Creditor's Interest in the Company. No creditor who
makes a loan to the Company shall have or acquire at any time as a result of
making the loan any direct or indirect interest in the profits, capital or
property of the Company, other than such interest as may be accorded to a
secured creditor. Notwithstanding the foregoing, this provision shall not
prohibit in any manner whatsoever a secured creditor from participating in the
profits of operation or gross or net sales of the Company or in the gain on sale
or refinancing of the Company, all as may be provided in its loan or security
agreements.
Article XIV.
Allocation of Income, Gains and Losses;
---------------------------------------
Distributions
-------------
The income, profits, gains, losses and tax credits of the Company and
distributions of cash or property of the Company to the Member shall be treated
for federal income tax purposes as if the Company were a division of the Member
in accordance with Treasury Regulation Section 301.7701-2(a).
Article XV.
Miscellaneous Provisions
------------------------
Section 15.1. Pronouns. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the person or entity may require.
Section 15.2. Headings. Article and Section headings contained in
this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.
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Section 15.3. Governing Law. This Agreement, the rights and
obligations of the parties hereto, and any claims or disputes relating thereto,
shall be governed by and construed in accordance with the laws of the State of
Delaware (but not including the choice of law rules thereof).
Section 15.4. Survival. It is the express intention and agreement of
the Members that all covenants, agreements, statements, representations,
warranties and indemnities made in this Agreement shall survive the execution
and delivery of this Agreement.
Section 15.5. Severability. The invalidity of any one or more
provisions hereof or of any other agreement or instrument given pursuant to or
in connection with this Agreement shall not affect the remaining portions of
this Agreement or any such other agreement or instrument or any part thereof;
and in the event that one or more of the provisions contained herein or therein
should be invalid, or should operate to render this Agreement or any such other
agreement or instrument invalid, this Agreement and such other agreements and
instruments shall be construed as if such invalid provisions had not been
inserted.
Section 15.6. Entire Agreement. This Agreement contains the entire
agreement with respect to the matters contained herein, and supersedes all prior
oral or written agreements, commitments or understandings with respect to the
matters provided for herein.
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IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written.
GREEN TREE LEASE FINANCE II, INC.
/s/Joel H. Gottesman
-----------------------------------------
By: Joel H. Gottesman
Its: Senior Vice President
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===============================================================================
TRANSFER AGREEMENT
AMONG
GREEN TREE LEASE FINANCE II, INC.
PURCHASER
AND
GREEN TREE VENDOR SERVICES CORPORATION
SELLER AND SERVICER
_______________
DATED AS OF DECEMBER 1, 1997
_______________
===============================================================================
<PAGE>
TABLE OF CONTENTS
Page
-----
ARTICLE I DEFINITIONS............................................ 2
SECTION 1.1 General......................................... 2
SECTION 1.2 Specific Terms.................................. 2
SECTION 1.3 Certain References.............................. 3
SECTION 1.4 No Recourse..................................... 3
SECTION 1.5 Action by or Consent of Noteholders............. 3
ARTICLE II CONVEYANCE OF THE LEASES............................... 4
SECTION 2.1 Conveyance of Leases and Related Assets......... 4
SECTION 2.2 Intention of the Parties........................ 5
ARTICLE III REPRESENTATIONS AND WARRANTIES......................... 6
SECTION 3.1 Representations and Warranties of
Vendor Services................................. 6
SECTION 3.2 Representations and Warranties of Lease
Finance......................................... 17
ARTICLE IV COVENANTS OF VENDOR SERVICES........................... 19
SECTION 4.1 Protection of Title of Lease Finance and the LLC 19
SECTION 4.2 Other Liens or Interests........................ 22
SECTION 4.3 Costs and Expenses.............................. 22
SECTION 4.4 Indemnification................................. 22
SECTION 4.5 Negative Covenant............................... 24
ARTICLE V REPURCHASES............................................ 25
SECTION 5.1 Repurchase of Leases Upon Breach of
Representation or Warranty...................... 25
SECTION 5.2 Reassignment of Purchased Leases and
Equipment....................................... 26
SECTION 5.3 Waivers......................................... 26
ARTICLE VI MISCELLANEOUS.......................................... 26
SECTION 6.1 [Reserved]...................................... 26
SECTION 6.2 Merger or Consolidation of Vendor Services
or Lease Finance................................ 26
SECTION 6.3 Limitation on Liability of Vendor Services
and Others...................................... 27
SECTION 6.4 Vendor Services May Own Notes................... 28
SECTION 6.5 Amendment....................................... 28
SECTION 6.6 Notices......................................... 29
SECTION 6.7 Merger and Integration.......................... 30
SECTION 6.8 Severability of Provisions...................... 30
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SECTION 6.9 GOVERNING LAW................................... 30
SECTION 6.10 Counterparts.................................... 30
SECTION 6.11 Conveyance of the Leases to the LLC............. 30
SECTION 6.12 Nonpetition Covenant............................ 31
SCHEDULES
Schedule A -- Schedule of Leases and Equipment
Schedule B -- Schedule of Representations and Warranties of Vendor Services
-ii-
<PAGE>
TRANSFER AGREEMENT
------------------
THIS TRANSFER AGREEMENT, dated as of December 1, 1997, executed
between Green Tree Lease Finance II, Inc., a Minnesota corporation, as purchaser
("Lease Finance") and Green Tree Vendor Services Corporation, a Minnesota
corporation ("Vendor Services"), as seller and servicer (in such capacity, the
"Servicer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Vendor Services owns certain Leases (the "Leases") as are
more particularly described in Schedule A attached hereto and has an ownership
or security interest in the items of Equipment subject thereto (the
"Equipment"), as more particularly described in Schedule A attached hereto; and
WHEREAS, Lease Finance has agreed to acquire the Leases and the
Equipment from Vendor Services, and Vendor Services has agreed to transfer the
Leases and the Equipment to Lease Finance; and
WHEREAS, pursuant to the terms of a Contribution and Servicing
Agreement, dated as of December 1, 1997 (the "Contribution and Servicing
Agreement"), by and among the LLC, Lease Finance, as contributor, and Vendor
Services, in its individual capacity and as Servicer, to be executed
concurrently with the execution of this Agreement, Lease Finance will convey the
Leases and certain rights to the proceeds of disposition of the Equipment
("Residual Realizations") to the LLC; and
WHEREAS, pursuant to the terms of an Indenture, dated as of December
1, 1997 (the "Indenture"), between Green Tree Lease Finance 1997-1, LLC (the
"LLC") and [_______], as Trustee (the "Trustee"), to be executed concurrently
with this Agreement, the LLC will, on the Closing Date, issue the Notes (as
defined in the Indenture).
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and for other good and valuable consideration, the receipt of which
is acknowledged, Lease Finance, Vendor Services and the Servicer, intending to
be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 General.
<PAGE>
(a) The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision, and Article, Section, Schedule and Exhibit
references, unless otherwise specified, refer to Articles and Sections of and
Schedules and Exhibits to this Agreement. All capitalized terms used herein
without definition shall have the respective meanings assigned to such terms in
the Contribution and Servicing Agreement or, if not defined in the Contribution
and Servicing Agreement, in the Indenture.
(b) With respect to all terms used in this Agreement, the singular includes
the plural and the plural the singular; words importing any gender include the
other gender; references to "writing" include printing, typing, lithography, and
other means of reproducing words in a visible form; references to agreements and
other contractual instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement or the Contribution and Servicing Agreement;
references to Persons include their permitted successors and assigns; and the
terms "include" or "including" mean "include without limitation" or "including
without limitation."
SECTION 1.2 Specific Terms. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Agreement" means this Transfer Agreement and all amendments hereof
and supplements hereto.
"Closing Date" means December __, 1997.
"Related Documents" means the Indenture, the Contribution and
Servicing Agreement and the Notes. The Related Documents to be executed by any
party are referred to herein as "such party's Related Documents," "its Related
Documents" or by a similar expression.
"Repurchase Event" means, with respect to any Lease, the occurrence of
a breach of any of the representations and warranties set forth in the Schedule
of Representations that materially and adversely affects the value of such
Lease.
"Schedule of Leases" means, collectively, the schedule of Leases and
Equipment attached hereto as Schedule A.
"Schedule of Representations" means the Schedule of Representations
and Warranties of Vendor Services attached hereto as Schedule B.
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"Statistical Pool Principal Balance" means an amount equal to the
future remaining scheduled payments (not including delinquent amounts) from the
Leases as of the Cut-Off Date, discounted at a rate equal to ___%.
"Trust Assets" means the property and proceeds of every description
conveyed pursuant to Section 2.1 of the Contribution and Servicing Agreement,
together with the Trust Accounts (including all Eligible Investments therein and
all proceeds therefrom).
SECTION 1.3 Certain References. All references to the Principal
Balance of a Lease as of an Accounting Date shall refer to the close of business
on such day, or as of the first day of a Monthly Period shall refer to the
opening of business on such day. All references to the last day of a Monthly
Period shall refer to the close of business on such day.
SECTION 1.4 No Recourse. Without limiting the obligations of Vendor
Services hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of any of
Vendor Services, the Servicer, Lease Finance or the Trustee, or of any
predecessor or successor of any of Vendor Services, the Servicer, Lease Finance
or the Trustee.
SECTION 1.5 Action by or Consent of Noteholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Noteholders, such provision shall be deemed to refer to Noteholders of record as
of the Record Date immediately preceding the date on which such action is to be
taken, or consent given, by such Noteholders. Solely for the purposes of any
action to be taken, or consented to, by Noteholders, any Note registered in the
name of any of Lease Finance, Vendor Services or any Affiliate thereof, shall be
deemed not to be outstanding, and the related Principal Balance, as applicable,
evidenced thereby shall not be taken into account in determining whether the
requisite Principal Balance necessary to effect any such action or consent has
been obtained; provided, however, that, solely for the purpose of determining
whether the Trustee is entitled to rely upon any such action or consent, only
Notes which the Trustee knows to be so owned shall be so disregarded.
ARTICLE II
CONVEYANCE OF THE LEASES
SECTION 2.1 Conveyance of Leases and Related Assets.
(a) As a contribution to the capital of Lease Finance, Vendor Services
hereby sells, transfers, assigns, and otherwise conveys to Lease Finance,
without recourse (but without limitation of its obligations in this Agreement),
and
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Lease Finance hereby acquires, all right, title and interest, including
security interests, whether now owned or hereafter acquired, of Vendor
Services in and to the following:
(i) the Leases, including, without limitation, (A) all monies at any
time paid or payable thereon or in respect thereof from and after the
Cut-Off Date, including but not limited to (1) Scheduled Payments
(including those Scheduled Payments due prior to, but not received as
of, the Cut-Off Date, but excluding those Scheduled Payments due on or
after, but received prior to, the Cut-Off Date), (2) Prepayments, (3)
Liquidation Proceeds, (4) Extension Fees, (5) payments to be applied by
the Servicer to the payment of insurance charges, maintenance, taxes or
other similar obligations, and (6) payments to be retained by the
Servicer in payment of Administrative Fees, (B) all security interests
of the lessor or secured party, as the case may be, in the related
Equipment and all present or future leases and other contracts relating
to the Equipment and all revenues, payments, rights to payment, profits,
accounts, chattel paper, products and contract rights arising from or
related to the Equipment or any use thereof or from any such lease or
other contract, (C) all rights of the lessor or secured party, as the
case may be, in all Insurance Policies and all other security for the
payment of amounts due under the Leases (including all rights, if any,
the lessor or the secured party may have against vendors and other third
parties for payments of such amounts), (D) all items contained in the
related Lease Files and any and all other documents that are kept on
file in accordance with Vendor Services's customary procedures relating
to the Leases, and (E) any and all proceeds of any and all of the
foregoing; and
(ii) the Equipment and all proceeds thereof, including in any event
and without limitation, all present and future leases and other
contracts relating to the Equipment and all revenues, payments, rights
to payment, profits, accounts, chattel paper, products and contract
rights arising from or related to the Equipment or any use thereof or
from any such lease or other contract, and any and all proceeds of any
and all of the foregoing.
(b) LEASE FINANCE ACKNOWLEDGES THAT VENDOR SERVICES IS TRANSFERRING
THE EQUIPMENT "AS-IS, WHERE-IS," AND THAT VENDOR SERVICES MAKES NO
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT, INCLUDING
WITHOUT LIMITATION ITS MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
SECTION 2.2 Intention of the Parties. The execution and delivery of
this Agreement shall constitute an acknowledgment by each of Vendor Services and
Lease Finance that they intend that each assignment and transfer herein
contemplated constitute a sale and assignment outright, and not for security, of
the property described in Section 2.1(b), conveying good title thereto free and
clear of any
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Liens, from Vendor Services to Lease Finance, and that all such property shall
not be a part of the estate of Vendor Services in the event of the bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, or the
occurrence of another similar event, of, or with respect to Vendor Services.
In the event that such conveyance is determined to be made as security for a
loan made by Lease Finance, the LLC or the Noteholders to Vendor Services,
Vendor Services hereby grants to Lease Finance a security interest in all of
Vendor Services's right, title and interest in and to the property described
in Section 2.1(b) to secure the loan determined to have been made to Vendor
Services and the payment and performance of the other obligations of Vendor
Services under this Agreement, and agree that in such event this Agreement
shall constitute a security agreement under applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of Vendor Services. Vendor
Services makes the following representations and warranties, on which Lease
Finance relies in purchasing the Leases and in transferring the Leases to the
LLC under the Contribution and Servicing Agreement. Such representations are
made as of the Closing Date, but shall survive the sale, transfer and assignment
of the Leases hereunder and the transfer of the Leases and certain rights to the
Residual Realizations by Lease Finance to the LLC under the Contribution and
Servicing Agreement. Vendor Services and Lease Finance agree that Lease Finance
will assign to the LLC all of Lease Finance's rights under this Agreement at the
Closing Date and that the LLC will thereafter be entitled to enforce this
Agreement against Vendor Services in the LLC's own name.
(a) Schedule of Representations. With respect to each Lease, the
representations and warranties set forth on the Schedule of
Representations are true and correct as of the date specified therein.
(b) Organization and Good Standing. Vendor Services has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Minnesota, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to acquire, own and
sell the Leases transferred to Lease Finance.
(c) Due Qualification. Vendor Services is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in each jurisdiction in which the
ownership or lease of its property or the conduct of its business
requires such
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qualification and in which the failure to so qualify would
have a material adverse impact on its business or financial condition.
(d) Power and Authority. Vendor Services has the power and
authority to execute and deliver this Agreement and its Related Documents
and to carry out its terms and their terms, respectively, and the
execution, delivery and performance of this Agreement and all of Vendor
Services's Related Documents have been duly authorized by Vendor Services
by all necessary corporate action.
(e) No Consents. Vendor Services holds all necessary licenses,
certificates and permits from all government authorities necessary for
conducting its business as it is presently conducted, and is not required
to obtain the consent of any other party or any consent, license,
approval or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except for such consents, licenses, approvals or
authorizations, or registrations or declarations, as shall have been
obtained or filed, as the case may be, prior to the Closing Date.
(f) Valid Sale; Binding Obligations. This Agreement and each of
Vendor Services's Related Documents have been duly executed and
delivered, and effect a valid sale, transfer and assignment of the Leases
and Vendor Services's interest in the related Equipment, enforceable
against Vendor Services, and creditors of and purchasers from Vendor
Services; and this Agreement and each of Vendor Services's Related
Documents constitute legal, valid and binding obligations of Vendor
Services, enforceable in accordance with their respective terms, except
as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(g) No Violation. The execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement and the
Related Documents and the fulfillment of the terms of this Agreement and
the Related Documents shall not conflict with, result in any breach of
any of the terms and provisions of or constitute (with or without notice
or lapse of time, or both) a default under, the certificate of
incorporation or bylaws of Vendor Services, or any indenture, agreement,
mortgage, deed of trust or other instrument to which Vendor Services is a
party or by which it is bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, other
than this Agreement, the Contribution and Servicing Agreement and the
Indenture, or violate any law, order, rule or
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regulation applicable to Vendor Services of any court or of any federal
or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Vendor Services or any of its
properties.
(h) No Proceedings. There are no proceedings or investigations
pending or, to the knowledge of Vendor Services, threatened against
Vendor Services, before any court, regulatory body, administrative agency
or other tribunal or governmental instrumentality having jurisdiction
over Vendor Services or any properties of Vendor Services (i) asserting
the invalidity of this Agreement or any of the Related Documents, (ii)
seeking to prevent the issuance of the Notes or the consummation of any
of the transactions contemplated by this Agreement or any of the Related
Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by Vendor Services of its
obligations under, or the validity or enforceability of, this Agreement
or any of the Related Documents or (iv) seeking to affect adversely the
federal income tax or other federal, state or local tax attributes of, or
seeking to impose any excise, franchise, transfer or similar tax upon,
the transfer and acquisition of the Leases hereunder or under the
Contribution and Servicing Agreement.
(i) Chief Executive Offices. The chief executive office of Vendor
Services is located at 1100 Landmark Towers, 345 St. Peter Street, St.
Paul, MN 55102, and the offices where Vendor Services keeps its records
concerning the Leases and related documents are at [address].
SECTION 3.2 Representations and Warranties of Lease Finance. Lease
Finance makes the following representations and warranties, on which Vendor
Services relies in selling, assigning, transferring and conveying the Leases to
Lease Finance hereunder. Such representations are made as of the Closing Date
but shall survive the sale, transfer and assignment of the Leases hereunder and
the transfer thereof by Lease Finance to the LLC under the Contribution and
Servicing Agreement.
(a) Organization and Good Standing. Lease Finance has been duly
organized and is validly existing and in good standing as a corporation
under the laws of the State of Minnesota, with the power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and has, full power, authority and legal right to acquire
and own the Leases and to transfer the Leases to the LLC pursuant to the
Contribution and Servicing Agreement.
(b) Due Qualification. Lease Finance is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in each jurisdiction where the failure
to do so would
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materially and adversely affect (i) Lease Finance's ability to acquire
the Leases, (ii) the validity or enforceability of the Leases or (iii)
Lease Finance's ability to perform its obligations hereunder and under
the Related Documents.
(c) Power and Authority. Lease Finance has the power and authority
to execute and deliver this Agreement and its Related Documents and to
carry out its terms and their terms, respectively, and to acquire the
Leases and the Equipment; and the execution, delivery and performance of
this Agreement and its Related Documents and all of the documents
required pursuant hereto or thereto have been duly authorized by Lease
Finance by all necessary action.
(d) No Consents. Lease Finance holds all necessary licenses,
certificates and permits from all government authorities necessary for
conducting its business as it is presently conducted, and is not required
to obtain the consent of any other party or any consent, license,
approval or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except for such consents, licenses, approvals or
authorizations, or registrations or declarations, as shall have been
obtained or filed, as the case may be, prior to the Closing Date.
(e) Binding Obligation. This Agreement and each of Lease Finance's
Related Documents constitutes a legal, valid and binding obligation of
Lease Finance, enforceable against Lease Finance in accordance with its
terms; and this Agreement and each of Lease Finance's Related Documents
constitute legal, valid and binding obligations of Lease Finance,
enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(f) No Violation. The execution, delivery and performance by Lease
Finance of this Agreement, the consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of this Agreement and the Related Documents do
not and will not conflict with, result in any breach of any of the terms
and provisions of or constitute (with or without notice or lapse of time,
or both) a default under the certificate of incorporation or bylaws of
Lease Finance, or any indenture, agreement, mortgage, deed of trust or
other instrument to which Lease Finance is a party or by which Lease
Finance is bound or to which any of its properties are subject, or result
in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument (other
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than the Contribution and Servicing Agreement and the Indenture), or
violate any law, order, rule or regulation, applicable to Lease Finance
or its properties, of any federal or state regulatory body or any court,
administrative agency, or other governmental instrumentality having
jurisdiction over Lease Finance or any of its properties.
(g) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of Lease Finance, threatened against Lease
Finance, before any court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality having jurisdiction over
Lease Finance or its properties: (i) asserting the invalidity of this
Agreement or any of the Related Documents, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or
any of the Related Documents, (iii) seeking any determination or ruling
that might materially and adversely affect the performance by Lease
Finance of its obligations under, or the validity or enforceability of,
this Agreement or any of the Related Documents or (iv) that may adversely
affect the federal or state income tax attributes of, or seeking to
impose any excise, franchise, transfer or similar tax upon, the transfer
and acquisition of the Leases hereunder or the transfer of the Leases to
the LLC pursuant to the Contribution and Servicing Agreement.
(h) Chief Executive Offices. The chief executive office of Lease
Finance is located at 1100 Landmark Towers, 345 St. Peter Street, St.
Paul, MN 55102, and the offices where Lease Finance keeps its records
concerning the Leases and related documents are at [address].
In the event of any breach of a representation and warranty made by Lease
Finance hereunder, Vendor Services covenants and agrees that (i) it will not
take any action or pursue any remedy that it may have hereunder, in law, in
equity or otherwise, until a year and a day have passed since the date on which
all Notes have been paid in full, and (ii) any remedy it may have hereunder is
subject to Section 6.12. Each of Vendor Services and Lease Finance agree that
damages will not be an adequate remedy for breach of the foregoing covenant and
that this covenant may be specifically enforced by Lease Finance on behalf of
the LLC.
ARTICLE IV
COVENANTS OF VENDOR SERVICES
SECTION 4.1 Protection of Title of Lease Finance and the LLC.
(a) At or prior to the Closing Date, Vendor Services shall have filed
or caused to be filed UCC-1 financing statements, executed by Vendor Services,
as seller or debtor, naming Lease Finance as secured party and the LLC as
assignee and
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(i) describing the Leases and other property described in Section 2.1 as
collateral, filed with the office of the Secretary of State of the State of
Minnesota, and (ii) describing the Equipment as collateral, filed with the
appropriate filing office in those jurisdictions where Equipment subject to
Leases constituting at least 75% of the Statistical Pool Principal Balance and
at lease 75% of the aggregate Book Value as of the Cut-Off Date is located.
Vendor Services shall deliver (or cause to be delivered) to Lease Finance, the
LLC and the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
In the event that Vendor Services fails to perform its obligations under this
subsection, Lease Finance or the LLC may do so at the expense of Vendor
Services.
(b) If Vendor Services changes its name, identity, or corporate
structure in any manner that would, could or might make any financing statement
or continuation statement filed by Vendor Services (or by Lease Finance or the
LLC on behalf of Vendor Services) in accordance with paragraph (a) above,
seriously misleading within the meaning of (S) 9-402(7) of the UCC, it shall
give Lease Finance and the LLC written notice thereof no later than 10 days
following the occurrence of such change, and shall file appropriate amendments
to all such previously filed financing statements and continuation statements
within the time period required by the UCC.
(c) If Vendor Services relocates its principal executive office and,
as a result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement, it shall give Lease
Finance, the LLC and the Trustee written notice thereof; and shall promptly file
such appropriate amendments or financing statements within the time period
required by the UCC.
(d) Vendor Services shall at all times maintain its principal
executive office, and any office from which it services Leases, within the
United States of America.
(e) Vendor Services shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Leases, the Equipment and
the other items described in Section 2.1(b) to Lease Finance, and the conveyance
of the Leases by Lease Finance to the LLC, the master computer records
(including archives) of Vendor Services that shall refer to a Lease, any
Equipment or any of the other items described in Section 2.1(b) indicate clearly
that such Lease, Equipment or other item described in Section 2.1(b) has been
sold to Lease Finance and that such Lease has been conveyed by Lease Finance to
the LLC. Indication of the LLC's ownership of a Lease shall be deleted from or
modified on any of Vendor Services's computer systems when, and only when, the
Lease has been paid in full, liquidated (including receipt of all recoveries
reasonably expected to be collected) or purchased by Vendor Services or Lease
Finance.
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(f) If at any time Vendor Services shall propose to sell, grant a
security interest in, or otherwise transfer any interest in lease contracts of a
character similar to the Leases to any prospective purchaser, lender or other
transferee, Vendor Services shall give to such prospective purchaser, lender, or
other transferee computer tapes, records, or print-outs (including any restored
from archives) that, if they shall refer in any manner whatsoever to any Lease,
shall indicate clearly that such Lease has been sold to Lease Finance and is
owned by the LLC. Vendor Services and Lease Finance agree that, if any one of
them receives an inquiry from a bona fide potential creditor regarding whether
any lease contract or item of equipment is identified on the Schedule of Leases,
they will instruct the Trustee to disclose the contents of the Schedule of
Leases to such potential creditor in accordance with the provisions of Section
11.17 of the Indenture.
(g) If Vendor Services receives payments in respect of Leases, any
Equipment or any of the other items described in Section 2.1(b), Vendor Services
agrees to pay or cause to be paid to the Servicer all such payments as soon as
practicable after identification thereof, but in no event later than two
Business Days after receipt thereof by Vendor Services.
(h) Vendor Services shall notify Lease Finance and the Trustee within
three Business Days after becoming aware of any Lien on any Lease, Equipment or
other item described in Section 2.1(b), other than the conveyances hereunder or
under the Contribution and Servicing Agreement.
(i) Vendor Services will promptly pay and discharge all taxes,
assessments, levies and other governmental charges imposed on it which may
materially and adversely affect any of the Leases, Equipment or other items
described in Section 2.1(b), or Lease Finance's rights with respect thereto.
(j) Vendor Services hereby agrees that it will perform its obligations
under the agreements relating to the Leases in conformity with its customary and
usual policies and procedures relating to the Leases.
(k) No later than 10 days after the Closing Date, Vendor Services
shall deliver to Lease Finance and the Trustee a written certification that all
notifications and consents required by paragraph (J) in the Schedule of
Representations hereto have been given or obtained, as applicable.
SECTION 4.2 Other Liens or Interests. Except for the conveyances
hereunder, with respect to any Lease, Vendor Services will not sell, pledge,
assign or transfer to any other Person, or grant, create, incur, assume or
suffer to exist any Lien on such Lease or any interest therein, and Vendor
Services shall defend the right, title, and interest of Lease Finance and the
LLC in and to such Lease against all claims of third parties claiming through or
under Vendor Services.
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SECTION 4.3 Costs and Expenses. Vendor Services shall pay all
reasonable costs and disbursements in connection with the performance of its
obligations hereunder and under its Related Documents.
SECTION 4.4 Indemnification.
Vendor Services shall defend, indemnify and hold harmless Lease
Finance, the LLC, the Trustee and the Noteholders from and against:
(a) any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from any breach of any representations
and warranties of Vendor Services contained herein (other than those set forth
in the Schedule of Representations, the exclusive remedies for which are
specified in Section 5.1);
(b) any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from the use, ownership or operation of
any item of Equipment (notwithstanding the disclaimer of Section 2.1(c)); and,
in addition, Vendor Services shall cause Lease Finance and the LLC to be named
as an additional insured under its liability insurance policies;
(c) any and all costs, expenses, losses, damages, claims and
liabilities arising out of or resulting from any action taken, or failed to be
taken, by it in respect of any portion of the Trust Assets other than any action
taken in accordance with this Agreement or any Related Document;
(d) any taxes that may at any time be asserted against Lease Finance,
the LLC, the Trustee and the Noteholders with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales, gross
receipts, general corporation, tangible or intangible personal property,
privilege, or license taxes (but not including any taxes asserted with respect
to, and as of the date of, the sale, transfer and assignment of the Leases to
Lease Finance and of the Trust Assets to the LLC or the issuance and original
sale of the Notes, or asserted with respect to ownership of the Leases or the
Trust Assets, which shall be indemnified by Vendor Services pursuant to clause
(e) below), or federal, state or other income taxes, arising out of
distributions on the Notes or transfer taxes arising in connection with the
transfer of the Notes) and costs and expenses in defending against the same,
arising or imposed against such Persons by reason of the acts to be performed by
Vendor Services under this Agreement;
(e) any taxes which may at any time be asserted against such Persons
with respect to, and as of the date of, the conveyance or ownership of the
Leases and the conveyance or ownership of the Trust Assets under the Transfer
Agreement or the Contribution and Servicing Agreement or the issuance and
original sale of the Notes, including, without limitation, any sales, gross
receipts, personal property, tangible or intangible personal property, privilege
or license taxes (but not including
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any federal or other income taxes, including franchise taxes, arising out of
the transactions contemplated hereby or transfer taxes arising in connection
with the transfer of Notes) and costs and expenses in defending against the
same, arising or imposed against such Persons;
(f) any and all costs, expenses, losses, claims, damages, and
liabilities to the extent that such cost, expense, loss, claim, damage, or
liability arose out of, or was imposed upon Lease Finance, the LLC, the Trustee
and the Noteholders through the negligence, willful misfeasance, or bad faith of
Vendor Services in the performance of its duties under this Agreement or by
reason of reckless disregard of the obligations and duties of Vendor Services
under this Agreement;
(g) any loss, liability or expense incurred by reason of the violation
by Vendor Services of federal or state securities laws in connection with the
registration or the sale of the Notes; and
(h) any loss, liability or expense imposed upon, or incurred by, Lease
Finance, the LLC, the Trustee or the Noteholders as a result of the failure of
any Lease, or the sale of the related Equipment, to comply with all requirements
of applicable law, but only to the extent such loss, liability or expense is not
covered by the repurchase of such Lease and Equipment as required by Section
5.1.
Indemnification under this Section 4.4 shall include reasonable fees
and expenses of counsel and expenses of litigation and shall survive termination
of the Indenture. The indemnity obligations hereunder shall be in addition to
any obligation that Vendor Services may otherwise have.
Promptly after receipt by an indemnified party under this Section 4.4
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or
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consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from
all liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by
or on behalf of any indemnified party.
SECTION 4.5 Negative Covenant. Vendor Services (a) shall not engage
in any transaction or series of transactions or otherwise take any action or
omit to take any action which could result in a determination that Vendor
Services shall have received less than reasonably equivalent value for the
transfer and conveyance of the Leases and the other property described in
Section 2.1(b) to Lease Finance either on the Closing Date or thereafter and (b)
in any event, shall not use the proceeds received from the transfer and
conveyance of the Leases and the other property described in Section 2.1(b)
either on the Closing Date or thereafter (i) to pay any dividend or make any
distribution on or in respect of its capital stock or (ii) to purchase, redeem
or otherwise acquire or retire for value any of its capital stock or the capital
stock of any of its affiliates (other than any of its wholly owned
subsidiaries), if, in the case of either (i) or (ii), at the time of any such
action and after giving effect thereto (x) the present fair saleable value of
the assets of Vendor Services is less than the amount that would be required to
be paid on or in respect of Vendor Services's total liabilities (including a
reasonable estimate of its contingent liabilities (net of tax benefits to the
extent reasonably likely to be realized)), (y) the assets of Vendor Services
constitute an unreasonably small capital to carry out Vendor Services's business
as it is then conducted or as Vendor Services then intends to conduct its
business or (z) Vendor Services has incurred, intends to incur, or believes that
it will incur, debts that would be beyond Vendor Services's ability to pay as
they mature.
ARTICLE V
REPURCHASES
SECTION 5.1 Repurchase of Leases Upon Breach of Representation or
Warranty. Upon the occurrence of a Repurchase Event, Vendor Services shall,
unless such breach shall have been cured in all material respects, repurchase
such Lease from the LLC and the related Equipment from Lease Finance and, on or
before the related Deposit Date, Vendor Services shall pay the Purchase Amount
to the Servicer on behalf of the LLC and Lease Finance pursuant to Section 2.6
of the Contribution and Servicing Agreement. It is understood and agreed that,
except as set forth in the following paragraph, the obligation of Vendor
Services to repurchase any Lease and the related Equipment (if applicable) as to
which a breach has occurred and is continuing shall, if such obligation is
fulfilled, constitute the sole remedy against Vendor Services for such breach
available to Lease Finance, the LLC, the
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<PAGE>
Noteholders or the Trustee on behalf of the Noteholders. The provisions of
this Section 5.1 are intended to grant the LLC and the Trustee a direct right
against Vendor Services to demand performance hereunder, and in connection
therewith, Vendor Services waives any requirement of prior demand against
Lease Finance with respect to such repurchase obligation. Notwithstanding any
other provision of this Agreement or the Contribution and Servicing Agreement
to the contrary, the obligation of Vendor Services under this Section shall
not terminate upon a termination of Vendor Services as Servicer under the
Contribution and Servicing Agreement and shall be performed by Vendor Services
in accordance with the terms hereof notwithstanding the failure of the
Servicer or Lease Finance to perform any of their respective obligations with
respect to such Lease under the Contribution and Servicing Agreement.
In addition to the foregoing and notwithstanding whether the related
Lease and the related Equipment (if applicable) shall have been purchased by
Vendor Services, Vendor Services shall indemnify Lease Finance, the LLC, the
Trustee and the Noteholders against all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such Repurchase Events.
SECTION 5.2 Reassignment of Purchased Leases and Equipment. Upon
deposit in the Collection Account of the Purchase Amount of any Lease and the
related Equipment (if applicable) repurchased by Vendor Services under Section
5.1, Lease Finance and the LLC shall take such steps as may be reasonably
requested by Vendor Services in order to assign to Vendor Services all of Lease
Finance's and the LLC's right, title and interest in and to such Lease and the
related Equipment (if applicable) and all security and documents conveyed to
Lease Finance and the LLC directly relating thereto, without recourse,
representation or warranty, except as to the absence of liens, charges or
encumbrances created by or arising as a result of actions of Lease Finance or
the LLC. Such assignment shall be a sale and assignment outright, and not for
security. If, following the reassignment of a Purchased Lease and the related
Equipment (if applicable), in any enforcement suit or legal proceeding, it is
held that Vendor Services may not enforce any such Lease on the ground that it
shall not be a real party in interest or a holder entitled to enforce the Lease,
Lease Finance and the LLC shall, at the expense of Vendor Services, take such
steps as Vendor Services deems reasonably necessary to enforce the Lease,
including bringing suit in Lease Finance's or the LLC's name or the name of the
Trustee on behalf of the Noteholders.
SECTION 5.3 Waivers. No failure or delay on the part of Lease
Finance or the LLC in exercising any power, right or remedy under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or remedy preclude any other or future exercise thereof or
the exercise of any other power, right or remedy.
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<PAGE>
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Reserved.
SECTION 6.2 Merger or Consolidation of Vendor Services or Lease
Finance. Any corporation or other entity (i) into which Vendor Services or
Lease Finance may be merged or consolidated, (ii) resulting from any merger or
consolidation to which Vendor Services or Lease Finance is a party or (iii)
succeeding to the business of Vendor Services or Lease Finance, shall be the
successor to Vendor Services or Lease Finance, as the case may be (without
relieving Vendor Services or Lease Finance of its responsibilities hereunder, if
it survives such merger or consolidation) without the execution or filing of any
document or any further act by any of the parties to this Agreement. Vendor
Services or Lease Finance shall promptly inform the other parties, the LLC and
the Trustee of such merger, consolidation or purchase and assumption.
Notwithstanding the foregoing, as a condition to the consummation of the
transactions referred to in clauses (i), (ii) and (iii) above, (x) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Sections 3.1 (other than subsections (b) and (i)) and 3.2 (other
than subsections (a) and (i)) of this Agreement shall have been breached (for
purposes hereof, such representations and warranties shall speak as of the date
of the consummation of such transaction), (y) Vendor Services or Lease Finance,
as applicable, shall have delivered written notice of such consolidation, merger
or purchase and assumption to the Rating Agencies prior to the consummation of
such transaction and shall have delivered to the LLC and the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section 6.2 and that all conditions precedent, if any, provided for in this
Agreement, relating to such transaction have been complied with, and (z) Vendor
Services or Lease Finance, as applicable, shall have delivered to the LLC and
the Trustee an Opinion of Counsel, stating that, in the opinion of such counsel,
either (A) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to preserve and protect
the interest of the LLC in the Trust Assets and reciting the details of the
filings or (B) no such action shall be necessary to preserve and protect such
interest.
SECTION 6.3 Limitation on Liability of Vendor Services and Others.
(a) Except with respect to the Representations and Warranties herein
and in the Schedule of Representations, and the indemnification obligations set
forth in Section 4.4 herein, Vendor Services may rely in good faith on the
advice of counsel or on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising under this Agreement.
Vendor Services shall not be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its obligations under this
Agreement or its
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<PAGE>
Related Documents and that in its reasonable judgment may involve it in any
expense or liability.
(b) Any officer, director, employee or agent of Vendor Services may
rely in good faith on the advice of counsel or on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising under this Agreement. Vendor Services shall be under no obligation to
appear in, prosecute or defend any legal action that is not incidental to its
obligations under this Agreement or its Related Documents and that in its
reasonable judgment may involve it in any expense or liability.
SECTION 6.4 Vendor Services May Own Notes. Subject to the provisions
of the Contribution and Servicing Agreement, Vendor Services, and any Affiliate
of Vendor Services, may in its individual or any other capacity become the owner
or pledgee of Notes with the same rights as it would have if it were not Vendor
Services or an Affiliate thereof (except as provided in Section 1.6).
SECTION 6.5 Amendment.
(a) This Agreement may be amended by Vendor Services and Lease Finance
without the consent of the LLC, the Trustee or the Noteholders (i) to cure any
ambiguity; (ii) to correct or supplement any provisions in this Agreement that
may be inconsistent with any other provisions herein; or (iii) to make any other
provisions with respect to matters or questions arising under this Agreement
that are not inconsistent with the provisions hereof, provided, however, that
such action shall not, as evidenced by an Opinion of Counsel delivered to the
LLC and the Trustee, adversely affect in any material respect the interests of
the Noteholders.
(b) This Agreement may also be amended from time to time by Vendor
Services and Lease Finance, with the prior written consent of a Note Majority
(which consent of any Holder of a Note given pursuant to this Section or
pursuant to any other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such Note and of any Note
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon the Note), for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, or of modifying in any manner the rights of the
Noteholders; provided, however, that no such amendment shall (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Leases, distributions that shall be required to be
made on any Note or the applicable rate of interest payable thereon, (ii) amend
any provisions of Section 5.06 or 8.03 of the Indenture in such a manner as to
affect the priority of payment of interest or principal to Noteholders, or (iii)
reduce the aforesaid percentage required to consent to any such amendment or any
waiver hereunder, without the consent of the Holders of all Notes then
Outstanding and affected thereby; and provided,
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<PAGE>
further, that no such amendment shall be effective unless and until the Rating
Agency Condition has been satisfied.
(c) Promptly after the execution of any such amendment or consent, the
LLC or the Trustee, as applicable, shall furnish written notification of the
substance of such amendment or consent to each Noteholder.
(d) It shall not be necessary for the consent of Noteholders pursuant
to this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Noteholders provided for in this Agreement) and of evidencing the authorization
of the execution thereof by Noteholders shall be subject to such reasonable
requirements as the LLC or the Trustee, as applicable, may prescribe, including
the establishment of record dates. The consent of any Holder of a Note given
pursuant to this Section or pursuant to any other provision of this Agreement
shall be conclusive and binding on such Holder and on all future Holders of such
Note and of any Note issued upon the transfer thereof or in exchange thereof or
in lieu thereof whether or not notation of such consent is made upon the Note.
SECTION 6.6 Notices. All demands, notices and communications to
Vendor Services or Lease Finance hereunder shall be in writing, personally
delivered, or sent by telecopier (subsequently confirmed in writing), reputable
overnight courier or mailed by certified mail, return receipt requested, and
shall be deemed to have been given upon receipt:
(a) in the case of Vendor Services, to 1100 Landmark Towers, 345 St.
Peter Street, St. Paul, Minnesota 55102, Attention: General Counsel, or such
other address as shall be designated by Vendor Services in a written notice
delivered to the other parties and to the LLC and the Trustee; and
(b) in the case of Lease Finance, to 1100 Landmark Towers, 345 St.
Peter Street, St. Paul, Minnesota 55102, Attention: General Counsel, or such
other address as Lease Finance shall be designated by a written notice delivered
to the other parties and to the LLC and the Trustee.
SECTION 6.7 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and the Related Documents set forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement and the
Related Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
SECTION 6.8 Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed
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<PAGE>
severable from the remaining covenants, provisions or terms of this Agreement
and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
SECTION 6.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
SECTION 6.10 Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 6.11 Conveyance of the Leases to the Trust. Vendor Services
acknowledges that Lease Finance intends, pursuant to the Contribution and
Servicing Agreement, to convey the Leases, the Residual Realizations and the
other items described in Section 2.1(b), together with its rights under this
Agreement, to the LLC on the Closing Date. Vendor Services acknowledges and
consents to such conveyance and waive any further notice thereof and covenants
and agrees that the representations and warranties of Vendor Services contained
in this Agreement and the rights of Lease Finance hereunder are intended to
benefit the LLC, the Trustee and the Noteholders. In furtherance of the
foregoing, Vendor Services covenants and agrees to perform its duties and
obligations hereunder, in accordance with the terms hereof, for the benefit of
the LLC, the Trustee and the Noteholders and that, notwithstanding anything to
the contrary in this Agreement, Vendor Services shall be directly liable to the
LLC and the Trustee (notwithstanding any failure by the Servicer or Lease
Finance to perform its duties and obligations hereunder or under the
Contribution and Servicing Agreement) and that the LLC and the Trustee may
enforce the duties and obligations of Vendor Services under this Agreement
against Vendor Services for the benefit of the Noteholders.
SECTION 6.12 Nonpetition Covenant. Neither Vendor Services nor Lease
Finance shall petition or otherwise invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the LLC (or, in the case of Vendor Services, against Lease Finance) under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the LLC (or Lease Finance) or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the LLC (or Lease
Finance).
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Transfer Agreement to
be duly executed by their respective officers as of the day and year first above
written.
GREEN TREE LEASE FINANCE II, INC.,
as Transferee
By ___________________________
Name:
Title:
GREEN TREE VENDOR SERVICES
CORPORATION,
In its individual capacity and as Servicer
By ___________________________
Name:
Title:
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<PAGE>
SCHEDULE A
SCHEDULE OF LEASES AND EQUIPMENT
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<PAGE>
SCHEDULE B
SCHEDULE OF REPRESENTATIONS AND WARRANTIES
OF VENDOR SERVICES
With respect to each Lease as of the Cut-Off Date, Vendor Services
represents and warrants as follows:
A. Characteristics of Leases. Each Lease (i) constitutes a valid,
binding and enforceable payment obligation of the Obligor in accordance with its
terms (except as may be limited by applicable bankruptcy, insolvency or other
similar laws affecting the enforceability of creditors' rights generally and the
availability of equitable remedies), (ii) has been duly and properly sold,
assigned and conveyed by Vendor Services to Lease Finance, (iii) was originated
by Vendor Services in the ordinary course of its business, or (in the case of
any Lease purchased by Vendor Services) was acquired by Vendor Services for
proper consideration and was validly assigned to Vendor Services by the
originator of such Lease, and (iv) contains customary and enforceable provisions
adequate to enable realization against the Obligor and/or the related Equipment
(although no representation or warranty is made with respect to the perfection
or priority of any security interest in such related Equipment).
B. No Waivers. No provisions of any Lease have been waived, altered
or modified in any material respect, except as indicated in the Lease File.
C. No Consumer Leases. No Lease is a "consumer lease" as defined in
Article 2A of the Uniform Commercial Code, except for a de minimis number of
Leases.
D. Acceptance of Equipment. To the best of Vendor Services's
knowledge, each Obligor has accepted the related Equipment and has had
reasonable opportunity to inspect and test such Equipment.
E. Compliance with Law. All requirements of applicable Federal,
state and local laws, and regulations thereunder, in respect of all of the
Leases, have been complied with in all material respects.
F. No Default. There is no known default, breach, violation or
event permitting cancellation or termination of the Lease by the lessor under
the terms of any Lease (other than Scheduled Payment delinquencies (in excess of
10% of the Scheduled Payment due) of not more than 59 days), and (except for
payment extensions and waivers of Administrative Fees in accordance with Vendor
Services's servicing and collection policies and procedures) there has been no
waiver of any of the foregoing; and as of the Cut-Off Date, no related Equipment
had been repossessed.
B-1
<PAGE>
G. The Obligors. Each Obligor (i) is located in the United States,
and (ii) is not (a) the United States of America or any State or local
government or any agency, department, subdivision or instrumentality thereof
(except for Leases representing no more than 3% of the Statistical Pool
Principal Balance) or (b) Vendor Services or any Affiliate thereof .
H. Obligor Bankruptcy. Each Lease was entered into by an Obligor
who, at the Cut-Off Date, had not been identified on the records of Vendor
Services as being the subject of a current bankruptcy proceeding.
I. Delinquencies. No Lease has a Scheduled Payment delinquency (in
excess of 10% of the Scheduled Payment due) of more than 59 days past due as of
the Cut-Off Date.
J. Assignment to the LLC. Each Lease may be sold, assigned and
transferred by Vendor Services to Lease Finance, and may be assigned and
transferred by Lease Finance to the LLC, without the consent of, or prior
approval from, or any notification to, the applicable Obligor, other than (i)
certain Leases (which, in proportion to the aggregate of all of the Leases, are
not material) that require notification of the assignment to the Obligor, which
notification will be given by the Servicer not later than 10 days following the
Closing Date, and (ii) Leases (which, in proportion to the aggregate of all of
the Leases, are not material) that require the consent of the Obligor, which
consent will be obtained not more than 10 days following the Closing Date.
K. Lease Not Assumable. Each Lease prohibits the sale, assignment
or transfer of the Obligor's interest therein, the assumption of the Lease by
another person in a manner that would release the Obligor thereof from the
Obligor's obligation, or any sale, assignment or transfer of the related
Equipment, without the prior consent of the lessor, other than Leases which may
(i) permit assignment to a subsidiary, corporate parent or other affiliate, (ii)
permit the assignment to a third party, provided the Obligor remains liable
under the Lease, or (iii) permit assignment to a third party with a credit
standing (determined by Vendor Services in accordance with its underwriting
policy and practice at the time for an equivalent contract type, term and
amount) equal to or better than the original Obligor.
L. Payments in United States Dollars. The Obligor under each Lease
is required to make payments thereunder (i) in United States dollars, and (ii)
in fixed amounts and on fixed and predetermined dates.
M. Maintenance and Repair. Each Lease requires the Obligor to
assume responsibility for payment of all expenses in connection with the
maintenance and repair of the related Equipment, the payment of all premiums for
insurance of such Equipment and the payment of all taxes (including sales and
property taxes) relating to such Equipment.
B-2
<PAGE>
N. Scheduled Payments. Each Lease requires the Obligor thereunder
to make all Scheduled Payments thereon under all circumstances and regardless of
the condition or suitability of the related Equipment and notwithstanding any
defense, set-off or counterclaim that the Obligor may have against the
manufacturer, lessor or lender (as the case may be).
O. Repair or Replacement of Damaged Equipment. Under each Lease, if
the Equipment is damaged or destroyed, the Obligor is required either (i) to
repair such Equipment, (ii) to make a termination payment to the lessor in an
amount not less than the Required Payoff Amount, or (iii) in some cases, to
replace such damaged or destroyed Equipment with other equipment of comparable
use and value.
P. No Termination by Lessee. None of the Leases permit the Obligor
to terminate the Lease prior to the latest Stated Maturity Date or to otherwise
prepay the amounts due and payable thereunder, except for a de minimis number of
Leases which allow for an early termination or prepayment upon payment of an
amount which is not less than the Required Payoff Amount.
Q. No Transfer of Title Required. It is not a precondition to the
valid transfer or assignment of Vendor Services interest in any of the Equipment
related to any Lease that title to such Equipment be transferred on the records
of any governmental or quasi-governmental agency, body or authority.
R. Good Title. Immediately prior to the sale, assignment and
conveyance of each Lease by Vendor Services to Lease Finance, Vendor Services
had good title to such Lease and Vendor Services's interest in the related
Equipment (subject to the terms of such Lease) and was the sole owner thereof,
free of any Lien.
S. No Impairment. No person has a participation in or other right
to receive Scheduled Payments under any Lease, and neither Lease Finance nor
Vendor Services has taken any action to convey any right to any Person that
would result in such Person having a right to Scheduled Payments received with
respect to any Lease.
T. Lawful Assignment. The sale, transfer and assignment of such
Lease and Vendor Services interest in the related Equipment to Lease Finance
under this Agreement, and the transfer and conveyance of such Lease from, and
the grant of rights to the related Residual Realizations by, Lease Finance to
the LLC under the Contribution and Servicing Agreement, are not unlawful, void
or voidable under the laws of the jurisdiction applicable to such Lease.
U. All Filings Made. All filings and other actions required to be
made, taken or performed by any Person in any jurisdiction to give the LLC a
first priority perfected lien or ownership interest in the Leases and a first
priority
B-3
<PAGE>
perfected security interest in Vendor Services's interest in the Equipment
have been made, taken or performed.
V. Lease Files Complete. There exists a Lease File pertaining to
each Lease, and such Lease File contains the Lease or a facsimile copy thereof.
W. One Original. There is only one original executed copy of each
Lease or, if there are multiple originals, all such originals are in the
possession of Vendor Services or the signed original in the possession of Vendor
Services is noted thereon as being the only copy that constitutes chattel paper.
X. Chattel Paper. The Leases constitute chattel paper within the
meaning of the UCC as in effect in the States of Minnesota and Delaware (other
than those Leases in which the lessor is financing exclusively the Obligor's
software license or maintenance contract for Equipment, which Leases, in
proportion to the Statistical Pool Principal Balance, are not material).
Y. Marking Records. By the Closing Date, the portions of the
electronic master record of Vendor Services relating to the Leases will have
been clearly and unambiguously marked to show that the Leases constitute part of
the Trust Assets and are owned by the LLC in accordance with the terms of the
Contribution and Servicing Agreement.
Z. Computer Tape. The Computer Tape containing information with
respect to the Leases that was made available by Vendor Services to the Trustee
on the Closing Date and was used to select the Leases was complete and accurate
in all material respects as of the Cut-Off Date and includes a description of
the same Leases that are described in the Schedule of Leases to the Contribution
and Servicing Agreement.
AA. Schedule of Leases. The information with respect to the Leases
listed on the Schedule of Leases attached to the Contribution and Servicing
Agreement is true, correct and complete in all material respects.
BB. No Fraud or Misrepresentation. Each Lease was originated by
Vendor Services or acquired by Vendor Services and was sold and assigned by
Vendor Services to Lease Finance without any fraud or misrepresentation on the
part of Vendor Services.
CC. Adverse Selection. No selection procedures adverse to the
Noteholders were utilized in selecting the Lease from those leases owned by
Vendor Services on the Cut-Off Date.
B-4
<PAGE>
================================================================================
CONTRIBUTION AND SERVICING AGREEMENT
AMONG
GREEN TREE LEASE FINANCE 1997-1, LLC
ISSUER
GREEN TREE LEASE FINANCE II, INC.
CONTRIBUTOR
GREEN TREE VENDOR SERVICES CORPORATION
IN ITS INDIVIDUAL CAPACITY AND AS SERVICER
[________]
TRUSTEE
-------------------------
DATED AS OF DECEMBER 1, 1997
-------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION............................................................. 1
ARTICLE I DEFINITIONS............................................. 1
SECTION 1.1. Definitions........................................ 1
SECTION 1.2. Usage of Terms..................................... 9
SECTION 1.3. Calculations....................................... 9
SECTION 1.4. Section References................................. 9
SECTION 1.5. No Recourse........................................ 10
ARTICLE II CONVEYANCE OF LEASES.................................... 10
SECTION 2.1. Conveyance of Leases and Related Assets............ 10
SECTION 2.2. Custody of Lease Files............................. 11
SECTION 2.3. Further Assurances................................. 12
SECTION 2.4. Representations and Warranties of
Contributor ....................................... 13
SECTION 2.5. Nonpetition Covenant............................... 16
SECTION 2.6. Purchase of Leases Upon Breach of
Representations and Warranties..................... 16
ARTICLE III ADMINISTRATION AND SERVICING OF LEASES.................. 18
SECTION 3.1. Duties of the Servicer
SECTION 3.2. Collection of Lease Payments;
Modifications of Leases............................ 19
SECTION 3.3. Realization Upon Leases............................ 21
SECTION 3.4. Insurance, Maintenance and Taxes................... 22
SECTION 3.5. Maintenance of Security Interests in
Equipment.......................................... 25
SECTION 3.6. Covenants, Representations, and Warranties
of Servicer........................................ 25
SECTION 3.7. Sub-Servicers...................................... 27
SECTION 3.8. Total Servicing Fee; Payment of Expenses
by Servicer ....................................... 27
SECTION 3.9. Servicer's Certificate............................. 28
SECTION 3.10. Annual Statement as to Compliance; Notice
of Servicer Termination Event...................... 28
SECTION 3.11. Annual Independent Accountants' Report............. 29
SECTION 3.12. Access to Certain Documentation and
Information Regarding Leases....................... 30
SECTION 3.13. Certain Duties of the Servicer..................... 30
SECTION 3.14. Duties of the Servicer under the Indenture......... 30
SECTION 3.15. Fidelity Bond...................................... 31
ARTICLE IV COLLECTIONS AND DEPOSITS................................ 32
SECTION 4.1. Initial Deposit.................................... 32
SECTION 4.2. Collections........................................ 32
SECTION 4.3. Application of Collections......................... 33
SECTION 4.4. Net Deposits....................................... 34
SECTION 4.5. Servicer Advances.................................. 35
<PAGE>
ARTICLE V TERMINATION............................................. 36
SECTION 5.1. Optional Purchase of All Leases;
Liquidation of Trust Assets........................ 36
ARTICLE VI THE CONTRIBUTOR......................................... 37
SECTION 6.1. Liability of Contributor........................... 37
SECTION 6.2. Merger or Consolidation of, or Assumption
of the Obligations of, Contributor; Amendment
of Certificate of Incorporation.................... 37
SECTION 6.3. Limitation on Liability of Contributor and
Others............................................. 38
SECTION 6.4. Contributor May Own Notes.......................... 38
ARTICLE VII THE SERVICER............................................ 39
SECTION 7.1. Liability of Servicer; Indemnities................. 39
SECTION 7.2. Merger or Consolidation of, or Assumption
of the Obligations of, the Servicer................ 40
SECTION 7.3. Limitation on Liability of Servicer and
Others............................................. 40
SECTION 7.4. Servicer Not to Resign............................. 41
SECTION 7.5. Corporate Existence................................ 41
ARTICLE VIII SERVICER TERMINATION EVENTS............................. 42
SECTION 8.1. Servicer Termination Event......................... 42
SECTION 8.2. Consequences of a Servicer Termination
Event.............................................. 43
SECTION 8.3. Trustee to Act; Appointment of Successor........... 44
SECTION 8.4. Notification to Noteholders........................ 44
SECTION 8.5. Waiver of Past Defaults............................ 44
ARTICLE IX ADDITION AND SUBSTITUTION OF LEASES..................... 46
SECTION 9.1. Substitution and Addition.......................... 46
SECTION 9.2. Procedure.......................................... 47
SECTION 9.3. Objection and Repurchase........................... 48
SECTION 9.4. Vendor Services' and Servicer's Subsequent
Obligations........................................ 48
ARTICLE X MISCELLANEOUS PROVISIONS................................ 49
SECTION 10.1. Amendment.......................................... 49
SECTION 10.2. Protection of Title to Trust Assets................ 50
SECTION 10.3. Governing Law...................................... 52
SECTION 10.4. Severability of Provisions......................... 52
SECTION 10.5. Assignment......................................... 52
SECTION 10.6. Third-Party Beneficiaries.......................... 52
SECTION 10.7. Counterparts....................................... 52
SECTION 10.8. Intention of Parties............................... 53
SECTION 10.9. Notices............................................ 53
SECTION 10.10. Income Tax Characterization........................ 53
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EXHIBITS
Exhibit A -- Schedule of Leases and Equipment
Exhibit B -- Form of Servicer's Certificate
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THIS CONTRIBUTION AND SERVICING AGREEMENT, dated as of December 1,
1997, is made among GREEN TREE LEASE FINANCE 1997-1, LLC, a Delaware limited
liability company (the "Issuer"), GREEN TREE LEASE FINANCE II, INC., a Minnesota
corporation, as Contributor ("Lease Finance"), GREEN TREE VENDOR SERVICES
CORPORATION, a Minnesota corporation, in its individual capacity and as Servicer
(in its individual capacity, "Vendor Services"; in its capacity as Servicer, the
"Servicer"), and [__________], a [__________] [__________], as trustee under the
Indenture (the "Trustee").
In consideration of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. All terms defined in the Indenture (as
defined below) shall have the same meaning in this Agreement. Whenever
capitalized and used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accountants' Report: The report of a firm of nationally recognized
independent accountants described in Section 3.11.
Accounting Date: With respect to a Payment Date, the last day of the
preceding calendar month.
Additional Lease: An Eligible Lease acquired by the Issuer from
Vendor Services with all or a portion of the proceeds of an Early Termination
Lease that has been prepaid in full or in part.
Adjusted Lease: A Lease that has had one or more non-credit related
terms adjusted or modified by the Servicer, other than modifications permitted
by Section 3.2.
Administrative Fee: With respect to any Collection Period, all
administrative fees, expenses and charges collected in respect of the Leases
during such Collection Period, including late fees, late payment interest,
documentation fees, insurance administration charges and that portion of any
Extension Fees allocated to the Servicer.
Affiliate: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used
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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.
Agreement or "this Agreement": This Contribution and Servicing
Agreement, all amendments and supplements thereto and all exhibits and schedules
to any of the foregoing.
Book Value: With respect to any Equipment, the value of such
Equipment as shown on the accounting books and records of Vendor Services as of
the Cut-Off Date. The Book Value for each item of Equipment shall be set forth
on Exhibit A hereto.
Business Day: Any day (other than a Saturday, Sunday or legal
holiday) on which commercial banking institutions in St. Paul, Minnesota, or any
other location of any successor Servicer or successor Trustee, are open for
regular business.
Collection Account: The account designated as such in, and
established and maintained pursuant to, Section 8.02 of the Indenture.
Collection Period: With respect to a Payment Date, the calendar month
preceding the month in which such Payment Date occurs (such calendar month being
referred to as the "related" Collection Period with respect to such Payment
Date). With respect to an Accounting Date, the Collection Period in which such
Accounting Date occurs is referred to herein as the "related" Collection Period
with respect to such Accounting Date.
Collection Records: All manually prepared or computer generated
records relating to collection efforts or payment histories with respect to the
Leases.
Contributor: Green Tree Lease Finance II, Inc., a Minnesota
corporation, or its successor in interest pursuant to Section 6.2.
Cut-Off Date: December 1, 1997.
Deposit Date: With respect to any Collection Period, the Business Day
immediately preceding the related Determination Date.
Determination Date: With respect to any Collection Period, the fifth
Business Day immediately preceding the related Payment Date.
Early Lease Termination: The prepayment in full or in part, subject
to a Prepayment of the entire unpaid amount thereunder, of an Early Termination
Lease.
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Early Termination Lease: A Lease that has been terminated prior to
its Stated Maturity Date [but not a default], in accordance with Section 3.2(d).
Eligible Lease: A Lease satisfying the Representations and
Warranties.
Eligible Servicer: Vendor Services, the Trustee or another Person
which at the time of its appointment as Servicer (i) is servicing a portfolio of
equipment lease contracts, installment sale contracts, promissory notes, loan
and security agreements and/or other similar types of receivables comparable to
the Leases, (ii) is legally qualified and has the capacity to service the
Leases, (iii) has demonstrated the ability professionally and competently to
service a portfolio of equipment lease contracts, installment sale contracts,
promissory notes, loan and security agreements and other similar types of
receivables comparable to the Leases with reasonable skill and care, and (iv)
has available software which is adequate to perform its duties and
responsibilities under this Agreement.
Equipment: The Equipment subject to a Lease, as more particularly
described on Exhibit A hereto.
Extension Fees: Any fee received by the Servicer in consideration for
the granting of an extension on the payment of any Scheduled Payment due under a
Lease. [Any Extension Fees received shall be allocated as follows: (1) 50%
thereof shall be allocated to the Issuer and shall constitute Pledged Revenues;
and (2) 50% thereof shall be allocated to the Servicer and shall constitute an
Administrative Fee.]
Indenture: The Indenture, dated as of December 1, 1997, between the
Issuer and the Trustee, as the same may be amended and supplemented from time to
time.
Independent Accountants: As defined in Section 3.11(a).
Initial Pool Principal Balance: $ [___________].
Insurance, Maintenance and Tax Accounts: The accounts which are
established and maintained pursuant to Section 3.4(a).
Insurance Policy: Any insurance policy benefiting the lessor or
secured party under a Lease providing loss or physical damage, theft or similar
coverage with respect to the Equipment.
Issuer: Green Tree Lease Finance 1997-1, LLC.
Lease File: The documents, electronic entries, instruments and
writings listed in Section 2.2 pertaining to a particular Lease.
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Lease Pool Principal Balance: With respect to any Payment Date, the
sum of the Principal Balances (computed as of the related Accounting Date) for
all Leases.
Leases: The lease contracts listed on Exhibit A hereto (excluding any
such lease contract which has become a Purchased Lease) and all rights and
obligations under such contracts, including, without limitation, all monies at
any time paid or payable thereon or in respect thereof from and after the Cut-
Off Date (whether in the form of (i) Scheduled Payments (including those
Scheduled Payments due prior to, but not received as of, the Cut-Off Date, but
excluding those Scheduled Payments due on or after, but received prior to, the
Cut-Off Date), (ii) Prepayments, (iii) Liquidation Proceeds, (iv) Extension
Fees, (v) payments to be applied by the Servicer to the payment of insurance
charges, maintenance, taxes or other similar obligations, (vi) payments to be
retained by the Servicer in payment of Administrative Fees, or otherwise), and
all rights of the lessor in the related Equipment (other than any ownership
interest of the lessor in such Equipment), Insurance Policies and any other
security for the payment of amounts due under such contracts.
Lien: Any security interest, lien, charge, pledge, preference, equity
or encumbrance of any kind, including tax liens, mechanics' liens and any liens
that attach by operation of law.
Liquidated Lease: With respect to any Collection Period, (i) a Lease
which, during such Collection Period, was charged off as uncollectible by the
Servicer in accordance with its credit and collection policies and procedures
(which shall be no later than the date as of which the Servicer has repossessed
and disposed of the related Equipment and otherwise collected all proceeds
(including any proceeds of insurance to be applied as described in Section
3.4(c)(ii)) which, in the Servicer's reasonable judgment, can be collected under
such Lease) following a default thereunder or upon damage to or destruction of
such Equipment (if such Equipment is not to be replaced or repaired in
accordance with Section 3.4(c)(i)), or (ii) a Lease as to which, during such
Collection Period, 10% or more of a Scheduled Payment shall have become 180 days
delinquent.
Liquidation Proceeds: All amounts received by the Servicer (i) in
connection with the liquidation of any Lease and disposition of the related
Equipment or (ii) as insurance proceeds with respect to any damaged or destroyed
Equipment to be applied as described in Section 3.4(c)(ii), in each case net of
(a) reasonable out-of-pocket expenses incurred by or on behalf of the Servicer
in connection with the collection of such Lease and the maintenance,
repossession, repair, storage and disposition of the related Equipment
(including taxes and insurance charges, to the extent in excess of amounts
available therefor and relating to such Lease in the Insurance, Maintenance and
Tax Accounts, as well as attorneys' fees) and (b) amounts that are required to
be refunded to the Obligor on such Lease;
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provided, however, that the Liquidation Proceeds with respect to any Lease and
disposition of the related Equipment shall in no event be less than zero.
Monthly Records: All records and data maintained by the Servicer with
respect to the Leases in accordance with its customary standards, policies and
procedures.
Note Distribution Account: The account designated as such in, and
established and maintained pursuant to, Section 8.04 of the Indenture.
Note Majority: Holders of Notes representing a majority of the
Principal Balance of each Class of the Notes then Outstanding.
Obligor: The lessee, borrower, purchaser or any other Person or
Persons who are obligated to make payments under a Lease.
Opinion of Counsel: A written opinion of counsel acceptable in form
and substance and from counsel acceptable to the Issuer and, if such opinion or
a copy thereof is required to be delivered to the Trustee, to the Trustee.
Original Term: The term of a Lease as of the Cut-Off Date (which
shall include any renewals or extensions of the original term thereof prior to
the Cut-Off Date), as such term may be extended in accordance with Section
3.2(c) or as a result of a bankruptcy proceeding with respect to the related
Obligor, but excluding, in the case of any Lease, any other extensions or
renewals thereof.
Payment Date: The twentieth day of each calendar month (or, if such
twentieth day is not a Business Day, the next succeeding Business Day),
commencing January 20, 1998.
Person: Any legal person, including any individual, corporation,
partnership, joint venture, estate, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof, or any other entity.
Pledged Revenues: (i) All Scheduled Payments on the Leases received
on or after the Cut-Off Date (including all Scheduled Payments due prior to, but
not received as of, the Cut-Off Date, but excluding any Scheduled Payments due
on or after, but received prior to, the Cut-Off Date); (ii) any Prepayments
received on the Leases on or after the Cut-Off Date (unless Vendor Services has
substituted a Substitute Lease therefor); (iii) the Purchase Amount of any
Leases purchased by Vendor Services in accordance with Section 2.6 (other than
any portion thereof attributable to the Book Value of the Equipment); (iv) the
amount paid by the Contributor to purchase the Leases pursuant to Section 5.1;
(v) that portion of the Liquidation Proceeds received in respect of any Leases
and the disposition of the related Equipment on or after the Cut-Off Date and
allocated to the Issuer; (vi) that
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portion of any Extension Fees received on or after the Cut-Off Date and
allocated to the Issuer; and (vii) any earnings on the investment of amounts
credited to the Collection Account and the Note Distribution Account.
Predecessor Lease: As defined in Section 9.01.
Prepayment: With respect to any Collection Period for any Lease, a
voluntary prepayment during such Collection Period of amounts due and owing
under such Lease.
Principal Balance: As of any Accounting Date,
(1) in the case of any Lease that does not by its terms permit
prepayment or early termination, the present value of the unpaid
Scheduled Payments due on such Lease after such last day of the
Collection Period (excluding all Scheduled Payments due on or prior
to, but not received as of, such last day, as well as any Scheduled
Payments due after such last day and received on or prior thereto),
after giving effect to any Prepayments received on or prior to such
last day, discounted monthly (assuming, for purposes of such
calculation, that each Scheduled Payment is due on the last day of the
applicable Collection Period) at the rate of _______% per annum, plus
the Servicing Fee;
(2) in the case of any Lease that permits prepayment or early
termination only upon payment of a premium that is at least equal to
the present value (calculated in the manner described in clause (1)
above) of the unpaid Scheduled Payments due on such Lease after the
date of such prepayment, the amount specified in clause (1) above; and
(3) in the case of any Lease that permits prepayment or early
termination without payment of a premium at least equal to the amount
specified in clause (2) above, the lesser of (a) the outstanding
principal balance of such Lease after giving effect to Scheduled
Payments due on or prior to such last day of the Collection Period,
whether or not received, as well as any Prepayments, and any Scheduled
Payments due after such last day, received on or prior to such last
day, and (b) the amount specified in clause (1) above;
provided that, for purposes of computing the Monthly Principal Amount for a
given Payment Date (as well as all Payment Dates thereafter), the Principal
Balance of any Lease which became a Liquidated Lease during the related
Collection Period or was required to be purchased by Vendor Services as of the
last day of the related Collection Period in accordance with Section 2.6, will
be deemed to be zero on and after the last day of such Collection Period.
Purchase Amount: With respect to a Lease and related Equipment
required to be purchased by Vendor Services in accordance with Section 2.6, the
sum
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of (i) the Required Payoff Amount for such Lease as of the Accounting Date
on which such obligation to so purchase arises, plus (ii) in the case of a
Lease, the Book Value of the related Equipment.
Purchased Lease: As of any Deposit Date, any Lease which Vendor
Services has purchased as of the related Accounting Date, as required by Section
2.6.
Related Assets: The assets, in addition to the Leases, transferred by
the Contributor to the Issuer pursuant to Section 2.1(a).
Related Documents: The Indenture, the Notes and the Transfer
Agreement. The Related Documents executed by any party are referred to herein
as "such party's Related Documents," "its Related Documents" or by a similar
expression.
Representations and Warranties: As defined in Section 2.6.
Required Payoff Amount: With respect to any Collection Period for any
Lease, the sum of (i) the Scheduled Payment due in such Collection Period,
together with any Scheduled Payments due in prior Collection Periods but not yet
received, plus (ii) the Principal Balance of such Lease (after taking into
account the Scheduled Payment due in such Collection Period, whether or not
received).
Residual Account: The account designated as such in, and established
and maintained pursuant to, Section 8.06 of the Indenture.
Residual Realizations: Cash flows realized from the sale or re-lease
of the Equipment following the scheduled expiration dates or voluntary early
termination of the Leases, other than Equipment subject to Liquidated Leases.
Responsible Officer: When used with respect to the Servicer, the
Contributor or any other Person, the President, any Vice-President or Assistant
Vice-President or the Controller of such Person, or any other officer or
employee having similar functions.
Schedule of Leases: Collectively, the schedules of Leases (which
shall be made available to the parties hereto on a computer disk or other data
storage medium) attached hereto as (or described in) Exhibit A.
Scheduled Payment: With respect to any Collection Period for any
Lease during the Original Term of such Lease, the required payment or payments
due under such Lease in such Collection Period other than those portions of such
payments which, (i) under such Lease, are to be applied by the Servicer to the
payment of insurance charges, maintenance, taxes and other similar obligations,
or (ii) retained by the Servicer in payment of Administrative Fees or are late
payments as to which Servicer Advances were made on a Payment Date.
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Servicer: Green Tree Vendor Services Corporation, its successor in
interest pursuant to Section 8.2 or, after any termination of the Servicer upon
a Servicer Termination Event, any successor Servicer.
Servicer Advance: As defined in Section 4.6.
Servicer Termination Event: An event described in Section 8.1.
Servicer's Certificate: With respect to each Determination Date, a
certificate, completed by and executed on behalf of the Servicer, in accordance
with Section 3.9, substantially in the form attached hereto as Exhibit B.
Servicing Account: The account designated as such in, and established
and maintained pursuant to, Section 8.05 of the Indenture.
Servicing Fee: With respect to any Collection Period, the fee payable
to the Servicer for services rendered during such Collection Period, which shall
be equal to one-twelfth of the Servicing Fee Rate multiplied by the Lease Pool
Principal Balance determined as of the last day of the preceding Collection
Period (or, in the case of the Servicing Fee with respect to the Collection
Period commencing on the Cut-Off Date, the Lease Pool Principal Balance as of
the Cut-Off Date).
Servicing Fee Rate: _____% per annum.
Sub-Servicer: The Person named as servicer or sub-servicer in any
agreement between the Servicer and such Person by which such Person is
contractually obligated to perform on the Servicer's behalf all or a part of the
servicing obligations described herein.
Substitute Lease: An Eligible Lease substituted by Vendor Services
for (a) a Liquidated Lease, (b) a Warranty Lease or (c) an Adjusted Lease.
Total Servicing Fee: The sum of the Servicing Fee, the Administrative
Fees and any earnings on the investment of amounts in the Servicing Account.
Transfer Agreement: The Transfer Agreement, dated as of December 1,
1997, among Vendor Services and the Contributor.
Trust Accounts: The Collection Account, the Note Distribution
Account, the Servicing Account, the Residual Account, the Insurance, Maintenance
and Tax Accounts and such other accounts as may be established in the name of
the Issuer or the Trustee pursuant to the Trust Agreement or this Agreement.
Trustee: The Person acting as Trustee under the Indenture, its
successors in interest and any successor Trustee under the Indenture.
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UCC: The Uniform Commercial Code as in effect in the relevant
jurisdiction.
Vendor Services: Green Tree Vendor Services Corporation, a Minnesota
corporation.
Warranty Lease: A Lease subject to repurchase by Vendor Services
pursuant to Section 2.6.
SECTION 1.2. Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
SECTION 1.3. Calculations. All calculations of the amount of the
Servicing Fee shall be made on the basis of a 360-day year consisting of twelve
30-day months. All references to the Principal Balance of a Lease as of any
date shall refer to the close of business on such date.
SECTION 1.4. Section References. All references to Articles,
Sections, paragraphs, subsections, exhibits and schedules shall be to such
portions of this Agreement unless otherwise specified.
SECTION 1.5. No Recourse. No recourse may be taken, directly or
indirectly, under this Agreement or any certificate or other writing delivered
in connection herewith or therewith, against any stockholder, officer or
director, as such, of the Contributor, Vendor Services, the Servicer or the
Trustee or of any predecessor or successor of the Contributor, Vendor Services,
the Servicer or the Trustee.
ARTICLE II
CONVEYANCE OF LEASES
SECTION 2.1. Conveyance of Leases and Related Assets. (a) Subject
to the terms and conditions of this Agreement, the Contributor, pursuant to the
mutually agreed upon terms contained herein, hereby transfers, assigns, and
otherwise conveys to the Issuer, without recourse (but without limitation of its
obligations in this Agreement), as of the Closing Date, all of the right, title
and interest, including any security interest, whether now owned or hereafter
acquired, of the Contributor in and to the following:
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(i) the Leases, including, without limitation, (A) all monies at
any time paid or payable thereon or in respect thereof from and after
the Cut-Off Date in the form of (1) Scheduled Payments (including
those Scheduled Payments due prior to, but not received as of, the
Cut-Off Date, but excluding those Scheduled Payments due on or after,
but received prior to, the Cut-Off Date), (2) Prepayments (other than,
in the case of a Lease, any portion thereof allocated to the
Contributor in accordance with this Agreement), (3) Liquidation
Proceeds, (4) Extension Fees, (5) payments to be applied by the
Servicer to the payment of insurance charges, maintenance, taxes or
other similar obligations, and (6) payments to be retained by the
Servicer in payment of Administrative Fees, but excluding any payments
made and attributable to the purchase price or use of any Equipment
upon expiration of the related Lease (whether upon completion of the
Original Term thereof, Prepayment thereof or otherwise), (B) all
rights of the lessor or the secured party, as the case may be, in all
present or future leases and other contracts relating to the Equipment
and all revenues, payments, rights to payment, profits, accounts,
chattel paper, products and contract rights arising from or related to
such Equipment or any use thereof or from any such lease or other
contract, (C) all rights of the lessor or secured party, as the case
may be, in all Insurance Policies and any other security (other than
any ownership interest of the lessor in the Equipment) for the payment
of amounts due under the Leases (including all rights, if any, the
lessor or the secured party may have against vendors and other third
parties for payments of such amounts), (D) all items contained in the
related Lease Files and any and all other documents that are kept on
file in accordance with Vendor Services's customary procedures
relating to the Leases, and (E) all proceeds of the foregoing;
(ii) all funds on deposit from time to time in the Trust Accounts
and all investments therein and proceeds thereof;
(iii) the Transfer Agreement, including any Purchase Amount paid
(other than any portion thereof attributable to the Book Value of the
Equipment); and
(iv) rights to Residual Realizations and to amounts on deposit
from time to time in the Residual Account, to the extent necessary to
make interest and principal payments on the Notes on each Payment Date
and subject to the Residual Amount Cap, as set forth in the Indenture.
The foregoing does not constitute, nor is it intended to result in, the creation
or assumption by the Issuer, the Trustee or any Noteholder of any obligation of
the Contributor, the Servicer or any other Person in connection with the Leases
or the related Equipment or any agreement or instrument relating thereto,
including any obligation to the Obligors.
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(b) As security for the payment of amounts described in Section
2.1(a)(i)(3) and 2.1(a)(iv), the Contributor hereby grants to the Issuer a
security interest in all of the right, title and interest, whether now owned or
hereafter acquired, of the Contributor in and to the Equipment and all proceeds
thereof.
SECTION 2.2. Custody of Lease Files.
(a) The Issuer hereby appoints the Servicer, and the Servicer hereby
accepts such appointment, to act as the agent of the Issuer as custodian of the
following documents or instruments (with respect to each Lease), which will be,
as of the Closing Date, in the possession of the Servicer or its agents:
(i) the fully executed original of the Lease or a facsimile
copy thereof (together with any agreements modifying the Lease,
including, without limitation, any extension agreements);
(ii) documents evidencing or related to any Insurance
Policy, or copies thereof; and
(iii) such documents, if any, that Vendor Services keeps on
file in accordance with its customary procedures indicating that the
Equipment is owned or leased by the Obligor and subject to the
interest of the lessor or secured party.
(b) The Servicer agrees to maintain the Lease Files at the locations
where they are currently maintained, or at such other locations as shall from
time to time be identified to the Trustee by written notice. The Servicer may
temporarily move individual Lease Files or any portion thereof without notice as
necessary to conduct collection and other servicing activities in accordance
with its customary practices and procedures.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Lease Files on behalf of the Contributor, the
Issuer, the Noteholders and the Trustee, maintain accurate records
pertaining to each Lease to enable it to comply with the terms and
conditions of this Agreement and the Related Documents, maintain a
current inventory thereof and certify to the Trustee annually that it
continues to maintain possession of such Lease Files;
(ii) implement written policies and procedures with respect
to persons authorized to have access to the Lease Files and the
receipting for Lease Files taken from their storage area by an
employee of the Servicer for purposes of servicing or any other
purposes; and
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(iii) attend to all details in connection with maintaining
custody of the Lease Files on behalf of the Contributor, the Issuer,
the Noteholders and the Trustee.
(d) In performing its duties under this Section, the Servicer agrees
to act with reasonable care, using that degree of skill and care that it
exercises with respect to similar contracts owned and/or serviced by it. The
Servicer shall promptly report to the Trustee any failure by it to hold the
Lease Files as herein provided and shall promptly take appropriate action to
remedy any such failure. In acting as custodian of the Lease Files, the
Servicer agrees further not to assert any beneficial ownership interests in the
Leases or the Lease Files. The Servicer agrees to indemnify the Contributor,
the Issuer, the Noteholders and the Trustee for any and all liabilities,
obligations, losses, damages, payments, costs or expenses of any kind whatsoever
which may be imposed on, incurred or asserted against the Contributor, the
Issuer, the Noteholders or the Trustee as the result of any act or omission by
the Servicer relating to the maintenance and custody of the Lease Files;
provided, however, that the Servicer will not be liable for any portion of any
such amount resulting from the negligence or willful misconduct of the
Contributor, the Issuer, any Noteholder or the Trustee.
SECTION 2.3. Further Assurances. Following the Closing Date, the
Contributor shall, at the reasonable request of the Trustee or the Servicer, and
at the Contributor's expense, execute and deliver any further instruments of
transfer or other documents, and shall take all such other actions that may be
necessary, appropriate or desirable, to fully convey the Leases and the Related
Assets to the Issuer or otherwise to evidence, effectuate or implement the
transactions contemplated hereby. In addition, the Contributor, as agent for
the Issuer, shall defend the Leases and the Related Assets against any and all
claims and demands of all Persons at any time claiming the same or any interest
therein adverse to that of the Issuer.
SECTION 2.4. Representations and Warranties of Contributor. By its
execution of this Agreement, the Contributor makes the following representations
and warranties. Unless otherwise specified, such representations and warranties
speak as of the Closing Date.
(a) Organization and Good Standing. The Contributor has
been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Minnesota, with power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is currently
conducted, and had at all relevant times, and now has, power,
authority and legal right to acquire, own and transfer the Leases and
the other property transferred to the Issuer.
(b) Due Qualification. The Contributor is duly qualified to
do business as a foreign corporation in good standing, and has
obtained all
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necessary licenses and approvals, in all jurisdictions where the
failure to do so would materially and adversely affect the performance
of its obligations under this Agreement and the Related Documents.
(c) Power and Authority. The Contributor has the power and
authority to execute and deliver this Agreement and the Contributor's
Related Documents and to carry out the terms hereof and thereof; the
Contributor has full power and authority to transfer and assign the
Trust Assets to be transferred and assigned to and deposited with the
Issuer by it and has duly authorized such transfer and assignment to
the Issuer by all necessary corporate action; and the execution,
delivery and performance of this Agreement and the Contributor's
Related Documents have been duly authorized by the Contributor by all
necessary corporate action.
(d) No Consent Required. No consent, license, approval or
authorization of, or registration or declaration with, any Person or
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement and the
Related Documents, except for such as have been obtained, effected or
made or as described in paragraph (m) below.
(e) Valid Transfer; Binding Obligations. This Agreement
effects, as of the Closing Date, a valid transfer and assignment of
the Leases and the other Trust Assets, enforceable against the
Contributor and creditors of and purchasers from the Contributor; and
this Agreement and the Contributor's Related Documents, when duly
executed and delivered, shall constitute legal, valid and binding
obligations of the Contributor enforceable in accordance with their
respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or
at law.
(f) No Violation. The execution and delivery of this
Agreement and the Related Documents, the consummation of the
transactions contemplated by this Agreement and the Related Documents
and the fulfillment of the terms of this Agreement and the Related
Documents shall not conflict with, result in any breach of any of the
terms and provisions of or constitute (with or without notice or lapse
of time, or both) a default under the articles of incorporation or by-
laws of the Contributor, or any indenture, agreement, mortgage, deed
of trust or other instrument to which the Contributor is a party or by
which it is bound, or result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument,
other than this Agreement, or violate any law, order, rule or
regulation applicable to the Contributor of any court or of any
federal or state regulatory
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body, administrative agency or other governmental instrumentality
having jurisdiction over the Contributor or any of its properties.
(g) No Proceedings. There are no proceedings or
investigations pending or, to the Contributor's knowledge, threatened
against the Contributor, before any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Contributor or its
properties (A) asserting the invalidity of this Agreement or any of
the Related Documents, (B) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or any of the
Related Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Contributor of
its obligations under, or the validity or enforceability of, this
Agreement or any of the Related Documents, or (D) seeking to adversely
affect (i) the federal income tax or other federal, state or local tax
attributes of the Notes or (ii) the federal, state or local tax
treatment of any of the transactions contemplated by this Agreement
and the Related Documents.
(h) Place of Business. The principal executive offices of
the Contributor, and the offices where the Contributor keeps its
records concerning the Leases and related documents, are located at
[address].
(i) Registration Statement. No stop order suspending the
effectiveness of the Registration Statement relating to the Notes has
been issued, and no proceeding for that purpose has been instituted or
is threatened, by the Securities and Exchange Commission.
(j) Filings. Since the effective date of the Registration
Statement relating to the Notes, there has occurred no event required
to be set forth in an amendment or supplement to the Registration
Statement or Prospectus that has not been so set forth, and there has
been no document required to be filed under the Securities Exchange
Act of 1934 and the rules and regulations of the Securities and
Exchange Commission thereunder that upon such filing would be deemed
to be incorporated by reference in the Prospectus that has not been so
filed.
(k) Good Title. Immediately prior to the transfer and
assignment of the Leases and Related Assets to the Issuer pursuant to
Section 2.1(a), the Contributor had good title thereto and was the
sole owner thereof (subject, in the case of amounts in the Insurance,
Maintenance and Tax Accounts, to the rights of the Obligors therein),
free of any Lien. Upon the transfer and assignment of the Leases and
Related Assets to the Issuer pursuant to Section 2.1(a), the Issuer
will have good title thereto and will be the sole owner thereof
(subject, in the case of amounts in the Insurance, Maintenance and Tax
Accounts, to the rights of the Obligors therein), free of any Lien.
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(l) No Impairment. No person has a participation in or
other right to receive Scheduled Payments under any Lease, and the
Contributor has taken no action to convey any right to any Person that
would result in such Person having a right to Scheduled Payments
received with respect to any Lease.
(m) Lawful Assignment. No Lease was originated in, or is
subject to the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the transfer and assignment of such Lease
from the Contributor to the Issuer under this Agreement. Each Lease
may be sold, assigned and transferred by the Contributor to the Issuer
without the consent of, or prior approval from, or any notification
to, the applicable Obligor, other than (i) certain Leases (which, in
proportion to the aggregate of all of the Leases, are not material)
that require notification of the assignment to the Obligor, which
notification will be given by the Servicer not later than 10 days
following the Closing Date, and (ii) certain Leases (which, in
proportion to the aggregate of all of the Leases, are not material)
that require the consent of the Obligor, which consent will be
obtained by the Servicer not later than 10 days following the Closing
Date.
(n) All Filings Made. All filings and other actions
required to be made, taken or performed by any Person in any
jurisdiction to give the Issuer a first priority perfected lien or
ownership interest in the Leases has been made, taken or performed.
(o) Schedule of Leases Accurate. The information with
respect to the Leases contained in the Schedule of Leases is true and
correct in all material respects.
SECTION 2.5. Nonpetition Covenant. None of the Contributor, the
Servicer, nor Vendor Services shall petition or otherwise invoke the process of
any court or government authority for the purpose of commencing or sustaining a
case against the Issuer or the Contributor under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or the Contributor or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the Issuer or the Contributor.
SECTION 2.6. Purchase of Leases Upon Breach of Representations and
Warranties. Concurrently with the execution and delivery of this Agreement,
Vendor Services and the Contributor have entered into the Transfer Agreement,
the rights of the Contributor under which have been assigned by the Contributor
to the Issuer pursuant to Section 2.1(a). Under the Transfer Agreement, Vendor
Services has made certain representations and warranties to the Contributor with
respect to the Leases (the "Representations and Warranties"). As of the second
Accounting Date following its discovery or its receipt of notice of any breach
of the
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Representations and Warranties that materially and adversely affects the value
of any Lease (including any Liquidated Lease), Vendor Services shall, unless
such breach shall have been cured in all material respects, either (A) (i)
purchase such Lease from the Issuer and (ii) purchase the related Equipment from
the Contributor or (B) substitute a Substitute Lease for such Lease. On or
before the related Deposit Date, Vendor Services shall pay the Purchase Amount
to the Servicer and the Contributor, as their interests may appear, or
substitute a Substitute Lease. The obligations of the Contributor with respect
to any such breach of representations and warranties shall be limited to taking
any and all actions necessary to enable the Issuer to enforce directly the
obligations of Vendor Services to purchase the applicable Lease under the
Transfer Agreement. It is understood and agreed that, except as set forth in the
following paragraph, the obligation of Vendor Services to purchase or substitute
another Lease for any Lease, together with the related Equipment, as to which a
breach has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against Vendor Services for such breach available to
the Contributor or the Trustee on behalf of the Noteholders and to the
Contributor, as their interests may appear.
In addition to the foregoing and notwithstanding whether the Lease and
related Equipment shall have been purchased by Vendor Services, Vendor Services
shall indemnify the Contributor, the Issuer, the Noteholders and the Trustee
against all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach.
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ARTICLE III
ADMINISTRATION AND SERVICING OF LEASES
SECTION 3.1. Duties of the Servicer. The Servicer is hereby
authorized to act as agent for the Issuer and the Contributor and in such
capacity shall manage, service, administer and make collections on the Leases,
and perform the other actions required by the Servicer under this Agreement.
The Servicer agrees that its servicing of the Leases shall be carried out in
accordance with customary and usual procedures of institutions which service
equipment lease contracts, installment sale contracts, promissory notes, loan
and security agreements and other similar types of receivables comparable to the
Leases and, to the extent more exacting, the degree of skill and attention that
the Servicer exercises from time to time with respect to all comparable such
contracts that it services for itself or others. In performing such duties, so
long as Vendor Services is the Servicer, it shall comply in all material
respects with its customary standards, policies and procedures in effect from
time to time. The Servicer may at any time change its customary standards,
policies and procedures; provided that any such change shall not materially
impair the collectibility of any Lease nor the Servicer's ability to perform its
obligations under this Agreement and the Related Documents. The Servicer's
duties shall include, without limitation, billing, collection and posting of all
payments, responding to inquiries of Obligors on the Leases, investigating
delinquencies, sending invoices to Obligors, accounting for collections and
furnishing monthly and annual statements to the Issuer and the Trustee with
respect to distributions, monitoring the status of Insurance Policies with
respect to the Equipment and performing the other duties specified herein. The
Servicer shall also administer and enforce all material rights and
responsibilities of the lessor or secured party under the Leases and provided
for in the Insurance Policies, to the extent that such Insurance Policies relate
to the Leases, the Equipment or the Obligors. To the extent consistent with the
standards, policies and procedures otherwise required hereby, the Servicer shall
follow its customary standards, policies and procedures and shall have full
power and authority to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable, including the authority to forego collection efforts under
circumstances deemed appropriate by the Servicer in accordance with its
customary standards, policies and procedures. Without limiting the generality
of the foregoing, the Servicer is hereby authorized and empowered by the Issuer
to execute and deliver, on behalf of the Contributor and the Issuer or either of
them, any and all instruments of satisfaction or cancellation, or of partial or
full release or discharge, and all other comparable instruments, with respect to
the Leases and with respect to the Equipment in accordance with its customary
standards, policies and procedures. The Servicer is hereby authorized to
commence, in its own name (or in the name of the Issuer, provided the Servicer
has obtained the Issuer's consent, which consent shall not be unreasonably
withheld), a legal proceeding to enforce a Lease pursuant to Section 3.3 or to
commence or participate in any other legal proceeding (including, without
limitation, a bankruptcy proceeding) relating to or
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involving a Lease, an Obligor or the related Equipment. If the Servicer
commences or participates in such a legal proceeding in its own name, the Issuer
shall thereupon be deemed to have automatically assigned such Lease to the
Servicer solely for purposes of commencing or participating in any such
proceeding as a party or claimant, and the Servicer is authorized and empowered
by the Issuer to execute and deliver in the Servicer's name any notices,
demands, claims, complaints, responses, affidavits or other documents or
instruments in connection with any such proceeding. The Issuer shall furnish the
Servicer with any powers of attorney and other documents which the Servicer may
reasonably request and which the Servicer deems necessary or appropriate and
take any other steps which the Servicer may deem necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties under
this Agreement.
SECTION 3.2. Collection of Lease Payments; Modifications of Leases.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Leases as and when the
same shall become due, and shall follow such collection procedures as it follows
with respect to all comparable contracts that it services for itself or others
and otherwise act with respect to the Leases, the related Equipment, the
Insurance Policies and the other Trust Assets in such manner as will, in the
reasonable judgment of the Servicer, maximize the amount to be received by the
Issuer and the Contributor with respect thereto. The Servicer is authorized in
its discretion to waive any Administrative Fees or Extension Fees that may be
collected in the ordinary course of servicing any Lease.
(b) The Servicer may at any time agree to a modification or amendment
of a Lease in accordance with its credit and collection policies and procedures
(it being acknowledged that any modification or amendment of a Lease resulting
from a bankruptcy proceeding with respect to the Obligor will not be deemed to
have been agreed to by the Servicer hereunder):
(i) in order to (A) change the Obligor's regular due date to
a date within the Collection Period in which such due date occurs or
(B) re-amortize (over the remainder of the original term) the
Scheduled Payments on a Lease following a partial Prepayment (provided
that the sum of such partial Prepayment and the Principal Balance of
the Lease after the re-amortization is at least equal to the Required
Payoff Amount for such Lease prior to the partial Prepayment), or
(ii) for any other purpose, provided that no such
modification or amendment shall:
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(A) change the amount or the due date of any Scheduled
Payment (except as provided in clauses (i)(A) and (B) above,
Section 3.2(c)(i) or Section 3.2(d)),
(B) release the related Equipment from the Lease, unless
(1) equipment of equal or greater value is substituted, (2) the
remaining related Equipment has a value at least equal to the
Required Payoff Amount of the Lease, or (3) the release is
pursuant to a partial Prepayment (which, in the case of a partial
Prepayment on a Lease, meets the requirements of Section 3.2(d))
and the ratio of the value of the related Equipment to the
Principal Balance of the Lease after such Prepayment and release
is at least equal to such ratio prior to such Prepayment and
release;
(C) cause any of the representations or warranties
contained in the Representations and Warranties (excluding, for
this purpose, those representations and warranties contained in
clauses (B), (F), (N) (except as such representation or warranty
relates to the requirement that payments be made on the Lease
regardless of the condition or suitability of the related
Equipment and notwithstanding any defense, set-off or
counterclaim against the manufacturer, lessor or lender) or (AA))
to cease to be true; or
(D) except as provided in clause (ii)(A) above, result in
the Principal Balance or Required Payoff Amount of the Lease
being less than it would have been absent such modification or
amendment.
(c) The Servicer may grant payment extensions on a Lease in
accordance with its credit and collection policies and procedures (it being
acknowledged that any extensions on a Lease resulting from a bankruptcy
proceeding with respect to the Obligor will not be deemed to have been granted
by the Servicer hereunder) if the Servicer believes in good faith that such
extension is necessary to avoid a termination and liquidation of such Lease and
will maximize the amount to be received by the Issuer with respect to such
Lease; provided, however, that:
(i) the aggregate period of all extensions granted on a
Lease shall not exceed six months; and
(ii) in no event may any Lease be extended beyond the
Collection Period immediately preceding the final Stated Maturity
Date.
Nothing in this Section 3.2(c) shall be deemed to prevent the Servicer from
extending or renewing, or otherwise accepting the continued performance by the
Obligor under, a Lease after expiration of its stated term.
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(d) The Servicer may, in its discretion, allow a Prepayment, in whole
or in part, of any Lease which, by its terms, is not prepayable, but only if the
amount of such Prepayment (or, in the case of a partial Prepayment, the sum of
such Prepayment and the remaining Principal Balance of the Lease after
application of such Prepayment), together with such additional amounts as are
(i) available to the Servicer for the purpose of prepaying such Lease (excluding
any monies otherwise constituting Pledged Revenues) and (ii) deposited in the
Collection Account contemporaneously with the deposit therein of such
Prepayment, is at least equal to the Required Payoff Amount for such Lease.
(e) In the event of an early termination of a Lease which has been
prepaid in full or in part, the Issuer will have the option to reinvest the
proceeds of such Lease in one or more Additional Leases.
(f) The Servicer shall remit all payments by or on behalf of the
Obligors (other than amounts constituting Administrative Fees) received by the
Servicer to the Servicing Account as soon as practicable, but in no event later
than the second Business Day after receipt thereof.
SECTION 3.3. Realization Upon Leases. Consistent with the standards,
policies and procedures required by this Agreement, the Servicer shall, except
as provided in the following paragraph, take such action as is reasonably
necessary (including making commercially reasonable efforts to repossess (or
otherwise comparably convert the ownership of) and dispose of the related
Equipment) to collect from the Obligor or otherwise all amounts payable under
any Lease as to which the Obligor is in default in the making of one or more
Scheduled Payments thereunder, if the Servicer has determined such default is
not likely to be cured. The Servicer will not be required to repossess (or
otherwise comparably convert the ownership of) any Equipment the repossession of
which, in accordance with the Servicer's credit and collection policies and
procedures, and based on the Servicer's good faith estimate of the value of the
Equipment and its availability, would not be reasonable. The Servicer is
authorized to follow such customary practices and procedures as it shall deem
necessary or advisable, consistent with the standard of care required by Section
3.1, which practices and procedures may include the sale of the related
Equipment at public or private sale, the submission of claims under an Insurance
Policy and other actions by the Servicer in order to realize upon such a Lease.
The foregoing is subject to the provision that, in any case in which the
Equipment shall have suffered damage, the Servicer shall not expend funds in
connection with any repair or towards the repossession of such Equipment unless
it shall determine in its reasonable judgment that such repair and/or
repossession shall increase the proceeds of liquidation of the related Lease by
an amount greater than the amount of such expenses. All amounts received upon
liquidation of a Lease (except as otherwise provided below), including any
proceeds derived from the disposition of the related Equipment, shall be
remitted by the Servicer to the Servicing Account as soon as practicable, but in
no event later than the second Business Day after receipt thereof. The Servicer
shall, to the extent the proceeds of
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such liquidation are sufficient therefor, be entitled to recover all reasonable
out-of-pocket expenses incurred by it in the course of liquidating a Lease,
which amounts may be retained by the Servicer from such proceeds (and shall not
be required to be deposited as provided in Section 3.2(e)) to the extent of such
expenses. The Servicer shall be entitled to retain in the Servicing Account,
from liquidation proceeds, a reserve for out-of-pocket liquidation expenses in
an amount equal to such expenses, in addition to those previously incurred, as
it reasonably estimates will be incurred. Upon completion of such liquidation,
the remainder of any such reserve, after reimbursement to the Servicer of all
out-of-pocket liquidation expenses, shall constitute Liquidation Proceeds and be
transferred as provided in Section 4.2(a). The Servicer shall, in accordance
with Section 3.4(f), pay on behalf of the Issuer and the Contributor any sales,
use, personal property and other taxes assessed on repossessed Equipment, as
well as any sales or similar taxes on the disposition thereof, and shall be
entitled to reimbursement of any such tax from liquidation proceeds with respect
to the related Lease as provided in Section 3.4(b).
The Servicer will use its best efforts to sell or re-lease any
Equipment upon the termination of the Lease to which such Equipment is subject
(whether as a result of early termination following an Obligor default or upon
scheduled expiration of the Lease), in a timely manner and in a manner so as to
maximize, to the extent possible under the prevailing market conditions, the net
proceeds of such Equipment. The Servicer may, in its discretion, choose to
dispose of Equipment through a new lease or in some other manner which provides
for payment for the Equipment over time. In any such event, the Servicer will
be required to pay from its own funds, and deposit in the Servicing Account, an
amount which, in its reasonable judgment, is equal to the fair market value of
such Equipment (less any related out-of-pocket liquidation expenses), and the
Servicer will be entitled to all payments received thereafter in respect of such
Equipment. Any such amounts so deposited by the Servicer shall be treated as
additional Liquidation Proceeds, or Residual Realizations, depending on the
reason for the disposition of the Equipment, with respect to the related Lease
and Equipment.
SECTION 3.4. Insurance, Maintenance and Taxes.
(a) The Servicer shall establish one or more insurance, maintenance
and tax accounts (collectively, the "Insurance, Maintenance and Tax Accounts")
in the name of the Servicer and for the benefit of the respective Obligors and,
to the extent provided herein, the Issuer and the Contributor. The Servicer
shall deposit into the Insurance, Maintenance and Tax Accounts any payments made
by or on behalf of Obligors which constitute (i) insurance charges paid by an
Obligor to the lessor or secured party under a Lease, (ii) any insurance
payments or recoveries paid by an insurance company or comparable third party
and related to the damage to, or destruction of, the Equipment related to such
Lease (unless paid directly by such insurance company or comparable third party
directly to the Obligor), (iii) any payments made by or on behalf of Obligors
which constitute amounts paid by an Obligor to the lessor or secured party under
a Lease in respect of
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the maintenance of the related Equipment, and (iv) taxes paid by the Obligor
with respect to the related Lease or Equipment (except for any such payments in
respect of taxes which were paid by Vendor Services prior to the Cut-Off Date,
which payments shall constitute Scheduled Payments hereunder). None of the
foregoing payments shall constitute Pledged Revenues except under the
circumstances described in clause (c)(ii) below.
(b) The Servicer may pay from its own funds, or may withdraw amounts
from the Insurance, Maintenance and Tax Accounts, when and if appropriate, to
pay, when due (i) all insurance charges in the amounts received under clause
(a)(i) above, (ii) any amounts payable under any applicable maintenance contract
or otherwise with respect to the maintenance of the related Equipment in the
amounts received under clause (a)(iii) above, and (iii) all taxes in the amounts
received under clause (a)(iv) above. If the Servicer has paid any such
insurance charges, maintenance costs or taxes from its own funds (including any
such amounts that may have been paid prior to the Closing Date), the Servicer
shall be entitled to reimbursement therefor from any appropriate amounts
available therefor in the Insurance, Maintenance and Tax Accounts, from payments
thereafter received from the applicable Obligor in respect thereof or from
liquidation proceeds in the event such Lease is liquidated. The Servicer is
authorized in its discretion to waive its right to receive reimbursement of any
such amount.
(c) Amounts on deposit in the Insurance, Maintenance and Tax Accounts
which represent amounts received by the Servicer pursuant to clause (a)(ii)
above shall be applied by the Servicer as follows: (i) if equipment is
purchased to replace the Equipment that was damaged or destroyed, and such
replacement equipment is (in the reasonable opinion of the Servicer) of
comparable use and equivalent value to the Equipment that was damaged or
destroyed, or if the Equipment is to be repaired, the Servicer shall release
such amount so received from the insurance company or comparable third party in
payment or reimbursement for such replacement equipment or such repair; and (ii)
if such replacement option is not exercised or the Equipment is not to be
repaired, then the Servicer shall treat such amount as Liquidation Proceeds and
transfer such amount from the Insurance, Maintenance and Tax Accounts to the
Collection Account, and (II) distribute the balance thereof from the Insurance,
Maintenance and Tax Accounts to the Contributor.
(d) The Servicer may sue to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent of the Issuer and the
Contributor. If the Servicer elects to commence a legal proceeding to enforce
an Insurance Policy, the act of commencement shall be deemed to be an automatic
assignment of the rights of the Issuer and the Contributor under such Insurance
Policy to the Servicer for purposes of collection only. If, however, in any
enforcement suit or legal proceeding it is held that the Servicer may not
enforce an Insurance Policy on the grounds that it is not a real party in
interest or a holder entitled to enforce the Insurance Policy, the Issuer, on
behalf of the Contributor, shall take such steps as the
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Servicer deems necessary to enforce such Insurance Policy, including bringing
suit in its name or the name of the Trustee for the benefit of the Noteholders.
(e) Consistent with its customary standards, policies and procedures,
with respect to each Lease, the Servicer shall maintain insurance against
casualty loss with respect to any Equipment financed by or leased pursuant to
the Lease, to the extent the Lease requires the lessor or secured party under
the Lease to maintain such insurance, and shall otherwise require the Obligor
under the Lease to maintain such insurance, to the extent the Lease requires
that such insurance be maintained by the Obligor. The Servicer shall not
otherwise be liable to the Issuer, the Trustee, the Contributor or any
Noteholder for any casualty loss with respect to any Equipment related to a
Lease, except to the extent otherwise explicitly provided in this Agreement.
(f) The Servicer shall determine and pay when due all sales, use,
personal property and other taxes payable in respect of the Equipment related to
each Lease. To the extent the Servicer has previously received from the related
Obligor payments with respect to such taxes and has deposited such payments in
the Insurance, Maintenance and Tax Accounts in accordance with clause (a)(iv)
above, the Servicer shall, in accordance with clause (b)(iii) above, either (i)
pay such taxes from amounts withdrawn from the Insurance, Maintenance and Tax
Accounts, or (ii) pay such taxes from its own funds and thereafter reimburse
itself from amounts withdrawn from the Insurance, Maintenance and Tax Accounts.
In the event the Servicer has not previously received payments from the Obligor
for this purpose, or to the extent any such payments received were insufficient
to pay the taxes due, the Servicer shall nonetheless pay such taxes from its own
funds and shall bill the Obligor for any amounts so paid. The Servicer shall be
entitled to reimbursement for any taxes so paid from its own funds, as provided
in clause (b)(iii) above. Failure on the part of the Servicer to perform its
duties in a timely fashion under this clause shall constitute a breach of this
Agreement by the Servicer for which indemnity will be available in accordance
with Section 7.1.
(g) The Servicer shall give prompt written notice to the Trustee of
the Servicer's failure to pay when due any insurance charge or tax payment
required to be paid pursuant to this Section 3.4 and the reason for such
failure. Upon receipt of any such notice, or if the Trustee has otherwise
received notice of any such failure to pay an insurance charge or tax payment,
the Trustee shall take such actions as are reasonably necessary (including the
withdrawal of monies, if any, available therefor in the Insurance, Maintenance
and Tax Accounts and attributable to payments previously made by the related
Obligor and payment of such insurance charge or tax payment) to cause any such
amounts to be paid. The Trustee shall be permitted to withdraw monies from the
Insurance, Maintenance and Tax Accounts for purposes of performing its
obligations under this paragraph, but shall not, in any event, be required to
use its own funds for such purposes.
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SECTION 3.5. Maintenance of Security Interests in Equipment. To the
extent the Servicer's credit and collection policies and procedures in this
regard would so require (it being acknowledged that, in certain instances, such
credit and collection policies and procedures would not so require), the
Servicer shall take such steps as are necessary to maintain perfection of any
security interest created by each Lease in the related Equipment on behalf of
the Issuer and the Contributor, including, but not limited to, obtaining the
execution by the Obligors and the recording, registering, filing, re-recording,
re-filing, and re-registering of all security agreements, financing statements
and continuation statements as are necessary to maintain such security interest
granted by the Obligors under the respective Leases. The Issuer hereby
authorizes the Servicer, and the Servicer agrees (to the extent the Servicer's
credit and collection policies and procedures in this regard would so require),
to take any and all steps necessary to re-perfect such security interest on
behalf of the Issuer and the Contributor as necessary because of the relocation
of Equipment or for any other reason.
SECTION 3.6. Covenants, Representations, and Warranties of Servicer.
By its execution and delivery of this Agreement, the Servicer makes the
following representations, warranties and covenants.
(a) The Servicer covenants as follows:
(i) Liens in Force. The Equipment securing each Lease shall
not be released in whole or in part from any interest the lessor or
secured party may have in such Equipment under the terms of the Lease,
except upon payment in full of the Lease or as otherwise contemplated
herein;
(ii) No Impairment. The Servicer shall do nothing to impair
the rights of the Issuer, the Contributor or the Noteholders in the
Leases, the Insurance Policies or the other Trust Assets; and
(iii) No Amendments. The Servicer shall not extend or
otherwise amend the terms of any Lease with respect to the Scheduled
Payments thereon, except (A) in accordance with Section 3.2, or (B) at
such time as the Notes are no longer Outstanding, with the consent of
the Issuer.
(b) The Servicer represents, warrants and covenants as of the date
of execution and delivery of this Agreement:
(i) Organization and Good Standing. The Servicer has been
duly organized and is validly existing and in good standing under the
laws of its jurisdiction of organization, with power, authority and
legal right to own its properties and to conduct its business as such
properties are currently owned and such business is currently
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conducted, and had at all relevant times, and now has, power,
authority and legal right to enter into and perform its obligations
under this Agreement and the Servicer's Related Documents;
(ii) Due Qualification. The Servicer is duly qualified to
do business as a foreign corporation in good standing, and has
obtained all necessary licenses and approvals, in all jurisdictions
where the failure to do so would materially and adversely affect the
performance of its obligations under this Agreement and the Related
Documents;
(iii) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and to carry out the
terms hereof; and the execution, delivery and performance of this
Agreement and the Servicer's Related Documents have been duly
authorized by the Servicer by all necessary corporate action;
(iv) Binding Obligation. This Agreement and the Servicer's
Related Documents shall each constitute the legal, valid and binding
obligation of the Servicer enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law;
(v) No Violation. The execution and delivery of this
Agreement, the consummation of the transactions contemplated by this
Agreement and the Servicer's Related Documents, and the fulfillment of
the terms hereof, shall not conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without notice
or lapse of time, or both) a default under, the articles of
incorporation or bylaws of the Servicer, or any indenture, agreement,
mortgage, deed of trust or other instrument to which the Servicer is a
party or by which it is bound, or result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust or other
instrument, other than this Agreement or any Related Document, or
violate any law, order, rule or regulation applicable to the Servicer
of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or any of its properties;
(vi) No Proceedings. There are no proceedings or
investigations pending or, to the Servicer's knowledge, threatened
against the Servicer, before any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality having
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jurisdiction over the Servicer or its properties (A) asserting the
invalidity of this Agreement or any of the Servicer's Related
Documents, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement
or any of the Servicer's Related Documents, or (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity
or enforceability of, this Agreement or any of the Servicer's Related
Documents or (D) seeking to adversely affect (i) the federal income
tax or other federal, state or local tax attributes of the Notes or
(ii) the federal, state or local tax treatment of any of the
transactions contemplated by this Agreement and the Related Documents;
and
(vii) No Consents. The Servicer is not required to obtain
the consent of any other party or any consent, license, approval or
authorization, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution,
delivery, performance, validity or enforceability of this Agreement or
any of the Servicer's Related Documents.
SECTION 3.7. Sub-Servicers. The Servicer may, without the Issuer's
or the Trustee's consent, maintain or enter into one or more agreements with
Sub-Servicers for the servicing and administration of the Leases by such Sub-
Servicers. Notwithstanding the terms or existence of any such agreement between
the Servicer and a Sub-Servicer, the Servicer shall not be relieved of any of
its obligations under this Agreement by reason of such agreement and shall be
obligated to the same extent and under the same terms and conditions as if the
Servicer alone was servicing and administering the Leases, and neither the
Issuer nor the Trustee shall have any obligation to deal with anyone other than
the Servicer with respect to the servicing of the Leases.
SECTION 3.8. Total Servicing Fee; Payment of Expenses by Servicer. On
each Payment Date, the Servicer shall be entitled to receive out of the
Collection Account the Servicing Fee for the related Collection Period and any
unreimbursed Servicer Advances in respect of a prior Payment Date, pursuant to
Section 8.03 of the Indenture. The Servicer shall be entitled to retain, as
additional servicing compensation under this Agreement, any Administrative Fees
and any earnings on the investment of amounts in the Servicing Account. The
Servicer shall be required to pay all expenses incurred by it in connection with
its activities under this Agreement (including taxes imposed on the Servicer and
all expenses incurred in connection with reports to Noteholders). In addition,
the Servicer shall pay to the Trustee, and the Trustee shall be entitled to,
certain annual fees and shall reimburse the Trustee for all ordinary and
reasonable out-of-pocket expenses incurred or made by it in connection with the
performance of its duties under the Indenture (excluding those incurred or made
in the performance of its duties under Article V of the Indenture, as referred
to in Section 6.07(b) of the Indenture).
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SECTION 3.9. Servicer's Certificate. No later than 10:00 a.m. St.
Paul, Minnesota time on each Determination Date, the Servicer shall deliver to
the Issuer, the Trustee and each Rating Agency a Servicer's Certificate executed
by a Responsible Officer of the Servicer containing, among other things, (i) all
information necessary to enable the Trustee to make the withdrawals and
distributions required by Section 8.03 of the Indenture, (ii) all information
necessary to enable the Trustee to send the statements to Noteholders required
by Section 7.05 of the Indenture, and (iii) all information necessary to enable
the Trustee to reconcile all deposits to, and withdrawals from, the Servicing
Account, the Collection Account and the Residual Account for the related
Collection Period and Payment Date, including the accounting required by Section
4.4. Leases purchased by Vendor Services on the related Deposit Date or by the
Contributor on the related Accounting Date and each Lease which became a
Liquidated Lease or which was paid in full during the related Collection Period,
shall be identified by account number (as set forth in the Schedule of Leases),
and information regarding each Substitute Lease and Additional Lease shall be
provided. A copy of such certificate may be obtained by any Noteholder (or by
any Note Owner, upon certification that such Person is a Note Owner and payment
of any expenses associated with the distribution thereof) by a request in
writing to the Trustee addressed to the Corporate Trust Office.
SECTION 3.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Issuer, the Trustee and each
Rating Agency, on or before March 31 (or 90 days after the end of the Servicer's
fiscal year, if other than December 31) of each year, beginning on March 31,
1998, a certificate signed by any Responsible Officer of the Servicer, dated as
of December 31 (or other applicable date) of the immediately preceding year,
stating that (i) a review of the activities of the Servicer during the preceding
12-month period (or such other period as shall have elapsed from the Closing
Date to the date of the first such certificate) and of its performance under
this Agreement has been made under such officer's supervision, and (ii) to such
officer's knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such period, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Issuer, the Trustee and each
Rating Agency, promptly after having obtained knowledge thereof, but in no event
later than two Business Days thereafter, written notice in a certificate signed
by any Responsible Officer of the Servicer of any event which with the giving of
notice or lapse of time, or both, would become a Servicer Termination Event
under Section 8.1(a). The Contributor or the Servicer shall deliver to the
Issuer, the Trustee, the Servicer or the Contributor (as applicable) and each
Rating Agency promptly after having obtained knowledge thereof, but in no event
later than three Business Days thereafter, written notice in a certificate
signed by any Responsible Officer of the
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Servicer of any event which with the giving of notice or lapse of time,
or both, would become a Servicer Termination Event under any other clause of
Section 8.1.
SECTION 3.11. Annual Independent Accountants' Report.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "Independent Accountants"), who
may also render other services to the Servicer, to deliver to the Issuer, the
Trustee and each Rating Agency, on or before March 31 (or 90 days after the end
of the Servicer's fiscal year, if other than December 31) of each year,
beginning on March 31, 1998, with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date) (or such other
period as shall have elapsed from the Closing Date to the date of such
certificate), a statement (the "Accountant's Report") addressed to the Board of
Directors of the Servicer, to the Issuer and to the Trustee, to the effect that
such firm has audited the financial statements of the Servicer and issued its
report thereon and that such audit was made in accordance with generally
accepted auditing standards, and accordingly included such tests of the
accounting records and such other auditing procedures as such firm considered
necessary in the circumstances, including procedures as determined by the
Independent Accountants related to (i) the documents and records concerning the
servicing of equipment lease contracts, installment sale contracts, promissory
notes, loan and security agreements and/or other similar types of receivables
under servicing agreements substantially similar one to another (such
Accountant's Report to have attached thereto a schedule setting forth the
servicing agreements covered thereby, including this Agreement); and (ii) the
delinquency and loss statistics relating to the Servicer's portfolio of
equipment lease contracts, installment sale contracts, promissory notes, loan
and security agreements and/or other similar types of receivables; and except as
described in the Accountant's Report, disclosed no exceptions or errors in the
records relating to the contracts serviced for others that, in the firm's
opinion, generally accepted auditing standards requires such firm to report.
The Accountant's Report shall further state that (1) a review of certain agreed
upon procedures was performed with respect to two randomly selected Servicer's
Certificates during the applicable period, and (2) except as disclosed in the
Report, no exceptions or errors in the Servicer's Certificates so examined were
found.
(b) The Accountants' Report shall also indicate that the firm is
independent of the Contributor and the Servicer within the meaning of the Code
of Professional Ethics of the American Institute of Certified Public
Accountants.
(c) A copy of the Accountants' Report may be obtained by any
Noteholder (or by any Note Owner, upon certification that such Person is a Note
Owner and payment of any expenses associated with the distribution thereof) by a
request in writing to the Trustee addressed to the Corporate Trust Office.
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SECTION 3.12. Access to Certain Documentation and Information
Regarding Leases. The Servicer shall provide to representatives of the Issuer
and the Trustee reasonable access to the documentation regarding the Leases. In
each case, such access shall be afforded without charge but only upon reasonable
request and during normal business hours. Nothing in this Section shall
derogate from the obligation of the Servicer to observe any applicable law, rule
or contractual provision with an Obligor prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
SECTION 3.13. Certain Duties of the Servicer. The Servicer shall,
and hereby agrees that it will, monitor the Issuer's compliance with all
applicable provisions of federal securities laws, notify the Issuer of any
actions to be taken by the Issuer necessary for compliance with such laws and
prepare on behalf of the Issuer all notices, filings or other documents or
instruments required to be filed under such laws.
SECTION 3.14. Duties of the Servicer under the Indenture. The
Servicer shall, and hereby agrees that it will, perform on behalf of the Issuer
the following duties of the Issuer under the Indenture (references are to the
applicable Sections in the Indenture):
(a) the direction to the Paying Agents, if any, to deposit
moneys with the Trustee (Section 3.03);
(b) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the Indenture, the Notes and each other instrument
and agreement included in the Trust Estate (Section 3.04);
(c) the preparation of all supplements, amendments,
financing statements, continuation statements, instruments of further
assurance and other instruments, in accordance with Section 3.05 of
the Indenture, necessary to protect the Trust Estate (Section 3.05);
(d) the annual delivery of Opinions of Counsel, in
accordance with Section 3.06 of the Indenture, as to the Trust Estate,
and the annual delivery of the Officers' Certificate and certain other
statements, in accordance with Section 3.09 of the Indenture, as to
compliance with the Indenture (Sections 3.06 and 3.09);
(e) the preparation and obtaining of documents and
instruments required for the release of the Issuer from its
obligations under the Indenture (Section 4.01);
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(f) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officers' Certificate and the obtaining of the Opinion of Counsel and
the Independent Certificate relating thereto (Section 4.01);
(g) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of any co-trustee or separate trustee (Sections
6.08 and 6.11);
(h) the opening of one or more accounts in the Issuer's
name, the preparation of Issuer Orders, Officers' Certificates and
Opinions of Counsel and all other actions necessary with respect to
investment and reinvestment of funds in the Trust Accounts (Sections
8.02, 8.04, 8.05 and 8.06);
(i) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures (Sections 9.01, 9.02 and 9.03);
(j) the preparation of all Officers' Certificates, Opinions
of Counsel and Independent Certificates with respect to any requests
by the Issuer to the Trustee to take any action under the Indenture
(Section 11.01); and
(k) the recording of the Indenture, if applicable (Section
11.15).
SECTION 3.15. Fidelity Bond. Within 30 days after the Closing Date,
the Servicer shall obtain, and shall thereafter maintain, (i) a policy or
policies of insurance covering errors and omissions by the Servicer, and (ii) a
fidelity bond. Such policy or policies and such fidelity bond shall be in such
form and amount as is generally customary among persons that service a portfolio
of equipment lease contracts, installment sale contracts, promissory notes, loan
and security agreements and/or other similar types of receivables having an
unpaid balance of at least $100,000,000 and which are generally regarded as
servicers acceptable to institutional investors. Each such policy shall name
the Issuer, the Trustee and the Contributor as parties insured thereunder as
their respective interests may appear.
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ARTICLE IV
COLLECTIONS AND DEPOSITS
SECTION 4.1. Initial Deposit. On the Closing Date, the Servicer
shall deposit in the Servicing Account (i) all Scheduled Payments and
Prepayments of Leases received by the Servicer on or after the Cut-Off Date
(including those Scheduled Payments due prior to, but not received as of, the
Cut-Off Date, but excluding those Scheduled Payments due on or after, but
received prior to, the Cut-Off Date) and on or prior to the second Business Day
immediately preceding such date and (ii) all Liquidation Proceeds (including
proceeds of Insurance Policies to be treated as such in accordance with Section
3.4) realized in respect of the Leases and related Equipment and applied by the
Servicer on and after the Cut-Off Date.
SECTION 4.2. Collections.
(a) Pursuant to the Indenture, the Trustee has established the
Servicing Account. The Servicer shall make deposits to and transfers from the
Servicing Account, and shall be entitled to make withdrawals therefrom, as
provided in this Agreement. The Servicer shall remit to the Servicing Account
all payments by or on behalf of the Obligors on the Leases (other than amounts
constituting Administrative Fees), all Residual Realizations and all Liquidation
Proceeds (including (1) proceeds of Insurance Policies to be treated as such in
accordance with Section 3.4 and (2) deficiency amounts paid by the Servicer with
respect to the disposition of Equipment to be treated as such in accordance with
the last paragraph of Section 3.3) received by the Servicer, in each case, as
soon as practicable, but in no event later than the second Business Day after
receipt thereof. Within three Business Days after the deposit of such payments
and proceeds therein, the Servicer shall transfer all amounts credited to the
Servicing Account on account of such payments and proceeds (i) to the extent
they constitute Pledged Revenues, to the Collection Account and (ii) to the
extent they represent Residual Realizations, to the Residual Account.
Notwithstanding the foregoing, the Servicer may utilize an alternative
remittance schedule acceptable to the Servicer if the Servicer provides to the
Trustee written confirmation from each Rating Agency that such alternative
remittance schedule will not result in the downgrading or withdrawal by the
Rating Agency of the rating then assigned to the Notes. Amounts from time to
time in the Servicing Account shall be invested in accordance with Section 8.07
of the Indenture, and the Servicer shall be entitled to any earnings on such
investments as additional servicing compensation hereunder. In the event of any
losses on such investments, the Servicer shall deposit in the Servicing Account
the amount thereof, net of any earnings otherwise distributable to the Servicer.
(b) The Servicer shall remit to the Collection Account (i) that
portion of any Purchase Amount relating to the Required Payoff Amount received
by the Servicer upon the purchase by Vendor Services of any Lease pursuant to
Section 2.6, and (ii) that portion of the amount paid by the Contributor to
purchase
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the Leases pursuant to Section 5.1 as is required to be deposited in the
Collection Account pursuant to such Section.
(c) Notwithstanding the provisions of subsections (a) and (b) hereof,
the Servicer will be entitled to be reimbursed from amounts on deposit in the
Servicing Account or the Collection Account with respect to a Collection Period
for amounts previously deposited in the Servicing Account or the Collection
Account but later determined by the Servicer in good faith to (i) have resulted
from mistaken deposits or postings or checks returned for insufficient funds, or
(ii) be required to be repaid to an Obligor. The amount to be reimbursed
hereunder may be retained pursuant to Section 4.4 at any time or may otherwise
be paid to the Servicer on the related Payment Date pursuant to Section 8.03(i)
of the Indenture upon certification by the Servicer of such amounts and the
provision of such information to the Trustee as may be necessary to verify the
accuracy of such certification.
SECTION 4.3. Application of Collections. For the purposes of this
Agreement, all collections for a Collection Period shall be applied by the
Servicer as follows:
(a) With respect to each Lease, payments by or on behalf of
the Obligor thereof (other than Administrative Fees with respect to
such Lease, to the extent collected) shall be applied to Scheduled
Payments and Prepayments in accordance with the terms of such Lease
and the Servicer's credit and collection policies and procedures.
With respect to each Liquidated Lease, the Liquidation Proceeds shall
be applied, for purposes of this Agreement and the Indenture only, to
Scheduled Payments and Prepayment on the Lease as if the Liquidation
Proceeds had been paid by the Obligor on the Accounting Date, and then
to any other amounts due and payable with respect to such Lease. The
Servicer shall not be entitled to any Administrative Fees with respect
to a Liquidated Lease unless the Required Payoff Amount for such Lease
has been deposited in the Collection Account.
(b) With respect to each Lease that has become a Purchased
Lease as of any Deposit Date, the Purchase Amount shall be applied,
for purposes of this Agreement and the Indenture only, to Scheduled
Payments and Prepayment on the Lease as if the Purchase Amount had
been paid by the Obligor on the related Accounting Date. All
payments by or on behalf of an Obligor received with respect to any
Purchased Lease after the Accounting Date immediately preceding the
Deposit Date on which the Purchase Amount was paid by Vendor Services,
shall be paid to Vendor Services and shall not be included in Pledged
Revenues.
(c) With respect to each Lease that has been purchased by
the Contributor pursuant to Section 5.1, the purchase price shall be
applied, for purposes of this Agreement and the Indenture only, to
Scheduled Payments and Prepayments on the Lease as if such purchase
price had been paid by the
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Obligor on the Accounting Date. All payments by or on behalf of an
Obligor received with respect to any Lease so purchased after the
Accounting Date on which the purchase price was paid by the
Contributor, shall be paid to the Contributor and shall not be
included in the Amount Available.
SECTION 4.4. Net Deposits. So long as no Servicer Termination Event
shall have occurred and be continuing with respect to the Servicer, the Servicer
may make the remittances or transfers to be made by it pursuant to Section 4.2
net of amounts (which amounts may be netted prior to any such remittance or
transfer) that would otherwise be distributed to it pursuant to Section 8.03(i)
of the Indenture; provided, however, that the Servicer shall account for all of
such amounts in the related Servicer's Certificate as if such amounts were
deposited and distributed separately. If an error is made by the Servicer in
calculating the amount to be deposited or retained by it, with the result that
an amount less than required is deposited in the Collection Account, the
Servicer shall make a payment of the deficiency to the Collection Account
immediately upon becoming aware, or receiving notice from the Trustee, of such
error.
SECTION 4.5. Servicer Advances. On each Determination Date, the
Servicer may, but will not be required to, advance and remit to the Trustee, in
such manner as will ensure that the Trustee will have immediately available
funds on account thereof by 11:00 a.m. St. Paul, Minnesota time on the second
Business Day prior to the next succeeding Payment Date, an amount (a "Servicer
Advance") equal to any Scheduled Payments due during the prior Collection Period
but unpaid prior to such Determination Date with respect to any Lease. In
consideration of each Servicer Advance the Servicer will be entitled to retain
any late payment fees recovered from the Obligor with respect to any Lease
Payment covered by a Servicer Advance. In addition, the Servicer will be
reimbursed for Servicer Advances from funds in the Collection Account in
accordance with the Indenture on the second following Payment Date.
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ARTICLE V
TERMINATION
SECTION 5.1. Optional Purchase of All Leases; Liquidation of Trust
Assets.
(a) At such time as the sum of the Aggregate Principal Balance of the
Notes is less than 10% of the Initial Pool Principal Balance, the Contributor
shall have the option to purchase all of the Leases from the Issuer; provided,
however, that the amount to be paid for such purchase (as set forth in the
following sentence) shall, in any event, be sufficient to pay the full amount of
unpaid principal of and interest payable on the Notes on the related Payment
Date. To exercise such option, Contributor shall, on any Accounting Date, pay
to the Servicer the aggregate purchase price for the Leases (which shall be an
amount equal to the sum of the Required Payoff Amounts for all of the Leases),
plus the appraised value of any other property (including the right to receive
any future recoveries) held as Trust Assets, such appraisal to be conducted by
an appraiser mutually agreed upon by the Contributor and the Trustee (or, if the
Notes are no longer Outstanding, the Issuer), and shall succeed to all interests
in and to the Trust Assets. The fees and expenses related to such appraisal
shall be paid by the Contributor. The Servicer shall immediately deposit the
purchase price so paid into the Collection Account, to be treated as Available
Pledged Revenues and distributed in accordance with Section 8.03 of the
Indenture.
(b) Notice of any termination of the Issuer shall be given by the
Servicer to the Issuer and the Trustee as soon as practicable (but in no event
more than three Business Days) after the Servicer has received notice thereof.
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ARTICLE VI
THE CONTRIBUTOR
SECTION 6.1. Liability of Contributor. The Contributor shall be
liable hereunder only to the extent of the obligations in this Agreement
specifically undertaken by the Contributor and the representations made by the
Contributor.
SECTION 6.2. Merger or Consolidation of, or Assumption of the
Obligations of, Contributor; Amendment of Certificate of Incorporation.
(a) The Contributor shall not merge or consolidate with any other
Person or permit any other Person to become the successor to the Contributor's
business except in accordance with the requirements of this Section. The
certificate of incorporation of any corporation (i) into which the Contributor
may be merged or consolidated, (ii) resulting from any merger or consolidation
to which the Contributor shall be a party, or (iii) succeeding to the business
of Contributor, shall contain provisions relating to limitations on business and
other matters substantively identical to those contained in the Contributor's
certificate of incorporation. Any such successor corporation shall execute an
agreement of assumption of every obligation of the Contributor under this
Agreement and each Related Document and, whether or not such assumption
agreement is executed, shall be the successor to the Contributor under this
Agreement without the execution or filing of any document or any further act on
the part of any of the parties to this Agreement. The Contributor shall provide
prompt notice of any merger, consolidation or succession pursuant to this
Section 6.2 to the Issuer, the Trustee and the Rating Agencies. Notwithstanding
the foregoing, the Contributor shall not merge or consolidate with any other
Person or permit any other Person to become a successor to the Contributor's
business, unless (w) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 2.4 shall have been breached
(for purposes hereof, such representations and warranties shall speak as of the
date of the consummation of such transaction) and no event that, after notice or
lapse of time, or both, would become an Event of Default or a Servicer
Termination Event shall have occurred and be continuing, (x) the Contributor
shall have delivered to the Issuer and the Trustee a certificate of a
Responsible Officer of the Contributor and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section 6.2 and that all conditions precedent, if any, provided
for in this Agreement relating to such transaction have been complied with, (y)
the Contributor shall have delivered to the Issuer and the Trustee an Opinion of
Counsel, stating that, in the opinion of such counsel, either (A) all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary to preserve and protect the interest of the Issuer
in the Trust Assets and reciting the details of the filings or (B) no such
action shall be necessary to preserve and protect such interest, and (z) the
Rating Agency Condition shall have been satisfied.
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(b) The Contributor hereby agrees that it shall not (i) take any
action prohibited by Article VIII of its certificate of incorporation or (ii)
without the prior written consent of the Issuer and the Trustee and without
satisfaction of the Rating Agency Condition, amend Article III, Article V,
Article VI or Article VIII of its certificate of incorporation.
SECTION 6.3. Limitation on Liability of Contributor and Others. The
Contributor and any director or officer or employee or agent of the Contributor
may rely in good faith on the advice of counsel or on any document of any kind
prima facie properly executed and submitted by any Person respecting any matters
arising under this Agreement. The Contributor shall not be under any obligation
to appear in, prosecute or defend any legal action that is not incidental to its
obligations as transferor of the Leases under this Agreement and that in its
opinion may involve it in any expense or liability.
SECTION 6.4. Contributor May Own Notes. Each of the Contributor and
any Affiliate of the Contributor may in its individual or any other capacity
become the owner or pledgee of Notes with the same rights as it would have if it
were not the Contributor or an Affiliate thereof except as otherwise
specifically provided herein or in the Related Documents. Notes so owned by or
pledged to the Contributor or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement or any Related
Document, without preference, priority, or distinction as among all of Notes;
provided that any Notes owned by the Contributor or any Affiliate thereof,
during the time such Notes are owned by them, shall be without voting rights for
any purpose set forth in this Agreement or any Related Document. The
Contributor shall notify the Issuer and the Trustee promptly after it or any of
its Affiliates become the owner or pledgee of a Note.
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ARTICLE VII
THE SERVICER
SECTION 7.1. Liability of Servicer; Indemnities.
(a) The Servicer (in its capacity as such and, in the case of Vendor
Services, without limitation of its obligations under the Transfer Agreement)
shall be liable hereunder only to the extent of the obligations in this
Agreement specifically undertaken by the Servicer and the representations made
by the Servicer.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Trustee, the Contributor, their respective officers, directors, agents and
employees and the Noteholders from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon the Issuer,
the Trustee, the Contributor or the Noteholders through the Servicer's breach of
this Agreement, the gross negligence, willful misfeasance or bad faith of the
Servicer in the performance of its duties under this Agreement or by reason of
reckless disregard of its obligations and duties under this Agreement.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
in its individual capacity, its officers, directors, agents and employees, from
and against all costs, taxes, expenses, losses, claims, damages and liabilities
arising out of or incurred in connection with the acceptance or performance of
the trusts and duties contained in the Related Documents, except to the extent
that such cost, taxes (other than income taxes), expense, loss, claim, damage or
liability is due to the willful misfeasance or gross negligence of the Issuer.
(d) Indemnification under this Article shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer has made any indemnity payments pursuant to this Article and the
recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts collected to the Servicer, together with any
interest earned thereon.
(e) Vendor Services, in its individual capacity, hereby acknowledges
that the indemnification provisions in the Transfer Agreement benefiting the
Issuer and the Trustee are enforceable by each hereunder.
(f) The provisions of this Section shall survive the termination of
the Related Documents.
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SECTION 7.2. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not merge or consolidate with
any other Person, convey, transfer or lease substantially all its assets as an
entirety to another Person, or permit any other Person to become the successor
to the Servicer's business unless, after the merger, consolidation, conveyance,
transfer, lease or succession, the successor or surviving entity shall be an
Eligible Servicer and shall be capable of fulfilling the duties of the Servicer
contained in this Agreement. Any corporation (i) into which the Servicer may be
merged or consolidated, (ii) resulting from any merger or consolidation to which
the Servicer shall be a party, (iii) which acquires by conveyance, transfer, or
lease substantially all of the assets of the Servicer, or (iv) succeeding to the
business of the Servicer, in any of the foregoing cases shall execute an
agreement of assumption to perform every obligation of the Servicer under this
Agreement and, whether or not such assumption agreement is executed, shall be
the successor to the Servicer under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding; provided,
however, that nothing contained herein shall be deemed to release the Servicer
from any obligation. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section to the Issuer, the Trustee
and each Rating Agency. Notwithstanding the foregoing, the Servicer shall not
merge or consolidate with any other Person or permit any other Person to become
a successor to the Servicer's business, unless (a) immediately after giving
effect to such transaction, no representation or warranty made pursuant to
Section 3.6 shall have been breached (for purposes hereof, such representations
and warranties shall speak as of the date of the consummation of such
transaction) and no event that, after notice or lapse of time, or both, would
become a Servicer Termination Event shall have occurred and be continuing, (b)
the Servicer shall have delivered to the Issuer and the Trustee a certificate of
a Responsible Officer of the Servicer and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with, (c) the
Servicer shall have delivered to the Issuer and the Trustee an Opinion of
Counsel, stating that, in the opinion of such counsel, either (1) all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary to preserve and protect the interest of the Issuer
in the Trust Assets and reciting the details of the filings or (2) no such
action shall be necessary to preserve and protect such interest, and (d) the
Rating Agency Condition has been satisfied.
SECTION 7.3. Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Issuer, the Contributor, the
Noteholders or the Trustee except as provided in this Agreement, for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement; provided, however, that this provision shall not protect the
Servicer or any such person against any liability that would otherwise be
imposed by reason of a breach of
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this Agreement or willful misfeasance, bad faith or gross negligence (excluding
errors in judgment) in the performance of duties, by reason of reckless
disregard of obligations and duties under this Agreement or any violation of law
by the Servicer or such person, as the case may be; provided further, that this
provision shall not affect any liability to indemnify the Issuer and the Trustee
for costs, taxes, expenses, claims, liabilities, losses or damages paid by the
Issuer or the Trustee, each in its individual capacity. The Servicer and any
director, officer, employee or agent of the Servicer may rely in good faith on
the advice of counsel or on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
SECTION 7.4. Servicer Not to Resign. Subject to the provisions of
Section 7.2, the Servicer shall not resign from the obligations and duties
imposed on it by this Agreement as Servicer except upon a determination that by
reason of a change in legal requirements the performance of its duties under
this Agreement would cause it to be in violation of such legal requirements in a
manner which would have a material adverse effect on the Servicer, and a Note
Majority does not elect to waive the obligations of the Servicer to perform the
duties which render it legally unable to act or to delegate those duties to
another Person. Any such determination permitting the resignation of the
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Issuer and the Trustee. No resignation of the Servicer shall become
effective until a successor Servicer that is an Eligible Servicer shall have
assumed the responsibilities and obligations of the Servicer; provided, however,
that in the event a successor Servicer is not appointed within 60 days after the
Servicer has given notice of its resignation and has provided the Opinion of
Counsel required by this Section, the Servicer may petition a court for its
removal.
SECTION 7.5. Corporate Existence. The Servicer shall maintain its
existence, rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation, and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which the failure to so qualify would have an adverse effect on the validity or
enforceability of any Lease or this Agreement or on the ability of the Servicer
to perform its duties under this Agreement.
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ARTICLE VIII
SERVICER TERMINATION EVENTS
SECTION 8.1. Servicer Termination Event. For purposes of this
Agreement, each of the following shall constitute a "Servicer Termination
Event":
(a) Any failure by the Servicer to deposit within the time
periods specified in this Agreement in the Collection Account for
distribution to Noteholders, or to distribute to the Contributor, any
proceeds or payment required to be so deposited or distributed under
the terms of this Agreement (or, if Vendor Services is the Servicer,
the Transfer Agreement) that continues unremedied for a period of five
Business Days (three Business Days with respect to payment of Purchase
Amounts) after written notice is received by the Servicer from the
Trustee or after discovery of such failure by a Responsible Officer of
the Servicer; or
(b) Failure by the Servicer to deliver to the Trustee and
the Issuer the Servicer's Certificate by the third Business Day prior
to the related Payment Date, or failure on the part of the Servicer to
observe its covenants and agreements set forth in Section 7.2; or
(c) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in this Agreement (or, if Vendor Services is
the Servicer, the Transfer Agreement), which failure (i) materially
and adversely affects the rights of the Issuer or Noteholders, and
(ii) continues unremedied for a period of 30 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Issuer, the
Trustee or any Noteholder; or
(d) (i) The commencement of an involuntary case under the
federal bankruptcy laws, as now or hereinafter in effect, or another
present or future federal or state bankruptcy, insolvency or similar
law and such case is not dismissed within 60 days; or (ii) the entry
of a decree or order for relief by a court or regulatory authority
having jurisdiction in respect of the Servicer in an involuntary case
under the federal bankruptcy laws, as now or hereafter in effect, or
another present or future, federal or state, bankruptcy, insolvency or
similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Servicer or
of any substantial part of their respective properties or ordering the
winding up or liquidation of the affairs of the Servicer; or
(e) The commencement by the Servicer of a voluntary case
under the federal bankruptcy laws, as now or hereafter in effect, or
any other present or future, federal or state, bankruptcy, insolvency
or similar law, or
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the consent by the Servicer to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Servicer or of any substantial part
of its property or the making by the Servicer of an assignment for the
benefit of creditors or the failure by the Servicer generally to pay
its debts as such debts become due or the taking of corporate action
by the Servicer in furtherance of any of the foregoing; or
(f) Any representation, warranty or statement of the
Servicer made in this Agreement or any certificate, report or other
writing delivered by the Servicer pursuant hereto shall prove to be
incorrect in any material respect as of the time when the same shall
have been made, the incorrectness of such representation, warranty or
statement has a material adverse effect on the Issuer or Noteholders,
and, within 30 days after written notice thereof shall have been given
to the Servicer or the Contributor by the Issuer, the Trustee or any
Noteholder, the circumstances or condition in respect of which such
representation, warranty or statement was incorrect shall not have
been eliminated or otherwise cured.
SECTION 8.2. Consequences of a Servicer Termination Event. If a
Servicer Termination Event shall occur and be continuing, the Trustee may, and
at the direction of a Note Majority shall, by notice given in writing to the
Servicer and the Issuer, terminate all of the rights and obligations of the
Servicer under this Agreement. On or after the receipt by the Servicer of such
written notice, all authority, power, obligations and responsibilities of the
Servicer under this Agreement, whether with respect to the Notes, the Trust
Assets or otherwise, shall be terminated and automatically shall pass to, be
vested in and become obligations and responsibilities of the Trustee (unless and
until a successor Servicer is appointed in accordance with Section 8.3);
provided, however, that the Trustee shall have no liability with respect to any
obligation which was required to be performed by the terminated Servicer prior
to the date that the Trustee becomes the Servicer or any claim of a third party
based on any alleged action or inaction of the terminated Servicer. The Trustee
is authorized and empowered by this Agreement to execute and deliver, on behalf
of the terminated Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination.
The terminated Servicer agrees to cooperate with the Trustee in effecting the
termination of the responsibilities and rights of the terminated Servicer under
this Agreement, including, without limitation, the transfer to the Trustee for
administration by it of all cash amounts that shall at the time be held by the
terminated Servicer for deposit, or have been deposited by the terminated
Servicer, in any of the Trust Accounts or thereafter received with respect to
the Leases and the delivery to the Trustee of all Lease Files, Monthly Records
and Collection Records and a computer tape in readable form as of the most
recent Business Day containing all information necessary to enable the Trustee
or a successor Servicer to service the Leases and the other Trust Assets. The
terminated
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Servicer shall grant the Issuer, the Trustee and the successor Servicer
reasonable access to the terminated Servicer's premises at the terminated
Servicer's expense.
SECTION 8.3. Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 8.2, the Trustee shall be the successor in all
respects to the Servicer in its capacity as servicer under this Agreement and
the transactions set forth or provided for in this Agreement, and shall be
subject to all the responsibilities, restrictions, duties, liabilities and
termination provisions relating thereto placed on the Servicer by the terms and
provisions of this Agreement. As compensation therefor, the Trustee shall be
entitled to receive the Total Servicing Fee. The Issuer and the Trustee shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
(b) Notwithstanding the foregoing, the Trustee may, if it shall be
unwilling to so act, or shall, if it is legally unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any Eligible Servicer as
the successor to the Servicer hereunder in the performance of all or any part of
the responsibilities, duties or liabilities of the Servicer hereunder. Pending
appointment of a successor pursuant to the preceding sentence, the Trustee shall
act as successor Servicer unless it is legally unable to do so, in which event
the outgoing Servicer shall continue to act as Servicer until a successor has
been appointed and accepted such appointment.
(c) In connection with such appointment and assumption, the Trustee
may make such arrangements for the compensation of such successor out of
payments on the Leases as it and such successor shall agree; provided, however,
that no such monthly compensation shall, without the written consent of the
Contributor and 100% of the Noteholders, exceed the Total Servicing Fee. The
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
(d) If a successor Servicer is acting as Servicer hereunder, it shall
be subject to termination under Section 8.2 upon the occurrence of any Servicer
Termination Event applicable to it as Servicer.
SECTION 8.4. Notification to Noteholders. Upon any termination of,
or appointment of a successor to, the Servicer pursuant to this Article VIII,
the Issuer shall give prompt written notice thereof to each Rating Agency, and
the Trustee shall give prompt written notice thereof to Noteholders at their
respective addresses appearing in the Note Register.
SECTION 8.5. Waiver of Past Defaults. A Note Majority may waive any
default by the Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Servicer Termination Event arising therefrom shall be deemed
to
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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.
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ARTICLE IX
ADDITION AND SUBSTITUTION OF LEASES
SECTION 9.1. Substitution and Addition.
(a) Subject to the satisfaction of the requirements set forth in
Section 9.1(b) hereof, Vendor Services will have the right (but not the
obligation) at any time to substitute one or more Substitute Leases and the
Equipment subject thereto for a Lease (for purposes of this Section 9, such
Lease referred to as a "Predecessor Lease") and the Equipment subject thereto
if:
(i) the Predecessor Lease became (A) a Liquidated Lease, (B)
a Warranty Lease or (C) an Adjusted Lease during the immediately
preceding Due Period; and
(ii) the aggregate Principal Balance of the Liquidated
Leases, Adjusted Leases and Warranty Leases that are Predecessor
Leases shall not in the aggregate exceed 10% of the Initial Pool
Principal Balance.
Subject to the satisfaction of 9.1(b) hereof, following the Determination Date
as of which any Lease first becomes an Early Termination Lease, the Issuer may,
but shall have no obligation to, reinvest the proceeds of such Early Termination
Lease in one or more Additional Leases. Any Early Termination Lease and the
Equipment subject thereto for which Additional Leases have been purchased shall
nevertheless remain subject to the Lien of the Indenture until such time as an
Additional Lease or Additional Leases have been purchased in accordance with the
provisions of Section 9 hereof or the proceeds of such Early Termination Lease
have been deposited into the Collection Account.
(b) Each transfer of Substitute Leases and addition of Additional
Leases will be subject to the satisfaction of the following conditions
precedent:
(i) after giving effect to such additions and substitutions
and any adjustments pursuant to Section 3.02 thereof, the
aggregate Book Value of such Leases must be not less than 90% of
the Book Value of the Leases added, substituted or adjusted since
the Closing Date.
(ii) either the final payment on such Substitute Lease or
Additional Lease must be on or prior to __________ or, to the
extent the final payment on such Lease is due subsequent to
__________, only scheduled payments due on or prior to such date
may be included in the Principal Balance of such Lease for the
purpose of making any calculation under the Indenture.
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(iii) after giving effect to such additions and
substitutions and any adjustments pursuant to Section 3.2, the
aggregate amount of Scheduled Payments through the term of the
Leases (including the Substitute Leases and the Additional
Leases) and the aggregate Principal Balance of the Performing
Leases will not be materially less than the aggregate Scheduled
Payments of the Leases and the aggregate Principal Balance of the
Leases, respectively prior to such substitution or addition or
adjustment; and
(iv) after giving effect to such adjustments, additions and
substitutions, the aggregate Principal Balance of the Performing
Leases must not be less than the aggregate Principal Balance of
the Performing Leases prior to such adjustment, substitution or
addition.
(c) Each addition and substitution pursuant to this Section 9.1 shall
include the right to receive all amounts due or to become due under each
Substitute Lease being substituted or Additional Leases being purchased and any
security deposits paid by the related Obligor to Vendor Services in connection
therewith (other than any prepayments of rent required pursuant to the terms
thereof at or before the commencement of such Lease and any payments due before
the Collection Period during which such substitution or addition is made). At
the time of each such substitution and addition, Vendor Services shall transfer
to the Trustee all Scheduled Payments actually received by Vendor Services which
became due during the current Collection Period.
SECTION 9.2. Procedure.
(a) By 11:00 a.m. on the third Business Day following each
Determination Date, Vendor Services shall give written notice to the Servicer of
any substitution of Substitute Leases for Predecessor Leases or addition of
Additional Leases for Early Termination Leases which have been prepaid in full
pursuant to Section 9.1 during the preceding Collection Period. By 11:00 a.m. on
the fourth Business Day following each Payment Date, Vendor Services shall
deliver to the Servicer and the Trustee and, to the extent not included in the
Servicer's Certificate, the Trustee shall promptly deliver to each Rating Agency
(i) a supplement to Exhibit A hereto setting forth the information shown thereon
for each such Substitute Lease and Additional Lease, (ii) an Officer's
Certificate (A) certifying that each such Substitute Lease and Additional Lease
is an Eligible Lease, (B) specifying each Predecessor Lease for which a
substitution has been made and each Early Termination Lease which is being
replaced by an Additional Lease and the amount of each Scheduled Payment and the
Book Value under each such Predecessor Lease and the amount of each Scheduled
Payment and the Book Value under each Additional Lease and Substitute Lease
being transferred thereby and (C) that all conditions precedent to such addition
or substitution have been satisfied and (iii) such additional information
concerning such Additional Leases, Substitute Leases, Early Termination Leases
or Predecessor Leases as may be needed for the Servicer to
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prepare its Servicer's Certificates pursuant to Section 3.9 and to otherwise
carry out its duties as servicer hereunder.
(b) Subject to the provisions of Section 9.3, the delivery of any
Officer's Certificate and supplement to Exhibit A pursuant to Section 9.2(a)
shall be conclusive evidence, without further act or deed, that during the
immediately preceding Collection Period (i) Vendor Services assigned to the
Issuer pursuant to Section 9.1 hereof all of Vendor Services' right, title and
interest in and to the Substitute Leases and Additional Leases identified in
such supplement and the related rights described in Section 9.1 hereof, (ii)
Vendor Services transferred to the Issuer, as a contribution to capital, all of
Vendor Services' right, title and interest in and to the Equipment subject to
such Substitute Leases, and (iii) the Issuer assigned and transferred to Vendor
Services, without representation or warranty, all of the Issuer's right, title
and interest in and to the Predecessor Leases and Early Termination Leases
identified in such Officer's Certificate and the Equipment subject thereto.
Vendor Services shall promptly deliver to the Trustee (or a custodian on its
behalf) the original executed counterpart of each Substitute Lease and Early
Termination Lease assigned to the Issuer pursuant to Section 9.1 hereof and the
Issuer shall promptly request the Trustee to deliver to Vendor Services the
original executed counterpart of each Predecessor Lease for which substitution
has been made pursuant to Section 9.1 hereof.
SECTION 9.3. Objection and Repurchase. If any holder of the Notes
objects to any substitution of Leases within ten days of receipt of the
Servicer's Certificate providing notice thereof pursuant to Section 3.9, on the
grounds either that any Substitute Lease or Additional Lease is not an Eligible
Lease or that such substitution or addition is otherwise not permitted under the
provisions of Section 9.1 hereof, Vendor Services shall be entitled to present
such additional information as it deems appropriate in an effort to demonstrate
that such Lease is an Eligible Lease and that such substitution is permitted
under the provisions of Section 9.1 hereof. Following such presentation, the
substitution shall remain effective if each person originally objecting to the
substitution withdraws his objection. If the conditions specified in the
preceding sentence are not satisfied, or if at any time it is established that
any lease was not, at the time of substitution, an Eligible Lease, then Vendor
Services shall be required to repurchase such Lease in accordance with the
provisions of Section 2.6 hereof.
SECTION 9.4. Vendor Services' and Servicer's Subsequent Obligations.
Upon any substitution of Leases in accordance with the provisions of this
Section 9, Vendor Services' and the Servicer's obligations hereunder with
respect to the Predecessor Lease shall cease but Vendor Services and the
Servicer shall each thereafter have the same obligations with respect to the
Substitute Lease substituted as it has with respect to all other Leases subject
to the terms hereof.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment.
(a) This Agreement may be amended by the Contributor, the Servicer,
the Issuer and the Trustee without the consent of any of the Noteholders, (i) to
cure any ambiguity, (ii) to correct or supplement any provisions in this
Agreement that may be inconsistent with any other provision herein, or (iii) to
make any other provisions with respect to matters or questions arising under
this Agreement that are not inconsistent with the provisions hereof; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of the Noteholders.
(b) This Agreement may also be amended from time to time by the
Contributor, the Servicer, the Issuer and the Trustee with the consent of a Note
Majority (which consent of any Holder of a Note given pursuant to this Section
or pursuant to any other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such Note and of any Note
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon the Note) for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, or of modifying in any manner the rights of the
Holders of Notes; provided, however, that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Leases or distributions required to be made on any
Note or the rate of interest payable thereon, (b) amend any provisions of
Section 5.06 or 8.03 of the Indenture in such a manner as to affect the priority
of payment of interest or principal to Noteholders, or (c) reduce the aforesaid
percentage required to consent to any such amendment or any waiver hereunder,
without the consent of the Holders of all Notes then Outstanding and affected
thereby; and provided, further, that no such amendment shall be effective unless
and until the Rating Agency Condition has been satisfied.
(c) Promptly after the execution of any such amendment or consent, the
Issuer or the Trustee, as appropriate, shall furnish written notification of the
substance of such amendment or consent to each Noteholder.
(d) It shall not be necessary for the consent of Noteholders pursuant
to Section 10.1(b) to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Noteholders provided for in this Agreement) and of evidencing the authorization
of the execution thereof by Noteholders shall be subject to such reasonable
requirements as
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the Issuer or Trustee, as applicable, may prescribe, including the establishment
of record dates.
(e) Prior to the execution of any amendment to this Agreement, the
Issuer shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement, in addition to the Opinion of Counsel referred to in Section 10.2(h).
The Issuer may, but shall not be obligated to, enter into any such amendment
which affects the Issuer's own rights, duties or immunities under this Agreement
or otherwise.
SECTION 10.2. Protection of Title to Trust Assets.
(a) The Contributor shall execute and file such financing statements
and cause to be executed and filed such continuation and other statements
(including those prepared by the Servicer pursuant to Section 3.14(c)), all in
such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Issuer, the Issuer and the Trustee in
the Trust Assets and in the proceeds thereof; except that (i) UCC-1 financing
statements and continuation statements, listing the Obligor as debtor and the
related Equipment as collateral, need be filed only as required by Section 3.5;
and (ii) no assignments of any such financing statements relating to the
Equipment shall be filed to reflect the assignment of the Leases by Vendor
Services to the Contributor and by the Contributor to the Issuer. The
Contributor shall deliver (or cause to be delivered) to the Issuer and the
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) Neither the Contributor nor the Issuer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed by the Contributor in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Issuer and the
Trustee at least 60 days' prior written notice thereof, and shall promptly file
appropriate amendments to all previously filed financing statements and
continuation statements.
(c) Each of the Contributor, the Servicer and the Issuer shall give
the Issuer and the Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement. The Servicer shall at all times maintain each office from
which it services Leases and its principal executive office within the United
States of America.
(d) The Servicer shall maintain accounts and records as to each Lease
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Lease, including payments and recoveries made and
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payments owing (and the nature of each) and (ii) reconciliation between payments
or recoveries on (or with respect to) each Lease and the amounts from time to
time deposited in the Collection Account in respect of such Lease.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of transfer and assignment under this Agreement of the Leases to
the Issuer, the Servicer's master computer records (including any backup
archives) that refer to any Lease indicate clearly that the Lease is owned by
the Issuer. Indication of the Issuer's ownership of a Lease shall be deleted
from or modified on the Servicer's computer systems when, and only when, the
Lease has been paid in full, liquidated (including receipt of all recoveries
reasonably expected to be collected) or purchased by the Contributor or Vendor
Services.
(f) Upon receipt by the Servicer of reasonable prior notice, Servicer
shall permit the Issuer, the Trustee and their respective agents, at any time
during the Servicer's normal business hours to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Leases or any other
portion of the Trust Assets.
(g) The Servicer shall furnish to the Issuer and the Trustee at any
time upon request a list (which may, at the option of the Servicer, be on a
computer disk or other electronic storage medium) of all Leases then held as
part of the Trust Assets, together with a reconciliation of such list to the
Schedule of Leases and to each of the Servicer's Certificates furnished before
such request indicating removal of Leases from the Issuer. Upon request, the
Servicer shall furnish a copy of any list to the Contributor. Subject to the
following sentence, the Issuer shall hold any such list and Schedule of Leases
for examination by interested parties during normal business hours at the
Corporate Trust Office upon reasonable notice by such Persons of their desire to
conduct an examination. The Issuer shall and shall cause its representatives to
hold in confidence all information thereon relating to the identity of the
Obligors except to the extent disclosure may be required by (S) 9-208 of the UCC
or by other applicable law (and all reasonable applications for confidential
treatment are unavailing) and except to the extent that the Issuer may
reasonably determine that such disclosure is consistent with its obligations
under the Indenture.
(h) The Contributor and the Servicer shall deliver to the Issuer and
the Trustee simultaneously with the execution and delivery of this Agreement and
of each amendment thereto and upon the occurrence of the events giving rise to
an obligation to give notice pursuant to Section 10.2(b) or (c), an Opinion of
Counsel either (a) stating that, in the opinion of such Counsel, all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Issuer and the
Trustee in the Leases and the other Trust Assets, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such details are
given, or (b) stating that, in the
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opinion of such counsel, no such action is necessary to preserve and protect
such interest.
(i) The Servicer shall deliver to the Issuer and the Trustee, within
90 days after the beginning of each calendar year beginning with the first
calendar year beginning more than three months after the Closing Date, an
Opinion of Counsel, either (a) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Issuer and
the Trustee in the Leases, and reciting the details of such filings or referring
to prior Opinions of Counsel in which such details are given, or (b) stating
that, in the opinion of such counsel, no action shall be necessary to preserve
and protect such interest.
SECTION 10.3. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
SECTION 10.4. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
respective rights of the Holders thereof.
SECTION 10.5. Assignment. Notwithstanding anything to the contrary
contained in this Agreement, except as provided in Section 7.2 or Section 8.2
(and as provided in the provisions of the Agreement concerning the resignation
of the Servicer), this Agreement may not be assigned by the Contributor or the
Servicer without (i) the prior written consent of the Issuer, the Trustee and a
Note Majority, and (ii) satisfaction of the Rating Agency Condition.
SECTION 10.6. Third-Party Beneficiaries. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
SECTION 10.7. Counterparts. For the purpose of facilitating its
execution and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an
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original, and all of which counterparts shall constitute but one and the same
instrument.
SECTION 10.8. Intention of Parties. The parties hereto intend that,
in the event that the conveyance of the Leases and other Trust Assets pursuant
to this Agreement is determined to be made as security for a loan made by the
Issuer or the Noteholders to the Contributor, the Contributor hereby grants to
the Issuer to secure such loan a first priority security interest in all of the
Contributor's right, title and interest in and to the rights and property
intended to be conveyed to the Issuer pursuant to Section 2.1(a). This
Agreement shall, in such event, constitute a security agreement under applicable
law.
SECTION 10.9. Notices. All demands, notices and communications under
this Agreement shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, or by facsimile transmission, and shall be deemed
to have been duly given upon receipt (a) in the case of Vendor Services, the
Contributor, the Issuer or the Servicer, at the following address: 1100
Landmark Towers, 345 S. Peter Street, St. Paul, Minnesota 55102, Attention:
General Counsel and (b) in the case of the Trustee, at its Corporate Trust
Office, or at such other address as shall be designated by any such party in a
written notice to the other parties.
SECTION 10.10. Income Tax Characterization. The Contributor has
structured the Indenture and the Notes with the intention that the Notes will
qualify under applicable federal, state, local and foreign tax law as
indebtedness of the Contributor secured by the Leases. The Contributor and the
Servicer agree to treat and to take no action inconsistent with the treatment of
the Notes as such indebtedness for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or measured by income.
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IN WITNESS WHEREOF, the Issuer, the Contributor, Vendor Services, the
Servicer and the Trustee have caused this Contribution and Servicing Agreement
to be duly executed by their respective officers as of the day and year first
above written.
ISSUER:
GREEN TREE LEASE FINANCE 1997-1, LLC
By GREEN TREE LEASE FINANCE II, INC.
By _________________________________________
Name:
Title:
CONTRIBUTOR:
GREEN TREE LEASE FINANCE II, INC.
By _________________________________________
Name:
Title:
GREEN TREE VENDOR SERVICES
CORPORATION
In its individual capacity and as Servicer
By _________________________________________
Name:
Title:
TRUSTEE:
[_____________],
not in its individual capacity but solely as
Trustee
By _________________________________________
Name:
Title:
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EXHIBIT A
SCHEDULE OF LEASES AND EQUIPMENT
--------------------------------
A-1
<PAGE>
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
------------------------------
The undersigned, on behalf of Green Tree Vendor Services Corporation,
in its capacity as servicer (the "Servicer") under the Contribution and
Servicing Agreement, dated as of December 1, 1997 (the "Contribution and
Servicing Agreement"), among Green Tree Lease Finance 1997-1, LLC, Green Tree
Lease Finance II, Inc., [_______], as trustee under the Indenture, and Green
Tree Vendor Services Corporation, in its individual capacity and as Servicer,
DOES HEREBY CERTIFY that he/she is a Responsible Officer of the Servicer and,
pursuant to Section 3.9 of the Contribution and Servicing Agreement, DOES HEREBY
FURTHER CERTIFY the following with respect to the Payment Date occurring on
___________________________________:
B-1
<PAGE>
This Certificate shall constitute the Servicer's Certificate required
by Section 3.9 of the Contribution and Servicing Agreement with respect to the
above Payment Date. Any term capitalized but not defined herein shall have the
meaning ascribed thereto in the Contribution and Servicing Agreement.
IN WITNESS WHEREOF the undersigned has hereunto set his/her hand this
_______________ day of ____________________________, ____________.
GREEN TREE VENDOR SERVICES
CORPORATION
By _________________________________________
Name:
Title:
B-2
<PAGE>
Exhibit 4.3
===============================================================================
GREEN TREE LEASE FINANCE 1997-1, LLC
% RECEIVABLE-BACKED NOTES, CLASS A-1
% RECEIVABLE-BACKED NOTES, CLASS A-2
% RECEIVABLE-BACKED NOTES, CLASS B
% RECEIVABLE-BACKED NOTES, CLASS C
GREEN TREE FINANCIAL CORPORATION
CLASS C LIMITED GUARANTOR
--------------------
INDENTURE
DATED AS OF DECEMBER 1, 1997
--------------------
[___________]
TRUSTEE
===============================================================================
<PAGE>
CROSS REFERENCE TABLE
TIA Indenture
Section Section
- ------- ----------
310(a)(1).................................................. 6.11
(a)(2).................................................. 6.11
(a)(3).................................................. 6.10
(a)(4).................................................. N.A./2/
(a)(5).................................................. 6.11
(b)..................................................... 6.08; 6.11
(c)..................................................... N.A.
311(a)..................................................... 6.12
(b)..................................................... 6.12
(c)..................................................... N.A.
312(a)..................................................... 7.01
(b)..................................................... 7.02
(c)..................................................... 7.02
313(a)..................................................... 7.04
(b)(1).................................................. 7.04
(b)(2).................................................. 7.04
(c)..................................................... 11.05
(d)..................................................... 7.04
314(a)..................................................... 7.03
(b)..................................................... 3.06; 11.15
(c)(1).................................................. 11.01
(c)(2).................................................. 11.01
(c)(3).................................................. 11.01
(d)..................................................... 11.01
(e)..................................................... 11.01
(f)..................................................... 11.01
315(a)..................................................... 6.01
(b)..................................................... 6.05; 11.05
(c)..................................................... 6.01
(d)..................................................... 6.01
(e)..................................................... 5.14
316(a)(last sentence)...................................... 1.01
(a)(1)(A)............................................... 5.12
(a)(1)(B)............................................... 5.13
(a)(2).................................................. N.A.
(b)..................................................... 5.08
(c)..................................................... N.A.
317(a)(1).................................................. 5.03
(a)(2).................................................. 5.03
(b)..................................................... 3.03
318(a)..................................................... 11.07
- ---------------
1 Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
2 N.A. means Not Applicable.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE I Definitions and Incorporation by Reference.................................................. 3
SECTION 1.01. Definitions....................................................................... 3
SECTION 1.02. Incorporation by Reference of Trust Indenture Act................................. 24
SECTION 1.03. Rules of Construction............................................................. 25
ARTICLE II The Notes................................................................................... 26
SECTION 2.01. Form.............................................................................. 26
SECTION 2.02. Execution, Authentication and Delivery............................................ 26
SECTION 2.03. Temporary Notes................................................................... 27
SECTION 2.04. Registration; Registration of Transfer and Exchange............................... 27
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes........................................ 29
SECTION 2.06. Person Deemed Owner............................................................... 29
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest............................. 30
SECTION 2.08. Cancellation...................................................................... 30
SECTION 2.09. Book-Entry Notes.................................................................. 31
SECTION 2.10. Notices to Depository............................................................. 32
SECTION 2.11. Definitive Notes.................................................................. 32
SECTION 2.12. Calculations...................................................................... 32
ARTICLE III Covenants................................................................................... 34
SECTION 3.01. Payment of Principal and Interest................................................. 34
SECTION 3.02. Maintenance of Office or Agency................................................... 34
SECTION 3.03. Money for Payments To Be Held in Trust............................................ 34
SECTION 3.04. Existence......................................................................... 36
SECTION 3.05. Protection of Trust Estate........................................................ 36
SECTION 3.06. Opinions as to Trust Estate....................................................... 37
SECTION 3.07. Performance of Obligations; Servicing of Leases................................... 37
SECTION 3.08. Negative Covenants................................................................ 39
SECTION 3.09. Annual Statement as to Compliance................................................. 39
SECTION 3.10. Issuer May Consolidate or Merge Only on Certain
Terms............................................................................. 40
SECTION 3.11. Successor or Transferee........................................................... 42
SECTION 3.12. No Other Business................................................................. 42
SECTION 3.13. No Borrowing...................................................................... 42
SECTION 3.14. Servicer's Obligations............................................................ 43
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities................................. 43
SECTION 3.16. Income Tax Characterization....................................................... 43
SECTION 3.17. Restricted Payments............................................................... 43
SECTION 3.18. Notice of Events of Default....................................................... 43
SECTION 3.19. Further Instruments and Acts...................................................... 44
SECTION 3.20. Compliance with Laws.............................................................. 44
</TABLE>
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SECTION 3.21. Amendments of Contribution and Servicing Agreement................................ 44
SECTION 3.22. Issuer Obligation................................................................. 44
ARTICLE IV Satisfaction and Discharge.................................................................. 46
SECTION 4.01. Satisfaction and Discharge of Indenture........................................... 46
SECTION 4.02. Application of Trust Money........................................................ 47
SECTION 4.03. Repayment of Moneys Held by Paying Agent.......................................... 47
SECTION 4.04. Release of Trust Estate........................................................... 47
ARTICLE V Remedies.................................................................................... 49
SECTION 5.01. Events of Default................................................................. 49
SECTION 5.02. Rights upon Event of Default...................................................... 50
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement.
by Trustee; Authority of Trustee.................................................. 50
SECTION 5.04. Remedies.......................................................................... 52
SECTION 5.05. Optional Preservation of the Leases............................................... 53
SECTION 5.06. Priorities........................................................................ 53
SECTION 5.07. Limitation of Suits............................................................... 54
SECTION 5.08. Unconditional Rights of Noteholders To Receive.......
Principal and Interest............................................................ 55
SECTION 5.09. Restoration of Rights and Remedies................................................ 55
SECTION 5.10. Rights and Remedies Cumulative.................................................... 55
SECTION 5.11. Delay or Omission Not a Waiver.................................................... 56
SECTION 5.12. Control by Noteholders............................................................ 56
SECTION 5.13. Waiver of Past Defaults........................................................... 56
SECTION 5.14. Undertaking for Costs............................................................. 57
SECTION 5.15. Waiver of Stay or Extension Laws.................................................. 57
SECTION 5.16. Action on Notes................................................................... 57
SECTION 5.17. Performance and Enforcement of Certain Obligations................................ 57
ARTICLE VI The Trustee................................................................................. 59
SECTION 6.01. Duties of Trustee................................................................. 59
SECTION 6.02. Rights of Trustee................................................................. 61
SECTION 6.03. Individual Rights of Trustee...................................................... 62
SECTION 6.04. Trustee's Disclaimer.............................................................. 63
SECTION 6.05. Notice of Defaults................................................................ 63
SECTION 6.06. Reports by Trustee to Holders..................................................... 63
SECTION 6.07. Compensation and Indemnity........................................................ 63
SECTION 6.08. Replacement of Trustee............................................................ 64
SECTION 6.09. Successor Trustee by Merger....................................................... 65
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee..................................... 66
SECTION 6.11. Eligibility; Disqualification..................................................... 67
SECTION 6.12. Preferential Collection of Claims Against Issuer.................................. 67
SECTION 6.13. Representations and Warranties of the Trustee..................................... 67
SECTION 6.14. Servicer's Obligations............................................................ 68
</TABLE>
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ARTICLE VII Noteholders' Lists and Reports.............................................................. 69
SECTION 7.01. Note Registrar To Furnish Trustee Names and..........
Addresses to Noteholders.......................................................... 69
SECTION 7.02. Preservation of Information; Communications to.......
Noteholders....................................................................... 69
SECTION 7.03. Reports by Issuer................................................................. 69
SECTION 7.04. Reports by Trustee................................................................ 70
SECTION 7.05. Statements to Noteholders and Equity.................
Certificateholders................................................................ 70
ARTICLE VIII Trust Accounts, Disbursements and Releases.................................................. 72
SECTION 8.01. Collection of Money............................................................... 72
SECTION 8.02. Collection Account................................................................ 72
SECTION 8.03. Distributions..................................................................... 72
SECTION 8.04. Note Distribution Account......................................................... 73
SECTION 8.05. Servicing Account................................................................. 74
SECTION 8.06. Residual Account.................................................................. 74
SECTION 8.07 Class C Limited Guaranty.......................................................... 76
SECTION 8.08. General Provisions Regarding Servicing Account,
Collection Account, Residual Account and
Note Distribution Account......................................................... 76
ARTICLE IX Supplemental Indentures..................................................................... 79
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders....................................................................... 79
SECTION 9.02. Supplemental Indentures With Consent of
Noteholders....................................................................... 80
SECTION 9.03. Execution of Supplemental Indentures.............................................. 82
SECTION 9.04. Effect of Supplemental Indenture.................................................. 82
SECTION 9.05. Conformity With Trust Indenture Act............................................... 83
SECTION 9.06. Reference in Notes to Supplemental Indentures..................................... 83
ARTICLE X Redemption of Notes......................................................................... 84
SECTION 10.01. Redemption........................................................................ 84
SECTION 10.02. Form of Redemption Notice......................................................... 84
SECTION 10.03. Notes Payable on Redemption Date.................................................. 85
ARTICLE XI Miscellaneous............................................................................... 86
SECTION 11.01. Compliance Certificates and Opinions, etc......................................... 86
SECTION 11.02. Form of Documents Delivered to Trustee............................................ 88
SECTION 11.03. Acts of Noteholders............................................................... 89
SECTION 11.04. Notices, etc., to Trustee, Issuer and Rating Agencies............................. 89
SECTION 11.05. Notices to Noteholders; Waiver.................................................... 90
SECTION 11.06. Alternate Payment and Notice Provisions........................................... 91
SECTION 11.07. Conflict with Trust Indenture Act................................................. 91
SECTION 11.08. Effect of Headings and Table of Contents.......................................... 91
</TABLE>
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SECTION 11.09. Successors and Assigns............................................................ 91
SECTION 11.10. Severability...................................................................... 91
SECTION 11.11. Benefits of Indenture............................................................. 92
SECTION 11.12. Legal Holidays.................................................................... 92
SECTION 11.13. Governing Law..................................................................... 92
SECTION 11.14. Counterparts...................................................................... 92
SECTION 11.15. Recording of Indenture............................................................ 92
SECTION 11.16. No Petition....................................................................... 92
SECTION 11.17. Inspection........................................................................ 92
Testimonium, Signatures and Seals.......................................................................... 95
</TABLE>
Exhibit A Form of Depository Agreement
Exhibit B Form of Monthly Statements to Noteholders
Exhibit C-1 Form of Class A Note
Exhibit C-2 Form of Class B Note
Exhibit C-3 Form of Class C Note
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<PAGE>
INDENTURE, dated as of December 1, 1997, among GREEN TREE LEASE
FINANCE 1997-1, LLC, a limited liability company formed pursuant to the laws of
the State of Delaware (the "Issuer"), GREEN TREE FINANCIAL CORPORATION, a
Delaware corporation ("Green Tree"), as Class C limited guarantor, and
[__________], a [__________] [__________], in its capacity as Trustee (the
"Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Issuer's __% Lease-
Backed Notes, Class A-1 (the "Class A-1 Notes"), __% Lease-Backed Notes, Class
A-2 (the "Class A-2 Notes"), __% Lease-Backed Notes, Class B (the "Class B
Notes") and __% Lease-Backed Notes, Class C (the "Class C Notes" and, together
with the Class A-1 Notes, the Class A-2 Notes and the Class B Notes, the
"Notes"):
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Notes, the Issuer hereby Grants to the
Trustee, on behalf of and for the benefit of the Noteholders to secure the
payment and performance of the Secured Obligations, the following (collectively,
the "Trust Estate"):
GRANTING CLAUSE FIRST
All rights, title, interest (including security interests) and
privileges of the Issuer, whether now owned or hereafter acquired, whether now
existing or hereafter arising and wherever located, in and to:
(a) the Leases and certain rights to the proceeds of the related
Equipment (subject to the rights of the SPC therein, as set forth
herein and in the Contribution and Servicing Agreement);
(b) the Pledged Revenues;
(c) the Trust Accounts, including amounts on deposit in the
Residual Account;
(d) the Insurance, Maintenance and Tax Accounts;
(e) the Contribution and Servicing Agreement, including any
deemed loan made by the Issuer to the SPC and the security therefor,
including the security interest granted by the SPC to the Issuer to
secure such deemed loan, as described in Section 9.8 of the
Contribution and Servicing Agreement, and (ii) the obligation of the
SPC pursuant to Section 2.1(a)(i)(3) of the Contribution and Servicing
Agreement to cause payment of the Liquidation Proceeds to the Issuer
and the security interest in the Equipment granted by the SPC to the
Issuer pursuant to Section 2.1(b) of the Contribution and Servicing
Agreement;
<PAGE>
(f) the Transfer Agreement, including (i) any Purchase Amount
paid and (ii) any deemed loan made by the SPC to Vendor Services and
the security therefor, including the security interest in the Leases
and Equipment granted by Vendor Services to the SPC to secure such
deemed loan, as described in Section 2.2 of the Transfer Agreement;
and
(g) all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing and all payments on
or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivables, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments
and other property which at any time constitute all or part of or are
included in the proceeds of any of the foregoing.
GRANTING CLAUSE SECOND
All other property of every name and nature from time to time
hereafter by delivery or by writing of any kind conveyed, pledged, assigned or
transferred, as and for additional security hereunder by the Issuer or by anyone
in its behalf or with its written consent to the Trustee, which is hereby
authorized to receive any and all such property at any and all times and to hold
and apply the same subject to the terms hereof.
The Trustee, for the benefit of the Holders of the Notes, acknowledges
such Grant. The Trustee, on behalf of the Holders of the Notes, accepts the
trusts under this Indenture in accordance with the provisions of this Indenture
and agrees to perform its duties required in this Indenture to the best of its
ability to the end that the interests of the Holders of the Notes may be
adequately and effectively protected.
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ARTICLE I
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions.
-----------
All terms defined in the Contribution and Servicing Agreement (as
defined below) shall have the same meaning in this Indenture. Except as
otherwise specified herein or as the context may otherwise require, the
following terms have the respective meanings set forth below for all purposes of
this Indenture.
"Accounting Date" means, with respect to a Payment Date, the last day
of the preceding calendar month.
"Act" has the meaning specified in Section 11.03(a).
"Additional Principal" with respect to each Payment Date is an amount
equal to (a) the Monthly Principal Amount, less (b) the Class A Principal
Payment, the Class B Principal Payment and the Class C Principal Payment to be
paid on such Payment Date.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Principal Amount" means, as of any date, the aggregate of
the Outstanding Principal Amounts of each Class of Notes.
"Amount Available" means, with respect to any Payment Date, the sum of
(i) the Available Pledged Revenues for such Payment Date, (ii) Servicer Advances
and (iii) that portion of the balance in the Residual Account available for
withdrawal by the Trustee in accordance with Section 8.06(c).
"Authorized Officer" means, with respect to the Issuer, any officer of
the Issuer who is authorized to act for the Issuer and who is identified on the
list of Authorized Officers delivered by the Issuer to the Trustee on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter).
"Available Funds Shortfall" has the meaning specified in Section
8.06(c).
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<PAGE>
"Available Pledged Revenues" means, with respect to any Payment Date,
the sum of (i) the Related Collection Period Pledged Revenues for such Payment
Date, (ii) all Purchase Amounts on deposit in the Collection Account as of the
immediately preceding Deposit Date, (iii) the amount paid by the SPC to purchase
the Leases pursuant to Section 5.1 of the Contribution and Servicing Agreement
on deposit in the Collection Account as of the immediately preceding Deposit
Date and (iv) all net income from investments of funds in the Collection Account
and the Note Distribution Account during the related Collection Period.
"Book-Entry Note" means any Note registered in the name of the
Depository or its nominee, ownership of which is reflected on the books of the
Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Business Day" means any day (other than a Saturday, Sunday or legal
holiday) on which commercial banking institutions in St. Paul, Minnesota, or any
other location of any successor Servicer or successor Trustee, are open for
regular business.
"Class" means, when used with respect to the Notes, all Notes of a
given Class.
"Class A Notes" means, collectively, the Class A-1 Notes and the Class
A-2 Notes.
"Class A Percentage" is _______%.
"Class A Principal Payment" means (a) while the Class A-1 Notes are
outstanding, (i) on all Payment Dates prior to the January 1999 Payment Date,
the lesser of (1) the amount necessary to reduce the Outstanding Principal
Amount on the Class A-1 Notes to zero and (2) the Monthly Principal Amount, and
(ii) on the January 1999 Payment Date, the entire Outstanding Principal Amount
on the Class A-1 Notes and (b) after the Class A-1 Notes have been paid in full,
the amount necessary to reduce the aggregate Outstanding Principal Amount on the
Class A-2 Notes to the Class A Target Investor Principal Amount.
"Class A Target Investor Principal Amount" with respect to each
Payment Date is an amount equal to the product of (a) the Class A Percentage and
(b) the Lease Pool Principal Balance as of such Payment Date.
"Class A-1 Interest Carryover Shortfall" means, with respect to any
Payment Date, the excess, if any, of the Class A-1 Interest Distributable Amount
for the preceding Payment Date over the amount that was actually distributed in
respect of interest on the Class A-1 Notes on such preceding Payment Date, plus,
to the
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<PAGE>
extent permitted by law, an amount equal to the product of (i) the Class
A-1 Interest Rate and (ii) such excess.
"Class A-1 Interest Distributable Amount" means, with respect to any
Payment Date, the sum of the Class A-1 Monthly Interest Distributable Amount and
the Class A-1 Interest Carryover Shortfall for such Payment Date.
"Class A-1 Interest Rate" means __% per annum, calculated on the basis
of actual days elapsed in a year of 360 days.
"Class A-1 Monthly Interest Distributable Amount" means, with respect
to any Payment Date, an amount equal to the product of (i) the Class A-1
Interest Rate and (ii) the Outstanding Principal Amount of the Class A-1 Notes
on the immediately preceding Payment Date, after giving effect to all payments
of principal to Class A-1 Noteholders on or prior to such immediately preceding
Payment Date (or, in the case of the first Payment Date, the Original Principal
Amount of the Class A-1 Notes).
"Class A-1 Notes" means the __% Lease-Backed Notes, Class A-1,
substantially in the form of Exhibit C-1.
"Class A-1 Stated Maturity Date" means the January 1998 Payment Date.
"Class A-2 Interest Carryover Shortfall" means, with respect to any
Payment Date, the excess, if any, of the Class A-2 Interest Distributable Amount
for the preceding Payment Date over the amount that was actually distributed in
respect of interest on the Class A-2 Notes on such preceding Payment Date, plus,
to the extent permitted by law, an amount equal to one-twelfth of the product of
(i) the Class A-2 Interest Rate and (ii) such excess.
"Class A-2 Interest Distributable Amount" means, with respect to any
Payment Date, the sum of the Class A-2 Monthly Interest Distributable Amount and
the Class A-2 Interest Carryover Shortfall for such Payment Date.
"Class A-2 Interest Rate" means _____ % per annum.
"Class A-2 Monthly Interest Distributable Amount" means, with respect
to any Payment Date, an amount equal to one-twelfth of the product of (i) the
Class A-2 Interest Rate and (ii) the Outstanding Principal Amount of the Class
A-2 Notes on the immediately preceding Payment Date, after giving effect to all
payments of principal to Class A-2 Noteholders on or prior to such immediately
preceding Payment Date (or, in the case of the first Payment Date, the Original
Principal Amount of the Class A-2 Notes).
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"Class A-2 Notes" means the _____% Lease-Backed Notes, Class A-2,
substantially in the form of Exhibit C-1.
"Class A-2 Stated Maturity Date" means _____ (or, if such day is not
a Business Day, the next succeeding Business Day thereafter).
"Class B Floor" with respect to each Payment Date means (a) ____% of
the Initial Pool Principal Balance, plus (b) the Cumulative Loss Amount with
respect to such Payment Date, minus (c) the Outstanding Principal Amount on the
Class C Notes as of the related Determination Date.
"Class B Interest Carryover Shortfall"means, with respect to any
Payment Date, the excess, if any, of the Class B Interest Distributable Amount
for the preceding Payment Date over the amount that was actually distributed in
respect of interest on the Class B Notes on such preceding Payment Date, plus,
to the extent permitted by law, an amount equal to one-twelfth of the product of
(i) the Class B Interest Rate and (ii) such excess.
"Class B Interest Distributable Amount" means, with respect to any
Payment Date, the sum of the Class B Monthly Interest Distributable Amount and
the Class B Interest Carryover Shortfall for such Payment Date.
"Class B Interest Rate" means _____ % per annum.
"Class B Monthly Interest Distributable Amount" means, with respect to
any Payment Date, an amount equal to one-twelfth of the product of (i) the Class
B Interest Rate and (ii) the Outstanding Principal Amount of the Class B Notes
on the immediately preceding Payment Date, after giving effect to all payments
of principal to Class B Noteholders on or prior to such immediately preceding
Payment Date (or, in the case of the first Payment Date, the Original Principal
Amount of the Class B Notes).
"Class B Notes" means the _____ % Lease-Backed Notes, Class B,
substantially in the form of Exhibit C-2.
"Class B Percentage" is _______%.
"Class B Principal Payment" shall equal (a) while the Class A-1 Notes
are outstanding, zero and (b) after the Outstanding Principal Amount on the
Class A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class B Notes to the greater of the Class B
Target Investor Principal Amount and the Class B Floor.
"Class B Stated Maturity Date" means _____ (or, if such day is not a
Business Day, the next succeeding Business Day thereafter).
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"Class B Target Investor Principal Amount" with respect to each
Payment Date is an amount equal to the product of (a) the Class B Percentage and
(b) the Lease Pool Principal Balance as of such Payment Date.
"Class C Floor" with respect to each Payment Date means (a) ____% of
the Initial Pool Principal Balance, plus (b) the Cumulative Loss Amount with
respect to such Payment Date; provided that if the Outstanding Principal Amount
on the Class B Notes is equal to the Class B Floor on such Payment Date, the
Class C Floor will equal the Outstanding Principal Amount on the Class C Notes
utilized in the calculation of the Class B Floor for such Payment Date.
"Class C Guaranty Payment" means, as to any Payment Date, the amount,
if any, by which interest and principal then due on the Class C Notes exceeds
the Amount Available less amounts due in respect of interest and principal on
the Class A and Class B Notes on such Payment Date.
"Class C Interest Carryover Shortfall"means, with respect to any
Payment Date, the excess, if any, of the Class C Interest Distributable Amount
for the preceding Payment Date over the amount that was actually distributed in
respect of interest on the Class C Notes on such preceding Payment Date, plus,
to the extent permitted by law, an amount equal to one-twelfth of the product of
(i) the Class C Interest Rate and (ii) such excess.
"Class C Interest Distributable Amount" means, with respect to any
Payment Date, the sum of the Class C Monthly Interest Distributable Amount and
the Class C Interest Carryover Shortfall for such Payment Date.
"Class C Interest Rate" means _____ % per annum.
"Class C Limited Guaranty" means the limited guaranty of Green Tree
provided pursuant to Section 8.08.
"Class C Monthly Interest Distributable Amount" means, with respect to
any Payment Date, an amount equal to one-twelfth of the product of (i) the Class
C Interest Rate and (ii) the Outstanding Principal Amount of the Class C Notes
on the immediately preceding Payment Date, after giving effect to all payments
of principal to Class C Noteholders on or prior to such immediately preceding
Payment Date (or, in the case of the first Payment Date, the Original Principal
Amount of the Class C Notes).
"Class C Notes" means the _____ % Lease-Backed Notes, Class C,
substantially in the form of Exhibit C-3.
"Class C Percentage" is _______%.
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"Class C Principal Payment" shall equal (a) while the Class A-1 Notes
are outstanding, zero and (b) after the Outstanding Principal Amount on the
Class A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class C Notes to the greater of the Class C
Target Investor Principal Amount and the Class C Floor.
"Class C Stated Maturity Date" means _____ (or, if such day is not a
Business Day, the next succeeding Business Day thereafter).
"Class C Target Investor Principal Amount" with respect to each
Payment Date is an amount equal to the product of (a) the Class C Percentage and
(b) the Lease Pool Principal Balance as of such Payment Date.
"Closing Date" means December __, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the Eligible Account or Accounts
established and maintained by the Trustee in accordance with Section 8.02.
"Collection Period" means, with respect to any Payment Date, the
calendar month preceding the month in which such Payment Date occurs (such
calendar month being referred to as the "related" Collection Period with respect
to such Payment Date). With respect to an Accounting Date, the Collection
Period in which such Accounting Date occurs is referred to herein as the
"related" Collection Period with respect to such Accounting Date.
"Contribution and Servicing Agreement" means the Contribution and
Servicing Agreement, dated as of December 1, 1997, among the SPC, the Servicer,
the Trustee and the Issuer.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at date of the execution of this Agreement is located at
[____________]; or at such other address as the Trustee may designate from time
to time by notice to the Noteholders and the Issuer, or the principal corporate
trust office of any successor Trustee (the address of which the successor
Trustee will notify the Noteholders and the Issuer).
"Cumulative Loss Amount" means, with respect to each Payment Date is
an amount equal to the excess, if any, of (a) the total of (i) the Outstanding
Principal Amount of the Notes as of the immediately preceding Payment Date after
giving effect to all payments made on such Payment Date, minus (ii) the lesser
of (A) the Monthly Principal Amount and (B) Available Funds remaining after the
payment of amounts owing the Servicer and in respect of interest on
the Notes on
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such Payment Date, over (b) the Lease Pool Principal Balance as of such Payment
Date.
"Cut-Off Date" means December 1, 1997.
"Default" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Definitive Notes" means any Note evidenced by a definitive, fully
registered Note and any Note issued in lieu of a Book-Entry Note pursuant to
Section 2.11.
"Delinquent Lease" means, as of any Determination Date, any Lease
(other than a Lease that became a Liquidated Lease prior to such Determination
Date) with respect to which the Obligor has not made all Scheduled Payments then
due.
"Deposit Date" means, with respect to any Collection Period, the
Business Day immediately preceding the related Determination Date.
"Depository" means the initial Depository, The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of the
Class A Notes, the Class B Notes and the Class C Notes as of the Closing Date,
and any permitted successor depository. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(a)(5) of the Minnesota UCC.
"Depository Agreement" means the agreement among the Issuer, the
Trustee and The Depository Trust Company, as the initial Depository, dated as of
the Closing Date, relating to the Notes, substantially in the form of Exhibit A.
"Depository Participant" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date" means, with respect to any Collection Period, the
[fifth] Business Day immediately preceding the related Payment Date.
"Duff & Phelps" means Duff & Phelps Credit Rating Co., or any
successor thereto.
"Eligible Account" means (i) an account maintained at an Eligible
Institution; (ii) an account or accounts the deposits in which are fully insured
by either the Bank Insurance Fund or the Savings Association Insurance Fund of
the FDIC; (iii) a trust account (which shall be a "segregated trust account")
maintained with the corporate trust department of a federal or state chartered
depository institution or trust company with trust powers and acting in its
fiduciary capacity for
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the benefit of the Trustee, which depository institution or trust company (or,
if such depository institution or trust company is a subsidiary of a bank
holding company, such bank holding company) shall have capital and surplus of
not less than $50,000,000 and the securities of such depository institution or
trust company (or, if such depository institution or trust company is a
subsidiary of a bank holding company and has no securities which are rated, the
securities of such bank holding company) shall have a credit rating from each of
the Rating Agencies (if rated by such Rating Agency) in one of its generic
credit rating categories which signifies investment grade; or (iv) an account
that will not cause any Rating Agency to downgrade or withdraw its then-current
rating assigned to the Notes, as confirmed in writing by such Rating Agency.
"Eligible Institution" means any depository institution (which may be
the Trustee or an Affiliate of the Trustee) organized under the laws of the
United States or any state, the deposits of which are insured to the full extent
permitted by law by the Bank Insurance Fund of the FDIC, which is subject to
supervision and examination by federal or state authorities and whose short-term
deposits, commercial paper or other short-term debt obligations have been rated
at least P-1 by Moody's, A-1 by S&P, F-1 by Fitch (if rated by Fitch) and D-1 by
Duff & Phelps (if rated by Duff & Phelps) or whose unsecured long-term debt has
been rated in one of the two highest rating categories by each Rating Agency (if
rated by such Rating Agency).
"Eligible Investments" means any one or more of the following types of
investments:
(i) direct obligations of, and obligations fully guaranteed as to
timely receipt of principal and interest by, the United States of
America, or any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith and
credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any
depository institution or trust company (including the Trustee or any
Affiliate of the Trustee, acting in its commercial capacity)
incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal or
state authorities, so long as, at the time of such investment or
contractual commitment providing for such investment, the short-term
deposits, commercial paper or other short-term debt obligations of
such depository institution or trust company are rated at least P-1 by
Moody's, A-1+ by S&P, F-1+ by Fitch (if rated by Fitch) and D-1+ by
Duff & Phelps (if rated by Duff & Phelps); and (B) any other demand or
time deposit or certificate of deposit which is fully insured by the
Bank Insurance Fund of the FDIC;
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(iii) shares of an investment company registered under the
Investment Company Act of 1940, whose shares are registered under the
Securities Act of 1933, as amended, and have a rating from each of the
Rating Agencies in its highest rating category;
(iv) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii)(A) above;
(v) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of
America or any state thereof which, at the time of such investment,
have a credit rating of at least Aa3 from Moody's, AAA from S&P, AAA
from Fitch (if rated by Fitch) and AAA from Duff & Phelps (if rated by
Duff & Phelps);
(vi) commercial paper having a rating of at least P-1 by Moody's,
A-1+ by S&P, F-1+ by Fitch (if rated by Fitch) and D-1+ by Duff &
Phelps (if rated by Duff & Phelps) at the time of such investment;
(vii) investments in money market funds rated in the highest
rating category by each of Moody's, S&P, Fitch (if rated by Fitch) and
Duff & Phelps (if rated by Duff & Phelps); and
(viii) any other investment which will not cause any Rating
Agency to downgrade or withdraw its then-current rating assigned to
the Notes, as confirmed in writing by such Rating Agency.
Eligible Investments may be purchased by or through the Trustee or any of its
Affiliates.
"Equipment" means the property which is leased pursuant to a Lease, or
which otherwise provides security for the payment of amounts payable thereunder.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, any Responsible Officer, the
Secretary or the Treasurer of such corporation; and with respect to any
partnership, any general partner thereof.
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"Fitch" means Fitch Investors Service, L.P., or any successor thereto.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Trust Estate or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Trust Estate and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Green Tree" means Green Tree Financial Corporation, a Delaware
corporation.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Independent" means, when used with respect to any specified Person,
that the Person (a) is in fact independent of the Issuer, any other obligor upon
the Notes, the SPC, the Servicer and any Affiliate of any of the foregoing
Persons, (b) does not have any direct financial interest or any material
indirect financial
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interest in the Issuer, any such other obligor, the SPC, the Servicer or any
Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the SPC, the Servicer or any Affiliate of any of
the foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"Initial Pool Principal Balance" is $ _____.
"Interest Rate" means the Class A-1 Interest Rate, the Class A-2
Interest Rate, the Class B Interest Rate and the Class C Interest Rate, as
applicable.
"Issuer" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"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 Trustee.
"Lease Pool Principal Balance" means, with respect to any Payment
Date, the sum of the Principal Balances (computed as of the related Accounting
Date) for all Leases.
"Leases" means the lease contracts listed on Exhibit A to the
Contribution and Servicing Agreement, including any modifications or amendments
in accordance with the provisions thereof (excluding any such lease contract
which has become a Purchased Lease), and all rights and obligations under such
contracts, including, without limitation, all monies at any time paid or payable
thereon or in respect thereof from and after the Cut-Off Date (whether in the
form of (i) Scheduled Payments (including those Scheduled Payments due prior to,
but not received as of, the Cut-Off Date, but excluding those Scheduled Payments
due on or after, but received prior to, the Cut-Off Date), (ii) Prepayments,
(iii) Liquidation Proceeds, (iv) Extension Fees, (v) payments to be applied by
the Servicer to the payment of insurance charges, maintenance, taxes or other
similar obligations, (vi) payments to be retained by the Servicer in payment of
Administrative Fees, or otherwise), and all rights of the lessor in the related
Equipment (other than any
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ownership interest of the lessor in such Equipment), Insurance Policies and any
other security for the payment of amounts due under such contracts.
"Lien" means any security interest, lien, charge, pledge, preference,
equity or encumbrance of any kind, including tax liens, mechanics' liens and any
liens that attach by operation of law.
"Liquidated Lease" means, with respect to any Collection Period, (i) a
Lease which, during such Collection Period, was charged off as uncollectible by
the Servicer in accordance with its credit and collection policies and
procedures (which shall be no later than the date as of which the Servicer has
repossessed and disposed of the related Equipment and otherwise collected all
proceeds (including any proceeds of insurance to be applied as described in
Section 3.4(c)(ii) of the Contribution and Servicing Agreement) which, in the
Servicer's reasonable judgment, can be collected under such Lease) following a
default thereunder or upon damage to or destruction of such Equipment (if such
Equipment is not to be replaced in accordance with Section 3.4(c)(i) of the
Contribution and Servicing Agreement), or (ii) a Lease as to which, during such
Collection Period, 10% or more of a Scheduled Payment shall have become 180 days
delinquent.
"Liquidation Proceeds" means all amounts received by the Servicer (i)
in connection with the liquidation of any Lease and disposition of the related
Equipment or (ii) as insurance proceeds with respect to any damaged or destroyed
Equipment to be applied as described in Section 3.4(c)(ii) of the Contribution
and Servicing Agreement, in each case net of (a) reasonable out-of-pocket
expenses incurred by or on behalf of the Servicer in connection with the
collection of such Lease and the maintenance, repossession, repair, storage and
disposition of the related Equipment (including taxes and insurance charges, to
the extent in excess of amounts available therefor and relating to such Lease in
the Insurance, Maintenance and Tax Accounts, as well as attorneys' fees) and (b)
amounts that are required to be refunded to the Obligor on such Lease; provided,
however, that the Liquidation Proceeds with respect to any Lease and disposition
of the related Equipment shall in no event be less than zero. Liquidation
Proceeds shall be allocated pro rata between the Issuer, on the one hand, and
the SPC, on the other, based upon the Required Payoff Amount for such Lease
(determined as of the Collection Period during which such Lease became a
Liquidated Lease) and the Book Value of the related Equipment, respectively.
"Minnesota UCC" means the UCC as in effect in the State of Minnesota
from time to time.
"Monthly Delinquency Percentage" means, with respect to any Payment
Date, the percentage equivalent of a fraction (a) the numerator of which is the
Principal Balance of the Delinquent Leases determined as of the related
Determination Date and (b) the denominator of which is the Lease Pool Principal
Balance as of the related Determination Date.
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"Monthly Principal Amount" means, with respect to any Payment Date,
the excess, if any, of (i) the sum of the Aggregate Principal Amount of the
Notes as of such Payment Date (determined prior to the payment of any principal
in respect thereof on such Payment Date), over (ii) the Lease Pool Principal
Balance as of the last day of the Collection Period relating to such Payment
Date.
"Monthly Servicer Realization Percentage" means, with respect to any
Payment Date, the percentage equivalent of a fraction (a) the numerator of which
is the aggregate amount of Residual Realizations collected during the
immediately preceding Collection Period and (b) the denominator of which is
equal to the aggregate Book Value with respect to the Leases for which Residual
Realizations have been collected in respect of such immediately preceding
Collection Period.
"Moody's" means Moody's Investors Service, Inc., or any successor
thereto.
"Note" means a Class A-1 Note, Class A-2 Note, Class B Note or Class C
Note, as applicable.
"Note Distribution Account" means the Eligible Account or Accounts
established and maintained by the Trustee in accordance with Section 8.04.
"Note Interest Distributable Amount" means, with respect to any
Payment Date, the sum of the Class A-1 Interest Distributable Amount, the Class
A-2 Interest Distributable Amount, the Class B Interest Distributable Amount and
the Class C Interest Distributable Amount.
"Note Majority" means Holders representing a majority of the
Outstanding Principal Amount of each Class of the Notes then Outstanding.
"Note Owner" means, with respect to a Book-Entry Note, the Person who
is the beneficial owner of such Book-Entry Note, as reflected on the books of
the Depository, or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant, in each case in accordance
with the rules of such Depository) and with respect to any Definitive Notes, the
Holder.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.04.
"Notes" means the Class A Notes, the Class B Notes and the Class C
Notes.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to
the Trustee.
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Unless otherwise specified, any reference in this Indenture to an Officer's
Certificate shall be to an Officer's Certificate of any Authorized Officer of
the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer or the Servicer and which shall comply with any
applicable requirements of Section 11.01.
"Original Principal Amount" means (i) with respect to the Class A-1
Notes, $_________, (ii) with respect to the Class A-2 Notes, $_________, (iii)
with respect to the Class B Notes, $_________ and (iv) with respect to the Class
C Notes, $_________.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor, satisfactory to the Trustee, has been made); and
(iii) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided, however, that in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Related Document,
Notes owned by the Issuer, any other obligor upon the Notes, the SPC or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that the Trustee knows to be so owned
shall be so disregarded. Notes so owned that have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes, the SPC or any
Affiliate of any of the foregoing Persons.
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"Outstanding Amount" means the Aggregate Principal Amount of the
Notes, or the Outstanding Principal Amount of a Class of Notes, as applicable,
Outstanding at the date of determination.
"Outstanding Principal Amount" means, as of any date, when used with
respect to a Class of Notes, the Original Principal Amount of such Class, less
all distributions previously made to such Class in respect of principal.
"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the distributions from the Note Distribution
Account, including payment of principal of or interest on the Notes on behalf of
the Issuer.
"Payment Date" means the twentieth day of each calendar month (or, if
such twentieth day is not a Business Day, the next succeeding Business Day),
commencing January 20, 1998.
"Performing Lease" means, as of any Determination Date, any Lease with
respect to which the Obligor has paid all payments then due.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Pledged Revenues" means (i) all Scheduled Payments on the Leases
received on or after the Cut-Off Date (including all Scheduled Payments due
prior to, but not received as of, the Cut-Off Date, but excluding any Scheduled
Payments due on or after, but received prior to, the Cut-Off Date); (ii) any
Prepayments received on the Leases on or after the Cut-Off Date; (iii) the
Purchase Amount of any Leases purchased by Vendor Services in accordance with
Section 2.6 of the Contribution and Servicing Agreement; (iv) the amount paid by
the SPC to purchase the Leases pursuant to Section 5.1 of the Contribution and
Servicing Agreement; (v) all Liquidation Proceeds received in respect of any
Leases and the related Equipment on or after the Cut-Off Date; (vi) that portion
of any Extension Fees received on or after the Cut-Off Date [and allocated to
the Issuer]; and (vii) any earnings on the investment of amounts credited to the
Collection Account and the Note Distribution Account.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
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"Prepayment" means, with respect to any Collection Period for any
Lease, a voluntary prepayment during such Collection Period of amounts due and
owing under such Lease.
"Principal Balance" means, as of any Accounting Date,
(1) in the case of any Lease that does not by its terms permit
prepayment or early termination, the present value of the unpaid
Scheduled Payments due on such Lease after such last day of the
Collection Period (excluding all Scheduled Payments due on or prior
to, but not received as of, such last day, as well as any Scheduled
Payments due after such last day and received on or prior thereto),
after giving effect to any Prepayments received on or prior to such
last day, discounted monthly (assuming, for purposes of such
calculation, that each Scheduled Payment is due on the last day of the
applicable Collection Period) at the rate of _______% per annum, plus
the Servicing Fee;
(2) in the case of any Lease that permits prepayment or early
termination only upon payment of a premium that is at least equal to
the present value (calculated in the manner described in clause (1)
above) of the unpaid Scheduled Payments due on such Lease after the
date of such prepayment, the amount specified in clause (1) above; and
(3) in the case of any Lease that permits prepayment or early
termination without payment of a premium at least equal to the amount
specified in clause (2) above, the lesser of (a) the outstanding
principal balance of such Lease after giving effect to Scheduled
Payments due on or prior to such last day of the Collection Period,
whether or not received, as well as any Prepayments, and any Scheduled
Payments due after such last day, received on or prior to such last
day, and (b) the amount specified in clause (1) above;
provided that, for purposes of computing the Monthly Principal Amount for a
given Payment Date (as well as all Payment Dates thereafter), the Principal
Balance of any Lease which became a Liquidated Lease during the related
Collection Period or was required to be purchased by Vendor Services as of the
last day of the related Collection Period in accordance with Section 2.6, will
be deemed to be zero on and after the last day of such Collection Period.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Purchase Amount" means, with respect to a Lease and related Equipment
required to be purchased by Vendor Services in accordance with Section 2.6 of
the Contribution and Servicing Agreement, the sum of (i) the Required Payoff
Amount for such Lease as of the Accounting Date on which such obligation to so
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purchase arises, plus (ii) in the case of a Lease, the Book Value of the related
Equipment.
"Purchased Lease" means, as of any Deposit Date, any Lease which
Vendor Services has purchased (or substituted a Substitute Lease for) as of the
related Accounting Date, as required by Section 2.6 of the Contribution and
Servicing Agreement.
"Rating Agency" means each of [Moody's, S&P, Fitch and Duff & Phelps],
so long as such Persons maintain a rating on the Notes; and, if none of
[Moody's, S&P, Fitch or Duff & Phelps] maintains a rating on the Notes, such
other nationally recognized statistical rating organization, if any, selected by
the SPC.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' prior notice thereof and that each
of the Rating Agencies shall have notified the Issuer, the Servicer, the
Trustee, and the SPC in writing that such action will not result in a reduction,
qualification or withdrawal of the then-current rating of the Notes.
"Record Date" means, with respect to a Payment Date or Redemption
Date, the close of business on the last Business Day immediately preceding such
Payment Date or Redemption Date (so long as the Notes are Book-Entry Notes), or
the last day of the prior calendar month (if Definitive Notes have been issued).
"Redemption Date" means, in the case of a redemption of the Notes
pursuant to Section 10.01(a) or a payment to Noteholders pursuant to Section
10.01(b), the Payment Date specified by the Servicer or the Issuer pursuant to
Section 10.01(a) or 10.01(b), as applicable.
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.01(a), an amount equal to the principal amount of the
Notes redeemed plus accrued and unpaid interest on the principal amount of each
Class of Notes at the respective Interest Rate for each such Class of Notes
being so redeemed to but excluding the Redemption Date, or (b) in the case of a
payment made to Noteholders pursuant to Section 10.01(b), the amount on deposit
in the Note Distribution Account, but not in excess of the amount specified in
clause (a) above.
"Registered Holder" means the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"Related Collection Period Pledged Revenues" means, with respect to
any Payment Date, the amount of Pledged Revenues in the Collection Account which
were received by the Servicer during the related Collection Period, including
all Liquidation Proceeds so received but excluding any Purchase Amounts.
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"Related Documents" means the Notes, the Contribution and Servicing
Agreement, the Transfer Agreement, the Depository Agreement and the underwriting
agreements between the SPC and the underwriters of the Notes. The Related
Documents executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
"Required Payments" has the meaning specified in Section 8.06(c).
"Required Payoff Amount" means, with respect to any Collection Period
for any Lease, the sum of (i) the Scheduled Payment due in such Collection
Period, together with any Scheduled Payments due in prior Collection Periods but
not yet received, plus (ii) the Principal Balance of such Lease (after taking
into account the Scheduled Payment due in such Collection Period, whether or not
received).
"Residual Account" means the account designated as such in, and
established and maintained pursuant to, Section 8.06.
"Residual Amount Cap" means an amount equal to $___________, which
represents __% of the Initial Pool Principal Balance.
"Residual Event" means the occurrence of one or more of the following:
(a) Vendor Services is no longer the Servicer, (b) with respect to the March
1998 Collection Period and each Collection Period thereafter, the Three-Month
Servicer Realization Percentage calculated on any Determination Date is less
than [100%]; or (c) with respect to the March 1998 Collection Period and each
Collection Period thereafter, the Three-Month Delinquency Percentage is greater
than [5%]; provided, however, that the Residual Event referred to in clause (b)
may be cured if the Three-Month Servicer Realization Percentage is greater than
or equal to [100%] for three consecutive months thereafter and the Residual
Event referenced in clause (c) may be cured if the Three-Month Delinquency
Percentage for any Due Period thereafter is less than or equal to [5%].
"Residual Realizations" means cash flows realized from the sale or re-
lease of the Equipment following the scheduled expiration dates or voluntary
early termination of the Leases, other than Equipment subject to Liquidated
Leases.
"Responsible Officer" means, with respect to the Trustee, any officer
of the Trustee assigned by the Trustee to administer its corporate trust affairs
relating to the Trust Estate.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.
"Schedule of Leases" means, collectively, the schedules of Leases
(which shall be made available to the parties to the Contribution and Servicing
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Agreement on a computer disk or other data storage medium) attached to the
Contribution and Servicing Agreement as (or described in) Exhibit A.
"Scheduled Payment" means, with respect to any Collection Period for
any Lease during the Original Term of such Lease, the scheduled payment or
payments due under such Lease in such Collection Period (other than those
portions of such payments which, under such Lease, are to be (i) applied by the
Servicer to the payment of insurance charges, maintenance, taxes and other
similar obligations, (ii) retained by the Servicer in payment of Administrative
Fees, or (iii) are late payments as to which Servicer Advances were made on a
Payment Date), received on or after the Cut-Off Date and due during the term of
the Leases, without giving effect to end-of-term extensions or renewals thereof.
"Secured Obligations" means all amounts and obligations which the
Issuer may at any time owe to or on behalf of the Trustee for the benefit of the
Noteholders under this Indenture.
"Servicing Account" means the Eligible Account or Accounts established
and maintained pursuant to Section 8.05.
"SPC" means Green Tree Lease Finance II, Inc., a Minnesota
corporation.
"State" means any one of the 50 states of the United States of America
or the District of Columbia.
"Stated Maturity Date" means Class A-1 Stated Maturity Date, the Class
A-2 Stated Maturity Date, the Class B Stated Maturity Date and the Class C
Stated Maturity Date, as appropriate.
"Termination Date" means the date on which the Trustee shall have
received payment and performance of all Secured Obligations.
"Three-Month Delinquency Percentage" means, with respect to any
Payment Date, the percentage equivalent of fraction, (a) the numerator of which
is the sum of the Monthly Delinquency Percentage for such Payment Date and the
two immediately preceding Payment Dates and (b) the denominator of which is
three.
"Three-Month Servicer Realization Percentage" means, with respect to
any Payment Date, the percentage equivalent of a fraction, (a) the numerator of
which is the sum of the Monthly Servicer Realization Percentage for such Payment
Date and the two immediately preceding Payment Dates and (b) the denominator of
which is three.
"Transfer Agreement" means the Transfer Agreement, dated as of
December 1, 1997, between Vendor Services and the SPC.
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"Trust Accounts" means the Servicing Account, the Collection Account,
the Residual Account and the Note Distribution Account, and such other accounts
as may be established in the name of the Issuer or the Trustee pursuant to the
Contribution and Servicing Agreement.
"Trust Estate" means the Trust Estate as described in the Granting
Clauses hereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended, as in force on the date hereof, unless otherwise specifically
provided.
"Trustee" means [________], a [________], as Trustee under this
Indenture, or any successor Trustee under this Indenture.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
"Vendor Services" means Green Tree Vendor Services Corporation, a
Minnesota corporation.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
SECTION 1.03. Rules of Construction. Unless otherwise specified:
(i) a term has the meaning assigned to it;
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(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular; and
(vi) references to Sections, Subsections, Schedules and Exhibits
shall refer to such portions of this Indenture.
Unless the context shall clearly indicate otherwise, or may otherwise
require, in this Indenture the terms "herein," "hereunder," "hereby," "hereto,"
"hereof" and any similar terms refer to this Indenture as a whole and not to any
particular article, section or subdivision hereof.
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ARTICLE II
The Notes
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SECTION 2.01. Form. Each Class of Class A Notes, Class B Notes and
Class C Notes, in each case together with the Trustee's certificate of
authentication, shall be in substantially the forms set forth in Exhibits C-1,
C-2 and C-3, respectively, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.
The terms of the Notes set forth in Exhibits C-1, C-2 and C-3 are part
of the terms of this Indenture.
SECTION 2.02. Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers.
The signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall upon receipt of an Issuer Order authenticate and
deliver Class A-1 Notes for original issue in an aggregate principal amount of
$___, Class A-2 Notes for original issue in an aggregate principal amount of
$___, Class B Notes for original issue in an aggregate principal amount of $___
and Class C Notes in an aggregate principal amount of $___. The aggregate
principal amount of Class A-1 Notes, Class A-2 Notes, Class B Notes and Class C
Notes outstanding at any time may not exceed such respective amounts except as
provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $10,000 and
in integral multiples thereof.
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No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.03. Temporary Notes. Pending the preparation of definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes.
SECTION 2.04. Registration; Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Trustee shall be the initial "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. The Issuer may
revoke the appointment of, and remove, any Note Registrar if the Issuer
determines in its sole discretion that such Note Registrar failed to perform its
obligations under this Indenture in any material respect. Any Note Registrar
shall be permitted to resign as Note Registrar upon 30 days' notice to the
Issuer and, if the Note Registrar is not the Trustee, to the Trustee; provided,
however, that such resignation shall not be effective and such Note Registrar
shall continue to perform its duties as Note Registrar until the Issuer has
appointed a successor Note Registrar or elected to assume such duties. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all
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reasonable times and to obtain copies thereof, and the Trustee shall have the
right to rely upon a certificate executed on behalf of the Note Registrar by an
Executive Officer thereof as to the names and addresses of the Holders of the
Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Trustee shall authenticate and the Noteholder shall
obtain from the Trustee, in the name of the designated transferee or
transferees, one or more new Notes of the same Class in any authorized
denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations, of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, the Issuer shall execute, and the Trustee
shall authenticate and the Noteholder shall obtain from the Trustee, the Notes
which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in a "signature guarantee program" determined by the Note
Registrar in accordance with the Exchange Act, and such other documents as the
Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 2.03 or 9.06 not involving any
transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its
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satisfaction of the destruction, loss or theft of any Note, and (ii) there is
delivered to the Trustee such security or indemnity as may be required by the
Trustee to hold the Issuer and the Trustee harmless, then, in the absence of
notice to the Issuer, the Note Registrar or the Trustee that such Note has been
acquired by a bona fide purchaser, the Issuer shall execute and upon its request
the Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Note, a replacement Note; provided,
however, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Trustee shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered or
any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer or the Trustee may require the payment by the Holder of such Note of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and
expenses of the Trustee or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.06. Person Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the
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Trustee nor any agent of the Issuer or the Trustee shall be affected by notice
to the contrary.
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest as provided in the forms of the
Class A Notes, the Class B Note and the Class C Note set forth in Exhibits C-1,
C-2 and C-3, respectively, and such interest shall be payable on each Payment
Date as specified therein, subject to Section 3.01. Any installment of interest
or principal, if any, payable on any Note which is punctually paid or duly
provided for by the Issuer on the applicable Payment Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is registered
on the Record Date, by check mailed first-class, postage prepaid to such
Person's address as it appears on the Note Register on such Record Date, except
that, unless Definitive Notes have been issued pursuant to Section 2.11, with
respect to Notes registered on the Record Date in the name of the nominee of the
Depository, payment will be made by wire transfer in immediately available funds
to the account designated by such nominee and except for the final installment
of principal payable with respect to such Note on a Payment Date, which shall be
payable as provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on
each Payment Date as provided in the forms of the Class A Notes, the Class B
Notes and the Class C Notes set forth in Exhibits C-1, C-2 and C-3,
respectively. Notwithstanding the foregoing, the entire unpaid principal amount
of the Notes shall be due and payable, if not previously paid, on the date on
which an Event of Default shall have occurred and be continuing and the Trustee
or a Note Majority have declared the Notes to be immediately due and payable in
the manner provided in Section 5.02. All principal payments on a class of Notes
shall be made pro rata to the Noteholders of such Class entitled thereto. The
Trustee shall notify the Person in whose name a Note is registered at the close
of business on the Record Date preceding the Payment Date on which the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed no later than five days prior to such
final Payment Date and shall specify that such final installment will be payable
only upon presentation and surrender of such Note and shall specify the place
where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.02.
SECTION 2.08. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Trustee. No Notes shall be
authenticated in lieu of or in
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exchange for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Notes may be held or disposed of by
the Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Order that they
be destroyed or returned to it, provided that such Issuer Order is timely and
the Notes have not been previously disposed of by the Trustee.
SECTION 2.09. Book-Entry Notes. The Notes, upon original issuance,
will be issued in the form of a typewritten Note or Notes representing the Book-
Entry Notes, to be delivered to The Depository Trust Company, the initial
Depository, by, or on behalf of, the Issuer. Each such Note shall initially be
registered on the Note Register in the name of Cede & Co., the nominee of the
initial Depository, and no Note Owner will receive a Definitive Note
representing such Note Owner's interest in such Note, except as provided in
Section 2.11. Unless and until Definitive Notes have been issued to Note Owners
pursuant to Section 2.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Trustee shall be entitled to deal
with the Depository for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of the Notes,
and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this
Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Depository and shall be limited to those established by law and
agreements between such Note Owners and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless
and until Definitive Notes are issued pursuant to Section 2.11, the
initial Depository will make book-entry transfers among the Depository
Participants and receive and transmit payments of principal of and
interest on the Notes to such Depository Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Depository shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect
from Note Owners and/or Depository Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to the
Trustee.
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SECTION 2.10. Notices to Depository. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.11, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Depository and shall have no
obligation to the Note Owners.
SECTION 2.11. Definitive Notes. If (i) the SPC advises the Trustee
in writing that the Depository is no longer willing or able properly to
discharge its responsibilities with respect to the Notes, and the SPC is unable
to locate a qualified successor, (ii) the SPC at its option advises the Trustee
in writing that it elects to terminate the book-entry system through the
Depository or (iii) after the occurrence of an Event of Default, a Note Majority
advises the Trustee and the Depository in writing that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Note Owners, then the Depository shall notify all Note Owners and the
Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Note Owners requesting the same. Upon surrender to the
Trustee of the Note or Notes representing the Book-Entry Notes by the
Depository, accompanied by registration instructions, the Issuer shall execute
and the Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Depository. None of the Issuer, the Note Registrar or the
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, all references herein to obligations
imposed upon or to be performed by the Depository shall be deemed to be imposed
upon and performed by the Trustee or a Paying Agent (if other than the Trustee),
to the extent applicable with respect to such Definitive Notes, and the Trustee
shall recognize the Holders of the Definitive Notes as Noteholders.
SECTION 2.12. Calculations. Interest on the Class A-1 Notes will be
calculated on the basis of actual days elapsed in a year of 360 days. All
calculations of the amount of interest accrued on the Class A-2, Class B and
Class C Notes, and all calculations of the amount of the Servicing Fee, shall be
made on the basis of a 360-day year consisting of twelve 30-day months.
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ARTICLE III
Covenants
---------
SECTION 3.01. Payment of Principal and Interest. The Issuer will
duly and punctually pay the principal and interest on the Notes in accordance
with the terms of the Notes and this Indenture. Without limiting the foregoing,
the Issuer will cause to be distributed all amounts on deposit in the Note
Distribution Account on a Payment Date in accordance with Section 8.04(b).
Amounts properly withheld under the Code by any Person from a payment to any
Noteholder of interest and/or principal shall be considered as having been paid
by the Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.02. Maintenance of Office or Agency. The Issuer will
maintain in the City of St. Paul, Minnesota, an office or agency where Notes may
be surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Issuer in respect of the Notes and this Indenture may be
served. The Issuer hereby initially appoints the Trustee to serve as its agent
for the foregoing purposes. The Issuer will give prompt written notice to the
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the Issuer hereby appoints the Trustee as its agent to receive all
such surrenders, notices and demands.
SECTION 3.03. Money for Payments To Be Held in Trust. As provided in
Section 8.04, all payments of amounts due and payable with respect to any Notes
that are to be made from amounts withdrawn from the Note Distribution Account
pursuant to Section 8.04(b) shall be made on behalf of the Issuer by the Trustee
or by another Paying Agent, and no amounts so withdrawn from the Note
Distribution Account for payments of Notes shall be paid over to the Issuer.
On or before the Business Day preceding each Payment Date and
Redemption Date, the Issuer shall deposit or cause to be deposited in the Note
Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due, such sum to be held in trust for the benefit of the Persons
entitled thereto and (unless the Paying Agent is the Trustee) shall promptly
notify the Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the 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
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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 Trustee notice of any default (of which it has
actual knowledge) by the Issuer (or any other obligor upon the Notes)
in the making of any payment required to be made with respect to the
Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such payment
by any Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Trustee or any Paying Agent in trust for the payment of any amount
due with respect to any Note and remaining unclaimed for two years after such
amount has become due and payable shall be discharged from such trust and upon
Issuer Request shall be deposited by the Trustee in the Collection Account; and
the Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Issuer cause to be published once,
in a newspaper published in the English language, customarily published on each
Business Day and of general circulation in St. Paul, Minnesota, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to or for the account of the
Issuer. The Trustee may also adopt and employ, at the expense of the Issuer,
any other reasonable means of notification of such repayment (including, but not
limited to, mailing notice of such
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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 Trustee or of any Paying Agent,
at the last address of record for each such Holder).
SECTION 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a limited liability company under the laws
of the State of Delaware (unless it becomes, or any successor Issuer hereunder
is or becomes, organized under the laws of any other state or of the United
States of America, in which case the Issuer will keep in full effect its
existence, rights and franchises under the laws of such other jurisdiction) and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Leases and each other
instrument or agreement included in the Trust Estate.
SECTION 3.05. Protection of Trust Estate. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Trustee to
be prior to all other liens in respect of the Trust Estate, and the Issuer shall
take all actions necessary to obtain and maintain, in favor of the Trustee, for
the benefit of the Noteholders, a first lien on and a first priority, perfected
security interest in the Trust Estate. The Issuer will from time to time
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, all as prepared by the Servicer and delivered to the
Issuer, and will take such other action necessary or advisable to:
(i) grant more effectively all or any portion of the Trust
Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) in favor of the Trustee for the benefit of the
Trustee created by this Indenture or carry out more effectively the
purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any of the Leases and each other instrument or
agreement included in the Trust Estate;
(v) preserve and defend title to the Trust Estate and the rights
of the Trustee in such Trust Estate against the claims of all persons
and parties; or
(vi) pay all taxes or assessments levied or assessed upon the
Trust Estate when due.
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The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required by the Trustee pursuant to this Section 3.05.
SECTION 3.06. Opinions as to Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the Trustee an
Opinion of Counsel either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording and filing of this
Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continuation statements, as are necessary to perfect and make
effective the first priority lien and security interest in favor of the Trustee,
for the benefit of the Trustee, created by this Indenture and reciting the
details of such action, or stating that, in the opinion of such counsel, no such
action is necessary to make such lien and security interest effective.
(b) On or before April 30 in each calendar year, beginning in 1998,
the Issuer shall furnish to the Trustee an Opinion of Counsel with respect to
each jurisdiction in which the Leases are located or a Uniform Commercial Code
financing statement has been filed by the Servicer either stating that, in the
opinion of such counsel, such action has been taken with respect to the
recording, filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and with respect to the
execution and filing of any financing statements and continuation statements as
is necessary to maintain the first priority lien and security interest created
by this Indenture and reciting the details of such action or stating that in the
opinion of such counsel no such action is necessary to maintain such lien and
security interest. Such Opinion of Counsel shall also describe the recording,
filing, re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and the execution and filing of any
financing statements and continuation statements that will, in the opinion of
such counsel, be required to maintain the lien and security interest of this
Indenture until April 30 in the following calendar year.
SECTION 3.07. Performance of Obligations; Servicing of Leases.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any instrument
or agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Contribution and Servicing Agreement
or such other instrument or agreement.
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(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Trustee in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer to assist the Issuer in performing its duties under
this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Related Documents
and in the instruments and agreements included in the Trust Estate, including
but not limited to filing or causing to be filed all UCC financing statements
and continuation statements required to be filed by the terms of this Indenture
and the Contribution and Servicing Agreement in accordance with and within the
time periods provided for herein and therein. Except as expressly provided
herein, the Issuer shall not waive, amend, modify, supplement or terminate any
of its Related Documents or any provision thereof without the consent of the
Trustee or a Note Majority.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Termination Event under the Contribution and Servicing Agreement, the Issuer
shall promptly notify the Trustee and the Rating Agencies thereof, and shall
specify in such notice the action, if any, the Issuer is taking with respect of
such default. If a Servicer Termination Event shall arise from the failure of
the Servicer to perform any of its duties or obligations under the Contribution
and Servicing Agreement with respect to the Leases, the Issuer shall take all
reasonable steps available to it to remedy such failure.
(e) If the Issuer has given notice of termination to the Servicer of
the Servicer's rights and powers pursuant to Section 8.2 of the Contribution and
Servicing Agreement, as promptly as possible thereafter, the Issuer shall
appoint a successor servicer in accordance with Section 8.3 of the Contribution
and Servicing Agreement.
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Contribution and Servicing Agreement, the Issuer shall promptly notify
the Trustee. As soon as a successor Servicer is appointed, the Issuer shall
notify the Trustee of such appointment, specifying in such notice the name and
address of such successor Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the SPC of their respective duties under the
Related Documents if the effect thereof would adversely affect the Holders of
the Notes.
SECTION 3.08. Negative Covenants. Until the Termination Date, the
Issuer shall not:
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(i) except as expressly permitted by this Indenture, sell,
transfer, exchange or otherwise dispose of any of the properties or
assets of the Issuer, including those included in the Trust Estate,
unless directed to do so by the Trustee;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable state law) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied or
assessed upon any part of the Trust Estate;
(iii) dissolve or liquidate in whole or in part;
(iv) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien in favor of the 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;
(v) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien in favor of the
Trustee created by this Indenture) to be created on or extend to or
otherwise arise upon or burden the Trust Estate 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 the Equipment and arising solely as a result of an action
or omission of the related Obligor);
(vi) permit the lien in favor of the Trustee created by this
Indenture not to constitute a valid first priority (other than with
respect to any such tax, mechanics' or other lien described in clause
(v) above) security interest in the Trust Estate; or
(vii) amend, modify or fail to comply with the provisions of the
Related Documents without the prior written consent of the Trustee.
SECTION 3.09. Annual Statement as to Compliance. The Issuer will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year ended December 31, 1998), an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that
(i) a review of the activities of the Issuer during such year and
of performance under this Indenture has been made under such
Authorized Officer's supervision; and
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(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer 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 3.10. Issuer May Consolidate or Merge Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any State and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form and substance satisfactory to the
Trustee, the due and punctual payment of the principal of and interest
on all Notes and the performance or observance of every agreement and
covenant of this Indenture and each other Related Document on the part
of the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel which
shall be delivered to and shall be satisfactory to the Trustee to the
effect that such transaction will not have any material adverse tax
consequence to the Trust or any Noteholder;
(v) any action as is necessary to maintain the lien and security
interest created in favor of the Trustee by this Indenture shall have
been taken;
(vi) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel (which shall describe the
actions taken as required by clause (a)(v) of this Section or state
that no such actions will be taken) each stating that such
consolidation or merger and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
relating to such transaction have been compiled with (including any
filing required by the Exchange Act); and
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(vii) the Issuer or the Person (if other than the Issuer) formed
by or surviving such consolidation or merger has a net worth,
immediately after such consolidation or merger, that is (a) greater
than zero and (b) not less than the net worth of the Issuer
immediately prior to giving effect to such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all
of its properties or assets, including those included in the Trust Estate, to
any Person (except as expressly permitted by the Indenture or the Contribution
and Servicing Agreement), unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer shall (A) be a United States
citizen or a Person organized and existing under the laws of the
United States of America or any State, (B) expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee,
in form and substance satisfactory to the Trustee, the due and
punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture and each Related Document on the part of the Issuer to be
performed or observed, all as provided herein, (C) expressly agree by
means of such supplemental indenture that all right, title and
interest so conveyed or transferred shall be subject and subordinate
to the rights of Holders of the Notes, (D) unless otherwise provided
in such supplemental indenture, expressly agree to indemnify, defend
and hold harmless the Issuer against and from any loss, liability or
expense arising under or related to this Indenture and the Notes and
(E) expressly agree by means of such supplemental indenture that such
Person (or if a group of Persons, then one specified Person) shall
make all filings with the Commission (and any other appropriate
Person) required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel which
shall be delivered to and shall be satisfactory to the Trustee to the
effect that such transaction will not have any material adverse tax
consequence to the Trust or any Noteholder;
(v) any action as is necessary to maintain the lien and security
interest created in favor of the Trustee by this Indenture shall have
been taken;
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(vi) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel (which shall describe the
actions taken as required by clause (b)(v) of this Section or that no
such actions will be taken) each stating that such conveyance or
transfer and such supplemental indenture comply with this Article III
and that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by
the Exchange Act); and
(vii) the Person acquiring by conveyance or transfer the
properties or assets of the Issuer has a net worth, immediately after
such conveyance or transfer, that is (a) greater than zero and (b) not
less than the net worth of the Issuer immediately prior to giving
effect to such conveyance or transfer.
SECTION 3.11. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Trustee stating that the Issuer is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Leases and the related Equipment in the manner contemplated by this Indenture
and the Related Documents and activities incidental thereto.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes and (ii) any other Indebtedness permitted
by or arising under the Related Documents. The proceeds of the Notes shall be
used exclusively to fund the Depositor's purchase of the Leases and the other
assets specified in the Contribution and Servicing Agreement and to pay the
Issuer's organizational, transactional and start-up expenses.
SECTION 3.14. Servicer's Obligations. The Issuer shall monitor the
performance of the Servicer under the Contribution and Servicing Agreement, and
shall use its reasonable good faith efforts to cause the Servicer duly and
punctually to perform all of its duties and obligations thereunder.
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SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Contribution and Servicing Agreement or this
Indenture, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuming 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, any other interest in, or make any capital
contribution to, any other Person.
SECTION 3.16. Income Tax Characterization. The SPC has structured
this Indenture and the Notes with the intention that the Notes will qualify
under applicable federal, state, local and foreign tax law as indebtedness of
the SPC secured by the Leases. The SPC, the Servicer, each Noteholder and each
Note Owner agree to treat and to take no action inconsistent with the treatment
of the Notes as such indebtedness for purposes of federal, state, local and
foreign income or franchise taxes and any other tax imposed on or measured by
income. Each Noteholder and each Note Owner, by acceptance of its Note or
beneficial interest therein, agrees to be bound by the provisions of this
Section. Each Noteholder agrees that it will cause any Note Owner acquiring an
interest in a Note through it to comply with this Indenture as to treatment as
indebtedness under applicable tax law, as described in this Section.
SECTION 3.17. Restricted Payments. Except as expressly permitted by
this Indenture or the Contribution and Servicing Agreement, the Issuer shall
not, directly or indirectly, (i) make any distribution (by reduction of capital
or otherwise), whether in cash, property, securities or a combination thereof,
to any owner of a beneficial interest in the Issuer or otherwise with respect to
any ownership or equity interest or security in or of the Issuer or to the
Servicer, (ii) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose. The Issuer will not, directly or
indirectly, make payments to or distributions from any of the Trust Accounts
except in accordance with this Indenture and the Related Documents.
SECTION 3.18. Notice of Events of Default. The Issuer agrees to give
the Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and each default on the part of the Servicer or the SPC of its
obligations under the Contribution and Servicing Agreement.
SECTION 3.19. Further Instruments and Acts. Upon request of the
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
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SECTION 3.20. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
Related Document.
SECTION 3.21. Amendments of Contribution and Servicing Agreement.
The Issuer shall not agree to any amendment to Section 9.1 of the Contribution
and Servicing Agreement to eliminate the requirements thereunder that the
Trustee or the Holders of the Notes consent to amendments thereto as provided
therein.
SECTION 3.22. Issuer Obligation. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer or the Trustee on
the Notes or under this Indenture or any certificate or other writing delivered
in connection herewith or therewith, against (i) the Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer or the Trustee or of any successor or assign of the Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Trustee has no such obligations in its individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
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ARTICLE IV
Satisfaction and Discharge
--------------------------
SECTION 4.01. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal and interest thereon, (iv) Sections [3.03, 3.04,
3.05, 3.07, 3.08, 3.10, 3.12, 3.13, 3.16, 3.20 and 3.21], (v) the rights,
obligations and immunities of the Trustee hereunder (including the rights of the
Trustee under Section 6.07 and the obligations of the Trustee under Section
4.02) and (vi) the rights of Noteholders as beneficiaries hereof with respect to
the property so deposited with the Trustee payable to all or any of them, and
the Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.05 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated
and held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been
delivered to the Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity Date within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and at
the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee as part of the Trust Estate cash or direct obligations of or
obligations guaranteed by the United States of America (which will
mature prior to the date such amounts are payable), in trust in an
Eligible Account in the name of the Trustee for such purpose, in an
amount sufficient to
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pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation when due to
their Stated Maturity Date or Redemption Date (if Notes shall have
been called for redemption pursuant to Section 10.01(a)), as the case
may be;
(B) the Issuer has paid or caused to be paid all Secured
Obligations; and
(C) the Issuer has delivered to the Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the
Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section
11.01(a) and each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this
Indenture have been complied with and the Rating Agency Condition has
been satisfied.
SECTION 4.02. Application of Trust Money. All moneys deposited with
the Trustee pursuant to Section 4.01 shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the
Contribution and Servicing Agreement or required by law.
SECTION 4.03. Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all moneys then held by any Paying Agent other than the Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Trustee to be held and applied according to
Section 3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
SECTION 4.04. Release of Trust Estate. The Trustee shall, on or
after the Termination Date, release any remaining portion of the Trust Estate
from the lien created by this Indenture and deposit in the Collection Account
any funds then on deposit in any other Trust Account. The Trustee shall release
property from the lien created by this Indenture pursuant to this Section only
upon receipt of an Issuer Request accompanied by an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA (S)(S) 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.01.
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ARTICLE V
Remedies
--------
SECTION 5.01. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note when the
same becomes due and payable, and such default shall continue for a
period of five days; or
(ii) default in the payment of the principal of any Note on the
Redemption Date or Stated Maturity Date applicable thereto; or
(iii) default in the observance or performance in any material
respect of any covenant or agreement of the Issuer made in this
Indenture (other than a covenant or agreement, a default in the
observance or performance of which is elsewhere in this Section
specifically dealt with), or any representation or warranty of the
Issuer made in this Indenture or in any certificate or other writing
delivered pursuant hereto or in connection herewith proving to have
been incorrect in any material respect as of the time when the same
shall have been made, and such default shall continue or not be cured,
or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been
eliminated or otherwise cured, for a period of 30 days after there
shall have been given, by registered or certified mail, to the Issuer
by the Trustee or to the Issuer and the Trustee by the Holders of at
least 25% of the Outstanding Amount of the Notes, a written notice
specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(iv) the commencement of an involuntary case against the Issuer
or the SPC under any applicable Federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, and such
case is not dismissed within 60 days; or
(v) (A) the commencement by the Issuer or the SPC of a voluntary
case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, (B) the entry of an
order for relief in an involuntary case against the Issuer or the SPC
under any such law, (C) the consent by the Issuer or the SPC to the
entry of any such order for relief, (D) the consent by the Issuer or
the SPC to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator
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or similar official of the Issuer or the SPC or for any substantial
part of the Trust Estate, (E) the making by the Issuer or the SPC of
any general assignment for the benefit of creditors, (F) the failure
by the Issuer or the SPC generally to pay its debts as such debts
become due, (G) the liquidation of the Issuer or the SPC, or (H) the
taking of action by the Issuer or the SPC, as applicable, in
furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee, within five days after
obtaining knowledge of the occurrence thereof, written notice in the form of an
Officer's Certificate of any event which with the giving of notice and the lapse
of time would become an Event of Default under clause (iii) or (iv), its status
and what action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.02. Rights upon Event of Default.
If an Event of Default shall have occurred and be continuing, a Note
Majority or the Trustee may, upon prior written notice to the Rating Agencies,
declare by written notice to the Issuer that the Notes become, whereupon they
shall become, immediately due and payable at par, together with accrued interest
thereon. Notwithstanding anything to the contrary in this Section, if an Event
of Default specified in Section 5.01(iv) or (v) shall occur and be continuing,
the Notes shall become immediately due and payable at par, together with accrued
interest thereon. If an Event of Default shall have occurred and be continuing,
the Trustee may exercise any of the remedies specified in Sections 5.03 and
5.04.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee; Authority of Trustee.
(a) The Issuer covenants that if any Notes are accelerated following
the occurrence of an Event of Default, the Issuer will, upon demand of the
Trustee, pay to it, for the benefit of the Holders of such Notes, the whole
amount then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue installments of interest, at
the applicable Interest Rate and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee and
its agents and counsel.
(b) If an Event of Default occurs and is continuing, the Trustee may
in its discretion proceed to protect and enforce its rights and the rights of
the Noteholders, by such appropriate Proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.
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(c) In case there shall be pending, relative to the Issuer, the SPC or
any other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer, the SPC or such other obligor
or Person, or its property, or in case of any other comparable judicial
Proceedings relative to the Issuer, the SPC or other obligor upon the Notes, or
to the creditors or property of the Issuer, the SPC or such other obligor, the
Trustee, irrespective of whether the principal of any Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee, except as
a result of negligence or bad faith) and of the Noteholders allowed in
such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the Noteholders and of
the Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses
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and liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith.
(d) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar Person.
(e) All rights of action and of asserting claims under this Indenture
or under any of the Notes, may be enforced by the Trustee without the possession
of any of the Notes or the production thereof in any trial or other Proceedings
relative thereto, and any such action or Proceedings instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Notes.
(f) In any Proceedings brought by the Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture),
the Trustee shall be held to represent all the Holders of the Notes, and it
shall not be necessary to make any Noteholder a party to any such Proceedings.
SECTION 5.04. Remedies. If an Event of Default shall have occurred
and be continuing, the Trustee may (subject to Section 5.05) and, in the case of
an Event of Default described in Section 5.01(iv) or (v), shall, as to the
actions described in the following clauses (i), (ii) and (iii):
(i) institute Proceedings in its own name and as or on behalf of
a trustee of an express trust for the collection of all amounts then
payable on the Notes or under this Indenture with respect thereto,
whether by declaration or otherwise, enforce any judgment obtained,
and collect from the Issuer and any other obligor upon such Notes
moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC and
any other remedy available to the Trustee and take any other
appropriate action to protect and enforce the rights and remedies of
the Trustee on behalf of the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any
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manner permitted by law; provided, however, that the Trustee may not
sell or otherwise liquidate the Trust Estate following an Event of
Default unless
(A) the Holders of 100% of the Outstanding Amount of the Notes
consent thereto,
(B) the proceeds of such sale or liquidation distributable to the
Noteholders will be sufficient to discharge in full all amounts then
due and unpaid upon such Notes for principal and interest, or
(C) the Trustee determines that the Trust Estate will not
continue to provide sufficient funds for the payment of principal of
and interest on the Notes as they would have become due if the Notes
had not been declared due and payable, and the Trustee provides prior
written notice to the Rating Agencies and obtains the consent of
Holders of 66-2/3% of the Outstanding Amount of the Notes.
In determining such sufficiency or insufficiency with respect to clause (B) or
(C), the Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
SECTION 5.05. Optional Preservation of the Leases. If any Notes have
been declared to be due and payable under Section 5.02 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Trustee may, but need not, elect to maintain possession of the
Trust Estate. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Trustee shall take such desire into account when
determining whether or not to maintain possession of the Trust Estate. In
determining whether to maintain possession of the Trust Estate, the Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
SECTION 5.06. Priorities.
If the Trustee collects any money or property pursuant to this Article
V, including any money or property in respect of liquidation of the Trust Estate
pursuant to Section 5.04(a)(iv), the Trustee shall pay as promptly as
practicable out the money or property in the following order:
FIRST: amounts due and owing to the Trustee pursuant to Section
6.07;
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SECOND: amounts due and owing and required to be distributed to
the Servicer pursuant to priority (i) of Section 8.03 and not
previously distributed;
THIRD: to Class A Noteholders for amounts due and unpaid on the
Class A Notes for interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Class A
Notes for interest;
FOURTH: to Class A Noteholders for amounts due and unpaid on the
Class A Notes for principal, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Class A
Notes for principal;
FIFTH: to Class B Noteholders for amounts due and unpaid on the
Class B Notes for interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Class B
Notes for interest;
SIXTH: to Class B Noteholders for amounts due and unpaid on the
Class B Notes for principal, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Class B
Notes for principal;
SEVENTH: to Class C Noteholders for amounts due and unpaid on
the Class C Notes for interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class C Notes for interest;
EIGHTH: to Class C Noteholders for amounts due and unpaid on the
Class C Notes for principal, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Class C
Notes for principal;
NINTH: amounts due and owing and required to be distributed to
the Servicer pursuant to priority (v) of Section 8.03 and not
distributed; and
TENTH: the remainder, if any, to the Issuer.
SECTION 5.07. Limitation of Suits. No Holder of any Note shall have
any right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount
of the Notes have made written request to the Trustee to institute
such
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Proceeding in respect of such Event of Default in its own name as
Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee may conclusively rely on and act upon the request of the group
representing the largest Outstanding Amount of the Notes.
SECTION 5.08. Unconditional Rights of Noteholders To Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest on such Note
on or after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the Trustee or
any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Trustee or to such
Noteholder, then and in every such case the Issuer, the Trustee and the
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Noteholders shall continue as
though no such Proceeding had been instituted.
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SECTION 5.10. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not a Waiver. No delay or omission
of the Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Noteholders, as the
case may be.
SECTION 5.12. Control by Noteholders. The Holders of a majority of
the Outstanding Amount of the Notes shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Trustee with respect to the Notes or exercising any trust or power conferred on
the Trustee; provided that
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) subject to the express terms of Section 5.04, any direction
to the Trustee to sell or liquidate all or any portion of the Trust
Estate shall be by the Holders of Notes representing not less than
100% of the Outstanding Amount of the Notes; and
(iii) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction; provided,
however, that, subject to Section 6.01, the Trustee need not take any
action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not
consenting to such action.
SECTION 5.13. Waiver of Past Defaults.
The Holders of Notes of not less than a majority of the Outstanding
Amount of the Notes may waive any past Default or Event of Default and its
consequences except a Default (a) in payment of principal of or interest on any
of the Notes or (b) in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each Note. In the case
of any such waiver, the Issuer, the Trustee and the Holders of the Notes shall
be restored to their
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former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.14. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to (a)
any suit instituted by the Trustee, (b) any suit instituted by any Noteholder,
or group of Noteholders, in each case holding in the aggregate more than 10% of
the Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.15. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantages of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 5.16. Action on Notes. The Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights
or remedies of the Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Trustee against the Issuer or by the levy of
any execution under such judgment upon any portion of the Trust Estate or upon
any of the assets of the Issuer.
SECTION 5.17. Performance and Enforcement of Certain Obligations.
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(a) Promptly following a request from the Trustee to do so and at the
Depositor's expense, the Issuer agrees to take all such lawful action as the
Trustee may request to compel or secure the performance and observance by the
SPC or the Servicer, as applicable, of each of their obligations to the Issuer
under or in connection with the Contribution and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Contribution and Servicing Agreement to the extent and in the manner
directed by the Trustee, including the transmission of notices of default on the
part of the SPC or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the SPC
or the Servicer of each of their obligations under the Contribution and
Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Trustee
may, and at the direction (which direction shall be in writing, including
facsimile) of the Holders of at least 66-2/3% of the Outstanding Amount of the
Notes shall, exercise all rights, remedies, powers, privileges and claims of the
Issuer against the SPC or the Servicer under or in connection with the
Contribution and Servicing Agreement, including the right or power to take any
action to compel or secure performance or observance by the SPC or the Servicer
of each of their obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under the Contribution
and Servicing Agreement, and any right of the Issuer to take such action shall
be suspended.
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ARTICLE VI
The Trustee
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SECTION 6.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture with the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture; however, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture and, if applicable, the Trustee's other
Related Documents.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it.
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(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Contribution and Servicing Agreement.
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayments of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) In no event shall the Trustee be required to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer, or any other party, under the Contribution and Servicing Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, powers, duties and privileges of the Servicer, in
accordance with the terms of the Contribution and Servicing Agreement.
(j) The Trustee shall, and hereby agrees that it will, perform all of
the obligations and duties required of it under the Contribution and Servicing
Agreement.
(k) Without limiting the generality of this Section, the Trustee shall
have no duty (i) to see to any recording, filing or depositing of this Indenture
or any agreement referred to herein or any financing statement evidencing a
security interest in the Equipment, or to see to the maintenance of any such
recording or filing or depositing or to any recording, refiling or redepositing
of any thereof, (ii) to see to any insurance of the Equipment or Obligors or to
effect or maintain any such insurance, (iii) except as specifically provided in
the Contribution and Servicing Agreement, 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
Estate, (iv) to confirm or verify the contents of any reports or certificates
delivered to the Trustee pursuant to this Indenture or the Contribution and
Servicing Agreement believed by the Trustee to be genuine and to have been
signed or presented by the proper party or parties, or (v) to inspect the
Equipment at any time or ascertain or inquire as to the performance of
observance of any of the Issuer's, the Depositor's or the Servicer's
representations, warranties or covenants or the Servicer's duties and
obligations as Servicer under the Contribution and Servicing Agreement.
(l) Except for actions expressly authorized by this Indenture or the
Contribution and Servicing Agreement or taken by the Trustee pursuant to Section
6.01(a), the Trustee shall take no action reasonably likely to impair (i) the
interests of
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the Trust Estate in any contract or agreement now existing or hereafter
created or (ii) the value of any contract or agreement now existing or
hereafter created.
(m) The Trustee shall have no power to vary the corpus of the Trust
Estate, except as expressly provided in this Indenture.
(n) In the event that the Note Registrar or the Paying Agent (if other
than the Trustee) shall fail to perform any obligation, duty or agreement in the
manner or on the day required to be performed by the Note Registrar or the
Paying Agent, as the case may be, under this Indenture, the Trustee shall be
obligated, as soon as possible upon knowledge of a Responsible Officer thereof
and receipt of appropriate records, if any, to perform such obligation, duty or
agreement in the manner so required.
(o) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any Event of Default (other than an Event of Default
pursuant to Section 5.01(i) or (ii)) unless a Responsible Officer of the Trustee
shall have received written notice thereof or otherwise has actual knowledge
thereof. In the absence of receipt of such notice or knowledge, the Trustee may
conclusively assume that there is no Event of Default.
SECTION 6.02. Rights of Trustee.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person.
The Trustee need not (except under the circumstances described in
paragraph (g) below) investigate any fact or matter stated in the
document;
(b) before the Trustee acts or refrains from acting, it may
require an Officer's Certificate (with respect to factual matters) or
an Opinion of Counsel, as applicable. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on
the Officer's Certificate or Opinion of Counsel, as applicable, or as
directed by the requisite amount of Note Owners as provided herein;
(c) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Trustee shall
not be responsible for any misconduct or negligence on the part of, or
for the supervision of, any such agent, attorney, custodian or nominee
appointed with due care by it hereunder;
(d) the Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or
within its rights or
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powers; provided, however, that the Trustee's conduct does not
constitute willful misconduct, negligence or bad faith;
(e) the Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or
suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel;
(f) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders of Notes, pursuant to the
provisions of this Indenture, unless such Holders of Notes shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities that may be incurred therein or
thereby; provided, however, that the Trustee shall, upon the
occurrence of an Event of Default (that has not been cured), exercise
the rights and powers vested in it by this Indenture with 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;
(g) the 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 Holders of Notes evidencing not less than 25% of the
Outstanding Amount thereof; provided, however, that if the payment
within a reasonable time to the 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 Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Indenture or the Contribution and Servicing Agreement, the
Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to so proceeding; the reasonable expense of
every such examination shall be paid by the Person making such
request, or, if paid by the Trustee, shall be immediately reimbursed
by the Person making such request upon demand; and
(h) The right of the Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act.
SECTION 6.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note Registrar, co-
registrar or co-
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paying agent may do the same with like rights. However, the Trustee is
required to comply with Sections 6.11 and 6.12.
SECTION 6.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and, except as provided in Section 6.13, makes no representation
as to the validity or adequacy of this Indenture, the Trust Estate or the Notes,
it shall not be accountable for the Issuer's use of the proceeds from the Notes,
and it shall not be responsible for any statement of the Issuer in the Indenture
or in any document issued in connection with the sale of the Notes or in the
Notes other than the Trustee's certificate of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to a Responsible Officer of the Trustee, the
Trustee shall mail to each Noteholder notice of the Default within 90 days after
it occurs. Except in the case of a Default in payment of principal of or
interest on any Note (including payments pursuant to the mandatory redemption
provisions of such Note), the Trustee may withhold the notice if and so long as
a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
SECTION 6.06. Reports by Trustee to Holders. The Trustee shall
provide or cause to be provided to each Noteholder all such tax information as
may be required by law to be distributed to enable such holder to prepare its
federal and state income tax returns.
SECTION 6.07. Compensation and Indemnity.
(a) The Servicer, pursuant to the Contribution and Servicing
Agreement, has covenanted and agreed to pay to the Trustee, and the Trustee
shall be entitled to, certain annual fees and to reimburse the Trustee for all
ordinary and reasonable out-of-pocket expenses incurred or made by it in
connection with the performance of its duties hereunder (excluding those
incurred or made in the performance of its duties under Article V, as referred
to in paragraph (b) below). Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts.
(b) The Trustee shall also be entitled to reimbursement, from moneys
available therefor in accordance with Section 5.06, for all reasonable out-of-
pocket expenses (including the reasonable fees of any attorneys, investment
bankers and public accountants) incurred or made by it in connection with the
performance of its duties under Article V. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 5.01(iv) or (v) with
respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
Federal or state bankruptcy, insolvency or similar law. Notwithstanding
anything else set forth in this Indenture or the
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Related Documents, the Trustee agrees that the obligations of the Issuer to
the Trustee hereunder and under the Related Documents shall be recourse to the
Trust Estate only. In addition, the Trustee agrees that its recourse to the
Issuer or the Trust Estate shall be limited to the right to receive the
reimbursement referred to in the first sentence of this paragraph.
(c) The Trustee and any director, officer, employee or agent of the
Trustee shall be indemnified by the Issuer and held harmless against any loss,
liability or reasonable expense incurred in connection with this Indenture or
the Notes, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance by the Trustee
of its duties hereunder or any loss, liability or expense incurred by the
Trustee in connection with the performance of its duties pursuant to Section
6.01, including, without limitation, any such loss, liability or expense
incurred in connection with any legal action or resulting from any error in any
tax or information return prepared by any Person other than the Trustee.
SECTION 6.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Issuer in writing. The Issuer may remove the Trustee
if:
(i) the Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of
the Trustee in an involuntary case or proceeding under federal or
state banking or bankruptcy laws, as now or hereafter constituted, or
any other applicable federal or state bankruptcy, insolvency or other
similar law, shall have entered a decree or order granting relief or
appointing a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or similar official) for the Trustee or for
any substantial part of the Trustee's property, or ordering the
winding-up or liquidation of the Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws, as
now or hereafter in effect, or another present or future federal or
state bankruptcy, insolvency or similar law is commenced with respect
to the Trustee and such case is not dismissed within 60 days;
(iv) the Trustee commences a voluntary case under any federal or
state banking or bankruptcy laws, as now or hereafter constituted, or
any other applicable federal or state bankruptcy, insolvency or other
similar law, or consents to the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or other similar official) for the Trustee or for any
substantial part of the Trustee's property, or makes any assignment
for the benefit of creditors or fails generally to pay its debts as
such debts become due or takes any corporate action in furtherance of
any of the foregoing;
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(v) the Trustee otherwise becomes incapable of acting; or
(vi) the rating assigned to the long-term unsecured debt
obligations of the Trustee (or the holding company thereof) by the
Rating Agencies shall be lowered below the rating of "BBB", "Baa3" or
equivalent rating or be withdrawn by any Rating Agency.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee, to the Issuer and to each Rating Agency.
Thereupon the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to Noteholders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of a majority in Outstanding Amount of the Notes may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to this Section and payment of all fees and expenses owed to the
retiring Trustee. Notwithstanding the replacement of the Trustee pursuant to
this Section, the retiring Trustee shall be entitled to payment or reimbursement
of such amounts as such Person is entitled pursuant to Section 6.07.
SECTION 6.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee; provided that no such merger,
conversion or consolidation shall relieve the Trustee of its obligation to
comply with Section 6.11. The Trustee shall provide the Rating Agencies prompt
notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture
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any of the Notes shall have been authenticated but not delivered, any such
successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such
cases such certificates shall have the full force which it is anywhere in the
Notes or in this Indenture provided that the certificate of the Trustee shall
have.
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust may at the time be located, the Trustee shall have
the power and may execute and deliver all instruments to appoint one or more
Persons to act as a co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person or
Persons, in such capacity and for the benefit of the Noteholders, such title to
the Trust, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Trustee may
consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor Trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-trustee
or separate trustee shall be required under Section 6.08.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-
trustee jointly (it being understood that such separate trustee or co-
trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
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(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VI. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the 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 Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 6.11. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b), including the optional provision permitted by the second sentence of
TIA (S) 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA (S) 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA (S) 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship
listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be
subject to TIA (S)311(a) to the extent indicated.
SECTION 6.13. Representations and Warranties of the Trustee. The
Trustee represents and warrants as of the Closing Date that:
(i) the Trustee is a [_________] organized, existing and in good
standing under the laws of the State of [_________];
(ii) the Trustee has full power, authority and right to execute,
deliver and perform this Indenture and each of the Trustee's Related
Documents, and has taken all necessary action to authorize the
execution, delivery and performance by it of this Indenture and each
such Related Document; and
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(iii) each of this Indenture and the Trustee's Related Documents
has been duly executed and delivered by the Trustee and represents a
legal, valid and binding obligation of the Trustee enforceable against
the Trustee in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
SECTION 6.14. Servicer's Obligations. The Trustee shall, subject to
Section 6.01, use its reasonable good faith efforts to cause the Servicer duly
and punctually to perform all of its duties and obligations under the
Contribution and Servicing Agreement.
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ARTICLE VII
Noteholders' Lists and Reports
------------------------------
SECTION 7.01. Note Registrar To Furnish Trustee Names and Addresses
to Noteholders. The Note Registrar will furnish or cause to be furnished to the
Trustee (a) not more than five 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
Trustee may reasonably require, of the names and addresses of the Holders of
Notes as of such Record Date, (b) at such other times as the Trustee may request
in writing, within 30 days after receipt by the Note Registrar of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long as the
Trustee is the Note Registrar, no such list shall be required to be furnished.
SECTION 7.02. Preservation of Information; Communications to
Noteholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Trustee as provided in Section 7.01 and the
names and addresses of Holders of Notes received by the Trustee in its capacity
as Note Registrar. The Trustee may destroy any list furnished to it as provided
in such Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA (S) 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA (S) 312(c).
SECTION 7.03. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Issuer may
be required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act;
(ii) file with the 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
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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 Trustee a sufficient number of copies (and
the Trustee shall transmit by mail to all Noteholders described in TIA
(S) 313(c)) of such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this paragraph as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year. In the event the Issuer changes
its fiscal year, it shall promptly notify the Trustee.
SECTION 7.04. Reports by Trustee. If required by TIA (S) 313(a),
within 60 days after each March 31 beginning with March 31, 1998, the Trustee
shall mail to each Noteholder as required by TIA (S) 313(c) a brief report dated
as of such date that complies with TIA (S) 313(a). The Trustee also shall
comply with TIA (S) 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Trustee with the Commission and each stock exchange, if any, on
which the Notes are listed. The Issuer shall notify the Trustee if and when the
Notes are listed on any other stock exchange.
SECTION 7.05. Statements to Noteholders.
(a) On each Payment Date, the Trustee shall include with each
distribution to each Noteholder, a statement (which statement shall also be
provided to each Rating Agency), based solely on information in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section 3.9
of the Contribution and Servicing Agreement, in substantially the form attached
hereto as Exhibit B.
(b) Note Owners may obtain copies of the statements delivered by the
Trustee pursuant to subsection (a) above upon written request to the Trustee at
its Corporate Trust Office (together with a certification that such Person is a
Note Owner and payment of any expenses associated with the distribution
thereof).
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ARTICLE VIII
Trust Accounts, Disbursements and Releases
------------------------------------------
SECTION 8.01. Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it as provided in this Indenture. Except as
otherwise expressly provided in this Indenture, if any default occurs in the
making of any payment or performance under any agreement or instrument that is
part of this Indenture or the Notes, the Trustee may take such action as may be
appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.02. Collection Account. On or prior to the Closing Date,
the Trustee shall establish the Collection Account in the name of the Trustee
for the benefit of the Noteholders. The Collection Account shall be an Eligible
Account and initially shall be a segregated trust account established with the
Trustee and maintained with the Trustee, into which the Servicer shall deposit
or cause to be deposited all amounts described in Sections 4.1, 4.2 and 5.1 of
the Contribution and Servicing Agreement.
SECTION 8.03. Distributions. No later than 3:00 p.m., St. Paul,
Minnesota time, on each Payment Date, the Trustee shall (based solely on the
information contained in the Servicer's Certificate delivered on the related
Determination Date, upon which the Trustee may conclusively rely) distribute the
following amounts and in the order of priority specified below. Within each
order of priority, amounts shall be deemed withdrawn first from Available
Pledged Revenues plus any Servicer Advances, and second (but only as to amounts
described in clauses (ii) through (iv) below) from amounts permitted to be
withdrawn from the Residual Account pursuant to Section 8.06:
(i) first, from the Available Pledged Revenues then on deposit in
the Collection Account, to the Servicer (if Vendor Services or an
Affiliate is no longer the Servicer), the Servicing Fee for the
related Collection Period, and (whether or not Vendor Services or an
Affiliate is the Servicer) any amounts specified in Section 4.2(c) of
the Contribution and Servicing Agreement, to the extent the Servicer
has not reimbursed itself in respect of such amounts pursuant to
Section 4.4 of the Contribution and Servicing Agreement;
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(ii) second, from the Amount Available then remaining on deposit
in the Collection Account, to reimburse the Servicer for unreimbursed
Servicer Advances made with respect to a prior Payment Date;
(iii) third, from the Amount Available then remaining on deposit
in the Collection Account, to the Note Distribution Account, an amount
equal to the Note Interest Distributable Amount for such Payment Date;
(iv) fourth, from the Amount Available then remaining on deposit
in the Collection Account, to the Note Distribution Account, an amount
equal to the Monthly Principal Amount for such Payment Date;
(v) fifth, from the Available Pledged Revenues then on deposit in
the Collection Account, to the Servicer (if Vendor Services or an
Affiliate is the Servicer), the Servicing Fee for the related
Collection Period;
(vi) sixth, during such time as a Residual Event has occurred and
is continuing, the amount of any remaining Residual Realizations on
deposit in the Collection Account and included in Available Funds up
to the Residual Amount Cap, after giving effect to the allocations in
clauses (i) through (v) above, to the Residual Account; and
(viii) seventh, the remainder, if any, to the Issuer.
SECTION 8.04. Note Distribution Account.
(a) On or prior to the Closing Date, the Trustee shall establish the
Note Distribution Account in the name of the Trustee for the benefit of the
Noteholders. The Note Distribution Account shall be an Eligible Account and
initially shall be a segregated trust account established with the Trustee and
maintained with the Trustee.
(b) On each Payment Date and Redemption Date, the Trustee shall
distribute all amounts on deposit in the Note Distribution Account in the
following amounts and in the following order of priority (except as otherwise
provided in Section 5.06):
(i) interest on the Notes in the following order of priority:
(A) to the Class A-1 Noteholders, the Class A-1 Interest
Distributable Amount and to the Class A-2 Noteholders, the Class
A-2 Interest Distributable Amount, or, if the remaining amount on
deposit in the Note Distribution Account is less than the sum of
the amounts specified in this clause (A), such remaining amount
pro rata to each of such Classes based their respective
entitlements to interest pursuant to this clause (A);
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(B) to the Class B Noteholders, the Class B Interest
Distributable Amount; and
(C) to the Class C Noteholders, the Class C Interest
Distributable Amount; and
(ii) principal on the Notes in the following order of priority:
(A) (i) to the Class A-1 Noteholders only, until the
Outstanding Principal Amount on the Class A-1 Notes has been
reduced to zero, the Class A Principal Payment, then (ii) to the
Class A-2 Noteholders, the Class A Principal Payment,
(B) to the Class B Noteholders, the Class B Principal
Payment,
(C) to the Class C Noteholders, the Class C Principal
Payment, and
(D) to the extent that the Class B Floor exceeds the Class B
Target Investor Principal Amount and/or the Class C Floor exceeds
the Class C Target Investor Principal Amount, sequentially, as an
additional principal payment, to the Class A-2 Notes, the Class B
Notes and the Class C Notes, the Additional Principal, until the
Outstanding Principal Amount of each Class has been reduced to
zero.
SECTION 8.05. Servicing Account. On or prior to the Closing Date,
the Trustee shall establish the Servicing Account in the name of the Trustee for
the benefit of the Noteholders and the SPC. The Servicing Account shall be an
Eligible Account. The Servicer shall deposit or cause to be deposited in the
Servicing Account all amounts described in Sections 4.1 and 4.2 of the
Contribution and Servicing Agreement, subject to Section 4.4 thereof. The
Servicer shall make transfers from the Servicing Account, and shall be entitled
to make withdrawals from the Servicing Account, as provided in the Contribution
and Servicing Agreement.
SECTION 8.06. Residual Account.
(a) On or prior to the Closing Date, the Trustee shall establish the
Residual Account in the name of the Trustee for the benefit of the Noteholders
and the SPC. The Residual Account shall be an Eligible Account. The Servicer
shall deposit or cause to be deposited in the Residual Account all Residual
Realizations pursuant to Section 4.2 of the Collection and Servicing Agreement.
(b) On each Payment Date, the Trustee shall transfer to the Residual
Account from the Collection Account such amounts as shall be required by Section
8.03 (vi).
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(c) If by 12:00 noon, St. Paul, Minnesota time, on the third Business
Day preceding any Payment Date, the amount of collected funds on deposit in the
Collection Account available for distribution under Section 8.03 is insufficient
to permit on such Payment Date all distributions required by Section 8.03 (i)
through (iv) (such payments, the "Required Payments" and such shortfall, an
"Available Funds Shortfall"), then the Trustee shall transfer, not later than
the end of such Business Day, from the Residual Account to the Collection
Account, an amount equal to the lesser of (i) the remaining Available Funds
Shortfall and (ii) the amount, if any, on deposit in the Residual Account and
available therefor.
(d) In the event that there are funds on deposit in the Residual
Account, the Trustee shall transfer, not later than the close of Business on
such Payment Date, after making required withdrawals, if any, on such Payment
Date pursuant to Section 8.06(c), an amount equal to the amount on deposit in
the Residual Account to the SPC. Funds on deposit in the Residual Account shall
only be available for allocation to the Collection Account pursuant to Section
8.06(c) during such time as a Residual Event has occurred and is continuing.
(e) Upon termination of this Indenture, any balance remaining in the
Reserve Account, after all obligations to the Noteholders hereunder have been
fully satisfied, shall be paid to reimburse the Trustee for any amounts owing to
it arising from the performance of its obligations under this Indenture and,
then, to the SPC.
SECTION 8.07. Class C Limited Guaranty.
(a) No later than the third Business Day prior to each Payment Date,
the Servicer shall notify Green Tree of the amount of the Class C Guaranty
Payment (if any) for such Payment Date. Not later than the Business Day
preceding each Payment Date, Green Tree shall deposit the Class C Guaranty
Payment, if any, for such Payment Date into the Note Distribution Account. Any
Class C Guaranty Payment shall be distributable to Class C Noteholders pursuant
to Section 8.03.
(b) The obligation of Green Tree to provide the Class C Guaranty
Payment shall terminate on the final scheduled Payment Date.
(c) The obligation of Green Tree to make the Class C Guaranty Payments
shall be unconditional and irrevocable. Green Tree acknowledges that its
obligation to make the Class C Guaranty Payments shall be deemed a guaranty by
Green Tree of indebtedness of the Issuer for the money borrowed from the Class C
Noteholders.
(d) If Green Tree fails to make a Class C Guaranty Payment in whole or
in part, Green Tree shall promptly notify the Trustee, and the Trustee shall
promptly notify the Rating Agencies.
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SECTION 8.08. General Provisions Regarding Servicing Account,
Collection Account, Residual Account and Note Distribution Account.
(a) So long as no Default or Event of Default shall have occurred and
be continuing, all amounts held in the Servicing Account, the Collection
Account, the Residual Account and the Note Distribution Account shall, to the
extent permitted by applicable laws, rules and regulations, be invested, as
directed by the Servicer, in Eligible Investments that mature not later than one
Business Day prior to the Payment Date for the Collection Period to which such
amounts relate. Any such written direction shall certify that any such
investment is authorized by this Section. Investments in Eligible Investments
shall be made in the name of the Trustee on behalf of the Trust, and such
investments shall not be (1) purchased at a price in excess of the principal
amount thereof plus accrued interest thereon, nor (2) sold or disposed of prior
to their maturity at a price less than the principal amount thereof plus accrued
interest thereon. Any investment of funds in the Servicing Account, the
Collection Account, the Residual Account or the Note Distribution Account shall
be made in Eligible Investments held by a financial institution in accordance
with the following requirements:
(i) all Eligible Investments shall be held in an account with
such financial institution in the name of the Trustee;
(ii) with respect to securities held in such account, such
securities shall be:
(A) certificated securities (as such term is used in
Minnesota UCC (S) 8-102(a)(4)), securities deemed to be
certificated securities under applicable regulations of the
United States government, or uncertificated securities issued by
an issuer organized under the laws of the State of New York or
the State of Delaware,
(B) either (I) in the possession of such institution, (II)
in the possession of a "clearing corporation" (as such term is
used in Section 8-102(a)(5) of the Minnesota UCC, registered in
the name of such clearing corporation or its nominee, not
endorsed for collection or surrender or any other purpose not
involving transfer, not containing any evidence of a right or
interest inconsistent with the Trustee's security interest
therein, and held by such clearing corporation in an account of
such institution, (III) held in an account of such institution
with the Federal Reserve Bank of New York, or (IV) in the case of
uncertificated securities, issued in the name of such
institution, and
(C) identified, by book entry or otherwise, as held for the
account of, or pledged to, the Trustee on the records of such
institution, and such institution shall have sent the Trustee a
confirmation thereof;
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(iii) with respect to repurchase obligations held in such
account, such repurchase obligations shall be identified by such
institution, by book entry or otherwise, as held for the account of,
or pledged to, the Trustee on the records of such institution, and the
related securities shall be held in accordance with the requirements
of clause (ii) above; and
(iv) with respect to other Eligible Investments other than
securities and repurchase agreements, such Eligible Investments shall
be held in a manner acceptable to the Trustee.
Subject to the other provisions hereof, the Trustee shall have sole control over
each such investment and the income thereon, and any certificate or other
instrument evidencing any such investment, if any, shall be delivered directly
to the Trustee or its agent, together with each document of transfer, if any,
necessary to transfer title to such investment to the Trustee in a manner which
complies with this Section. All interest, dividends, gains upon transfer and
other income from, or earnings on, investments of funds in the Collection
Account, the Residual Account and the Note Distribution Account shall be
deposited in the Collection Account and distributed on the next Payment Date in
accordance with Section 8.03. All interest, dividends, gains upon transfer and
other income from, or earnings on, investments of funds in the Servicing Account
shall be retained therein until distributed to the Servicer as additional
servicing compensation in accordance with Section 3.8 of the Contribution and
Servicing Agreement.
(b) Subject to Section 6.01(c), the Trustee shall not in any way be
held liable by reason of any insufficiency in any of the Servicing Account, the
Collection Account, the Residual Account or the Note Distribution Account
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Trustee's failure to make payments on such Eligible
Investments issued by the Trustee in accordance with their terms.
(c) The Trustee, in holding all funds in the Servicing Account, the
Collection Account, the Residual Account and the Note Distribution Account, and
in making distributions as provided in this Agreement, shall act solely on
behalf of and as agent for the Noteholders.
(d) Any account which is required to be established as an Eligible
Account pursuant to this Indenture and which ceases to be an Eligible Account
shall within five Business Days (or such longer period, not to exceed 30 days,
as to which each Rating Agency may consent) be established by the Trustee as a
new account which shall be an Eligible Account, and any cash and/or any
investments shall be transferred to such new account.
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ARTICLE IX
Supplemental Indentures
-----------------------
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes, but with prior
notice to the Rating Agencies, the Issuer and the Trustee, when authorized by an
Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Trustee any property subject to, or
required to be subjected to, the lien created by this Indenture, or to
subject to the lien created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Trustee;
(v) to cure any ambiguity or to correct or supplement any
provision herein which may be inconsistent with any other provision
herein;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI;
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
Federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA; or
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(viii) to avoid a reduction, qualification or withdrawal of any
rating on the Notes.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes, but upon
satisfaction of the Rating Agency Condition, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder.
SECTION 9.02. Supplemental Indentures With Consent of Noteholders.
(a) The Issuer and the Trustee, when authorized by an Issuer Order,
also may, with prior notice to the Rating Agencies and the consent of a Note
Majority of each Class affected thereby, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that, no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected thereby:
(i) change the date, timing or method of determination of payment
of any installment of principal of or interest on any Note, or reduce
the principal amount thereof, the interest rate thereon or the
Redemption Price with respect thereto, change the provision of this
Indenture relating to the application of collections on, or the
proceeds of the sale of, the Trust Estate to payment of principal of
or interest on the Notes, or change any place of payment where, or the
coin or currency in which, any Note or the interest thereon is
payable, or impair the right to institute suit for the enforcement of
the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any
such amount due on the Notes on or after the respective due dates
thereof (or, in the case of redemption, on or after the Redemption
Date);
(ii) impair the right of the Holder to institute suit pursuant to
Section 5.08;
(iii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental
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indenture, or the consent of the Holders of which is required for
any waiver of compliance with certain provisions of this Indenture
or certain defaults hereunder and their consequences provided for in
this Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.04;
(vi) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Related Documents cannot be
modified or waived without the consent of the Holder of each
Outstanding Note affected thereby;
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien created by this Indenture with respect to any
part of the Trust Estate or, except as otherwise permitted or
contemplated herein, terminate the lien created by this Indenture on
any property at any time subject hereto or deprive the Holder of any
Note of the security provided by the lien created by this Indenture;
(viii) modify or alter the definition of the term "Requisite
Cash Collateral Amount"; or
(viii) result in a reduction, qualification or withdrawal of the
rating of any class of Notes.
Any supplemental indenture to be entered into in accordance with this
Section shall be deemed to affect all Outstanding Notes other than any Class of
Notes with respect to which an Opinion of Counsel for the Issuer is addressed
and delivered to the Trustee to the effect that the interests of the Holders of
Notes of such Class are not affected in any material respect by the supplemental
indenture.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof. The
manner of obtaining such approvals shall be subject to such reasonable
requirements as the Trustee may prescribe.
(b) Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Trustee to mail such notice, or any defect
therein,
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shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
SECTION 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Trustee, the Issuer, the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.05. Conformity With Trust Indenture Act. Every amendment
of this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
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ARTICLE X
Redemption of Notes
-------------------
SECTION 10.01. Redemption. In the event that the SPC pursuant to
Section 5.1 of the Contribution and Servicing Agreement purchases the corpus of
the Trust, the Notes are subject to redemption in whole, but not in part, on the
Payment Date on which such repurchase occurs, for a purchase price equal to the
Redemption Price; provided, however, that the Issuer has available funds
sufficient to pay the Redemption Price. The SPC, the Servicer or the Issuer
shall furnish the Rating Agencies notice of such redemption. If the Notes are
to be redeemed pursuant to this paragraph, the Servicer or the Issuer shall
furnish notice of such election to the Trustee not later than 25 days (or such
lesser number of days as shall be satisfactory to the Trustee) prior to the
Redemption Date, and the Issuer shall deposit, or cause to be deposited, into
the Note Distribution Account the Redemption Price of the Notes to be redeemed,
whereupon all such Notes shall be due and payable on the Redemption Date upon
the furnishing of a notice complying with Section 10.02 to each Holder of the
Notes.
SECTION 10.02. Form of Redemption Notice.
(a) Notice of redemption under Section 10.01(a) shall be given by the
Trustee not less than five days prior to the applicable Redemption Date by
first-class mail, postage prepaid, mailed to each Holder of Notes, as of the
close of business on the Record Date with respect to the Payment Date
immediately preceding the applicable Redemption Date, at such Holder's address
appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency
of the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption, or
any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
(b) Prior notice of redemption under Section 10.01(b) is not required
to be given to Noteholders.
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SECTION 10.03. Notes Payable on Redemption Date. The Notes or
portions thereof to be redeemed shall, following notice of redemption (if any)
as required by Section 10.02, on the Redemption Date, become due and payable at
the Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
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ARTICLE XI
Miscellaneous
-------------
SECTION 11.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Trustee to
take any action under any provision of this Indenture, the Issuer shall furnish
to the Trustee (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as
to whether or not such covenant or condition has been complied with;
and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any property or securities with
the Trustee that is to be made the basis for the release of any
property subject to the lien created by this Indenture, the Issuer
shall, in addition to any obligation imposed in Section 11.01(a) or
elsewhere in this Indenture, furnish to the Trustee (1) an Officer's
Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within 90 days of such deposit)
to the Issuer of the property or securities to be so deposited, (2) an
Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and
filing of this
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Indenture and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation
statements, as are necessary to perfect and make effective the first
priority lien and security interest in favor of the Trustee, for the
benefit of the Trustee, created by this Indenture in the property or
securities to be so deposited, and reciting the details of such
action, or stating that, in the opinion of such counsel, no such
action is necessary to make such lien and security interest
effective, and (3) evidence that the Rating Agency Condition has
been satisfied.
(ii) Whenever the Issuer is required to furnish to the Trustee an
Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer
shall also deliver to the Trustee an Independent Certificate as to the
same matters, if the fair value to the Issuer of the property to be so
deposited and of all other such property made the basis of any such
withdrawal or release since the commencement of the then-current
fiscal year of the Issuer, as set forth in the certificates delivered
pursuant to clause (i) above and this clause (ii), is 10% or more of
the Outstanding Amount of the Notes, but such a certificate need not
be furnished with respect to any property so deposited, if the fair
value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the
Outstanding Amount of the Notes.
(iii) Other than with respect to any release described in clause
(A) or (B) of Section 11.01(b)(v), whenever any property or securities
are to be released from the lien created by this Indenture, the Issuer
shall also furnish to the Trustee an Officer's Certificate certifying
or stating the opinion of each person signing such certificate as to
the fair value (within 90 days of such release) of the property or
securities proposed to be released and stating that in the opinion of
such person the proposed release will not impair the security created
by this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee an
Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer
shall also furnish to the Trustee an Independent Certificate as to the
same matters if the fair value of the property or securities and of
all other property or securities (other than property described in
clauses (A) or (B) of Section 11.01(b)(v)) released from the lien
created by this Indenture since the commencement of the then current
fiscal year, as set forth in the certificates required by clause (iii)
above and this clause (iv), equals 10% or more of the Outstanding
Amount of the Notes, but such certificate need not be furnished in the
case of any release of property or securities if the fair value
thereof as set forth in the related Officer's Certificate is less than
$25,000 or less than one percent of the then Outstanding Amount of the
Notes.
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(v) Notwithstanding any other provision of this Section, the
Issuer may, without compliance with the other provisions of this
Section, (A) collect, liquidate, sell or otherwise dispose of Leases
as and to the extent permitted or required by the Related Documents
(including as provided in Section 3.1 of the Contribution and
Servicing Agreement) and (B) make cash payments out of the Trust
Accounts as and to the extent permitted or required by the Related
Documents.
SECTION 11.02. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the SPC or the Issuer, stating that the information with respect
to such factual matters is in the possession of the Servicer, the SPC or the
Issuer, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
VI.
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SECTION 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly required, to the
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.04. Notices, etc., to Trustee, Issuer and Rating Agencies.
Any request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to or filed with:
(a) the Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, to the Trustee at its Corporate Trust
Office, or
(b) the Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, to the Issuer addressed to: Green Tree
Lease Finance 1997-1, LLC, 1100 Landmark Towers, 345 St. Peter Street,
St. Paul, Minnesota 55102-1639, or at any other address previously
furnished in writing to the Trustee by the Issuer. The Issuer shall
promptly transmit any notice received by it from the Noteholders to
the Trustee.
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Notices required to be given to the Rating Agencies by the Issuer or
the Trustee shall be in writing, personally delivered or mailed by certified
mail, return receipt requested to (i) in the case of [_______], at the following
address: [_______] and (ii) in the case of [_______], at the following address:
[_______]; or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
SECTION 11.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid, to each Noteholder affected by such
event, at his address as it appears on the Note Register. In any case where
notice to Noteholders is given by mail, neither the failure to mail such notice
nor any defect in any notice so mailed to any particular Noteholder shall affect
the sufficiency of such notice with respect to other Noteholders, and any notice
that is mailed in the manner herein provided shall conclusively be presumed to
have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event of Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any reasonable manner of
giving such notice as shall be satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Trustee or any Paying Agent
to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices. The Issuer will furnish to the Trustee
a copy of each such agreement and the Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
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SECTION 11.07. 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 (S)(S) 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 11.08. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.09. Successors and Assigns. All covenants and agreements
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not.
All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 11.10. Severability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.11. Benefits of Indenture. Nothing in this Indenture or
in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person with an ownership interest
in any part of the Trust Estate, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 11.12. Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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SECTION 11.14. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Trustee or any other counsel reasonably
acceptable to the Trustee) to the effect that such recording is necessary either
for the protection of the Noteholders or any other Person secured hereunder or
for the enforcement of any right or remedy granted to the Trustee under this
Indenture.
SECTION 11.16. No Petition. The Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the SPC or the Issuer, or join
in any institution against the SPC or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the Related Documents.
SECTION 11.17. Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports, and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Trustee shall
and shall cause its representatives to hold in confidence all such information
(including the identity of the Obligors on the Leases) except to the extent
disclosure may be required by (S)9-208 of the UCC or by any other applicable law
(and all reasonable applications for confidential treatment are unavailing) and
except to the extent that the Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
-84-
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
GREEN TREE LEASE FINANCE 1997-1, LLC
By: GREEN TREE LEASE FINANCE II, INC.
By
------------------------------------
Name:
-------------------------------
Title:
------------------------------
GREEN TREE FINANCIAL CORPORATION
By
------------------------------------
Name:
-------------------------------
Title:
------------------------------
[________________],
not in its individual capacity but solely as
Trustee,
By
------------------------------------
Name:
-------------------------------
Title:
------------------------------
-85-
<PAGE>
EXHIBIT A
Form of Depository Agreement
A-1
<PAGE>
EXHIBIT B
Form of Monthly Statements to Noteholders
B-1
<PAGE>
EXHIBIT C-1
REGISTERED $______________ */
No. [ ]
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.______________
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
GREEN TREE LEASE FINANCE 1997-1, LLC
______% LEASE-BACKED NOTE, CLASS A-[1][2]
Green Tree Lease Finance 1997-1, LLC, a limited liability company
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to [
], or registered assigns, the principal sum of [ ] payable on each Payment
Date in an amount equal to the result obtained by multiplying (i) a fraction
the numerator of which is $__________ [INSERT INITIAL PRINCIPAL AMOUNT OF
NOTE] and the denominator of which is $__________ [INSERT INITIAL CLASS A-
[1][2] PRINCIPAL BALANCE] by (ii) the aggregate amount, if any, payable from
the Note Distribution Account in respect of principal on the Class A-[1][2]
Notes pursuant to Section 8.04(b)(ii) of the Indenture hereinafter referred
to; provided, however, that the entire unpaid principal amount of this Note
shall be due and payable on the earliest of the Payment Date occurring in
__________________________ (the "Class A-[1][2] Stated Maturity Date") and the
Redemption Date, if any, pursuant to Section 10.01(a) or (b) of the Indenture.
The Issuer will pay interest on this Note on each Payment Date in an amount
equal to [one-twelfth of] the product of (i) the rate
- ------------
*/ Denominations of $10,000 and integral multiples thereof.
C-1-1
<PAGE>
per annum shown above [calculated on the basis of actual days elapsed in a
year of 360 days] [calculated on the basis of a 360-day year comprised of
twelve 30-day months] and (ii) the principal amount of this Note outstanding
on the preceding Payment Date (after giving effect to all payments of
principal made on the preceding Payment Date) or, with respect to the first
Payment Date, the original principal amount of this Note. Such principal of
and interest on this Note shall be paid in the manner specified on the reverse
hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: GREEN TREE LEASE FINANCE 1997-1, LLC
By
----------------------------------
Name:
Title:
C-1-2
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
[_______________],
not in its individual capacity but solely as
Trustee,
By
----------------------------------
Authorized Signatory
C-1-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer
(herein called the "Notes"), issued in four classes designated as its _______%
Lease-Backed Notes, Class A-1, _______% Lease-Backed Notes, Class A-2, _______%
Lease-Backed Notes, Class B, and _______% Lease-Backed Notes, Class C,
respectively, all issued under an Indenture dated as of December 1, 1997 (such
indenture, as supplemented or amended, herein called the "Indenture"), between
the Issuer and [__________], as trustee (the "Trustee," which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Notes are and will be secured by the collateral pledged as
security therefor as provided in the Indenture.
Principal of the Class A-[1][2] Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the
twentieth day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing in January 1998.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earliest of the Class A-[1][2] Stated Maturity
Date and the Redemption Date, if any, pursuant to Section 10.01 of the
Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable on the date on which an Event of Default
shall have occurred and be continuing and the Trustee or a Note Majority have
declared the Notes to be immediately due and payable in the manner provided in
Section 5.02 of the Indenture. All principal payments on the Class A-[1][2]
Notes shall be made pro rata to the Class A-[1][2] Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Depository (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor
C-1-4
<PAGE>
Notes) affected by any payments made on any Payment Date shall be binding upon
all future Holders of this Note and of any Note issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof, whether or not
noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount
of this Note on a Payment Date, then the Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Registered Holder hereof as
of the Record Date with respect to the Payment Date immediately preceding such
Redemption Date by notice mailed within five days of such Redemption Date and
the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Trustee's principal Corporate Trust Office or at
the office of the Trustee's agent appointed for such purposes located in St.
Paul, Minnesota.
The Issuer shall pay interest on overdue installments of interest at
the Class A-[1][2] Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01(a) of the Indenture, in whole, but not in part, at the option of
the SPC on any Payment Date on or after the date on which the sum of the
Aggregate Principal Amount of the Notes is less than or equal to 10% of the
Initial Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in a "signature guarantee program" determined by the
Note Registrar in accordance with the Exchange Act, and such other documents as
the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer or the Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith, against (i) the
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Trustee in its
C-1-5
<PAGE>
individual capacity, any holder of a beneficial interest in the Issuer or the
Trustee or of any successor or assign of the Trustee in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the SPC or the Issuer, or join
in any institution against the SPC or the Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Related Documents.
The SPC has structured the Indenture and the Notes with the intention
that the Notes will qualify under applicable federal, state, local and foreign
tax law as indebtedness of the SPC secured by the Leases. The SPC, the
Servicer, each Noteholder and each Note Owner agree to treat and to take no
action inconsistent with the treatment of the Notes as such indebtedness for
purposes of federal, state, local and foreign income or franchise taxes and any
other tax imposed on or measured by income. Each Noteholder and each Note
Owner, by acceptance of its Note or beneficial interest therein, agrees to be
bound by the provisions of this paragraph. Each Noteholder agrees that it will
cause any Note Owner acquiring an interest in a Note through it to comply with
the Indenture as to treatment as indebtedness under applicable tax law, as
described in this paragraph.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each class of Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of each class
of Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Holders and
C-1-6
<PAGE>
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holder of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of Minnesota, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Related Documents, neither any owner of a beneficiary interest
in the Issuer, nor any of its partners, beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture. The
Holder of this Note by the acceptance hereof agrees that except as expressly
provided in the Related Documents, in the case of an Event of Default under the
Indenture, the Holder shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however, that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
C-1-7
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- -----------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ____________________________________________________________
___________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: ________________ _____________________________________________ **
Signature Guaranteed:
---------------------------------------------
- -----------------------------
- --------------
** NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change
whatsoever.
C-1-8
<PAGE>
EXHIBIT C-2
REGISTERED $______________ */
No. [ ]
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.______________
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1 NOTES
AND THE CLASS A-2 NOTES, AS DESCRIBED IN THE INDENTURE REFERRED TO HEREIN.
GREEN TREE LEASE FINANCE 1997-1, LLC
______% LEASE-BACKED NOTE, CLASS B
Green Tree Lease Finance 1997-1, LLC, a limited liability company
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
[ ], or registered assigns, the principal sum of [ ]
payable on each Payment Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $__________ [INSERT
INITIAL PRINCIPAL AMOUNT OF NOTE] and the denominator of which is $__________
[INSERT INITIAL CLASS B PRINCIPAL BALANCE] by (ii) the aggregate amount, if
any, payable from the Note Distribution Account in respect of principal on the
Class B Notes pursuant to Section 8.04(b)(ii) of the Indenture hereinafter
referred to; provided, however, that the entire unpaid principal amount of
this Note shall be due and payable on the
- -------------
/* Denominations of $10,000 and integral multiples thereof.
C-2-1
<PAGE>
earliest of the Payment Date occurring in __________________________ (the
"Class B Stated Maturity Date") and the Redemption Date, if any, pursuant to
Section 10.01(a) or (b) of the Indenture. The Issuer will pay interest on this
Note on each Payment Date in an amount equal to one-twelfth of the product of
(i) the rate per annum shown above and (ii) the principal amount of this Note
outstanding on the preceding Payment Date (after giving effect to all payments
of principal made on the preceding Payment Date) or, with respect to the first
Payment Date, the original principal amount of this Note. Such principal of
and interest on this Note shall be paid in the manner specified on the reverse
hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: GREEN TREE LEASE FINANCE 1997-1, LLC
By
-----------------------------------------
Name:
Title:
C-2-2
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
[_________________],
not in its individual capacity but solely as
Trustee,
By
----------------------------------------
Authorized Signatory
C-2-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer
(herein called the "Notes"), issued in four classes designated as its _______%
Lease-Backed Notes, Class A-1, _______% Lease-Backed Notes, Class A-2, _______%
Lease-Backed Notes, Class B and _______% Lease-Backed Notes, Class C,
respectively, all issued under an Indenture dated as of December 1, 1997 (such
indenture, as supplemented or amended, herein called the "Indenture"), between
the Issuer and [_______], as trustee (the "Trustee," which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Notes are and will be secured by the collateral pledged as
security therefor as provided in the Indenture.
Principal of the Class B Notes will be payable on each Payment Date in
an amount described on the face hereof. "Payment Date" means the twentieth day
of each month, or, if any such date is not a Business Day, the next succeeding
Business Day, commencing in January 1998.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earliest of the Class B Stated Maturity Date and
the Redemption Date, if any, pursuant to Section 10.01 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Trustee or a Note Majority have declared the
Notes to be immediately due and payable in the manner provided in Section 5.02
of the Indenture. All principal payments on the Class B Notes shall be made pro
rata to the Class B Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Depository (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor
C-2-4
<PAGE>
Notes) affected by any payments made on any Payment Date shall be binding upon
all future Holders of this Note and of any Note issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof, whether or not
noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount
of this Note on a Payment Date, then the Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Registered Holder hereof as
of the Record Date with respect to the Payment Date immediately preceding such
Redemption Date by notice mailed within five days of such Redemption Date and
the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Trustee's principal Corporate Trust Office or at
the office of the Trustee's agent appointed for such purposes located in St.
Paul, Minnesota.
The Issuer shall pay interest on overdue installments of interest at
the Class B Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01(a) of the Indenture, in whole, but not in part, at the option of
the SPC on any Payment Date on or after the date on which the sum of the
Aggregate Principal Amount of the Notes is less than or equal to 10% of the
Initial Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in a "signature guarantee program" determined by the
Note Registrar in accordance with the Exchange Act, and such other documents as
the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer or the Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith, against (i) the
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Trustee in its
C-2-5
<PAGE>
individual capacity, any holder of a beneficial interest in the Issuer or the
Trustee or of any successor or assign of the Trustee in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the SPC or the Issuer, or join
in any institution against the SPC or the Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Related Documents.
The SPC has structured the Indenture and the Notes with the intention
that the Notes will qualify under applicable federal, state, local and foreign
tax law as indebtedness of the SPC secured by the Leases. The SPC, the
Servicer, each Noteholder and each Note Owner agree to treat and to take no
action inconsistent with the treatment of the Notes as such indebtedness for
purposes of federal, state, local and foreign income or franchise taxes and any
other tax imposed on or measured by income. Each Noteholder and each Note
Owner, by acceptance of its Note or beneficial interest therein, agrees to be
bound by the provisions of this paragraph. Each Noteholder agrees that it will
cause any Note Owner acquiring an interest in a Note through it to comply with
the Indenture as to treatment as indebtedness under applicable tax law, as
described in this paragraph.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each class of Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of each class
of Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Holders and
C-2-6
<PAGE>
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holder of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of Minnesota, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Related Documents, neither any owner of a beneficiary interest
in the Issuer, nor any of its partners, beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture. The
Holder of this Note by the acceptance hereof agrees that except as expressly
provided in the Related Documents, in the case of an Event of Default under the
Indenture, the Holder shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however, that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
C-2-7
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- -----------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ____________________________________________________________
___________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: ________________ _____________________________________________ **
Signature Guaranteed:
---------------------------------------------
- -----------------------------
- --------------
** NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change
whatsoever.
C-2-8
<PAGE>
EXHIBIT C-3
REGISTERED $______________ */
No. [ ]
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.______________
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1 NOTES,
THE CLASS A-2 NOTES AND THE CLASS B NOTES, AS DESCRIBED IN THE INDENTURE
REFERRED TO HEREIN.
GREEN TREE LEASE FINANCE 1997-1, LLC
______% LEASE-BACKED NOTE, CLASS C
Green Tree Lease Finance 1997-1, LLC, a limited liability company
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to [
], or registered assigns, the principal sum of [
] payable on each Payment Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $__________ [INSERT INITIAL
PRINCIPAL AMOUNT OF NOTE] and the denominator of which is $__________ [INSERT
INITIAL CLASS C PRINCIPAL BALANCE] by (ii) the aggregate amount, if any, payable
from the Note Distribution Account in respect of principal on the Class C Notes
pursuant to Section 8.04(b)(ii) of the Indenture hereinafter referred to;
provided, however,
- ---------------
/* Denominations of $10,000 and integral multiples thereof.
C-3-1
<PAGE>
that the entire unpaid principal amount of this Note shall be due and payable
on the earliest of the Payment Date occurring in __________________________
(the "Class C Stated Maturity Date") and the Redemption Date, if any, pursuant
to Section 10.01(a) or (b) of the Indenture. The Issuer will pay interest on
this Note on each Payment Date in an amount equal to one-twelfth of the
product of (i) the rate per annum shown above and (ii) the principal amount of
this Note outstanding on the preceding Payment Date (after giving effect to
all payments of principal made on the preceding Payment Date) or, with respect
to the first Payment Date, the original principal amount of this Note. Such
principal of and interest on this Note shall be paid in the manner specified
on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: GREEN TREE LEASE FINANCE 1997-1, LLC
By
------------------------------------
Name:
Title:
C-3-2
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
[_________________],
not in its individual capacity but solely as
Trustee,
By
------------------------------------
Authorized Signatory
C-3-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer
(herein called the "Notes"), issued in four classes designated as its _______%
Lease-Backed Notes, Class A-1, _______% Lease-Backed Notes, Class A-2, _______%
Lease-Backed Notes, Class B and _______% Lease-Backed Notes, Class C,
respectively, all issued under an Indenture dated as of December 1, 1997 (such
indenture, as supplemented or amended, herein called the "Indenture"), between
the Issuer and [_______], as trustee (the "Trustee," which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Notes are and will be secured by the collateral pledged as
security therefor as provided in the Indenture.
Principal of the Class C Notes will be payable on each Payment Date in
an amount described on the face hereof. "Payment Date" means the twentieth day
of each month, or, if any such date is not a Business Day, the next succeeding
Business Day, commencing in January 1998.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earliest of the Class C Stated Maturity Date and
the Redemption Date, if any, pursuant to Section 10.01 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Trustee or a Note Majority have declared the
Notes to be immediately due and payable in the manner provided in Section 5.02
of the Indenture. All principal payments on the Class C Notes shall be made pro
rata to the Class C Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Depository (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor
C-3-4
<PAGE>
Notes) affected by any payments made on any Payment Date shall be binding upon
all future Holders of this Note and of any Note issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof, whether or not
noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount
of this Note on a Payment Date, then the Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Registered Holder hereof as
of the Record Date with respect to the Payment Date immediately preceding such
Redemption Date by notice mailed within five days of such Redemption Date and
the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Trustee's principal Corporate Trust Office or at
the office of the Trustee's agent appointed for such purposes located in St.
Paul, Minnesota.
The Issuer shall pay interest on overdue installments of interest at
the Class C Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01(a) of the Indenture, in whole, but not in part, at the option of
the SPC on any Payment Date on or after the date on which the sum of the
Aggregate Principal Amount of the Notes is less than or equal to 10% of the
Initial Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in a "signature guarantee program" determined by the
Note Registrar in accordance with the Exchange Act, and such other documents as
the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer or the Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith, against (i) the
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Trustee in its
C-3-5
<PAGE>
individual capacity, any holder of a beneficial interest in the Issuer or the
Trustee or of any successor or assign of the Trustee in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the SPC or the Issuer, or join
in any institution against the SPC or the Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Related Documents.
The SPC has structured the Indenture and the Notes with the intention
that the Notes will qualify under applicable federal, state, local and foreign
tax law as indebtedness of the SPC secured by the Leases. The SPC, the
Servicer, each Noteholder and each Note Owner agree to treat and to take no
action inconsistent with the treatment of the Notes as such indebtedness for
purposes of federal, state, local and foreign income or franchise taxes and any
other tax imposed on or measured by income. Each Noteholder and each Note
Owner, by acceptance of its Note or beneficial interest therein, agrees to be
bound by the provisions of this paragraph. Each Noteholder agrees that it will
cause any Note Owner acquiring an interest in a Note through it to comply with
the Indenture as to treatment as indebtedness under applicable tax law, as
described in this paragraph.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each class of Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of each class
of Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Holders and
C-3-6
<PAGE>
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holder of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of Minnesota, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Related Documents, neither any owner of a beneficiary interest
in the Issuer, nor any of its partners, beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture. The
Holder of this Note by the acceptance hereof agrees that except as expressly
provided in the Related Documents, in the case of an Event of Default under the
Indenture, the Holder shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however, that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
C-3-7
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- -----------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ____________________________________________________________
___________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: ________________ _____________________________________________ **
Signature Guaranteed:
---------------------------------------------
- -----------------------------
- --------------
** NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change
whatsoever.
C-3-8
<PAGE>
Exhibit 5.1
-----------
Re: Green Tree Financial Corporation
Green Tree Lease Finance II, Inc.
Green Tree Lease Finance 1997-1, LLC
Registration Statement on Form S-3
Registration No. 333-38687-01
Ladies and Gentlemen:
We have acted as counsel to Green Tree Financial Corporation ("Green
Tree"), a Delaware corporation, Green Tree Lease Finance II, Inc. ("Lease
Finance"), a Minnesota corporation, and Green Tree Lease Finance 1997-1, LLC
(the "LLC"), a Delaware limited liability company, in connection with a
Registration Statement on Form S-3 (the "Registration Statement") relating to
the issuance and sale of $550,000,000 aggregate principal amount of Lease-Backed
Notes (the "Notes") issued by the LLC pursuant to an Indenture dated as of
December 1, 1997 (the "Indenture") between the LLC and [First Trust National
Asssociation], as Trustee (the "Trustee").
We have examined such documents and have reviewed such questions of
law as we have considered necessary and appropriate for the purposes of our
opinion set forth below. In rendering our opinion, we have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures and the conformity to authentic originals of all documents
submitted to us as copies. We have also assumed the legal capacity for all
purposes relevant hereto of all natural persons and, with respect to all parties
to agreements or instruments relevant hereto other than Green Tree, Lease
Finance or the LLC, that such parties had the requisite power and authority
(corporate or otherwise) to execute, deliver and perform such agreements or
instruments, that such agreements or instruments have been duly authorized by
all requisite action (corporate or otherwise), executed and delivered by such
parties and that such agreements or instruments are the valid, binding and
enforceable obligations of such parties. As to questions of fact material to
our opinion, we have relied upon certificates of officers of Green Tree, Lease
Finance and the LLC, and of public officials. We have also assumed that the
Notes will be issued and sold as described in the Registration Statement.
Based on the foregoing, we are of the opinion that the Notes have been
duly authorized by all requisite corporate action and, when executed and
authenticated as specified in the Indenture and delivered against payment
therefor
<PAGE>
Green Tree Financial Corporation
Page 2
in the manner described in the Registration Statement, will constitute valid
and binding obligations of the LLC, enforceable in accordance with their
terms.
The opinion set forth above is subject to the following
qualifications and exceptions:
(a) Our opinion is subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar law of
general application affecting creditors' rights.
(b) Our opinion is subject to the effect of general principles of
equity, including (without limitation) concepts of materiality,
reasonableness, good faith and fair dealing, and other similar doctrines
affecting the enforceability of agreements generally (regardless of whether
considered in a proceeding in equity or at law).
Our opinion expressed above is limited to the laws of the
State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the caption
"Legal Matters" in the Prospectus constituting part of the Registration
Statement.
Dated: December 9, 1997
Very truly yours,
/s/ Dorsey & Whitney LLP
CFS
<PAGE>
Exhibit 23.3
CONSENT OF DORSEY & WHITNEY LLP
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
We hereby consent to the summary of our opinions under the heading "Risk Factors
- - Risks Related to Bankruptcy of Green Tree or Vendor Services" in the
Registration Statement on Form S-3 (Registration No. 333-38687-01) of Green Tree
Financial Corporation and the related Prospectus.
/s/ Dorsey & Whitney LLP
December 9, 1997
<PAGE>
EXHIBIT 99.1
Standard & Poor's Ratings Services
25 Broadway
New York, New York 10004
Fitch Investors Service, L.P.
One State Street Plaza
New York, New York 10004
Re: Green Tree Lease Finance 1997-1, LLC
Lease-Backed Notes
Ladies and Gentlemen:
We have acted as counsel for Green Tree Financial Corporation, a
Delaware corporation ("Green Tree Financial"), Green Tree Vendor Services
Corporation, a Delaware corporation and a subsidiary of Green Tree Financial
("Vendor Services"), Green Tree Lease Finance II, Inc., a Minnesota corporation
and a subsidiary of Vendor Services (the "SPC"), and Green Tree Lease Finance
1997-1, LLC, a Delaware limited liability company of which the SPC is the sole
member (the "Issuer"), in connection with the issuance of Lease-Backed Notes
(the "Notes") pursuant to an Indenture, dated as of December 1, 1997 (the
"Indenture"), among the Issuer, Green Tree Financial, as Class C Limited
Guarantor, and __________ (the "Trustee"), as Trustee.
Pursuant to a Transfer Agreement dated as of December 1, 1997 (the
"Transfer Agreement"), among the SPC, as Purchaser, and Vendor Services, as
Seller and Servicer, Vendor Services has sold certain leases, including all
collections received with respect to the leases and certain other related rights
(the "Leases") and its interests (which may be deemed an ownership interest or a
security interest, depending on the terms of the related Lease) in the equipment
related to such Leases (such interests being hereinafter referred to as the
"Equipment") to the SPC. The Leases will be transferred by the SPC to the
Issuer pursuant to the terms of a Contribution and Servicing Agreement dated as
of December 1, 1997 (the "Contribution and Servicing Agreement"), among the
Issuer, the SPC, Vendor Services, in its individual capacity and as Servicer,
and the Trustee. Pursuant to the
<PAGE>
Standard & Poor's Rating Services
Fitch Investors Service, L.P.
December , 1997
Page 2
Contribution and Servicing Agreement, the SPC will also grant to the Issuer
certain rights to the proceeds of the Equipment (the "Residual Realizations").
The Issuer has requested that we provide to you our opinion whether
the transfer by Vendor Services to the SPC of the Leases, the Equipment and the
proceeds thereof could be recharacterized as a pledge by Vendor Services to
secure borrowings, rather than an absolute contribution by Vendor Services of
such assets, in the event that Green Tree Financial or Vendor Services became a
debtor in a case under the United States Bankruptcy Code (the "Code"). In
rendering such opinion, we have examined the Transfer Agreement and such
additional related documents, and we have reviewed such questions of law, as we
have considered necessary and appropriate for the purposes of the opinion
expressed herein. All capitalized terms used herein and not defined herein have
the meanings assigned to them in the Indenture.
I. LEGAL BACKGROUND.
It is important to note that, in view of the lack of authoritative
case law directly on point, it is not possible to predict with certainty the
outcome if a court were to consider the proper characterization of Vendor
Services' transfer of the Leases and the Equipment to the SPC. In determining
whether a particular transfer is properly characterized as a sale or a loan,
courts have examined and analyzed a variety of factors which they have deemed
relevant. While these courts have set forth the factors considered to be
indicative of either a sale or a loan, they generally have provided little or no
analysis of why a particular factor or combination of factors was held to be
determinative.(1) In addition, the courts have differed in the importance
and relative weight to be accorded to these factual elements, so that their
decisions do not provide strong guidance for the application of consistently
applied
- -----------------------------
(1) There is strong authority for the proposition that the party asserting
that a transaction structured as a sale is in reality a loan must establish that
fact by evidence which is clear and convincing. In re Bevill Bresler & Schulman
Asset Management Corp., 67 B.R. 557, 596-98 (D.N.J. 1986); In re Candy Lane
Corp., 38 B.R. 571, 577 (Bankr. S.D.N.Y. 1984) (citing Cross v. A.G.V. Assocs.,
Inc., 340 F.2d 42, 44 (2d Cir. 1964), cert. denied, 381 U.S. 913 (1965)); A.B.
Lewis Co. v. National Inv. Corp., 421 S.W.2d 723, 729 (Tex. Civ. App. 1967); see
also Fox v. Peck Iron & Metal Co., 25 B.R. 674, 688 (Bankr. S.D. Cal. 1982).
But see In re Hurricane Elkhorn Coal Corp. II, 19 B.R. 609, 618 (Bankr. W.D. Ky.
1982), modified on other grounds, 32 B.R. 737 (W.D. Ky. 1983) (there is a
"presumption of includability in the estate, leaving it to the property
claimant, even the possessory claimant, to rebut the presumption. . .").
<PAGE>
Standard & Poor's Rating Services
Fitch Investors Service, L.P.
December , 1997
Page 3
or well developed legal doctrines.(2) Accordingly, our analysis is based upon a
review of existing case law, decided under the laws of various
jurisdictions,(3) which we believe may be applicable by analogy but which
would not necessarily be deemed controlling by a court exercising jurisdiction
under the Bankruptcy Code of a proceeding instituted with respect to the SPC or
Vendor Services.
Although no single factor is considered to be determinative in the
characterization analysis, the several factors which courts have considered in
their analysis generally concentrate on (a) the intent of the parties to the
transaction and (b) the economic substance of the transaction. Although
categorization of the factual elements assists in the review of case law, within
each such category the analysis is the same: an attempt to determine the true
nature of a particular transaction. Moreover, unless all of the factual elements
in a given transaction are indicative of either a sale or a loan, the
determination of its true nature, as discussed below, almost invariably requires
a balancing of factors to ascertain whether the transaction more closely
resembles a sale or a loan.
In determining whether a challenged transfer is properly characterized
as a loan or a sale, courts frequently refer to the intent of the parties to the
transaction. See, e.g., In re Bevill Bresler & Schulman Asset Management Corp.,
67 B.R. 557, 596-98 (D.N.J. 1986)(having determined that agreements at issue
were "hybrid" transactions possessing both sale and loan characteristics, court
rejected analysis based upon "weighing economic factors" and gave effect to
clearly expressed intent of sophisticated parties to consummate sale rather than
loan); In re Candy Lane Corp., supra note 1, 38 B.R. at 576 (noting that under
the Uniform Commercial Code, "the intent of the parties governs whether a
particular document or transaction creates a security interest"); In re Lemons &
Associates Inc., 67 B.R. 198, 210 (Bankr. D. Nev. 1986); see also In re Armando
Gerstel, Inc., 65 B.R. 602, 604 (Bankr. S.D. Fla. 1986). The courts' analysis of
the parties' intent is consistent with and reflects recognition of the express
provision of (S)9-102(1)(a) of the Uniform
- --------------------------
(2) Moreover, with respect to the subject transaction, a court may exercise
its equitable authority to deem significant in its "characterization" analysis
facts or circumstances which do not exist as of the date hereof.
(3) The case law strongly suggests that the determination of whether a
transfer of property is properly characterized as a sale or a loan - and
consequently excluded from or included in the debtor-transferor's estate - is
ultimately governed by applicable state property law. See Butner v. United
States, 440 U.S. 48, 54 (1979) ("Congress has generally left the determination
of property rights in the assets of a bankrupt's estate to state law"); see also
Barnhill v. Johnson, 112 S. Ct. 1386, 1389 (1992) ("In the absence of any
controlling federal law, 'property' and 'interests in property' are creatures of
state law"); In re Contractors Equip. Supply Co., 861 F.2d 241, 244 (9th Cir.
1988) ("Whether a debtor in possession has an interest in property is determined
by state law").
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Commercial Code, which provides that Article 9 applies to "any transaction
(regardless of its form) which is intended to create a security interest in
personal property . . ." (emphasis added) (hereinafter cited as the "UCC").
However, neither this provision nor any other relevant provision in the UCC
resolves the characterization issue. As noted by the Third Circuit in Major's
Furniture Mart, Inc. v. Castle Credit Corp. Inc., 602 F.2d 538, 543 (3rd Cir.
1979) (hereinafter referred to as "Major's Furniture"):
[T]he [Uniform Commercial] Code does not provide assistance in
distinguishing between the character [sale or loan] of such transactions.
This determination, as to whether a particular assignment constitutes a
sale or a transfer for security, is left to the courts for decision.
See also In re Evergreen Valley Resort, Inc., 23 B.R. 659, 661 (Bankr. D. Me.
1982); but see Octagon Gas Systems Inc. v. Rimmer (In re Meridian Reserve,
Inc.), 995 F.2d 948, 956-57, 957 n.9 (10th Cir.), cert. denied, 114 S. Ct. 554
(1993).(4)
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(4) The Octagon Gas court held that accounts sold by a debtor prior to filing
for bankruptcy, though subject to the rights and interests of the purchaser,
nevertheless remain property of the debtor's bankruptcy estate under the
combined workings of Article 9 of the Oklahoma Uniform Commercial Code and
Bankruptcy Code (S) 541. The court concluded that because Article 9 treats the
interest transferred in a sale of accounts as a form of "security interest," the
seller of accounts does not part with all transferable rights in the accounts
even following an absolute assignment. 995 F.2d at 956. We do not believe that
a bankruptcy court properly applying the principles of Article 9 and the
Bankruptcy Code in a proceeding in which Green Tree Financial or Vendor Services
was the debtor would follow Octagon Gas. The Official Comments to Article 9
explain that the definitional labels employed by Article 9 were specifically
chosen to avoid reference to existing law. See Official Comment 1 to Section 9-
102 (providing rationale for use of uniform definitional terms). Thus, although
the interest held by a buyer of chattel paper is termed a "security interest"
for the purposes of applying Article 9 perfection rules, this label should not
transform the underlying substantive nature of an absolute conveyance of chattel
paper under applicable state law. Moreover, Article 9 itself recognizes that
there may be a true sale of chattel paper. See Official Comment 2 to Section 9-
102 ("Neither Section 9-102 nor any other provision of Article 9 is intended to
prevent the sale of chattel paper. The determination of whether a particular
transfer of accounts or chattel paper constitutes a sale or a transfer for
security purposes (such as in connection with a loan) is not governed by Article
9."). In sum, we do not believe that Octagon Gas properly or definitively
determines whether a seller of chattel paper retains any interest or right
where, as is anticipated by the Transfer Agreement, Vendor Services intends to
convey to the SPC all of its right, title and interest in and to the Leases as a
true sale, and where the SPC evidences its ownership interest by filing
appropriate financing statements. The Permanent Editorial Board for the Uniform
Commercial Code (the "PEB") came to a similar conclusion - that the holding in
Octagon Gas was erroneous - in its recently adopted comment to Article 9. See
PEB Commentary on the Uniform Commercial Code, Commentary No. 14 (Section 9-
102(1)(b)) (Final Draft dated June 10, 1994). Moreover, Octagon Gas is not
controlling precedent with respect to a Minnesota court or a federal court
sitting in Minnesota and applying Minnesota law. You should recognize, however,
that if Octagon Gas were followed, it could result in a conclusion that the
Leases remained "property of the estate" of Vendor Services under (S) 541 of the
Bankruptcy Code.
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While the parties' subjective intent to consummate a sale may be
manifest in the language employed in the operative documents, it is well
established that courts often will ignore the "labels" used by the parties and
conduct an independent examination of the objective intent or true nature of the
transaction. See In re The Woodson Co., 813 F.2d 266, 272 (9th Cir. 1987)
("Simply calling transactions 'sales' does not make them so. Labels cannot
change the true nature of the underlying transactions"); In re Joseph Kanner Hat
Co., Inc., 482 F.2d 937, 940 (2d Cir. 1973) ("courts will determine the true
nature of a security transaction, and will not be prevented from exercising
their function of judicial review by the form of words the parties may have
chosen") (quoting 1 Gilmore, Security Interests in Personal Property (1965) (S)
2.6, at 47);(5) In re Evergreen Valley Resort Inc., supra, 23 B.R. at 661
("the label attached to the transaction by the parties does not control");
People v. Service Inst., Inc., 101 Misc.2d 549, 421 N.Y.S.2d 325, 326 (N.Y. Sup.
Ct. 1979) ("The mere fact that a transaction may have been denominated a sale
rather than a loan is not determinative"); see also Major's Furniture, supra,
602 F.2d at 543;(6) In re Candy Lane Corp., supra note 1, 38 B.R. at 575; In
re O.P.M. Leasing Services, Inc., 30 B.R. 642, 647-48 (Bankr. S.D.N.Y. 1983).
This objective intent and the true nature of the transaction are to be
determined from all of the facts and circumstances of the transaction. See In re
Golden Plan of California, Inc., 829 F.2d 705, 709 (9th Cir. 1987); In re Candy
Lane Corp., supra note 1, 38 B.R. at 576 ("an
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Each of the Leases is "chattel paper" (except for a small number of Leases that
may be deemed "accounts" or "general intangibles") within the meaning of the
U.C.C. Under the U.C.C., either the pledge or the sale of chattel paper may be
perfected by means of filing a UCC-1 financing statement. U.C.C. (S) 9-302.
(Possession by the secured party is also effective to perfect either a pledge or
a sale of chattel paper, U.C.C. (S) 9-305, but Vendor Services will retain
custody of each Lease that constitutes chattel paper.) Such filings therefore
are a necessary, but not necessarily sufficient, condition to concluding that a
"true sale" of such chattel paper or accounts has taken place. As noted in Part
II infra, such filings will be made with respect to the Leases, indicating that
such filings are being made in order to perfect sales of such Leases. Article 9
of the U.C.C. does not govern the sale of general intangibles. See Part III
infra. You should note that if a third party purchased Leases that constitute
chattel paper for new value and took possession of the chattel paper in the
ordinary course of business, such third party could prevail over a party whose
purchase of such chattel paper was perfected by means of filing in certain
circumstances. See U.C.C. (S)9-308.
(5) In Kanner, the debtor assigned a legal claim against a third party
pursuant to an agreement providing that the debtor "absolutely assigned,
transferred and sold any and all right, title and interest it had" in the claim.
482 F.2d at 938. As discussed infra, the Second Circuit held that the
assignment created only a security interest, relying largely upon the fact that
payments made on the claims were to be applied in satisfaction of the debt
secured and that any balance would belong to the assignor.
(6) In Major's Furniture, although the accounts receivable purchase agreement
contained the words "purchase" and "sale," the Third Circuit found, as discussed
infra, that the agreement provided for merely a transfer to secure indebtedness.
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examination of the substance of the documents in the context of the surrounding
transaction").(7) As stated by the Third Circuit in reviewing prior cases:
[D]espite the express language of the agreements, the respective courts
examined the parties' practices, objectives, business activities and
relationships and determined whether the transaction was a sale or a
secured loan only after analysis of the evidence as to the true nature of
the transaction.
Major's Furniture, supra, 602 F.2d at 545 (emphasis added); see also In re
Evergreen Valley Resort, Inc., supra, 23 B.R. at 661; In re Carolina Utils.
Supply Co., 118 B.R. 412, 415 (Bankr. D.S.C. 1990). In sum, an examination of
the true nature of a transaction requires an analysis of the economic substance
and legal character of the transaction, which examination will enable the court
to resolve the ultimate issue in characterizing such transaction, i.e., "whether
the true nature of the transaction is such that the 'legal rights and economic
consequences of the agreement bear a greater similarity to a financing
transaction or to a sale.'" In re Evergreen Valley Resort, Inc., supra, 23 B.R.
at 661, quoting Major's Furniture, supra, 602 F.2d at 544.(8)
In conducting an analysis of the economic substance and legal
character of a transaction, the case law indicates that the determination of
whether to recharacterize a sale of assets as a loan is largely a function of
the extent to which the
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(7) In evaluating the "context of the surrounding transaction," a court may be
expected to consider whether the transaction is characterized by the parties as
a sale or a loan not only in the operative documents, but also for accounting
and tax purposes.
(8) There are, however, a few cases involving sophisticated parties in which
the courts either have given effect to the intent clearly expressed in the
language and terms of the operative documents without analyzing the economic
substance and legal character of the transaction, or have found the latter
factors outweighed by such clearly expressed intent. See In re National Equip.
& Mold Corp., 64 B.R. 239, 245 (Bankr. N.D. Ohio 1986) ("Such terms so clearly
express the intent of the parties that there is no reasonable or rational
interpretation which can be used to assert that the Debtor intended to retain
any rights in the accounts subsequent to its execution of the contract"); In re
Bevill Bresler & Schulman Asset Management Corp., 67 B.R. 557, 596-98 (D.N.J.
1986) (having determined that agreements at issue were "hybrid" transactions
possessing both sale and loan characteristics, court rejected analysis based
upon "weighing economic factors" and gave effect to clearly expressed intent of
sophisticated parties to consummate sale rather than loan); see also In re
Kassuba, 562 F.2d 511, 515 (7th Cir. 1977) ("However, appellants have admitted
that they were sophisticated in matters of real estate financing at the time of
these transactions . . . . Appellants have removed any doubt about the intent of
the parties"); cf. In re Lemons & Assocs., Inc., supra, 67 B.R. at 209-10
(guarantee of payment "insufficient to outweigh objective indications of an
intended sale"); Indian Lake Estates Inc. v. Special Invs., Inc., 154 So.2d 883,
888 (Fla. Dist. Ct. App.), cert. denied, 161 So.2d 219 (1963) ("It is clear
that the intent of the parties controls in these cases").
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risks and benefits associated with ownership have either been retained or
transferred by the transferor. See, e.g., Grossman v. Butcher, 1992 WL 158422,
Slip Op. at 3 (Ohio Ct. App. June 30, 1992) (citing treatise for view that in
"true sale," buyer is subject to risk of loss and/or entitled to benefit beyond
fixed sum); In re Executive Growth Invs., Inc., 40 B.R. 417, 422 (Bankr. C.D.
Cal. 1984) ("Traditionally, risk of loss has been regarded as one of the
hallmarks of ownership"); see also Major's Furniture, supra, 602 F.2d at 545-46;
In re The Woodson Co., supra, 813 F.2d at 271-72; In re Lendvest Mortgage, Inc.
119 B.R. 199, 200 (9th Cir. BAP 1990). Probably the most important factor in an
analysis of the allocation of risks and benefits is the nature and level of
recourse possessed by the putative buyer against the seller. Other factors
include the nature and scope of the role retained by the seller in the
administration of the assets and the proceeds thereof; the rate of return paid
to the putative buyer; and the transfer or retention of the right to enjoy the
value or surplus generated by the assets in excess of the consideration paid
therefor.(9) Recourse in a transaction generally involves some form of
guarantee of the performance of the underlying assets transferred, which can be
structured as a reserve fund, an obligation to substitute or repurchase
underperforming assets, or a guarantee of an agreed-upon return regardless of
the performance of those assets. Although the mere existence of recourse is
itself not dispositive of the proper characterization of a transaction,(10)
many courts have reasoned that if the nature and level of recourse reveals that
all or virtually all risk of loss was retained by the transferor, the transfer
should properly be characterized as a loan.
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(9) The court in In re Evergreen Valley Resort Inc., supra, set out a list of
factors, including recourse, that bear upon the characterization analysis:
A security interest is indicated where the assignee retains a right to a
deficiency on the debt if the assignment does not provide sufficient funds
to satisfy the amount of debt. A security interest is also indicated when
the assignee acknowledges that his rights in the assigned property would
be extinguished if the debt owed were to be paid through some other
source. Likewise, a security interest is indicated if the assignee must
account to the assignor for any surplus received from the assignment over
the amount of the debt. Evidence that the assignor's debt is not reduced
on account of the assignment is also evidence that the assignment is
intended as security. Finally, the contract language itself may express
the intent that the assignment is for security only.
23 B.R. at 661 (citations omitted).
(10) See Major's Furniture, supra, 602 F.2d at 544 ("[T]he presence of recourse
in a sale agreement without more will not automatically convert a sale into a
security interest"); Official Comment 4 to Section 9-502("there may be a true
sale of accounts or chattel paper although recourse exists"). Indeed, as
discussed infra, several cases have held that a transaction was a sale
notwithstanding significant or even complete recourse.
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Major's Furniture represents the most frequently cited case on this
topic, for its analysis of the nature and level of recourse and its holding that
a transfer structured as a sale should be recharacterized as a loan where the
transferee assumes almost none of the risks associated with ownership. Major's
Furniture involved a purported sale by Major's to Castle of accounts receivable
in which Major's effectively retained all risk associated with the
collectibility of the assigned accounts. The Third Circuit adopted the findings
and conclusions of the lower court and held that, notwithstanding the "sale"
language contained in the agreement, the transfer was merely a loan secured by a
pledge because "none of the risks present in a true sale is present here":
It appears that Castle required Major's to retain all conceivable risks of
uncollectibility of these accounts. It required . . . that Major's warrant
that the accounts were fully enforceable legally and were "fully and timely
collectible." It also imposed an obligation to indemnify Castle out of a
reserve account for losses resulting from a customer's failure to pay, or
for any breach of warranty, and an obligation to repurchase any account
after the customer was in default for more than 60 days . . . Guaranties of
quality alone, or even guarantees of collectibility alone, might be
consistent with a true sale, but Castle attempted to shift all risks to
Major's, and incur none of the risks or obligations of ownership.
Major's Furniture, supra, 602 F.2d at 545; see also Blackford v. Commercial
Credit Corp., 263 F.2d 97, 106 (5th Cir.), cert. denied, 361 U.S. 825 (1959)
(transfer of accounts held a loan where transferor warranted that each account
would be paid timely, agreed to pay any amounts not timely paid and provided
similar protections "essentially guaranteeing [the transferees] that they will
suffer no loss on the transaction"); Fox v. Peck Iron & Metal Co., supra note 1,
25 B.R. at 690 ("Peck never assumed the normal risks of ownership, such as the
risk that the value of the property might decline . . ."); Abeloff v. Ohio
Finance Co., 313 Mich. 568, 21 N.W.2d 856 (Sup. Ct. Mich. 1946); Union Planters
Nat'l Bank v. United States, 426 F.2d 115 (6th Cir.), cert. denied, 400 U.S. 827
(1970).
In In re The Woodson Co., supra, the Ninth Circuit found that the
transferees were relieved of all risk of loss and held, as a result, that
purported sales
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of interests in a mortgage broker's (Woodson's) loan portfolio should properly
be recharacterized as loans.(11) The transferees were relieved of any risk of
loss in that:
Woodson guaranteed monthly payments to each investor regardless of whether
borrowers made their monthly payments . . . . If a loan was foreclosed, the
investors had an option either to receive payment in full (unpaid principal
balance plus accrued interest) from Woodson or to reimburse Woodson for the
costs for foreclosure and to take title to the property at the time of
sale. No investor ever exercised this latter option.
813 F.2d at 268.(12)
Similarly, in In re S.O.A.W. Enterprises. Inc., 32 B.R. 279 (Bankr.
W.D. Tex. 1983), the court considered the nature of transactions in which
S.O.A.W., a real estate developer, entered into financing arrangements with a
bank, Castle Rock, whereby Castle Rock "purchased" participations in "Agreements
for Deeds." The court concluded that the purported sales of participations were
properly recharacterized as loans because the transactions were structured so
that Castle Rock bore no risk of loss. In addition to an absolute obligation on
the part of S.O.A.W. to "repurchase" Castle Rock's investment for any Agreement
in default:
[B]oth S.O.A.W. and its President . . . personally guaranteed the return to
Castle Rock of its investment and guaranteed the interest to be generated
by investment. Thus, Castle Rock "participated" in no risk of
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(11) See also In re Executive Growth Invs., Inc., supra, 40 B.R. at 422 (court
held that transfer of interest in promissory note and collateral was properly
recharacterized as a loan where transferor retained the risk of loss by virtue
of an express contractual provision providing for full recourse).
(12) This recourse mechanism differed from the device discussed in In re Golden
Plan of California Inc., 829 F.2d 705 (9th Cir. 1986), whereby the seller-
servicer of promissory notes and trust deeds would, in the event an assigned
obligation went into default, make "advances" on the defaulting borrower's
behalf. The Ninth Circuit, after reviewing the other servicing functions
performed by the seller-servicer, concluded that making "advances" did not
amount to a guarantee of repayment warranting recharacterization of the
transaction: "[D]espite a practice known as 'advancing,' the Bear investors
received no contractual guarantee of repayment or compensation in case of
foreclosure. Such assumption of risk strongly suggests that the Bear investors
were not in a creditor-debtor relationship with Golden Plan." 829 F.2d at 709.
The Woodson court, in fact, expressly distinguished the transaction in In re
Golden Plan of California Inc. noting that: "In contrast to our case, payments
[in the Golden Plan transaction] were not guaranteed (notes were assigned
without recourse), and upon foreclosure the purchasers were left to their own
remedies against borrowers. In other words, they bore the ordinary risks of
ownership." In re The Woodson Co., supra, 813 F.2d at 272 n.6.
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non-payment by the Agreement for Deed vendees because it did not look to
them for repayment.
32 B.R. at 282-83. Moreover, under the operative agreement, Castle Rock, as
participant, actually received a greater rate of repayment and return than
S.O.A.W. received.
The foregoing discussion indicates that several courts have considered
substantial recourse and the retention by the transferor of the risk of loss to
be important factors in the characterization of a particular transaction.
However, several other courts have upheld transactions denominated as sales
notwithstanding such recourse and the failure to transfer risk of loss. Most
notably, the court in In re Lemons & Assocs., Inc., supra, addressed the proper
characterization of transactions between a mortgage company, Lemons, which
engaged in brokering real estate loans and buying and selling promissory notes
secured by deeds of trust, and the investors, who purportedly "purchased" such
notes. The court determined that the objective manifestation of the parties'
intent, as indicated by the testimony of transferees and the terms (such as
"purchase" and "sale") contained in various documents, outweighed other factors
which might otherwise be indicative of a loan.
The Court acknowledges that Lemons' practice of "guaranteeing" regular
returns to investors irrespective of the actual performance on the notes,
and, at return rates exceeding the interest rates paid by the borrowers,
does indicate that the investors bore none of the risks normally
accompanying a purchase. Similarly, the "Early Withdrawal" provisions that
allowed investors to disassociate themselves with notes [that is, transfer
their investment to another note in the event of borrower default] suggests
that the risk associated with an investment purchase was lacking. On
balance, however, the Court finds that these inconsistencies are
insufficient to outweigh the objective indications of an intended sale
manifested by the other documents.
In re Lemons & Assocs., Inc., supra, 67 B.R. at 210.(13) In addition to
analyzing the
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(13) See also Lake Hiwassee Dev. Co. v. Pioneer Bank, 535 S.W.2d 323, 326-27
(Sup. Ct. Tenn. 1976) (court held that transaction involving transfer of notes
was sale notwithstanding provision of full recourse against seller and creation
of reserve fund, finding that "[t]he establishment of a reserve fund . . . is
not sufficient to convert an otherwise valid sale into a loan"); A.B. Lewis Co.
Inc. v. National Inv. Corp., 421 S.W.2d 723, 728 (Tex. Civ. App. 1967)
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objective intent of the parties, the court in Lemons also noted that
characterization of the transactions as loans rather than purchases would have
at least two significant consequences. First, since none of the investors were
in possession of the notes, their security interests would not be perfected and
the investors "would be unsecured creditors of the estate only." Id. at 209.
Second, if no sale had occurred, the investors would be unable to claim an
equitable ownership interest in the notes under the Bankruptcy Code. Id. These
observations suggest that a court may be influenced in its decisionmaking by
other considerations, such as the threat of broad losses to "innocent"
investors. Moreover, as previously noted, the official commentary to Article 9
states that "a sale of accounts . . . or chattel paper may exist even if there
is a right of recourse." See note 4 supra.
II. THE FACTUAL CONTEXT.
In rendering the opinion expressed herein we have relied, as to (i)
factual matters, (ii) conclusions (other than matters of law) and (iii) the
actions that parties to the transaction will take or refrain from taking in the
future, to the extent we deemed such reliance proper, on certificates of
responsible officers of Green Tree Financial, Vendor Services and the SPC,
copies of which certificates are attached hereto, and we have assumed, without
independent verification, that such certificates are correct. For purposes of
the opinion hereinafter expressed we note in particular the following terms of
the transfer of the Leases and the Equipment and related transactions, which,
unless expressly stated otherwise, we have established based upon a review of
the Transfer Agreement, the Indenture and related agreements:
1. Vendor Services will transfer the Leases and the Equipment to the
SPC pursuant to the Transfer Agreement. Following the transfer of the Leases
and the Equipment to the SPC, Vendor Services will have no right to modify or
alter the terms of such transfer, and no provision exists whereby the
consideration paid for the Leases and the Equipment may be modified following
such contribution.
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(court held that transfer of conditional sales contracts with full recourse was
sale and not loan, viewing full recourse as "a contingent obligation . . . not
inconsistent with a sale of the contract rather than a pledge to secure a
loan"); Indian Lake Estates, Inc. v. Special Invs., Inc., supra note 9,154 So.2d
at 891 (court held that transfer of contracts receivable was sale even though
transfer was accompanied by full recourse and guaranty of payment); General
Motors Acceptance Corp. v. Mid-West Chevrolet Co., 66 F.2d 1, 8 (10th Cir. 1933)
(court found "no substantial evidence . . . that the transactions were not sales
of contracts" despite full recourse against seller).
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2. The Transfer Agreement states that it is the intention of Vendor
Services that the transfer of the Leases and the Equipment from Vendor Services
to the SPC constitute an absolute assignment to the SPC of all of the right,
title and interest of Vendor Services to and in the Leases and the Equipment.
3. We have assumed that Vendor Services, as Servicer, will comply
with the requirements of the Transfer Agreement, the Contribution and Servicing
Agreement and the Indenture relating to the filing of UCC-1 financing statements
and continuation statements in order to perfect the transfer of the Leases under
applicable state law.
4. Although the SPC, as a wholly-owned subsidiary of Vendor
Services, and Vendor Services, as a subsidiary of Green Tree Financial, prepare
consolidated statements for financial reporting purposes, Vendor Services is
accounting for the transfer of the Leases and the Equipment to the SPC pursuant
to the Transfer Agreement as an absolute assignment, rather than a borrowing by
the SPC, for accounting purposes. Similarly, although Green Tree Financial,
Vendor Services and the SPC are required to file joint income tax returns,
Vendor Services is treating the transfer of the Leases and the Equipment to the
SPC pursuant to the Transfer Agreement as an irrevocable transfer of the
benefits and burdens of ownership.
5. Neither Green Tree Financial nor Vendor Services has any right to
repurchase or otherwise to cause the reconveyance to itself of any of the Leases
or Equipment.
6. Neither Green Tree Financial nor Vendor Services has any
obligation to repurchase Leases or Equipment from the SPC or the Issuer, except
that Vendor Services will be obligated under the Contribution and Servicing
Agreement to repurchase (or to substitute a Substitute Lease for) any Lease
discovered to be in breach of a representation or warranty. We believe such
representations and warranties are of a kind customarily used in the sale of
lease contracts similar to the Leases.
7. Neither Green Tree Financial nor Vendor Services has any
obligation to provide the Issuer with protection against delinquencies and
losses on the Leases, other than the Class C Limited Guaranty with respect to
the Class C Notes. Except as set forth in the Transfer Agreement, there are no
agreements or
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understandings affecting the obligations of Green Tree Financial or Vendor
Services with respect to delinquencies and losses on the Leases.
8. Neither Green Tree Financial nor Vendor Services has entered or
will enter into any agreements or other arrangements whereby any investor in the
Notes would be protected against the risk of fluctuations in the market value of
the Leases.
9. Neither Green Tree Financial nor Vendor Services has entered or
will enter into any agreements or other arrangements whereby any investor in the
Notes would be protected against prepayments on the Leases. Vendor Services
will have the right, but not the obligation, to deliver Substitute Leases to the
SPC to replace (a) Liquidated Leases, (b) Leases subject to repurchase as a
result of a breach of a representation or warranty, and (c) Leases following a
material modification or adjustment to the terms of such Lease, provided that
the aggregate Principal Balance of all such Leases for which Vendor Services has
substituted Substitute Leases may not exceed 10% of the Initial Pool Principal
Balance.
10. Vendor Services, directly or through sub-servicers, will retain
custody of the documents and records relating to the Leases, and the Leases will
not be stamped to evidence their assignment to the SPC. As a result, if another
lender or purchaser were to obtain possession of any Leases without knowledge of
their prior assignment to the SPC, such lender's or purchaser's security or
ownership interest would be prior to the ownership interest of the SPC in such
Leases. Vendor Services will hold the Lease Files strictly in a fiduciary
capacity, however, and UCC-1 financing statements will be filed in the
appropriate jurisdictions to reflect the contribution of the Leases. Vendor
Services will have no remaining rights in the Leases, and the only rights of
Vendor Services in the Leases and the Equipment will be pursuant to its
obligation to service the Leases and collect Resdiual Realizations as set forth
in the Contribution and Servicing Agreement.
11. There are no agreements, arrangements or understandings, written
or otherwise, with respect to the transfer of the Leases and the Equipment other
than as set forth in the Transaction Documents.
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III. APPLYING THE LAW TO THE INSTANT FACTS.
It is apparent, in applying the legal principles developed from the
cases discussed in Part I above to the facts summarized in paragraphs 1 through
11 of Part II above, that several attributes of the transaction described
therein argue strongly in favor of characterizing the transfer by Vendor
Services of the Leases and the Equipment to the SPC as a sale. At the same
time, certain other aspects of the transaction suggest a loan secured by the
Leases and the Equipment rather than a sale. On balance, however, we believe
that the factors which militate in favor of a court's characterizing the
transfer of the Leases and the Equipment as a "true sale" substantially outweigh
those which militate against such a characterization.
First, the parties' intent to have the transfer of the Leases and the
Equipment by Vendor Services to the SPC treated as a complete and absolute
contribution is clearly set forth in the Transfer Agreement. The Transfer
Agreement describes the transaction as a sale and assignment, and the
transaction will be treated by Vendor Services as a sale for accounting and tax
purposes.
Second, Vendor Services is obligated under the Transfer Agreement to
take the actions which are necessary to perfect the assignment of the Leases and
the Equipment by Vendor Services to the SPC under the laws of the State of
Minnesota. Although the taking of these actions does not settle the "sale"
question, the failure to take them would prevent a "sale" from taking place.
Thus, with respect to Leases which constitute chattel paper under the UCC,
Vendor Services is required to file the UCC financing statement which is
necessary in order to perfect an assignment thereof under the UCC of Minnesota.
See note 4 supra.(14)
In addition to the intent of the parties and the satisfaction of state
law requirements, the facts and circumstances surrounding the transfer of the
Leases
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(14) As stated in note 4, if a court applying Minnesota law followed the Octagon
Gas case, it could conclude that Leases that are chattel paper under the Uniform
Commercial Code nevertheless remained "property of the estate" of Vendor
Services under (S) 541 of the Bankruptcy Code. As stated in note 4, however,
Octagon Gas is not controlling precedent with respect to such a court.
Perfection of the "security interest" in chattel paper granted by Vendor
Services to the Issuer in connection with its contribution of the Leases to the
Issuer will be governed by the law of the state where the "debtor's" chief
executive office is located. U.C.C. (S)9-103(3). We therefore are of the opinion
that Minnesota law would govern perfection of the transfer of such chattel paper
by Vendor Services to the SPC in connection with the contribution made pursuant
to the Transfer Agreement. You should note, however, that perfection of a
competing possessory security interest in Leases that constitute chattel paper
could be governed by the laws of other jurisdictions. See U.C.C. (S) 9-105(1).
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and the Equipment are either indicative of or not inconsistent with a "true
sale" characterization. For example, whether the transferor or the transferee
services the accounts and notifies the obligor of the assignment may influence
the characterization of a transaction. See In re Alda Commercial Corp., 327 F.
Supp. 1315 (S.D.N.Y. 1971). In the instant case, Vendor Services will continue
to service the Leases in its capacity as the Servicer under the Contribution and
Servicing Agreement, and the Obligors will not be notified of the assignment of
the Leases. Nevertheless, while servicing by the transferee with notice to the
obligor of the sale may indicate a sale, servicing by the transferor and an
absence of notification does not necessarily prevent sale treatment. See In re
P.A. Bergner & Co. Holding Co., Nos. 91-05501 to 91-05516, Slip Op. at 11-12
(Bankr. E.D. Wis. April 16, 1992) (sales of receivables deemed "true arms-length
sales" notwithstanding appointment of seller as servicer of receivables); A.B.
Lewis Co. Inc. v. National Inv. Corp., 421 S.W.2d 723, 728 (Tex. Civ. App. 1967)
(giving reasons, on facts of case, that collection by seller and non-
notification of obligors of assigned sales contracts did not require
characterization of assignment as loan).
Another important factor examined by the courts is the extent to which
the purported buyer or seller of the Leases and the Equipment bears the risks
and enjoys the benefits of their ownership. The "benefits" associated with
ownership consist primarily of the opportunity for the buyer to retain any
excess above the purchase price of the property and to reap any gains that may
arise from an increase in the market value of the property. A purported
seller's right to repurchase the subject property or to substitute property, in
order to capture such increase or to retain any surplus remaining after the
buyer has received a discrete amount in respect of the transaction, may indicate
that the benefits of ownership have been retained by the transferor, suggesting
a debtor-creditor relationship rather than a seller-buyer relationship.
In the instant transaction, none of Green Tree Financial or Vendor
Services have any such rights. The SPC has no obligation to account for or
repay to Vendor Services any profit or surplus that the Leases or the Equipment
may generate. Any such profit will instead be paid to the SPC, as the owner of
the Equipment. See In re Joseph Kanner Hat Co., Inc., supra, 482 F.2d at 940;
In re Evergreen Valley Resort, Inc., supra, 23 B.R. at 661 ("a security interest
is indicated if the assignee must account to the assignor for any surplus
received from the assignment over the amount of the debt").
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IV. OPINION.
In considering the opinion expressed below, you should be aware that,
to the best of our knowledge, there is no controlling statutory provision and no
judicial precedent that is directly on point. In addition, certain of the
judicial precedents which do exist may be viewed as inconsistent with our
opinion, although we believe such precedents are distinguishable from the facts
presented in this transaction. Finally, you should recognize that it is
impossible to predict with certainty the outcome of any future judicial
proceeding. Nevertheless, based on the foregoing examination and review and
based on the terms of the transaction as set forth above, it is our opinion that
if Green Tree Financial or Vendor Services became a debtor under the Code, the
transfer by Vendor Services to the SPC of the Leases, the Equipment and the
proceeds thereof would ultimately be characterized, by a court exercising
reasonable judgment under existing statutes and judicial precedents, as a true
sale, such that the Leases, the Equipment and the proceeds thereof would not be
property of Green Tree Financial's or Vendor Services's estate for the purposes
of Section 541 of the Code (11 U.S.C. (S) 541), and as a result (1) neither
Section 362(a) of the Code (11 U.S.C. (S) 362(a)) nor Section 543 of the Code
(11 U.S.C. (S) 543) would apply to the Leases and the proceeds thereof in such
an insolvency proceeding relating to Green Tree Financial or Vendor Services
(except that we express no opinion as to proceeds of Leases held by Green Tree
Financial or Vendor Services on the date Green Tree Financial or Vendor Services
were to become a debtor under the Code), and (2) the Leases would not be subject
to rejection under Section 365(a) of the Code (11 U.S.C. (S) 362(a)) by or on
behalf of Green Tree Financial or Vendor Services. We express no opinion as to
the availability of a preliminary injunction or temporary restraining order
pursuant to the broad equitable powers granted to a bankruptcy court under
Section 105 of the Code (11 U.S.C. (S) 105).
The opinion expressed herein is limited to questions of federal law
and the laws of the State of Minnesota. This opinion is being delivered to you
at the Issuer's request only for your use. It is not to be circulated or
republished to, or relied upon by, any other person without our prior written
consent.
Dated: December , 1997
Very truly yours,
CFS
<PAGE>
EXHIBIT 99.2
Standard & Poor's Ratings Services
25 Broadway
New York, New York 10004
Fitch Investors Service, L.P.
One State Street Plaza
New York, New York 10004
Re: Green Tree Lease Finance 1997-1, LLC
Lease-Backed Notes
Ladies and Gentlemen:
We have acted as counsel for Green Tree Financial Corporation, a
Delaware corporation ("Green Tree Financial"), Green Tree Vendor Services
Corporation, a Delaware corporation and a subsidiary of Green Tree Financial
("Vendor Services"), Green Tree Lease Finance II, Inc., a Minnesota corporation
and a subsidiary of Vendor Services (the "SPC"), and Green Tree Lease Finance
1997-1, LLC, a Delaware limited liability company of which the SPC is the sole
member (the "Issuer"), in connection with the issuance of Lease-Backed Notes
(the "Notes") pursuant to an Indenture, dated as of December 1, 1997 (the
"Indenture"), among the Issuer, Green Tree Financial, as Class C Limited
Guarantor, and __________ (the "Trustee"), as Trustee.
The Issuer was formed in October 1997 and is governed by a Limited
Liability Company Agreement (the "LLC Agreement") executed by the SPC as its
sole member. Pursuant to a Transfer Agreement dated as of December 1, 1997 (the
"Transfer Agreement"), among the SPC, as Purchaser, and Vendor Services, as
Seller and Servicer, Vendor Services has sold certain leases, including all
collections received with respect to the leases and certain other related rights
(the "Leases") and its interests (which may be deemed an ownership interest or a
security interest, depending on the terms of the related Lease) in the equipment
related to such Leases (such interests being hereinafter referred to as the
"Equipment") to the SPC. The Leases will be transferred by the SPC to the
Issuer pursuant to the terms of a Contribution and Servicing Agreement dated as
of December 1, 1997 (the
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"Contribution and Servicing Agreement"), among the Issuer, the SPC, Vendor
Services, in its individual capacity and as Servicer, and the Trustee. Pursuant
to the Contribution and Servicing Agreement, the SPC will also grant to the
Issuer certain rights to the proceeds of the Equipment (the "Residual
Realizations").
Pursuant to the Indenture, the Issuer has issued four classes of Notes
with an aggregate principal amount of $_________ (the "Notes"). The Notes were
offered to the public pursuant to the Prospectus dated December __, 1997, by the
Underwriters described therein (collectively, the "Underwriters"). Principal of
and interest on the Notes will be payable solely from the Amount Available
(consisting primarily of amounts received in respect of the Leases).
The Issuer has requested that we render to you our opinion whether, in
the event Vendor Services became a debtor under the United States Bankruptcy
Code (the "Code"), a court would order that the assets and liabilities of the
SPC be consolidated with those of Vendor Services under either the bankruptcy
doctrine of substantive consolidation or the non-bankruptcy law doctrines
commonly referred to as "piercing the corporate veil."(1) In rendering the
opinion set forth below, we
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(1) Substantive consolidation was accomplished in early cases by "piercing the
corporate veil" of the debtor, I.E., by finding that the entity with which
consolidation was sought was the "alter-ego" or an "instrumentality" of the
debtor which was used by the debtor to hinder, delay or otherwise defraud
creditors. See, e.g., Maule Industries, Inc. v. Gerstel, 232 F.2d 294 (5th Cir.
1956); Fish v. East, 114 F.2d 177 (10th Cir. 1940). Although later cases
relaxed the requirement of fraud in favor of the test described below, courts
will still pierce the corporate veil to effect a substantive consolidation if
fraud or similar activity is present. See, e.g., Carte Blanche (Singapore)
Ptd., Ltd. v. Diners Club International Inc., 2 F.3d 24 (2nd Cir. 1993). See
also, e.g., In re Daily, 107 B.R. 996 (Bankr. D. Hawaii 1989), rev'd on other
grounds, 940 F.2d 1306 (9th Cir. 1991); In re Stop & Go of America, Inc., 49
B.R. 743 (Bankr. D. Mass. 1985); In re Tureaud, 45 B.R. 658, 662-63 (Bankr.
N.D. Okla. 1985), aff'd, 59 B.R. 973 (N.D. Okla. 1986).
Recent decisions have concluded that the comparison of the two doctrines
is not particularly suitable. See, e.g. F.D.I.C. v. Colonial Realty Co., 966
F.2d 57, 60-61 (2d Cir. 1992) ("The focus of piercing the corporate veil is the
limited liability afforded to a corporation[;]" whereas the focus of substantive
consolidation is "the equitable treatment of all creditors.") Federal courts
have increasingly looked to federal bankruptcy law precedent rather than state
corporate law doctrine when ruling on substantive consolidation motions. See,
e.g., Colonial Realty, 966 F.2d at 60-61; Eastgroup Properties v. Southern Motel
Assoc. Ltd., 935 F.2d 245 (11th Cir. 1991); In re Augie/Restivo Baking Co., 860
F.2d 515 (2d Cir. 1988); In re Auto-Train Corp., Inc., 810 F.2d 270 (D.C. Cir.
1987); In re Continental Vending Machine Corp., 517 F.2d 997, 1001 (2d Cir.
1975), cert. denied sub nom James Talcott, Inc. v. Wharton, 424 U.S. 913 (1976);
In re Flora Mir Candy Corp, 432 F.2d 1060 (2d Cir. 1970); Chemical Bank
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have reviewed such questions of law as we have deemed necessary and have
examined (a) the Articles of Incorporation and Bylaws of the SPC, (b)
representations and warranties as to matters of fact made by the Issuer in the
Contribution and Servicing Agreement, (c) representations and covenants of the
SPC and Vendor Services contained in the Transfer Agreement and (d) such
additional documents as we have deemed necessary. Where matters of fact material
to such opinions were not independently established, we have relied, to the
extent we deemed proper, on certificates of public officials.
The power of a bankruptcy court to consolidate the assets and liabilities
of separate entities, which derives from the bankruptcy court's equitable
powers, is not defined in the Code and is not precisely defined in the case
law.(2) See, e.g., In re Continental Vending Mach. Corp., 517 F.2d 997, 1000 (2d
Cir. 1975), cert. denied sub nom. James Talcott, Inc. v. Wharton, 424 U.S. 913
(1976). Although the substantive consolidation cases decided under the Code and
its predecessor statute rely on certain factual matters, which are discussed
below, to support their conclusions, cases decided under the Code tend to
emphasize the balancing of the benefits and harm resulting from substantive
consolidation and whether any injustice or fraud has been perpetrated against
creditors. See, e.g., Holywell Corporation v. The Bank of New York, 59 B.R. 340
(S.D. Fla. 1996); In re DRW Property Co. 82, 54 B.R. 489 (Bankr. N.D. Tex.
1985); In re Donut Queen, Ltd., 41 B.R. 706 (Bankr. E.D.N.Y. 1984); In re Snider
Bros., Inc., 18 B.R. 230 (Bankr. D. Mass. 1982).
- ------------------------
New York Trust Company v. Kheel, 369 F.2d 845, 847 (2d Cir. 1966); Soviero v.
Franklin National Bank of Long Island, 328 F.2d 446 (2d Cir. 1964); Stone v.
Eacho, 127 F.2d 284 (4th Cir.), cert. denied, 317 U.S. 635 (1942); but see In Re
Moran Pipe & Supply Co., Inc., 130 B.R. 588 (Bankr. E.D. Okla. 1991) (recent
case invoking substantive consolidation based on alter-ego theory). We will
analyze the question under both lines of authority.
(2) Courts generally have recognized that substantive consolidation affects the
substantive rights of creditors, and accordingly have treated substantive
consolidation as a remedy to be used only in unusual circumstances. See
Continental Vending, supra, 517 F.2d at 1001; Flora Mir Candy Corp, supra, 432
F.2d at 1062. See also Kheel, supra, 369 F.2d at 847 (it should be the "rare
case" where substantive consolidation is granted); In re DRW Property Co. 82, 54
B.R. 489, 494 (Bankr. N.D. Tex. 1986) (courts should grant substantive
consolidation sparingly because of the possibility of unfair treatment of some
creditors). Because the rules for substantive consolidation are not statutorily
provided, however, the courts must examine the facts and circumstances of each
case to determine if substantive consolidation is warranted. See 5 Collier on
Bankruptcy (P) 1100.06[1] at 1100-35 (15 ed. 1995) (stating that substantive
consolidation cases are, to a great degree, sui generis).
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Although different cases phrase the applicable standard differently,
several recent decisions in the United States Courts of Appeals describing the
general standard for substantive consolidation in bankruptcy proceedings can be
summarized as follows:
(a) The proponent of substantive consolidation must show that (1) there is
substantial identity between the entities to be consolidated, and (2)
consolidation is necessary to avoid some harm or to realize some
benefit. Eastgroup Properties v. Southern Motel Ass'n, Ltd., 935 F.2d
245, 249 (11th Cir. 1991); see also In re Auto-Train Corp., 810 F.2d
270, 276 (D.C. Cir. 1987).
(b) Once the proponent has made this prima facie showing, the creditor
objecting to substantive consolidation must show that (1) it has
relied on the separate credit of one of the entities to be
consolidated, and (2) it will be prejudiced by substantive
consolidation. Eastgroup, supra, 935 F.2d at 249; see also In re
Augie/Restivo Baking Co., Ltd., 860 F.2d 515, 518-19 (2d Cir. 1988);
Auto-Train, supra, 810 F.2d at 276.
(c) If an objecting creditor makes that showing, the court may order
consolidation only if the benefits of consolidation heavily outweigh
the harm. Eastgroup, supra, 935 F.2d at 249; see also In re Gillen,
962 F.2d 796, 799 (8th Cir. 1992); Auto-Train, supra, 810 F.2d at 276.
The analysis used in the piercing the corporate veil cases in Delaware
is similar, although stated differently. To pierce the corporate veil, a court
must first analyze the relationship between the two (or more) entities involved
to determine whether they are in fact conducting business as a single entity,
and second, conclude that the separate corporate form has been used to wrongly
or unfairly harm creditors. See, e.g., Alberto v. Diversified Group, Inc., 55
F. 3d 201 (5th Cir. 1995) (summarizing Delaware law).
In determining whether the proponent has satisfied the requirements
set forth in clause (a) above (which can establish a prima facie case for
substantive
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consolidation), many courts have relied on a list of objective factors. The most
frequently cited list consists of the following:
(1) the degree of difficulty in segregating and ascertaining
individual assets and liabilities;
(2) the presence or absence of consolidated financial statements;
(3) the profitability of consolidation at a single physical location;
(4) the commingling of assets and business functions;
(5) the unity of interests and ownership between various corporate
entities;
(6) the existence of parent and intercorporate guarantees on loans;
and
(7) the existence of transfers of assets without formal observance of
corporate formalities.(3)
In re Vecco Construction Industries, Inc., 4 B.R. 407, 410 (Bankr. E.D. Va.
1980). Other factors cited include:
(8) the entities have common officers and directors;
(9) a subsidiary transacts business solely with its parent;
(10) both entities disregard the legal requirements of the subsidiary
as a separate corporation.
In re Gainesville P-H Properties, Inc., 106 B.R. 304, 306 (Bankr. M.D. Fla.
1989). It should be stressed, however, that the factors set forth above are
merely "examples of information that may be useful to courts charged with
deciding whether there is a substantial identity between the entities to be
consolidated and whether
- --------------------------
(3) Accord, In re Murray Industries, Inc., 119 B.R. 820, 830 (Bankr M.D. Fla.
1990); In re Mortgage Investment Company of El Paso, Tex., 111 B.R. 604,
610 (Bankr. W.D. Tex. 1990); Holywell Corp., supra, 59 B.R. at 347.
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consolidation is necessary to avoid some harm or realize some benefit."
Eastgroup Properties, 935 F.2d at 250. Therefore, although the proponent of
consolidation may frame its argument using the factors outlined above, the
existence or absence of any number of those factors is not necessarily
determinative. Id. at 249.
In the piercing the corporate veil cases, the relevant factors are set
forth somewhat differently:
(1) insufficient capitalization of one entity;
(2) failure to observe corporate formalities;
(3) the solvency of each entity at the time of the relevant
transactions;
(4) "siphoning" of funds to dominant shareholder or entity;
(5) absence of corporate records; and
(6) function of separate entity as a "facade" for the dominant
shareholder or entity.
See United States v. Golden Acres, Inc., 707 F. Supp. 1097, 1104 (D. Del. 1988)
(applying Delaware law); Mass v. McClenahan, 893 F. Supp. 225, 233 (S.D.N.Y.
1995).
Of the factors set forth above defining the relationship among related
corporations, the third, fourth, fifth, sixth, eighth and ninth factors cited in
the substantive consolidation cases, and all six factors cited in the piercing
the corporate veil cases, are precluded by provisions of the SPC's Articles of
Incorporation. The Articles of Incorporation of the SPC require the SPC to (a)
maintain a separate mailing address and physical space through which its
business will be conducted; (b) observe the corporate formalities of holding
regular meetings of its board of directors, and having the board of directors
review the actions of its officers, and authorize and approve all transactions
outside the ordinary course of business; (c) maintain books and records separate
from any other person or entity; and (d) not commingle its assets with those of
any other entity. Although the SPC, the Issuer and Vendor Services have
represented and covenanted in their Related Documents that they are and will
remain adequately capitalized for the normal obligations
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reasonably foreseeable in the conduct of its business, a court's examination of
this issue will necessarily be based on the facts and circumstances at that
time.
The factors that will be present among the SPC, on the one hand, and
Green Tree Financial and Vendor Services, on the other, are consolidated
financial statements, unity of interests and ownership, and common directors and
officers. These factors are generally present in all parent-subsidiary
situations, however, and have not been sufficient, by themselves, to justify
substantive consolidation or piercing the corporate veil. See Eastgroup, supra,
935 F.2d at 249-50; Augie/Restivo Baking Co., supra, 860 F.2d at 518-19; Auto-
Train, supra, 810 F.2d at 276.
The existence of consolidated financial statements is occasionally
mentioned as one factor among several upon which substantive consolidation may
be founded. Gainesville P-H Properties, supra; Holywell Corp., supra. Federal
tax law and generally accepted accounting principles require the consolidation
of the financial statements of Green Tree Financial and its subsidiaries,
including Vendor Services and the SPC, for tax and financial reporting purposes.
The SPC is, however, required to maintain separate accounting books and records.
In addition, due to the limited nature of the SPC's business, its assets and
liabilities should be readily identifiable. The SPC's only assets will be the
Equipment and its membership interest in the Issuer, and other similar assets in
connection with other similar transactions, and its only liabilities will be its
expenses incurred in the course of conducting its business of holding such
Equipment and membership interest, and holding other similar assets in
connection with other similar transactions. Accordingly, the difficulty of
disentangling the assets and liabilities of the parent and the subsidiary, which
is the principal concern associated with consolidated financial statements, will
not favor consolidation of the SPC with Green Tree Financial or Vendor Services.
See Gainsville P-H Properties, supra, 106 B.R. at 305-6 (regarding extent of
intermingling of assets required to justify substantive consolidation); DRW
Property Co. 82, supra, 54 B.R. at 495-96 (same).
Unity of ownership or interest, by itself, is not sufficient to
justify substantive consolidation or piercing the corporate veil. The
domination by a parent corporation of its subsidiary is noted by several courts
addressing substantive consolidation as a factor leading to the consolidation of
parent and subsidiary, if such domination causes the perpetration of a fraud:
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The test set out in [Berger v. Columbia Broadcasting Sys., Inc., 453
F.2d 991, 995 (5th Cir. 1972), cert. denied, 409 U.S. 849 (1972)]
requires that a plaintiff seeking to set aside a corporate identity
must show that there has been: (1) Control, not mere majority or
complete stock control, but complete domination, not only of finances,
but of policy and business practice in respect to the transaction
attacked so that the corporate entity as to this transaction had at
the time no separate mind, will or existence of its own; and (2) Such
control must have been used by the defendant to commit fraud or wrong,
to perpetrate the violation of a statutory or other positive legal
duty, or a dishonest and unjust act in contravention of plaintiff's
legal rights; and (3) The aforesaid control and breach of duty must
proximately cause the injury or unjust loss complained of.
Bendix Home Sys., Inc. v. Hurston Enters., Inc., 566 F.2d 1039, 1041 (5th Cir.
1978). Delaware courts also require the existence of fraud, or at least
injustice, prior to piercing the corporate veil. "In order to reach a parent
corporation under the alter-ego theory, the plaintiff must show fraud,
injustice, or inequity in the use of the corporate form." Sears, Roebuck & Co.
v. Sears plc, 744 F. Supp. 1297, 1304 (D. Del. 1990) (applying Delaware law);
see also Alberto v. Diversified Group, Inc., supra, 55 F.3d at 205-206 (applying
Delaware law).
Notwithstanding the fact that Vendor Services will own 100% of the
common stock of the SPC and that some of the SPC's directors will be officers or
directors of Green Tree Financial or Vendor Services, or both, the SPC will act
independently of Green Tree Financial and Vendor Services, due to various
provisions included in its Articles of Incorporation, the LLC Agreement and
provisions in the Indenture, Transfer Agreement and Contribution and Servicing
Agreement. In addition to the "independent director" requirement discussed
below, these provisions include the restrictions on the business purpose of the
SPC, the requirement that the SPC maintain separate books and records, the
limitations of certain corporate actions and the requirement that affiliate
transactions be on an arms-length basis. The SPC was created by Vendor Services
in order to facilitate the formation of the Issuer and the issuance of the
Notes, and, if a court were to determine that a fraud or injustice has been
perpetrated on the creditors of Green Tree Financial or Vendor Services as a
result of the creation of the SPC or the transfer of the Leases and the
Equipment, such court might also decide that the SPC
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functioned as a mere instrumentality of Green Tree Financial or Vendor Services.
In the absence of such a determination, however, the unity of ownership between
Green Tree Financial, Vendor Services, the SPC and the Issuer would not be
sufficient to justify substantive consolidation or the piercing of the SPC's
corporate veil under existing precedent.
The existence of officers and directors common to both a company and
its subsidiary is a factor referred to in both substantive consolidation and
some piercing the corporate veil cases as favorable to consolidation. At least
one of the SPC's directors will be independent, however, as required by its
Articles of Incorporation, and the Articles of Incorporation require the
affirmative vote of the independent director before a variety of significant
actions may be taken by the SPC. The remaining directors of the SPC are expected
to be either officers or directors of Green Tree Financial or Vendor Services
(or both). We are aware of no case in which the court ordered substantive
consolidation due solely to the existence of common officers and directors, and
some cases expressly state that merely having common officers and directors is
not sufficient to justify consolidation; it is instead the effect of common
officers and directors which must be avoided, namely, the domination of one
corporation by another. Bendix Home Sys., Inc. v. Hurston Enters., Inc., 566
F.2d 1039, 1042 (5th Cir. 1978). However, not all courts make a distinction
between the existence and the effect of common officers and directors; they
simply mention it as a factor to be considered in a consolidation analysis.
We believe the common officers and directors factor is related to the
"domination" factor referred to above. Where there are common officers and
directors, presumably such common officers and directors could cause a
subsidiary to take actions for the benefit of the parent rather than the
subsidiary. For the purposes of this opinion, we have assumed that the SPC's
directors, particularly the independent director, will responsibly fulfill their
fiduciary obligations to the SPC, which should diminish the significance in the
eyes of a court of the existence of common officers and directors.
Throughout most courts' discussions of substantive consolidation and
piercing the corporate veil is the assumption, usually explicit, that
consolidation is justified to avoid an injustice or the perpetration of a fraud.
The enumerated factors described above as defining the relationship between a
subsidiary and its parent are often found where such fraud or injustice exists,
but they are not themselves evidence of fraud or injustice. For the purposes of
this opinion, we have assumed
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that the SPC and its directors and officers will comply with the provisions of
the SPC's Articles of Incorporation and the SPC's Related Documents, and that
none of the Issuer, the SPC, Green Tree Financial and Vendor Services will
attempt to perpetrate a fraud or injustice in connection with the issuance of
the Notes.
Subject to the discussion set forth above, and based upon the
continuing accuracy of the facts and assumptions set forth in this opinion, we
are of the opinion that, in the event Vendor Services became a debtor under the
Code, under existing statutes and precedents the assets and liabilities of
Vendor Services would not be consolidated with those of the SPC based upon any
legal theory currently recognized under applicable law and applicable to the
circumstances, including (i) case law concerning piercing the corporate veil or
(ii) any equitable doctrine analogous to the bankruptcy law doctrine of
substantive consolidation. We express no opinion as to the laws of any
jurisdiction other than the federal laws of the United States of America and the
laws of the State of Minnesota.
Although we believe this opinion represents a sound application of
existing statutes, regulations and case law, the situations contemplated by this
opinion involve equitable principles applied on a case-by-case basis in the
context of specific facts. This opinion is not a guaranty of any specific
decision by a particular court. Any determination by a court depends on an
examination of relevant law, facts and circumstances at a particular time, and a
court might reach a determination contrary to our conclusion if the facts of the
case differ from the assumed facts set forth above (which reflect the provisions
of the Articles of Incorporation and Bylaws of the SPC, the LLC Agreement and
the terms of the Related Documents to which the SPC, the Issuer, Green Tree
Financial or Vendor Services are parties).
This opinion is being delivered to you at the Issuer's request solely
for your benefit and may not be relied upon by, nor may copies be delivered to,
any other person without our prior written consent.
Dated: December , 1997
Very truly yours,
CFS
