SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 11, 1998
(Date of earliest event reported)
DVI Receivables Corp.
(Exact name of registrant as specified in its charter)
Delaware 333-68043 33-0608442
- -------- --------- ----------
(State or Other Juris- (Commission (I.R.S. Employer
diction of Incorporation) File Number) Identification No.)
500 Hyde Park, Doylestown, Pennsylvania 18901
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (215) 345-6600
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Item 5. Other Events.
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Item 7. Financial Statements, PRO FORMA Financial Information and Exhibits
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(a) Financial Statements.
--------------------
Not applicable.
(b) PRO FORMA Financial Information.
-------------------------------
Not applicable.
(c) Exhibits
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4.1 Contribution and Servicing Agreement, dated as of December
1, 1998, between DVI Financial Services Inc. as Contributor and DVI Receivables
Corp. as Transferor.
4.2 Pooling and Trust Agreement, dated as of December 1, 1998
between DVI Receivables Corp. and Wilmington Trust Company.
4.3 Indenture, dated as of December 1, 1998 between DVI
Business Trust 1998-2 as Issuer and U.S. Bank Trust National Association as
Indenture Trustee and Appendix A thereto.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on behalf of the
Registrant by the undersigned thereunto duly authorized.
DVI RECEIVABLES CORP.
By: /s/ Steven R. Garfinkel
-----------------------
Name: Steven R. Garfinkel
Title: Vice President
Dated: December 11, 1998
EXHIBIT 4.1
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================================================================================
DVI FINANCIAL SERVICES INC.,
CONTRIBUTOR AND SERVICER
AND
DVI RECEIVABLES CORP.
CONTRIBUTION AND SERVICING AGREEMENT
Dated as of December 1, 1998
================================================================================
ALL RIGHTS IN AND TO THIS AGREEMENT ON THE PART OF DVI RECEIVABLES CORP. HAVE
BEEN ASSIGNED TO DVI BUSINESS TRUST 1998-2 AND REASSIGNED AND ARE SUBJECT TO A
SECURITY INTEREST IN FAVOR OF U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE,
UNDER THE INDENTURE DATED AS OF DECEMBER 1, 1998 FOR THE BENEFIT OF THE PERSONS
REFERRED TO THEREIN.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C> <C>
SECTION 1. CAPITAL CONTRIBUTION............................................................................2
1.01 CONTRIBUTION.......................................................................................2
SECTION 2. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE CONTRIBUTOR........................4
2.01 CORPORATE ORGANIZATION AND AUTHORITY...............................................................4
2.02 BUSINESS AND PROPERTY..............................................................................5
2.03 EQUIPMENT AND CONTRACTS............................................................................5
2.04 CONTRACT SCHEDULE.................................................................................10
2.05 PENDING LITIGATION................................................................................10
2.06 NO MATERIAL EVENT.................................................................................10
2.07 TRANSACTIONS LEGAL AND AUTHORIZED.................................................................11
2.08 GOVERNMENTAL CONSENT..............................................................................11
2.09 COMPLIANCE WITH LAW...............................................................................11
2.10 ORDINARY COURSE; NO INSOLVENCY....................................................................11
2.11 ASSETS AND LIABILITIES............................................................................12
2.12 FAIR CONSIDERATION; VALID SALE....................................................................12
2.13 ABILITY TO PAY DEBTS..............................................................................12
2.14 BULK TRANSFER PROVISIONS..........................................................................12
2.15 TAX RETURNS.......................................................................................12
2.16 TRANSFER TAXES....................................................................................13
2.17 PRINCIPAL EXECUTIVE OFFICE........................................................................13
2.18 LEGAL NAME........................................................................................13
2.19 SERVICING PROVISIONS CUSTOMARY....................................................................13
2.20 DEFAULTS..........................................................................................13
2.21 ERISA.............................................................................................13
2.22 ALL FILINGS MADE..................................................................................14
2.23 NONCONSOLIDATION..................................................................................14
2.24 ALL REPRESENTATIONS AND WARRANTIES TRUE...........................................................15
2.25 PROSPECTUS SUPPLEMENT. ..........................................................................15
2.26 INSURANCE. ......................................................................................15
2.27 NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR OR THE ISSUER.......................................15
SECTION 3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE TRANSFEROR........................16
3.01 TRANSFEROR ORGANIZATION AND AUTHORITY; SUBSIDIARIES...............................................16
3.02 DUE AUTHORIZATION AND NO VIOLATION................................................................16
3.03 NO LITIGATION.....................................................................................16
3.04 PRINCIPAL OFFICE..................................................................................16
3.05 TAX RETURNS.......................................................................................17
3.06 SOLVENCY..........................................................................................17
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Page
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3.07 APPROVALS.........................................................................................17
3.08 NONCONSOLIDATION..................................................................................17
SECTION 4. ADMINISTRATION OF CONTRACTS....................................................................18
4.01 SERVICER TO ACT...................................................................................18
4.02 CONTRACT AMENDMENTS AND MODIFICATIONS; REPURCHASE OF CONTRACTS BY SERVICER........................19
4.03 CONTRACT DEFAULTS; RESIDUAL REALIZATIONS..........................................................20
4.04 COSTS OF SERVICING; SERVICER'S FEE................................................................21
4.05 OTHER TRANSACTIONS................................................................................22
4.06 COLLECTION OF MONEYS..............................................................................22
4.07 VOLUNTARY TERMINATION.............................................................................23
SECTION 5. SERVICER ADVANCES; REPURCHASE OF CONTRACTS.....................................................23
5.01 SERVICER ADVANCES.................................................................................23
5.02 INDEMNIFICATION...................................................................................23
5.03 REPURCHASE AND SUBSTITUTION OF CONTRACTS; OTHER PAYMENTS..........................................24
SECTION 6. INFORMATION TO BE PROVIDED.....................................................................25
6.01 MONTHLY SERVICER REPORT...........................................................................25
6.02 TAX REPORTING AND TREATMENT.......................................................................25
6.03 OTHER INFORMATION.................................................................................26
6.04 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT...........................................26
6.05 PAYMENT ADVICES...................................................................................26
SECTION 7. SUBSTITUTION OF CONTRACTS......................................................................26
7.01 SUBSTITUTION......................................................................................26
7.02 NOTICE OF SUBSTITUTION............................................................................29
7.03 CONTRIBUTOR'S AND SERVICER'S SUBSEQUENT OBLIGATIONS...............................................29
7.04 RESERVED..........................................................................................29
SECTION 8. THE SERVICER...................................................................................29
8.01 CORPORATE EXISTENCE OF THE SERVICER...............................................................29
8.02 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS................................................30
8.03 SERVICER NOT TO RESIGN OR BE REMOVED..............................................................30
8.04 FINANCIAL AND BUSINESS INFORMATION................................................................31
8.05 OFFICER'S CERTIFICATES............................................................................31
8.06 INSPECTION........................................................................................32
8.07 SERVICER RECORDS..................................................................................32
8.08 INSURANCE.........................................................................................32
8.09 NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR OR THE ISSUER.......................................32
8.10 FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE..................................................32
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Page
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SECTION 9. THE CONTRIBUTOR................................................................................33
9.01 CORPORATE EXISTENCE OF THE CONTRIBUTOR............................................................33
9.02 FINANCIAL AND BUSINESS INFORMATION................................................................33
9.03 INSPECTION........................................................................................34
9.04 NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR OR THE ISSUER.......................................34
9.05 ACCOUNTS, BOOKS AND RECORDS.......................................................................34
9.06 TAX RETURNS.......................................................................................35
9.07 INSURANCE.........................................................................................35
9.08 PROTECTION OF RIGHT, TITLE AND INTEREST...........................................................35
9.09 OTHER LIENS OR INTERESTS..........................................................................36
9.10 COSTS AND EXPENSES................................................................................36
SECTION 10. EVENTS OF DEFAULT..............................................................................36
10.01 SERVICER EVENTS OF DEFAULT.......................................................................36
10.02 TERMINATION......................................................................................38
10.03 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.........................................................38
10.04 SERVICER TO COOPERATE............................................................................39
10.05 REMEDIES NOT EXCLUSIVE...........................................................................39
10.06 WAVIER OF PAST DEFAULTS..........................................................................40
SECTION 11. ASSIGNMENT.....................................................................................40
11.01 ASSIGNMENT TO TRUSTEE............................................................................40
11.02 ASSIGNMENT BY CONTRIBUTOR OR SERVICER............................................................40
SECTION 12. NATURE OF CONTRIBUTOR'S OBLIGATIONS AND SECURITY THEREFOR
40
12.01 CONTRIBUTOR'S OBLIGATIONS ABSOLUTE...............................................................40
12.02 POWER OF ATTORNEY................................................................................41
SECTION 13. MISCELLANEOUS PROVISIONS.......................................................................41
13.01 SALE.............................................................................................41
13.02 AMENDMENT........................................................................................42
13.03 WAIVERS..........................................................................................42
13.04 NOTICES..........................................................................................42
13.05 COSTS AND EXPENSES...............................................................................44
13.06 THIRD PARTY BENEFICIARIES........................................................................44
13.07 SURVIVAL OF REPRESENTATIONS......................................................................44
13.08 CONFIDENTIAL INFORMATION.........................................................................44
13.09 HEADINGS AND CROSS-REFERENCES....................................................................44
13.10 GOVERNING LAW....................................................................................44
13.11 CONSENT TO JURISDICTION..........................................................................44
13.12 COUNTERPARTS.....................................................................................45
</TABLE>
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EXHIBITS
Exhibit A Contract Schedule
Exhibit B Monthly Servicer Report
Exhibit C Reserved
Exhibit D Substitute Contract Transfer Form
Exhibit E Form of Re-Assignment
Exhibit F Form of Officer's Certificate for Section 7
Exhibit G Forms of Contracts
Exhibit H Underwriting Guidelines
APPENDICES
Appendix I Defined Terms
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CONTRIBUTION AND SERVICING AGREEMENT
This Agreement is made and dated as of December 1, 1998, by
and between DVI FINANCIAL SERVICES INC., a Delaware corporation ("DVI"), as
contributor (in such capacity, the "Contributor") and servicer (in such
capacity, the "Servicer") hereunder, and DVI RECEIVABLES CORP., a Delaware
corporation (the "Transferor").
RECITALS
A. Pursuant to this Agreement, the Contributor is contributing
and assigning to the Transferor, (i) all right, title and interest of the
Contributor in, to and under, INTER ALIA, a pool of non-cancelable Finance
Leases, Fair Market Value Leases, Leveraged Lease Loans, Lease Receivable
Purchases and Secured Equipment Notes described in Exhibit A hereto (the
"Initial Contracts"), (ii) certain payments and proceeds received relating to
the Initial Contracts that are payable after the Cut-off Date and (iii) a
security interest in each item of underlying Equipment that is subject to each
Initial Contract. The Contributor may contribute and assign certain Substitute
Contracts and a security interest in the Equipment related thereto and certain
other related payments and proceeds in accordance with the terms of this
Agreement.
B. Pursuant to the Pooling and Trust Agreement (the "Trust
Agreement"), dated as of December 1, 1998 by and between the Transferor and the
Owner Trustee of DVI Business Trust 1998-2 (the "Issuer"), the Transferor is
transferring to the Issuer all of its right, title and interest in and to the
Trust Property.
C. Pursuant to the Indenture, dated as of December 1, 1998,
the Issuer is issuing its Asset-Backed Securities (the "Notes"). Pursuant to the
Indenture, the Issuer is granting to the trustee thereunder (the "Trustee"), for
the benefit and security of the holders from time to time of the Notes, a
security interest in the Trust Property, which includes, INTER ALIA, all right,
title and interest of the Transferor in, to and under the Contracts, the
Equipment and this Agreement.
D. In connection with the contribution and assignment of such
Contracts and the grant or assignment of a security interest in the related
Equipment, the Contributor agrees to undertake certain obligations set forth
herein.
E. In consideration for the Servicing Fee and other amounts as
more particularly set forth herein, the Servicer agrees to undertake certain
obligations set forth herein.
F. Capitalized terms used but not defined herein shall have
the respective meanings set forth in Appendix I hereto.
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AGREEMENTS
SECTION 1. CAPITAL CONTRIBUTION
1.01 CONTRIBUTION. (a) Upon the terms and conditions herein
set forth, the Contributor hereby agrees to transfer, assign and contribute, on
one or more Contract Transfer Dates, to the Transferor as a capital contribution
(or, in case of any Substitute Contracts, the related Substitution Date),
without recourse except as set forth herein, all of the Contributor's right,
title and interest in and to the Contributed Property. As collateral security
for the performance of its obligations as Contributor and as Servicer hereunder,
DVI hereby grants to the Transferor a first priority perfected security interest
in the Equipment related to a Contract that is a Fair Market Value Lease, and
such security interest shall constitute additional Contributed Property. The
Transferor assumes all of the Contributor's obligations under the Contracts
arising after the related Cut-off Date. All funds received by the Contributor on
or in connection with the Contracts that are payable after the applicable
Cut-off Date shall be received, held and applied by the Contributor in trust for
the benefit of the Transferor as owner of the Contracts.
(b) After giving effect to such contribution, the ownership of
each Contract will be vested in the Transferor. The Contract Files and any other
documents relating to the Contracts and the other Contributed Property that are
delivered as part of the Contributed Property or as incidental thereto are and
shall be held in trust by the Trustee for the benefit of the Noteholders. The
Contributor agrees to take no action inconsistent with the ownership of the
Contracts and the other Contributed Property, to promptly indicate to all
parties with a valid interest inquiring as to the true ownership of the
Contracts and the other Contributed Property, that the Contracts and the other
Contributed Property have been contributed and assigned to the Transferor and to
claim no ownership interest in the Contracts and the other Contributed Property.
(c) The Contributor shall take, or cause to be taken, such
actions and execute such documents as are necessary to protect the Trustee's
interest in the Contracts, security interest in the Equipment and the other
Contributed Property against all other Persons, including, without limitation,
the following: (i) in the case of the Contracts, on or before the Closing Date
(or, in case of any Substitute Contracts, the related Substitution Date), (A)
filing UCC-1 financing statements naming the Contributor as debtor, the
Transferor as secured party, the Issuer as assignee of the secured party and the
Contracts as collateral in the jurisdiction in which the principal place of
business of the Contributor is located, (B) UCC-1 financing statements naming
the Transferor as debtor, the Issuer as secured party, the Trustee as assignee
of the secured party and the Contracts as collateral in the jurisdiction in
which the principal place of business of the Transferor is located, (C) filing
UCC financing statements naming the Issuer as debtor and the Trustee as secured
party in the jurisdiction in which the principal place of business of the Issuer
is located, and (D) filing UCC-3 termination statements or releases from
lenders, if any, with liens on the Contracts; (ii) in the case of the assignment
of the security interests in the Equipment, within thirty days after the Closing
Date (or, in case of any Substitute Contracts, the related Substitution Date),
(A) with respect to a security interest in Equipment (other than Equipment for
which the Original Equipment Cost is less than $20,000) subject to Finance
Leases or Secured Equipment Notes, filing UCC financing statements naming the
Obligor as debtor, the Contributor as secured party, U.S. Bank Trust National
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Association, as custodian or as trustee, as assignee of the secured party and
the Equipment as collateral, in the appropriate filing offices in the
jurisdiction in which the Equipment was located on the date on which the
Contract was originated, (B) with respect to the Transferor's security interest
in the Equipment related to DVI Fair Market Value Leases, filing UCC-1 financing
statements (i) naming the Contributor as debtor, the Transferor as secured
party, and the Issuer as assignee of secured party, and the Equipment as
Collateral, in the appropriate filing offices in the jurisdiction in which the
Equipment is located on the relevant transfer date, (ii) naming the Transferor
as debtor, the Issuer as secured party, and U.S. Bank Trust National
Association, as trustee or as custodian as assignee of the secured party, and
the Equipment as Collateral, in the appropriate filing offices in the
jurisdiction in which the Equipment is located on the relevant transfer date,
(iii) naming the Issuer as debtor and U.S. Bank Trust National Association, as
trustee or as custodian as secured party, and the Equipment as Collateral, in
the appropriate filing offices in the jurisdiction in which the Equipment is
located on the relevant transfer date, (C) with respect to all Fair Market Value
Leases other than DVI Fair Market Value Leases, filing UCC-1 financing
statements (i) naming the originator as debtor, the Contributor as secured party
and DVI's interest in the Equipment as Collateral, (ii) naming the Contributor
as debtor, the Transferor as secured party, and the Issuer as assignee of the
secured party, and the related Equipment as Collateral, filed in the appropriate
filing offices in the jurisdiction in which the Transferor maintains its chief
executive office, (iii) naming the Transferor as debtor, the Issuer as secured
party, and U.S. Bank Trust National Association, as custodian or as Trustee, as
assignee of the secured party, and the related Equipment as Collateral, filed in
the appropriate filing offices in the jurisdiction in which the Transferor
maintains its chief executive office, (iv) naming the Issuer as debtor, and U.S.
Bank Trust National Association, as custodian or as Trustee, as secured party
and the related Equipment as Collateral, filed in the appropriate filing offices
in the jurisdiction in which the Transferor maintains its chief executive
office, (D) with respect to all Fair Market Value Leases, filing UCC-1 financing
statements naming the Transferor as debtor, U.S. Bank Trust National
Association, as custodian or trustee, as secured party and the Transferor's
security interest in the Equipment as collateral in the appropriate filing
offices in the jurisdiction in which the Transferor maintains its chief
executive office, (E) filing UCC-3 assignments of any "precautionary" filings
naming the Obligor as debtor, the Contributor as secured party, U.S. Bank Trust
National Association, as custodian or as trustee, as assignee of the secured
party and the Equipment as collateral (other than Equipment for which the
Original Equipment Cost is less than $20,000), in the appropriate filing offices
where the Equipment was located at the time the Contract was originated, (F)
with respect to Equipment subject to Leveraged Lease Loans or Lease Receivable
Purchases, filing UCC-3 assignments naming the Obligor as debtor, the
Contributor as secured party, U.S. Bank Trust National Association, as custodian
or as trustee, as assignee of the secured party and the Equipment as collateral,
in the appropriate filing offices in the jurisdiction where the Equipment was
located on the date the underlying contract was originated, (G) filing UCC-3
termination statements or releases from lenders, if any, with liens on the
Equipment, (H) with respect to any Equipment for which a certificate of title
has been issued, making an application for notation of lien on each such
certificate of title indicating the interest of the Trustee, (I) filing UCC
assignments with respect to each Contract acquired by the Contributor from a
third party, naming such person as debtor/seller, the Contributor as secured
party/purchaser, the Trustee as assignee of the secured party and such acquired
contracts as collateral, (J) filing UCC assignments with respect to each
Leveraged Lease Loan or Lease Receivable Purchase, naming the related Obligor as
debtor, the Contributor as secured party, the Trustee as assignee of the secured
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party and the related underlying equipment lease as collateral, (K) delivering a
certificate certifying that it has (1) made the filings of UCC financing
statements set forth above and certifying that copies of such UCC financing
statements are on file with the Trustee and (2) made the applications set forth
above and attaching copies of such applications. Thereafter, the Contributor
promptly shall file such additional UCC financing statements, continuation
statements and assignments and cause to be made such notations on certificates
of title with respect thereto as may be necessary because of equipment
replacements in accordance with the provisions of any Contract, or otherwise so
that the interest of the Trustee in (x) each of the Contracts, (y) the Equipment
which is subject to the Contracts and (z) the remainder of the Trust Property
will be perfected by such filings with the appropriate UCC filing offices and/or
notations on the appropriate certificates of title.
(d) If (i) any change in either the Contributor's name,
structure or the location of its principal place of business or chief executive
office occurs, then the Contributor shall deliver thirty (30) days' prior
written notice of such change or relocation to the Transferor and the Trustee
and (ii) if the Contributor becomes aware of the change in location of any
Equipment, then, no later than sixty (60) days after the effective date of such
change or relocation, shall file such amendments or statements as may be
required to preserve and protect the Transferor's, the Issuer's and the
Trustee's interest in the Contracts, the Equipment and the other Trust Property.
The Contributor shall pay all filing fees or taxes payable in respect of any UCC
financing or continuation statements required to be filed pursuant to this
Section 1.01(d).
(e) On or prior to the Closing Date or the related
Substitution Date, as applicable, the Contributor shall deliver to the Trustee
the sole original, manually executed counterpart of each Contract that
constitutes "chattel paper" (or, if the original Contract is in the form of a
schedule or supplement to a master lease or loan, all original counterparts of
such schedule or supplement previously in the possession of the Contributor or
the Transferor together with a true and correct copy of such master lease or
loan) or an "instrument". The Contributor will cause its accounting records to
be clearly and unambiguously marked to show that such Contract has been
transferred by the Contributor to the Transferor, and by the Transferor to the
Issuer, and then pledged by the Issuer to the Trustee for the benefit of the
Noteholders.
SECTION 2. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
CONTRIBUTOR
The Contributor (in its capacity as such and as the initial
Servicer under this Agreement) hereby represents and warrants to the Transferor
and covenants and agrees with the Transferor for the benefit of the Transferor,
the Issuer, the Trustee and the Noteholders with respect to the Initial
Contracts, as of the Closing Date and, with respect to any Substitute Contracts
(except for Sections 2.02 and 2.25) as of each Substitution Date (unless
otherwise indicated herein):
2.01 CORPORATE ORGANIZATION AND AUTHORITY. The Contributor (in
its capacity as such and as the initial Servicer under this Agreement):
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(a) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation;
(b) has all requisite power and authority and all
necessary licenses and permits to own and operate its properties and to
carry on its business as now conducted (except where the failure to
have such licenses and permits could not individually or in the
aggregate have a material adverse effect on the business or condition
(financial or otherwise) of the Contributor or impair the
enforceability of any Contract) and to enter into and perform its
obligations under this Agreement and each Transaction Document to which
it is a party and the transactions contemplated hereby, including
performance of the duties of the Servicer and the Contributor
hereunder;
(c) has duly qualified and is authorized to do
business and is in good standing as a foreign corporation in each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary (except where the failure
to be so qualified or in good standing could not individually or in the
aggregate have a material adverse effect on the Trust Property or the
business or condition (financial or otherwise) of the Contributor or
impair the enforceability of any Contract); and
(d) has duly executed and delivered this Agreement
and each Transaction Document to which it is a party and all other
documents delivered in connection herewith, and this Agreement are each
the legal, valid and binding obligation of the Contributor enforceable
in accordance with the terms hereof except as enforcement of such terms
may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally and by equitable
principles (regardless of whether such enforceability is in a
proceeding in equity or at law).
2.02 BUSINESS AND PROPERTY. The Prospectus Supplement (the
"Prospectus Supplement") dated December 7, 1998, to the Prospectus, dated
November 30, 1998, correctly describes in all material respects the Initial
Contracts and the general nature of the business of the Contributor.
2.03 EQUIPMENT AND CONTRACTS.
(a) As to each Contract:
(i) (A) Immediately prior to the transfers and conveyances set
forth herein, the Contributor will be the sole owner of, and have good and
marketable title to, the subject Contracts. With respect to any Leveraged Lease
Loans, Fair Market Value Lease or Lease Receivable Purchase, the Contributor
will have a valid first priority security interest in the equipment lease and
the Equipment that has been pledged as collateral security for such Leveraged
Lease Loan, Fair Market Value Lease or Lease Receivable Purchase; (B)
immediately prior to the transfers and conveyances set forth herein, the
Contributor will have acquired either good title to each item of Equipment or,
with respect to the Equipment that is the subject of a Secured Equipment Note,
Lease Receivables Purchase, Finance Lease or a Leveraged Lease Loan, a valid
first priority perfected security interest
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therein from the related Obligor (except for Equipment relating to a Secured
Equipment Note or Finance Lease and for which the Original Equipment Cost is
less than $20,000). Immediately prior to such date, with respect to each item of
Equipment related to Fair Market Value Leases, the Contributor will have paid in
full to the manufacturer or supplier or Obligor, as the case may be, the
purchase price and any related charges in connection with the acquisition of
such Equipment; (C) upon the transfer to the Transferor by the Contributor of
the Contributor's interest in the Contracts and a security interest in the
Equipment pursuant to Section 1 hereof, the Transferor will, after giving effect
to the provisions of Section 1.01(d), have a valid first priority perfected
ownership interest in, and have good title to the Contributed Property including
the Contracts and a valid first priority security interest in each item of the
Equipment (except for Equipment relating to a Secured Equipment Note or Finance
Lease and for which the Original Equipment Cost is less than $20,000) subject to
any Contract. At such time, the Contracts and the Transferor's interest in the
Equipment will be free and clear of all Liens other than the rights of each
Obligor under the Contract to which such Obligor is a party and Liens to be
discharged on the Closing Date; and there will be no delinquent taxes or other
outstanding charges affecting the Equipment which are or may be Liens;
(ii) Each of the Contracts is a legal, valid and binding full
recourse obligation of the related Obligor, enforceable by the Contributor (and
its designee) against such Obligor in accordance with the terms thereof, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization or
other laws relating to or affecting the enforcement of creditors' rights and by
general equitable principles, and is in full force and effect, and any and all
requirements of any federal, state or local law including, without limitation,
usury, truth-in-lending and equal credit opportunity laws applicable to the
origination, enforceability or assignment of each Contract have been complied
with; and the Contributor has no knowledge of any challenge, dispute or claim by
the Obligor under or affecting any Contract or of the bankruptcy or the
insolvency of any such Obligor;
(iii) The obligation of each Obligor to pay Contract Payments
under each of its related Contract(s) throughout the term thereof is and will be
unconditional, without any right of set-off by such Obligor and without regard
to any event affecting the Equipment, the obsolescence of any Equipment, any
claim of such Obligor against the Contributor or any change in circumstance of
such Obligor or any other circumstance whatsoever;
(iv) The Contributor has no knowledge that any item of the
Equipment has suffered any loss or damage except for such Equipment that has
been restored to its original condition, ordinary wear and tear excepted;
(v) Each Contract requires the Obligor thereunder to either
maintain insurance covering damage to, destruction or theft of the Equipment
subject thereto in an amount at least equal to the remaining Discounted Contract
Balance of such Contract;
(vi) As of the Cut-off Date, (A) no Contract had a remaining
term of more than 84 months, (B) no Contract Payment under any Contract is
delinquent for more than sixty (60) days and (C) no event of default has
occurred and is continuing under any Contract;
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(vii) There will be no facts or circumstances existing as of
the time of the transfer pursuant to this Agreement which give rise, or would
give rise at any time in the future, to any right of rescission, offset,
counterclaim or defense, including the defense of usury, to the obligations of
any Obligor, including the obligation of such Obligor to pay all amounts due
with respect to any Contract and neither the operation of any of the terms of
any Contract or the exercise of any right thereunder will render such Contract
unenforceable in whole or in part or subject to any right of rescission, offset,
counterclaim or defense, including the defense of usury, and no such right of
rescission, offset, counterclaim or defense has been asserted with respect
thereto;
(viii) No Contract has been amended, altered or modified in
any respect and no provision of any Contract has been waived, except in writing
and copies of all such writings are attached to the Contract delivered to the
Transferor;
(ix) No Obligor has been released, in whole or in part, from
any of its obligations in respect of a Contract; no Contract has been satisfied,
cancelled or subordinated, in whole or in part, or rescinded, and no Equipment
has been released from the related Contract, in whole or in part, nor has any
instrument been executed that would effect any such satisfaction, release,
cancellation, subordination or rescission;
(x) Each Contract is in substantially one of the forms
included as Exhibit G to this Agreement, and no Contract shall have been the
subject of any restructuring of the terms and provisions thereof;
(xi) No Contract permits early termination or voluntary
prepayment by the Obligor;
(xii) No right of the Contributor with respect to an Obligor's
failure to pay all rent due under any Contract has been waived by the
Contributor;
(xiii) Each Contract is "chattel paper" or an "instrument"
under the UCC as in effect in the applicable jurisdiction. The sole executed
counterpart of each Contract that constitutes chattel paper or an instrument is
in the possession of the Trustee and all of the documents required to be
delivered to the Trustee in connection therewith pursuant to Section 1 have been
so delivered;
(xiv) No Obligor is an Affiliate of the Contributor or the
Servicer;
(xv) The Contributor has no knowledge that the obligations of
any Obligor under any Contract will not be paid in full;
(xvi) No Contract will have been originated in or be subject
to the laws of any jurisdiction whose laws would make the assignment and
transfer thereof pursuant to the terms hereof or of the other Transaction
Documents unlawful;
(xvii) In the case of each Contract which consists of a master
lease and one or more exhibits or schedules thereto, (A) the Contributor has not
assigned and will not assign such master
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lease in its entirety, and has not delivered and will not deliver physical
possession of such master lease, to any Person other than the Trustee and (B)
such exhibits or schedules constitute a separate contract and are not part of
any other contract not sold to the Transferor;
(xviii) All parties to each Contract had requisite authority
and capacity to execute such Contract;
(xix) Prior to the time of assignment, transfer, sale and
contribution to the Transferor, each Contract will have been originated by the
Contributor in the ordinary course of its business, except for certain Contracts
which have been acquired by the Contributor in the ordinary course of its
business, and each Contract shall have been underwritten by the Contributor in
accordance with the standards set forth on Exhibit H hereto;
(xx) The Contributor is not aware of any fact that would
prevent or prohibit Obligors from being reimbursed by Medicare or Medicaid for
any services provided;
(xxi) The Contract Schedule accurately reflects the
information relating to each Contract;
(xxii) There are no proceedings or investigations pending or,
to the knowledge of the Contributor, threatened, before any court, regulatory
body, administrative agency or other tribunal or governmental instrumentality
(A) asserting the invalidity of any of the Contracts, (B) seeking to prevent the
payment and discharge of any of the Contracts or (C) seeking any determination
or ruling that would materially and adversely affect the performance by an
Obligor of its obligations under, or the validity or enforceability of the
Contracts;
(xxiii) Each Contract effects either the lease of, or the
grant of a perfected first priority security interest in, a specified item of
Equipment (other than Equipment relating to a Secured Equipment Note or Finance
Lease and for which the Original Equipment Cost is less than $20,000) in favor
of the Contributor as lessor or secured party, as the case may be, and contains
provisions sufficient for the realization of such leasehold interest or security
interest, as the case may be, as against such Equipment, and is assignable by
the Contributor without the consent of any other Person;
(xxiv) Each Contract provides that the Contributor has no
obligation to assemble, install, test, adjust or service the Equipment subject
to a Contract. Each Contract provides that the Obligor, at its sole expense, at
all times during the term of the Contract and until return of the Equipment will
maintain the Equipment in good operating order, repair, condition, appearance
and protect the Equipment from deterioration, and provide all accessories,
upgrades, repairs, replacement parts and service required therefor except that
the equipment lease pledged as collateral security for a Leveraged Lease Loan
may in certain instances provide that the related lessor is responsible for
maintaining such Equipment;
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(xxv) The Contributor has no knowledge that any Obligor under
a Contract is a Person involved in the business of selling medical equipment of
the same type as the Equipment subject to such Contract;
(xxvi) With respect to each item of Equipment either (A) no
such Equipment has been relocated from the jurisdiction set forth in the
Contract or, (B) if such Equipment has been relocated from the jurisdiction set
forth in the Contract and the Contributor has knowledge of any such relocation,
all UCC filings necessary to continue the first priority security interest in
such Equipment have been made (other than Equipment relating to a Secured
Equipment Note or Finance Lease and for which the Original Equipment Cost is
less than $20,000) ;
(xxvii) No Contract is a consumer lease as defined in Article
2A of the UCC;
(xxviii)Each Obligor has accepted the related Equipment and,
after reasonable opportunity to inspect and test, has not notified the
Contributor of any defects therein;
(xxix) No Obligor is a government or municipality; and
(xxx) No Contract requires the prior written consent of the
Obligor or contains any other restriction relating to the transfer or assignment
of such Contract by the Contributor or the seller except such consent as has
been obtained on or prior to the date of such transfer.
(b) The Contributor represents and warrants, as to the
Contracts in the aggregate:
(i) The Initial Aggregate Discounted Contract Balance of the
Contracts as of the initial Cut-off Date is equal to $218,254,123.54;
(ii) The Contracts have the following characteristics: (A)
each Initial Contract has a Discounted Contract Balance as of the
Cut-off Date of not more than $4,490,084.33; (B) no Discounted Contract
Balance of any Contract will include an amount attributable to any (i)
Purchase Option Payment for such Contract, (ii) Contract Payment due on
or prior to the Cut-off Date, (iii) security deposit or (iv) advance
payment; (C) as of the Cut-off Date, no item of Equipment has been
repossessed; (D) as of the Cut-off Date no Contract is a refinancing
due to delinquencies under a prior lease, security agreement or loan
with the same Obligor relating to the Equipment; (E) the Obligor with
respect to each Contract has a place of business in, or is organized
under, the laws of any state or territory of the United States of
America; (F) with respect to the Initial Contracts, each Contract will
have a Scheduled Termination Date no later than October , 2005; (G) as
of the Cut-off Date, (i) the Discounted Contract Balance of Contracts
that have Balloon Payments constitute not more than 4.0% of the
Aggregate Discounted Contract Balance, (ii) the Discounted Contract
Balance of Contracts that have non-level payments to the Scheduled
Termination Date (excluding Contracts that have Balloon Payments)
constitutes not more than 12% of, with respect to the Initial
Contracts, the Aggregate Discounted Contract Balance of the Initial
Contracts as of the Closing Date; (H) as of the Closing Date, the sum
of the Discounted Contract Balances of all Contracts with Equipment
located in any one State will not exceed
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20% of, with respect to the Initial Contracts, the Aggregate Discounted
Contract Balance of the Initial Contracts, no single Obligor will have
a Discounted Contract Balance that exceeds 2.50% of the Aggregate
Discounted Contract Balance on the Closing Date, the sum of the
Discounted Contract Balances of any seven Contracts shall not exceed
15.0% of the Aggregate Discounted Contract Balance on the Closing Date
and (iv) the sum of the Discounted Contract Balances of all Contracts
for which the related Equipment is magnetic resonance imaging equipment
will not exceed 42.47% of the Aggregate Discounted Contract Balance as
of the Closing Date; (I) not more than 10.0% of the Aggregate
Discounted Contract Balance will arise from Contracts which do not
constitute loans to manufacturers, wholesalers, and retailers of, and
to prospective purchasers of, specified merchandise, insurance and
services; (J) the Obligor under each Contract has made at least one
Contract Payment under such Contract prior to the first Payment Date
occurring after the time such Contract was executed by the parties
thereto in addition to any payment made at the time of the signing of
such Contract except for Contracts representing 1.5% of the Aggregate
Discounted Contract Balance as of the Closing Date which Contracts
provide for the related initial Contract Payment to be due within 30
days of the Payment Date occurring in January, 1999; and (K) the sum of
the Discounted Contract Balance of all Contracts that are Lease
Receivable Purchases shall not exceed, at any time, more than 2.00% of
the Aggregate Discounted Contract Balance as of the Closing Date.
2.04 CONTRACT SCHEDULE. The Contract Schedule (i) accurately
sets forth the identifying number of each Contract, the Obligor's name and
address, the original Scheduled Maturity Date of each Contract, the remaining
maturity of each Contract, the Discounted Contract Balance of each Contract as
of the Cut-off Date, the amount and scheduled due date of each Contract Payment
due under each of the Contracts, and the original amount funded on each
Contract, (ii) accurately sets forth the information with respect to certain
other characteristics of the Contracts and the Equipment described on such list,
(iii) identifies those Contracts which constitute Pool A and those Contracts
which constitute Pool B and (iv) is otherwise true and correct in all material
respects.
2.05 PENDING LITIGATION. There are no actions, suits,
proceedings, investigations or injunctive or other orders pending, or to the
knowledge of the Contributor or Servicer threatened, against or affecting the
Contributor or Servicer or any subsidiary in or before any court, governmental
authority or agency or arbitration board or tribunal, including, but not limited
to, any such actions, suits, proceeding, investigation or order with respect to
any environmental or other liability resulting from the ownership or use of any
of the Equipment which, individually or in the aggregate, involve the
possibility of materially and adversely affecting the properties, business, or
condition (financial or otherwise) of the Contributor or Servicer and its
subsidiaries, or the ability of the Contributor or Servicer to perform its
obligations under this Agreement or the payment or enforceability of any
Contract.
2.06 NO MATERIAL EVENT. No event has occurred which materially
adversely affects the Contributor's operations, including, but not limited to,
its ability to perform the transaction contemplated hereunder.
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2.07 TRANSACTIONS LEGAL AND AUTHORIZED. This Agreement and all
other documents delivered in connection herewith and the assignment, transfer
and contribution by the Contributor to the Transferor of all of the
Contributor's right, title and interest in and to each Contract and a security
interest in each item of Equipment at any time transferred hereunder and
compliance by the Contributor and the Servicer with all of the provisions of
this Agreement:
(a) have been duly authorized by all necessary
corporate action on the part of the Contributor or the Servicer, as the
case may be, and do not and will not require any stockholder approval,
or approval or consent of any trustee or holders of any indebtedness or
obligations of the Contributor or the Servicer, as the case may be;
(b) are within the corporate powers of the
Contributor and the Servicer; and
(c) are legal and will not conflict with, result in
any breach in any of the provisions of, constitute a default under, or
result in the creation of any lien upon any property of the Contributor
or the Servicer, as the case may be, under the provisions of, any
agreement, charter instrument, by-law or other instrument to which the
Contributor or the Servicer, as the case may be, is or will be a party
or by which it or its property may be bound or result in the violation
of any law, regulation, rule, order or judgment applicable to the
Contributor or the Servicer, as the case may be, or its properties, or
any order to which the Contributor or the Servicer, as the case may be,
or its properties is subject, of or by any government or governmental
agency or authority.
2.08 GOVERNMENTAL CONSENT. Except for the filing of the UCC
financing statements and the making of applications as set forth in Section
1.01(c) hereof, no consent, approval or authorization of, or filing,
registration or qualification with, any governmental authority is or will be
necessary or required on the part of the Contributor in connection with the
execution and delivery of this Agreement or the assignment, transfer and
contribution of the Contracts and the Equipment hereunder.
2.09 COMPLIANCE WITH LAW. Each of the Contributor and the
Servicer:
(a) is not in violation of any laws, ordinances,
governmental rules or regulations or court orders to which it is
subject; and
(b) has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the
ownership of its property or to the conduct of its business.
2.10 ORDINARY COURSE; NO INSOLVENCY. The transactions
contemplated by this Agreement are being consummated by the Contributor and the
Servicer, respectively, in furtherance of the Contributor's and the Servicer's
ordinary business purposes and constitute a practical and reasonable course of
action by the Contributor and the Servicer, respectively, designed to improve
the financial position of the Contributor and the Servicer, respectively, with
no contemplation of
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insolvency and with no intent to hinder, delay or defraud any of its present or
future creditors. Neither as a result of the transactions contemplated by this
Agreement, nor immediately before or after such transactions, will the
Contributor or the Servicer be insolvent, and both the Contributor and the
Servicer shall have adequate capital for the conduct of its business and the
payment of anticipated obligations.
2.11 ASSETS AND LIABILITIES.
(a) Both immediately before and after the assignment, transfer
and contribution of Contracts (including the right to receive all payments due
or to become due thereunder) and the other Contributed Property, the present
fair salable value of the Contributor's assets will be in excess of the amount
that will be required to pay the Contributor's probable liabilities as they then
exist and as they become absolute and matured.
(b) Both immediately before and after the assignment and
transfer of Contracts and the other Contributed Property, the sum of the
Contributor's assets will be greater than the sum of the Contributor's debts,
valuing the Contributor's assets at a fair salable value.
2.12 FAIR CONSIDERATION; VALID SALE. The consideration
received and to be received by the Contributor in exchange for the assignment,
transfer and contribution of the Contracts and the Contributed Property is fair
consideration having value equivalent to or in excess of the value of the assets
being transferred by the Contributor. This Agreement effects a valid assignment,
transfer and contribution of the Contributor's interest in the Contracts and the
other Contributed Property, enforceable against creditors of and purchasers from
the Contributor.
2.13 ABILITY TO PAY DEBTS. Neither as a result of the
transactions contemplated by this Agreement nor otherwise does the Contributor
believe that it will incur debts beyond its ability to pay or which would be
prohibited by its charter documents or by-laws. The Contributor's assets and
cash flow enable it to meet its present obligations in the ordinary course of
business as they become due.
2.14 BULK TRANSFER PROVISIONS. No transfer, assignment or
conveyance of Contracts or the other Contributed Property by the Contributor to
the Transferor contemplated by this Agreement will be subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction.
2.15 TAX RETURNS.
(a) The provisions for taxes on the books of the
Contributor and each subsidiary are in accordance with generally accepted
accounting principles.
(b) The Contributor and the Transferor are members of
an affiliated group, within the meaning of Section 1504 of the Code, that files
a consolidated return for federal income tax purposes, and all of the entities
with which the Contributor is consolidated for federal income tax purposes
(including the Transferor) have timely filed all tax returns required to be
filed in any
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jurisdiction and have paid all taxes, assessments, fees and other governmental
charges upon them or their properties, income or franchises, shown to be due and
payable on such returns, except to the extent any such entity is contesting the
same in good faith by appropriate proceedings and has set aside adequate
reserves in accordance with generally accepted accounting principles for the
payment thereof. The Contributor does not know of any proposed additional tax
assessment against any such entity in any material amount or of any basis
therefor.
2.16 TRANSFER TAXES. No transfer, assignment or conveyance of
Contracts or the other Contributed Property contemplated by this Agreement is
subject to or will result in any tax, fee or governmental charge payable by the
Contributor or the Transferor to any federal, state or local government
("Transfer Taxes"). In the event that the Contributor or the Transferor receives
actual notice of any Transfer Taxes arising out of the transfer, assignment and
conveyance of any Contracts and/or the other Contributed Property, on written
demand by the Transferor, or upon the Contributor otherwise being given notice
thereof, the Contributor shall pay, and otherwise indemnify and hold the
Transferor, the Issuer, the Trustee and the holders of the Notes harmless, on an
after-tax basis, from and against any and all such Transfer Taxes (it being
understood that neither the holders of the Notes nor the Trustee shall have any
obligation to pay such Transfer Taxes).
2.17 PRINCIPAL EXECUTIVE OFFICE. The principal place of
business and chief executive office of each of the Contributor and the Servicer,
and has been for at least four months prior to the date that this Agreement is
dated of, is located at 500 Hyde Park, Doylestown, Pennsylvania 18901.
2.18 LEGAL NAME. The legal name of the Contributor is as set
forth in this Agreement and the Contributor has not changed its name in the last
six years and does not have any trade names, fictitious names, assumed names or
"doing business as" names except Medical Equipment Finance Company, DVI Capital,
DVI Vendor, DVI Health Services Corp., DVI Finance Inc. and Medical Devices
Capital Company.
2.19 SERVICING PROVISIONS CUSTOMARY. The servicing
arrangements hereunder, including, without limitation, the terms and conditions
pursuant to which the Contributor will act as Servicer and the Servicer's Fee
and other amounts to be paid to the Contributor, are consistent with the
arrangements and customary practices of the Contributor when providing
comparable services to nonaffiliated entities and of other services in the
equipment leasing industry.
2.20 DEFAULTS. As of the Closing Date, neither the Contributor
nor the Servicer is in default with respect to any debt or obligation.
2.21 ERISA. The Contributor neither maintains, contributes to,
nor has any obligations to contribute to any "employee pension benefit plans,"
as such term is defined in Section 3(2) of ERISA (other than the 401(k) Plan of
DVI, Inc.). The execution and delivery of this Agreement and the other
applicable Transaction Documents and the consummation of the transactions
contemplated thereby will neither result in, constitute or otherwise give rise
to a "prohibited transaction" as described in Section 406 of ERISA or Section
4975 of the Code, with respect to a Contributor Plan. For the purpose of this
Section 2.21, the term "Contributor Plan" shall mean an "employee benefit plan"
(as defined in Section 3 of ERISA) which is or has been
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established or maintained, or to which contributions are, have been or are
required to be made, by the Contributor or by any trade or business, whether or
not incorporated, which, together with the Contributor, is under common control,
as described in Section 414(b) or (c) of the Code or Section 4001 of ERISA.
2.22 ALL FILINGS MADE. At the Closing Date, no further filings
(including, without limitation, UCC filings) or other actions are necessary in
any jurisdiction to give the Transferor an ownership interest in the Contracts
and the other Contributed Property, except that with respect to the Equipment,
the Contributor shall, within 30 days of the Closing Date, file the UCC
financing statements and made the necessary applications with respect to the
Equipment that are described in Section 1.01(c) hereof.
2.23 NONCONSOLIDATION. The Contributor is operated in such a
manner that it would not be substantively consolidated with the Transferor or
the Issuer, such that the separate existence of the Contributor and the
Transferor or the Issuer would not be disregarded in the event of a bankruptcy
or insolvency of the Contributor or the Transferor or the Issuer, and in such
regard, among other things:
(a) the Contributor is not involved in the day to day
management of the Transferor or the Issuer;
(b) the Contributor maintains separate corporate
records and books of account from the Transferor and the Issuer and
otherwise observes corporate formalities and has a separate business
office from the Transferor and the Issuer;
(c) the financial statements and books and records of
the Contributor prepared after the respective dates of creation of the
Transferor and the Issuer reflect and will reflect the separate
existence of the Transferor and the Issuer;
(d) the Contributor maintains its assets separately
from the assets of the Transferor and the Issuer (including through the
maintenance of a separate bank account), the Contributor's funds and
assets, and records relating thereto, have not been and are not
commingled with those of the Transferor or the Issuer and the separate
creditors of the Transferor and the Issuer will be entitled to be
satisfied out of the Transferor's assets or the Issuer's assets,
respectively, prior to any value in the Transferor becoming available
to the Transferor's equityholders or the Contributor's creditors;
(e) all business correspondence of the Contributor
and other communications are conducted in the Contributor's own name
and on its own stationery;
(f) the Transferor and the Issuer do not act as an
agent of the Contributor in any capacity and the Contributor does not
act as agent for the Transferor or the Issuer, but instead presents
itself to the public as a corporation separate from the Transferor and
the Issuer; PROVIDED that the Contributor is the Servicer hereunder;
and
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(g) the Transferor is not engaged in any other
activities other than the transactions contemplated by the Transaction
Documents.
2.24 ALL REPRESENTATIONS AND WARRANTIES TRUE. All
representations and warranties made by the Contributor in any certificate or
other document delivered at the closing of the transactions contemplated by the
applicable Transaction Document, including all representations and warranties
made to Thacher Proffitt & Wood in support of their opinions, are true and
correct in all material respects.
2.25 PROSPECTUS SUPPLEMENT. The Prospectus Supplement does not
contain any untrue statement of material fact or omit to state a material fact
necessary to make the statements contained therein not misleading in light of
the circumstances under which they were made; PROVIDED, HOWEVER, the Contributor
makes no representation or warranty as to the information contained in or
omitted from the Prospectus Supplement in reliance upon and in conformity with
information furnished to the Contributor in writing by Lehman Brothers, Inc. or
Prudential Securities Incorporated or any of their respective Affiliates (i.e.
the paragraphs under the headings "The Underwriting" or "Plan of Distribution")
or by the Trustee (under the heading "The Trustee").
2.26 INSURANCE. In addition to the insurance maintained by the
Obligors with respect to the Equipment, the Contributor maintains, among other
policies, a general liability insurance policy in the aggregate amount of
$1,000,000 and an excess liability insurance policy in umbrella form in the
aggregate amount of $3,000,000 for a total of $4,000,000 of liability insurance.
Each of such policies is in full force and effect and covers all Equipment owned
by the Contributor and the Transferor. All premiums in respect of such policies
have been paid. Each of the Trustee on behalf of the Noteholders, and the
Transferor is named as additional insureds on such liability policies.
2.27 NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR OR THE
ISSUER. The Contributor covenants and agrees it will not, prior to the date that
is one year and one day after the payment in full of all amounts owing pursuant
to the Transaction Documents, institute against, or join any other Person in
instituting against, either the Transferor or the Issuer, any bankruptcy,
reorganization, receivership, arrangement, insolvency or liquidation proceedings
or other similar proceedings under any federal or state bankruptcy or similar
law. This Section 2.27 shall survive the termination of this Agreement.
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SECTION 3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
TRANSFEROR
The Transferor hereby represents to the Contributor as of the
Closing Date and warrants, covenants and agrees as follows:
3.01 TRANSFEROR ORGANIZATION AND AUTHORITY; SUBSIDIARIES. The
Transferor is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation, and has full power and
authority to own and convey the Contracts and execute and deliver the
Transaction Documents to which the Transferor is a party (collectively, the
"Transferor Documents") and all related documents, and to perform the terms and
provisions hereof. The Transferor has no subsidiaries, but is the sole
beneficial owner of the Issuer.
3.02 DUE AUTHORIZATION AND NO VIOLATION. Each of the
Transferor Documents and all related documents have been duly authorized,
executed and delivered by the Transferor, and is the legal, valid and binding
obligation of the Transferor enforceable in accordance with its terms, except as
the same may be limited by insolvency, bankruptcy, reorganization or other laws
relating to or affecting the enforcement of creditors' rights or by general
equitable principles. The consummation of the transactions contemplated by the
Transferor Documents and all related documents and the fulfillment of the terms
hereof, will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or assets
of the Transferor pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, guarantee or similar agreement or instrument under which
the Transferor is a debtor or guarantor (other than the liens created pursuant
to the Transaction Documents), nor will such action result in any violation of
the provisions of the certificate of incorporation or the by-laws of the
Transferor. All applicable laws, rules, regulations, and orders with respect to
the Transferor, its business and properties, have been complied with. No
consents and no filings or governmental approvals that have not been made or
obtained are required for due execution, delivery and performance of the
agreements by the Transferor.
3.03 NO LITIGATION. No legal or governmental proceedings are
pending to which the Transferor is a party or of which any property of the
Transferor is the subject, and, to the knowledge of the Transferor, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others and no injunctions, writs, restraining orders or other
orders of any nature are in effect or, to the knowledge of the Transferor,
threatened, other than such proceedings which will not have a material adverse
effect upon the general affairs, financial position, net worth or results of
operations of the Transferor and will not materially and adversely affect the
performance by the Transferor of its obligations under, or the validity and
enforceability of, the Transferor Documents and all related documents.
3.04 PRINCIPAL OFFICE. The Transferor's principal place of
business and chief executive office is located at 500 Hyde Park, Doylestown,
Pennsylvania 18901. The legal name of the Transferor is as set forth herein and
the Transferor has no tradenames, fictitious names, assumed names or "doing
business" names.
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3.05 TAX RETURNS. The Transferor has filed on a timely basis
all tax returns required to be filed in any jurisdiction and has paid all taxes,
assessments, fees and other governmental charges upon it or its properties,
income or franchises, shown to be due and payable on such returns, except to the
extent the Transferor is contesting the same in good faith by appropriate
proceedings and has set aside adequate reserves in accordance with generally
accepted accounting principles for the payment thereof. The Transferor does not
know of any proposed additional tax assessment against it in any material amount
or of any basis therefor.
3.06 SOLVENCY. The Transferor is solvent and will not become
insolvent after giving effect to the contemplated transactions. The Transferor
is paying its debts as they become due and will have adequate capital to conduct
its business after giving effect to the contemplated transactions.
3.07 APPROVALS. All approvals, authorizations, consents,
orders or other actions of any person, corporation or other organization, or of
any court, governmental agency or body or official, required in connection with
the execution and delivery of the Transferor Documents have been or will be
taken or obtained on or prior to the Closing Date.
3.08 NONCONSOLIDATION. The Transferor is operated in such a
manner that it would not be substantively consolidated with the Contributor,
such that the separate existence of the Transferor and the Contributor would not
be disregarded in the event of a bankruptcy or insolvency of the Transferor or
the Contributor, and in such regard, among other things:
(a) the Transferor is not involved in the day to day
management of the Contributor;
(b) the Transferor maintains separate Transferor
records and books of account from the Contributor and otherwise
observes Transferor formalities and has a separate business office from
the Contributor;
(c) the financial statements and books and records of
the Transferor prepared after the date of creation of the Contributor
reflect and will reflect the separate existence of the Contributor;
(d) the Transferor maintains its assets separately
from the assets of the Contributor (including through the maintenance
of a separate bank account), the Transferor's funds and assets, and
records relating thereto, have not been and are not commingled with
those of the Contributor and the separate creditors of the Contributor
will be entitled to be satisfied out of the Contributor's assets prior
to any value in the Contributor becoming available to the Contributor's
equityholders or the Transferor's creditors;
(e) all business correspondence of the Transferor and
other communications are conducted in the Transferor's own name and on
its own stationery;
(f) the Contributor does not act as an agent of the
Transferor in any capacity and the Transferor does not act as agent for
the Contributor, but instead presents
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itself to the public as a corporation separate from the Contributor;
PROVIDED that the Contributor is the Servicer hereunder; and
(g) the Transferor will at all times maintain two
Independent Directors (as such term is defined in the certificate of
incorporation of the Transferor).
SECTION 4. ADMINISTRATION OF CONTRACTS
4.01 SERVICER TO ACT.
(a) Notwithstanding the transfers and assignments of the
Contracts and the other Contributed Property contemplated hereby, the Servicer,
for the benefit of the Transferor, and, upon assignment of the Transferor's
rights hereunder to the Issuer (and the Issuer's assignment thereof to the
Trustee for the benefit of the Trustee and the Noteholders), will service and
administer each Contract in accordance with the terms thereof and of this
Agreement. The Servicer shall provide the Obligors with appropriate invoices and
such other notices as may be required to ensure that all Contract Payments,
Prepayment Amounts and Partial Prepayment Amounts on or in respect of each
Contract are remitted by the Obligors directly to a Lock-Box Account.
(b) The Servicer shall do, and shall have full power and
authority to do, subject only to the specific requirements and prohibitions of
this Agreement, any and all things in connection with the servicing and
administration of the Contracts and the Equipment which are in the same manner
in which it services contracts and equipment held for its own account
(including, without limitation, servicing and administration of Contracts with
respect to which the related Equipment may be substituted or upgraded) and
consistent with prudent and customary practices of servicers in the industry,
but in performing its duties hereunder, the Servicer will act on behalf and for
the benefit of the Transferor, the Issuer, the Trustee and the Noteholders,
subject at all times to the provisions of the Transaction Documents, without
regard to any relationship which the Servicer or any Affiliate of the Servicer
may otherwise have with an Obligor. Notwithstanding the prior sentence, the
Servicer shall, within ten (10) Business Days after the Closing Date, notify
each Obligor to make all payments with respect to its respective Contracts which
are due after the Cut-off Date directly to a Lock-box Account. The Servicer
shall give the Trustee and the Rating Agencies prior written notice of any
change in the location of a Lock-box Account and the Servicer shall give at
least ten (10) days' prior written notice of the new location to each Obligor.
The Servicer shall at all times act in accordance with the provisions of each
Contract, and shall observe and comply with all requirements of law applicable
to it. Except as permitted by the terms of any Contract following a default
thereunder, the Servicer shall not take any action which would result in the
interference with the Obligor's right to quiet enjoyment of the Equipment
subject to the Contract during the term thereof.
(c) Without limiting the generality of the foregoing, the
Servicer will be responsible, among other duties, to (i) invoice each Obligor
for all Contract Payments required to be paid by such Obligor in such manner and
to the same extent as the Servicer does with respect to similar contracts held
for its own account, (ii) maintain with respect to each Contract and each item
of Equipment, and with respect to each payment by each Obligor and compliance by
each Obligor
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with the provisions of each Contract, complete and accurate records in such
manner and to the same extent as the Servicer does with respect to similar
contracts held for its own account and (iii) execute, deliver and file (or cause
the same to be done), and the Servicer is hereby authorized and empowered to
execute, deliver, and file on behalf of the Transferor, the Issuer and the
Trustee, any and all tax returns with respect to sales, use, personal property
and other taxes (other than corporate income and franchise tax returns) and any
and all reports or licensing applications required to be filed in any
jurisdiction with respect to any Contract or any item of Equipment and any and
all filings required by Section 4.01(d) below.
(d) The Servicer will file the UCC financing statements set
forth in Sections 1.01(c) and 7.01(c) hereof within the time frames set forth
therein and thereafter will file such additional UCC financing statements and
continuation statements and assignments in accordance with the provisions of any
Contract and item of Equipment or otherwise so that the security interest in
favor of the Trustee in each of the Contracts and the related Equipment will be
perfected by such filings with the appropriate UCC filing offices. The
Transferor agrees to execute such UCC financing statements and continuation
statements as shall be necessary and shall furnish the Servicer with any powers
of attorney or other documents necessary and appropriate to carry out its
servicing and administration duties hereunder.
(e) The Servicer will maintain, or cause to be maintained,
with respect to the Contracts and the Equipment, liability insurance in amounts
at least as great as those described in Section 2.26.
4.02 CONTRACT AMENDMENTS AND MODIFICATIONS; REPURCHASE OF
CONTRACTS BY SERVICER. (a) In performing its obligations hereunder, the Servicer
may, acting in the name of the Transferor and without the necessity of obtaining
the prior consent of the Transferor or the Trustee, enter into and grant
modifications, waivers and amendments to the terms of any Contract except for
modifications, waivers or amendments that (i) are inconsistent with the
servicing standards set forth in Section 4.01 above, (ii) would extend the date
of the final Contract Payment on any Contract by more than 24 months, (iii)
would reduce or adversely affect, individually or in the aggregate, the
Obligor's obligation to maintain, service, insure and care for the Equipment or
would permit the alteration of any item of Equipment in any way which could
adversely affect its present or future value,(iv) extend the Stated Maturity
Date of the Notes, (v) have a material adverse effect on the weighted average
life of any Class of Notes, (vi) be implemented on more than twenty percent of
the Initial Aggregate Discounted Contract Balance of the Contracts, (vii) be
effected on any Contract that is either 90 days or more delinquent or Defaulted
Contract, (viii) PROVIDED that the Issuer fails to deposit an amount into the
Collection Account equal to such decrease, decrease the Discounted Contract
Balance of any Contract or (ix) otherwise could adversely affect, individually
or in the aggregate, the interests of any of the Transferor, the Issuer, the
Trustee or the Noteholders. Notwithstanding the provisions of clause (ii) of the
preceding sentence, the Servicer may (1) permit any of the actions set forth in
clause (ii) of the preceding sentence, which in the Servicer's sole discretion,
in accordance with the same manner in which it services contracts and equipment
held for its own account, would maximize Recoveries on any Defaulted Contract,
or (2) permit termination of a Contract which does not otherwise provide for
termination by requiring, in the case of either clause (1) or (2), that the
Obligor pay, or, if the terms of such extension or termination do
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not provide for such payment by the Obligor that the Servicer deposit, in lieu
of all future Contract Payments with respect to such Contract, an amount which
equals or exceeds the applicable Prepayment Amount for such Contract as of 11:00
A.M. New York time on the second Business Day prior to the Payment Date next
succeeding the making of such payment is deposited into the Collection Account;
PROVIDED, HOWEVER, that the Servicer will not be permitted to allow prepayment
by an Obligor if there are any amounts due under the related Contract after such
prepayment.
In the event of any modification, waiver or amendment of any
Contract in accordance with this Section 4.02, the Servicer will promptly
furnish the Transferor, the Issuer and the Trustee with a copy thereof, together
with a certificate of the Servicer signed by one of its executive or financial
officers stating that such modification, waiver or amendment is not prohibited
by the provisions of this Section 4.02.
(b) If an Obligor requests either an upgrade or a trade-in of
an item of Equipment, the Servicer may either (x) remove such Contract and the
related Equipment from the Trust Property PROVIDED that the Servicer either (i)
subject to the limitations set forth in Section 7.01(c), transfers a Substitute
Contract and the related Equipment to the Transferor in accordance with Section
7 of this Agreement or (ii) deposits an amount equal to the Prepayment Amount
for such Contract into the Collection Account or (y) permit such Contract and
remaining related Equipment to remain in the Trust Property, PROVIDED that the
Servicer deposits an amount equal to the Partial Prepayment Amount for such
Contract into the Collection Account.
4.03 CONTRACT DEFAULTS; RESIDUAL REALIZATIONS.
(a) Upon receipt of notice from the Transferor, the Issuer,
the Trustee or any other Person, or if the Servicer otherwise learns that the
Obligor under any Contract is in default thereunder, the Servicer will take such
action as is appropriate, consistent with the Servicer's administration of
contracts held for its own account and consistent with the customary practices
of servicers in the industry, including such action as may be necessary to
cause, or attempt to cause, the Obligor thereunder to cure such default (if the
same may be cured) or to terminate or attempt to terminate such Contract and to
recover, or attempt to recover, all damages resulting from such default.
(b) The Servicer will use its best efforts (i) to sell or
re-lease any Equipment and realize on any other collateral related to a
Defaulted Contract in a timely manner and upon reasonable terms and conditions
so as to maximize, to the extent possible under then prevailing market
conditions, as expeditiously as is consistent with sound commercial practice and
the Servicer standard referenced in Section 4.01, the net proceeds from such
Equipment and other collateral, if any and (ii) to sell or re-lease any
Equipment remaining subject to the lien of the Indenture upon the expiration of
the Contract to which such Equipment is subject, in a timely manner and in a
manner consistent with that utilized by the Servicer with respect to equipment
owned by it so as to maximize, to the extent possible under then prevailing
market conditions, the net proceeds from such Equipment.
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(c) In the event that the Servicer is required to sell any
item of Equipment pursuant to the provisions of this Section 4.03 at a time when
the Servicer is trying to lease or sell other similar items of equipment, the
Servicer will not favor any such other item in its remarketing efforts.
4.04 COSTS OF SERVICING; SERVICER'S FEE.
(a) All costs of servicing each Contract in the manner
required by this Section 4 shall be borne by the Servicer, but the Servicer
shall be entitled to retain, out of any amounts actually recovered by the
Servicer in the performance of its obligations under Section 4.03 hereof with
respect to any Contract or the Equipment subject thereto, the Servicer's actual
out-of-pocket expenses reasonably incurred in the course of such performance
with respect to such Contract or Equipment. (For all purposes of this Section 4,
the Servicer's "out-of-pocket expenses" means only those expenses incurred to
non-Affiliated third parties (E.G., outside counsel in a collection suit) and
shall not include salaries, operating costs, overtime wages and other such
"overhead" costs or expenses of the Servicer or its Affiliates, and shall not
include expenses of or payments to an agent or subservicer allowed under Section
11.02, except that out-of-pocket expenses for the fees and expenses of an agent
used to remarket Equipment subject to Contracts shall be included as
"out-of-pocket expenses".) In addition, the Servicer shall be entitled to
receive from the Transferor on each Payment Date any unreimbursed Nonrecoverable
Advances or Servicer Advances with respect to any Contract (in accordance with
Section 5) and a servicing fee (the "Servicing Fee") in the amount described in
paragraph (b) below.
(b) As compensation to the Servicer for its servicing of the
Contracts, the Servicer will be entitled to receive on each Payment Date from
amounts on deposit in the Collection Account the Servicing Fee in an amount
equal to the product of (i) one-twelfth, (ii) the Servicing Fee Rate and (iii)
the Aggregate Discounted Contract Balance as of the beginning of the related
Collection Period. In addition, the Servicer will be entitled to receive as
additional compensation late payment fees, the penalty portion of interest paid
on past due amounts, origination fees, documentation fees, other administrative
fees or similar charges allowed by applicable law with respect to the Contracts,
and certain other similar fees paid by the Obligors ("Servicing Charges") and
earnings from any Eligible Investments of amounts on deposit in the Collection
Account.
(c) The Servicer hereby agrees:
(i) to pay to the Trustee from time to time such
compensation for all services rendered by it under the Indenture as the
Servicer and the Trustee have agreed in writing prior to the Closing
Date, such payment to be made independent of the other payment
obligations of the Servicer hereunder;
(ii) except as otherwise expressly provided herein,
to reimburse the Trustee upon its request for all reasonable expenses,
disbursements, and advances incurred or made by the Trustee in
accordance with any provision of the Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel),
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except any such expense, disbursement, or advance as may be
attributable to its negligence or bad faith;
(iii) to pay the Trustee its annual administrative
fee on the Closing Date;
(iv) to pay the reasonable fees and expenses of
Trustee's counsel, Dorsey and Whitney, on the Closing Date; and
(v) to pay the reasonable annual administrative fee
of each Lock-box Bank.
To the extent the Trustee has not been paid pursuant to the
Indenture, then all of the expenses set forth in this clause (c) shall be borne
by the Servicer, and the Servicer shall not be entitled to reimbursement of such
amounts from the Trust Property.
4.05 OTHER TRANSACTIONS. Nothing in this Agreement shall
preclude the Contributor or the Servicer from entering into other contracts or
other financial transactions with any Obligor or selling or discounting any such
contract with any Person.
4.06 COLLECTION OF MONEYS.
(a) Subject to Section 4.06(b), the Servicer shall remit or
cause each Lock-box Bank to remit all payments received by it on or in respect
of any Contract or Equipment (including any Residual Payment) during such
Collection Period into the Collection Account (including any such amounts then
held by the Servicer) as soon as practicable, but in any event within two
Business Days after receipt thereof; provided, however, that upon satisfaction
of conditions provided by the Rating Agencies from time to time, the Servicer
shall be permitted to deposit such amounts received during a particular
Collection Period into the Collection Account within two Business Days prior to
the related Payment Date.
(b) Any such amounts remitted to the Collection Account may
not include Excluded Amounts.
(c) Notwithstanding the provisions of paragraph (a) hereof,
the Servicer may retain, or will be entitled to be reimbursed, from amounts
otherwise payable into, or on deposit in, the Collection Account with respect to
a Collection Period, amounts previously deposited in the Collection Account but
later determined to have resulted from mistaken deposits or payments due before
or on the Cut-off Date or postings of checks returned for insufficient funds
(PROVIDED that the Servicer accounts for such amounts in the Monthly Servicer's
Report for the related Collection Period). The amount to be retained or
reimbursed hereunder shall not be included in funds available for distribution
with respect to the related Payment Date.
(d) Pending their deposit into the Collection Account, all
collections shall be segregated by book-entry or similar form of identification
on the Servicer's books and records and identified as the property of the
Transferor.
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4.07 VOLUNTARY TERMINATION.
(a) At the option of the Servicer, the obligations and
responsibilities of the Servicer with respect to all of the Contracts shall
terminate on any Payment Date on which the Pool A Aggregate Discounted Contract
Balance is less than 10% of the Pool A Aggregate Discounted Contract Balance as
of the Closing Date and the Pool B Aggregate Discounted Contract Balance is less
than 20% of the Pool B Aggregate Discounted Contract Balance as of the Closing
Date so long as the Servicer deposits or causes to be deposited into the
Collection Account the Repurchase Amount for each Contract.
(b) At the option of the Servicer, the obligations and
responsibilities of the Servicer with respect to the Contracts in Pool B shall
terminate on any Payment Date on which the Pool B Aggregate Discounted Contract
Balance is less than 20% of the Pool B Aggregate Discounted Contract Balance as
of the Closing Date so long as the Servicer deposits or causes to be deposited
into the Collection Account the Repurchase Amount for each Contract in Pool B.
SECTION 5. SERVICER ADVANCES; REPURCHASE OF CONTRACTS
5.01 SERVICER ADVANCES. Following each Determination Date, the
Servicer shall 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. New York time on the second Business Day prior to the next succeeding
Payment Date, a Servicer Advance equal to an amount sufficient to cover all
amounts due and unpaid on any Delinquent Contract as of the related
Determination Date; PROVIDED, HOWEVER, that the Servicer will not be obligated
to make a Servicer Advance with respect to (a) any Defaulted Contract, (b) any
Contract that was finally liquidated on or prior to such Determination Date or
(c) any Contract if the Servicer, in its good faith judgment, believes that such
Servicer Advance would be a Nonrecoverable Advance. If the Servicer determines
that any Servicer Advance it has made, or is contemplating making, would be a
Nonrecoverable Advance, the Servicer shall deliver to the Trustee an Officer's
Certificate stating the basis for such determination.
The Servicer shall be reimbursed for Servicer Advances on each
Payment Date from amounts on deposit in the Collection Account as follows: (i)
for any Servicer Advance made with respect to a Delinquent Contract, from
subsequent collections of such delinquent Contract Payments, Prepayment Amounts
or Repurchase Amounts and (ii) for any Nonrecoverable Advance, from all
collections received on all of the Contracts.
5.02 INDEMNIFICATION. Each of the Contributor and the Servicer
agrees to indemnify and hold harmless the Transferor, the Issuer, the Servicer,
the Trustee, the Owner Trustee (which shall include each of their respective
members, directors, officers, employees and agents), the Contributor and each
Noteholder, as the case may be, (each an "Indemnified Party") against any and
all liabilities, losses, damages, penalties, costs and expenses (including costs
of defense and legal fees and expenses) which may be incurred or suffered by
such Indemnified Party (except to the extent caused by gross negligence or
willful misconduct on the part of the Indemnified Party) as a
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result of claims, actions, suits or judgments asserted or imposed against an
Indemnified Party and arising out of the transactions contemplated hereby or by
the Indenture or arising out of, or based upon, action or inaction by the
Contributor or the Servicer, as the case may be, that is contrary to the terms
of this Agreement or the other Transaction Documents to which it is a party or a
breach by the Contributor or the Servicer, as the case may be, of any of its
covenants set forth in any of the Transaction Documents to which it is a party
or any information certified in any schedule delivered by the Contributor or the
Servicer, as the case may be, being untrue in any material respect as of the
date of such Certification, including without limitation, any claims resulting
from any use, operation, maintenance, repair, storage or transportation of any
item of Equipment, whether or not in the Servicer's possession or under its
control pursuant to this Agreement, and any tort claims and any fines or
penalties arising from any violation of the laws or regulations of the United
States or any state or local government or governmental authority, PROVIDED that
the foregoing indemnity shall in no way be deemed to impose on the Contributor
any obligation, other than to the extent specifically set forth in this Section
5, to make any payment with respect to principal or interest on the Notes or to
reimburse the Transferor for any payments on account of the Notes. In every
circumstance where the Indemnified party seeking indemnity hereunder for legal
fees, counsel fees and related costs and expenses is a Noteholder it is
understood, and the Noteholders by their acceptance of their respective Notes
agree, that such reimbursement, indemnification and holding harmless is limited
to the reasonable fees, related costs and expenses of the Noteholders Counsel
only. The obligations of the Contributor under this Section 5.02 shall survive
the termination of the Agreement the resignation or removal of the Trustee and
the termination of the Servicer pursuant to the terms hereof.
5.03 REPURCHASE AND SUBSTITUTION OF CONTRACTS; OTHER PAYMENTS.
(a) The Contributor or the Servicer, as the case may be, shall inform the
Transferor, the Issuer and the Trustee promptly, in writing, upon the discovery
of a breach of any of the Contributor's representations and warranties set forth
herein. With respect to any breach of the Contributor's representations and
warranties set forth herein which materially and adversely affects the interest
of the Noteholders in any Contract or Contracts, the Contributor, unless within
90 days following the discovery or receipt of notice of such breach such breach
has been cured or waived in all respects by the Noteholders evidencing more than
50% of the Voting Rights, shall either (a) purchase such Contract and the
security interest in the related Equipment from either the Transferor or the
Issuer, as the case may be, or (b) replace such Contract and the security
interest in the related Equipment with a Substitute Contract in accordance with
the provisions of Sections 7.01, 7.02 and 7.03 of this Agreement. In the event
of a repurchase of a Contract, the Contributor shall remit to the Trustee (upon
written notice to the Trustee thereof) for deposit into the Collection Account
the Repurchase Amount of each such Contract to be repurchased on or prior to
11:00 A.M. New York City time on the second Business Day prior to the Payment
Date immediately following the date when the Contributor shall become obligated
to purchase (or, if such Contract is then a Defaulted Contract, an amount equal
to the Repurchase Amount as of the date such Contract first became a Defaulted
Contract, together with interest thereon at the Discount Rate from the date such
Contract first became a Defaulted Contract to the end of the month preceding the
date of payment). In connection with such repurchase, the Servicer shall be
reimbursed in accordance with Section 3.04(b) of the Indenture for all amounts,
if any, theretofore advanced by the Servicer pursuant to Section 5.01 with
respect to such Contract. The Trustee shall deposit such Repurchase Amounts in
the Collection Account on or prior to 11:00 A.M. New York City time on the
second Business Day immediately following the date on
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which the Trustee receives such Repurchase Amounts. Without limiting the
generality of the foregoing, it is agreed and understood that for purposes of
this Section 5.03, any inaccuracy in any representation or warranty with respect
to (i) the priority of the lien of the Indenture with respect to any Contract or
(ii) the amount (if less than represented) of the Contract Payments or
Repurchase Amount under any Contract shall be deemed to be material.
(b) With respect to all Predecessor Contracts and the security
interest in the related Equipment purchased or replaced by the Contributor
pursuant to this Section 5 hereof, the Transferor will deliver to the
Contributor, an instrument substantially in the form of Exhibit E hereto,
assigning to the Contributor, without recourse, representation or warranty
(except as to the absence of liens, claims, or encumbrances resulting from
actions taken, or failed to be taken, by the Transferor), all of the
Transferor's right, title and interest in and to such Predecessor Contracts and
the security interest in the related Equipment, and all security and documents
relating thereto.
(c) The Transferor, the Issuer and the Trustee agree that the
obligation of the Contributor to repurchase or substitute any Contract pursuant
to this Section 5.03 shall constitute the sole remedy for any such breach
available against the Contributor by the Transferor, the Issuer, any Noteholder
or the Trustee; PROVIDED, that the limitation contained in this clause (c) shall
not otherwise limit the rights of any such Person under Section 5.02.
SECTION 6. INFORMATION TO BE PROVIDED
6.01 MONTHLY SERVICER REPORT. On or prior to each
Determination Date, the Servicer shall deliver a report in writing substantially
in the form of Exhibit B (the "Monthly Servicer Report") to the Trustee and the
Rating Agencies.
6.02 TAX REPORTING AND TREATMENT. (a) The Servicer shall
furnish or cause to be furnished to each Noteholder, within a reasonable time
after the end of each calendar year, to each Noteholder who was a Noteholder at
any time during such year, a report setting forth the amount of principal and
interest paid on the Notes during such year and indicating such other customary
factual information as the Servicer deems necessary, or as any Noteholder
reasonably requests, to enable Noteholders to prepare their respective tax
returns. In addition, the Servicer shall provide, or cause to be provided to the
Internal Revenue Service and each Noteholder, information statements required by
the Code (and the regulations issued thereunder) or as such Noteholders may
reasonably request from time to time with respect to in the case of any class of
Notes that is issued with original issue discount within the meaning of section
1273 of the Code ("OID"), information statements with respect to OID. For
purposes of consolidated federal and state income and franchise tax reporting,
the Contributor will be treated (i) as the owner of the Contracts and the other
Contributed Property and (ii) as the borrower under the Indenture.
(b) The Transferor, the Issuer, the Contributor, the Servicer,
any subservicer and each Noteholder by acceptance of its Note (and any Person
that is a beneficial owner of any interest in a Note, by virtue of such Person's
acquisition of a beneficial interest therein) agrees to treat the
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Notes as indebtedness for purposes of federal, state and local income or
franchise taxes (and any other tax imposed on or measured by income).
6.03 OTHER INFORMATION. The Servicer shall at the Trustee's
request, furnish to the Trustee from time to time certain information and make
various calculations which are relevant to the performance of the Trustee's
duties as set forth in the Indenture. Copies of all information furnished
pursuant to this Section shall also be furnished to the Rating Agencies.
6.04 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT.
The Servicer shall cause a firm of independent certified public accountants (who
may also render other services to the Servicer or to the Contributor) to deliver
to the Trustee, the Rating Agencies and each Noteholder within 90 days following
the end of each fiscal year of the Servicer, beginning with the Servicer's
fiscal year ending June 30, 1999, a written statement to the effect that such
firm has examined in accordance with generally accepted practices samples of the
accounts, records, and computer systems of the Servicer for the fiscal year
ended on the previous June 30 relating to the Contracts (which accounts,
records, and computer systems shall be described in one or more schedules to
such statement), that such firm has compared the information contained in the
Servicer's reports delivered in the relevant period with information contained
in the accounts, records, and computer systems for such period, and that, on the
basis of such examination and comparison, such firm is of the opinion that the
Servicer has, during the relevant period, serviced the Contracts in compliance
with such servicing procedures, manuals, and guides and in the same manner as it
services comparable leases for itself or others, and that such certificates,
accounts, records, and computer systems have been properly prepared and
maintained in all material respects, except in each case for (a) such exceptions
as such firm shall believe to be immaterial and (b) such other exceptions as
shall be set forth in such statement. Copies of all information furnished
pursuant to this Section shall also be furnished to the Rating Agencies.
6.05 PAYMENT ADVICES. Each payment by the Contributor or the
Transferor or the Servicer to the Trustee pursuant to any of the provisions of
the Transaction Documents shall be accompanied by written advice containing
sufficient information to identify the Contract and/or Equipment to which such
payment relates, the Section of the Transaction Documents pursuant to which such
payment is made, and the proper application pursuant to the provisions of the
applicable Transaction Document of the amounts being paid.
SECTION 7. SUBSTITUTION OF CONTRACTS
7.01 SUBSTITUTION. (a) (1) With respect to Pool A, in addition
to the Servicer's other rights of substitution, the Servicer will have the right
(but not the obligation), at any time in connection with exercise by the
Transferor of its rights of substitution under the Pooling and Trust Agreement,
to substitute (a "Pool A Non-Performing Contract Substitution") one or more
Eligible Contracts and the security interest in the related Equipment subject
thereto (the foregoing collectively, a "Substitute Contract") for a Contract in
Pool A and the security interest in the related Equipment subject thereto (the
foregoing collectively, a "Predecessor Contract") if:
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(i) (A) any Contract Payment on the Predecessor Contract
is delinquent for at least sixty (60) consecutive days as of the most
recent Determination Date; or
(B) a bankruptcy petition has been filed by or
against the Obligor or, with respect to a Leveraged Lease Loan, the
related Lessor, under any Predecessor Contract; or
(C) the Predecessor Contract was initially classified
as a Defaulted Contract during the related Collection Period.
PROVIDED, HOWEVER, that if the Predecessor Contract included a first
priority perfected security interest in Equipment related to a Fair
Market Value Lease, the related Substitute Contract, if related to a
Fair Market Value Lease, shall also include a first priority perfected
security interest in the Equipment related thereto.
(ii) the conditions set forth in Section 7.01(d) have been
satisfied and the sum of (x) the Discounted Contract Balances of all
Substitute Contracts substituted under this Section 7.01(a)(1) and (y)
amounts deposited by the Servicer in the Collection Account in
connection with all such substitutions under this Section 7.01(a)(1)
does not exceed 10% of the Pool A Aggregate Discounted Contract Balance
as of the Closing Date.
(2) With respect to Pool A, in addition to the Servicer's
other rights of substitution, the Servicer will have the right (but not the
obligation) at any time in connection with exercise by the Transferor of its
rights of substitution under the Pooling and Trust Agreement, to substitute (a
"Pool A Prepaid Contract Substitution") one or more Substitute Contracts for a
Predecessor Contract in Pool A if (i) the Predecessor Contract has been prepaid
and (ii) the conditions set forth in Section 7.01(d) have been satisfied and the
sum of (x) the Discounted Contract Balance of all Substitute Contracts
substituted under this Section 7.01(a)(2) and Section 4.02(b) and (y) amounts
deposited by the Servicer in the Collection Account in connection with all such
substitutions under this Section 7.01(a)(2) and Section 4.02(b) does not exceed
10% of the Pool A Aggregate Discounted Contract Balance as of the Closing Date.
(b) (1) With respect to Pool B, in addition to the Servicer's
other rights of substitution, the Servicer will have the right (but not the
obligation), at any time in connection with exercise by the Transferor of its
rights of substitution under the Pooling and Trust Agreement, to substitute (a
"Pool B General Contract Substitution") one or more Substitute Contracts for a
Predecessor Contract in Pool B if the conditions set forth in Section 7.01(d)
have been satisfied and the sum of (x) the Discounted Contract Balances of all
Substitute Contracts substituted under this Section 7.01(b)(1) and (y) amounts
deposited by the Servicer in the Collection Account in connection with all such
substitutions under this Section 7.01(b)(1) does not exceed 10% of the Pool B
Aggregate Discounted Contract Balance as of the Closing Date.
(3) With respect to Pool B, in addition to the Servicer's
other rights of substitution, the Servicer will have the right (but not the
obligation), at any time in connection with exercise by the Transferor of its
rights of substitution under the Pooling and Trust Agreement, to substitute (a
"Pool B Prepaid Contract Substitution") one or more Substitute Contracts for a
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Predecessor Contract in Pool B if (i) the Predecessor Contract has been prepaid
and (ii) the conditions set forth in Section 7.01(d) have been satisfied and the
sum of (x) the Discounted Contract Balance of all Substitute Contracts
substituted under this Section 7.01(b)(2) and Section 4.02(b) and (y) amounts
deposited by the Servicer in the Collection Account in connection with all such
substitutions under this Section 7.01(b)(2) and Section 4.02(b) does not exceed
10% of the Pool B Aggregate Discounted Contract Balance as of the Closing Date;
PROVIDED, HOWEVER, that unless the Rating Agency has given its prior consent,
the sum of clauses (x) and (y) in this Section 7.01(b)(2) may not exceed 10% of
the Pool B Aggregate Discounted Contract Balance as of the Closing Date.
(c) Any substitution pursuant to this Section 7.01 or Section
5.03 shall become effective upon (i) delivery to the Trustee and the Transferor
of the Substitute Contract Contribution Form, substantially in the form of
Exhibit D hereto, transferring to the Transferor (and the Issuer, as assignee of
the Transferor) all right, title and interest of the Contributor or the Servicer
in and to the Eligible Contract being substituted and a security interest in the
related Equipment subject thereto, and granting the Trustee a valid and first
priority security interest in such Substitute Contracts and the related
Equipment (other than Equipment relating to a Secured Equipment Note or Finance
Lease and for which the Original Equipment Cost is less than $20,000) subject
thereto, (ii) delivery to the Trustee of amendments to, or executed originals
of, the UCC financing statements referred to in Section 1.01(c) hereof
reflecting the deletion of the Predecessor Contract and the addition of the
Substitute Contract, (iii) delivery to the Contributor by the Transferor of an
instrument, substantially in the form of Exhibit E hereto, transferring to the
Contributor or the Servicer, without representation or warranty, all of the
Transferor's right, title and interest in and to the Predecessor Contract, (iv)
delivery to the Trustee of the sole original, manually executed counterpart of
each Contract that constitutes "chattel paper" or an "instrument" under the UCC
and (v) delivery to the Trustee of an amendment to the Contract Schedule,
reflecting the deletion of the Predecessor Contract and the addition of the
Substitute Contract. Upon delivery of each Substitute Contract and the
Substitute Contract Transfer Form therefor, the definition of "Contributed
Property" will be automatically amended to include such Substitute Contract and
all related property and rights contained in the definition of Contributed
Property.
(d) With respect to a substitution of Contracts in accordance
with the provisions of this Section 7 and Section 5.03 hereof, each proposed
Substitute Contract must (i) be an Eligible Contract; (ii) satisfy all of the
representations and warranties set forth in Section 2.03(a) of this Agreement;
(iii) have a Discounted Contract Balance such that the sum of its Discounted
Contract Balance, including any additional cash delivered by the Servicer into
the Collection Account in connection therewith, is not less than the Discounted
Contract Balance of the Contract(s) being replaced; (iv) not cause the remaining
weighted average life of the Contracts (as calculated based upon the Contract
Payments which constitute the Discounted Contract Balance of the Contracts) to
be materially altered; and (v) in accordance with the Servicer's standard credit
evaluation policies, be of equal or better credit quality than the Contract
being replaced. For purposes of determining compliance with clause (iii) of the
preceding sentence, if more than one Substitute Contract is being provided on
any date, the Discounted Contract Balance of the Substitute Contracts and the
Contracts being replaced shall be determined on an aggregate basis.
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7.02 NOTICE OF SUBSTITUTION. In the Monthly Servicer Report to
be delivered on each Determination Date, the Contributor shall give written
notice to the Trustee, each Noteholder, the Rating Agencies and the Servicer of
each substitution of Contracts pursuant to Section 7.01(a) hereof and of any
substitution or repurchase pursuant to Section 5.03 hereof during the preceding
Collection Period. Such Monthly Servicer Report or other written notice shall
(i) specify the amount of each periodic Contract Payment under the Predecessor
Contract and the amount of each periodic Contract Payment under each Eligible
Contract being substituted, (ii) specify the residual values of the Equipment
subject to the Predecessor Contract and the Equipment subject to the Eligible
Contract being substituted, (iii) specify the Discounted Contract Balance of the
Predecessor Contracts, the Discounted Contract Balance of the Substitute
Contracts, any Excess Substituted Discounted Contract Balance, and any amounts
to be deposited in the Collection Account in connection with such Substitute
Contracts and (iv) with respect to a substitution pursuant to Section 7.01(a)
hereof, be accompanied by an Officer's Certificate, substantially in the form of
Exhibit F hereto, certifying as to compliance with the provisions of Section
7.01(a) hereof.
7.03 CONTRIBUTOR'S AND SERVICER'S SUBSEQUENT OBLIGATIONS. Upon
any substitution of Contracts in accordance with the provisions of this Section
7 or Section 5.03, the Contributor's and the Servicer's obligations hereunder
with respect to the Predecessor Contract shall cease (except for the Servicer's
obligation as set forth in Section 4.03 hereof to take such action as is
necessary and appropriate to maximize net proceeds to be paid to the Trustee)
but the Contributor and the Servicer shall each thereafter have the same
obligations with respect to the Substitute Contract substituted as it has with
respect to all other Contracts subject to the terms hereof.
7.04 RESERVED.
SECTION 8. THE SERVICER
8.01 CORPORATE EXISTENCE OF THE SERVICER. The Servicer will
keep in full force and effect its existence, rights and franchise as a
corporation under the laws of its jurisdiction of incorporation and will
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is necessary to protect the validity
and enforceability of any of the Contracts or to permit performance of the
Servicer's duties under this Agreement.
The Servicer shall not merge or consolidate with any other
Person unless: (i) the entity surviving such merger or consolidation is a
corporation organized under the laws of the United States or any state thereof,
(ii) the surviving entity, if not the Servicer, shall execute and deliver to the
Transferor and the Trustee, in form and substance satisfactory to each of them,
(x) an instrument expressly assuming all of the obligations of the Servicer
hereunder, and (y) an Officer's Certificate to the effect that such Person is a
corporation of the type described in the preceding clause (i), has effectively
assumed the obligations of the Servicer hereunder, that all conditions precedent
provided for in this Agreement relating to such transaction have been complied
with, that all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interest of the Transferor, the Issuer and Trustee in the Trust
Property, and reciting the details of such filings, or stating that no such
action shall be necessary to preserve and protect such interest, (iii) the
Servicer shall deliver to the Trustee a letter
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from each Rating Agency to the effect that such consolidation, merger or
succession will not, in and of itself, result in a downgrading of the ratings
for the Notes and (iv) immediately after giving effect to such transaction, no
Servicer Event of Default, and no event which, after notice or lapse of time, or
both, would become a Servicer Event of Default shall have occurred and be
continuing.
8.02 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS. (a)
Neither the Servicer nor any of the directors, officers, employees or agents of
the Servicer shall incur any liability to the Transferor, the Issuer, the Owner
Trustee, the Trustee or the holders of the Notes, for any action taken or not
taken in good faith pursuant to the terms of this Agreement with respect to any
Contract (including any Defaulted Contract) or the Equipment subject thereto;
PROVIDED, HOWEVER, that this provision shall not protect the Servicer or any
such person against any breach of representations or warranties made by it
herein or in any certificate delivered in conjunction with the purchase of the
Notes or for any liability that would otherwise be imposed by reason of willful
misfeasance or negligence in the performance of its duties hereunder or by
reason of reckless disregard of obligations and duties hereunder.
(b) Except as provided in this Agreement, the Servicer shall
not be under any obligation to appear in, prosecute, or defend any legal action
that shall not be incidental to its duties to service the Contracts in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability; PROVIDED, HOWEVER, that the Servicer may undertake, at its
expense, any reasonable action that it may deem necessary or desirable in
respect of this Agreement and the rights and duties of the parties to this
Agreement and the interests of the Noteholders under this Agreement.
(c) The Servicer, and any director or officer or employee or
agent of the Servicer, may rely in good faith on the advice of counsel selected
by it with due care or on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
8.03 SERVICER NOT TO RESIGN OR BE REMOVED. The Servicer shall
not resign from the servicing obligations and duties hereby imposed on it except
in connection with an assignment permitted by Section 11.02 hereof or upon
determination that such duties hereunder are no longer permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced by an opinion of independent counsel, in form and
substance satisfactory to the Noteholders evidencing more than 50% of the Voting
Rights, to such effect delivered to the Trustee.
Except as provided in Section 10.02 hereof, the Servicer shall
not be removed or be replaced as Servicer with respect to any Contract or
Equipment; PROVIDED, HOWEVER, that upon the occurrence of any Amortization
Event, Noteholders evidencing not less than 66-2/3% of the Voting Rights shall
have the right to replace DVI as Servicer with a successor Servicer in
accordance with Section 10.02 hereof.
No resignation or removal of the Servicer shall in any event
(i) become effective until the successor Servicer shall have assumed the
Servicer's servicing responsibilities and obligations in accordance with Section
10.02 hereof, or (ii) affect the Contributor's obligations pursuant to this
Agreement.
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8.04 FINANCIAL AND BUSINESS INFORMATION. The Servicer will
deliver to the Transferor, the Issuer, the Trustee (who shall forward copies to
each Noteholder) and the Rating Agencies:
(a) promptly upon their becoming available, one copy
of each report (including the Servicer's (or for so long as DVI
Financial Services Inc. is the Servicer, DVI, Inc.'s) annual report to
shareholders and reports on Form 8-K, 10-K, and 10-Q, proxy statement,
registration statement, prospectus and notices filed with or delivered
to any securities exchange, the Securities and Exchange Commission or
any successor agencies, in each case relating to the Transferor or the
Notes;
(b) immediately upon becoming aware of the existence
of any condition or event which constitutes a Servicer Event of
Default, a written notice describing its nature and period of existence
and what action the Servicer is taking or proposes to take with respect
thereto;
(c) promptly upon the Servicer's becoming aware of:
(i) any proposed or pending investigation of
it by any governmental authority or agency, or
(ii) any court or administrative proceeding
which individually or in the aggregate involves the possibility of
materially and adversely affecting the properties, business, profits or
conditions (financial or otherwise) of the Servicer, a written notice
specifying the nature of such investigation or proceeding and what
action the Servicer is taking or proposes to take with respect thereto
and evaluating its merits; and
(d) (i) upon request, the Servicer shall furnish to
the Transferor, the Issuer and the Trustee, within ten (10) Business
Days, a list of all Contracts (by contract number and name of Obligor),
as of the end of the most recent Collection Period, held as part of the
Trust Property, together with a reconciliation of such list to the
Contract Schedule and (ii) with reasonable promptness, any other data
and information which may be reasonably requested from time to time.
8.05 OFFICER'S CERTIFICATES. With each set of documents
delivered pursuant to Section 8.04(a), the Servicer will deliver an Officer's
Certificate stating (i) that the officer signing such Certificate have reviewed
the relevant terms of this Agreement and have made, or caused to be made under
such officer's supervision, a review of the activities of the Servicer during
the period covered by the statements then being furnished, (ii) that the review
has not disclosed the existence of any Servicer Event of Default or, if a
Servicer Event of Default exists, describing its nature and what action the
Servicer has taken and is taking with respect thereto and (iii) that on the
basis of such review the officer signing such certificate is of the opinion that
during such period the Servicer has serviced the Contracts in compliance with
the procedures hereof except as described in such certificate.
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8.06 INSPECTION. The Servicer shall make available to the
Trustee or its duly authorized representatives, attorneys or auditors, and the
Noteholders or their duly authorized representative attorneys or auditors copies
of the Contract Files and the related accounts, records and computer systems
maintained by the Servicer at such times during normal operating hours as the
Trustee shall reasonably request which does not unreasonably interfere with the
Servicer's normal operations or customer or employee relations. Nothing in this
Section 8.06 shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section 8.06. Any expense
incident to the exercise by the Trustee or any Noteholder during the continuance
of a Servicer Event of Default of any right under this Section 8.06 shall be
borne by the Servicer, but any expense due to the exercise of a right by any
such Person prior to the occurrence of a Servicer Event of Default shall be
borne by such Person.
8.07 SERVICER RECORDS. On or before the Closing Date, the
Servicer will indicate in its records that it is servicing and administering
each Contract in its capacity as Servicer hereunder, at the request and for the
benefit of the Transferor (and subject to the provisions of the applicable
Transaction Documents) and its successors and assigns (including the Issuer and
the Trustee).
8.08 INSURANCE. The Servicer will track, on a quarterly basis,
casualty insurance premium payments by Obligors as required by the Contracts, in
the same manner in which the Servicer would service contracts and equipment held
for its own account.
8.09 NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR OR THE
ISSUER. The Servicer covenants and agrees it will not, prior to the date that is
one year and one day after the payment in full of all amounts owing pursuant to
the Transaction Documents, institute against, or join any other Person in
instituting against, either the Transferor or the Issuer, any bankruptcy,
reorganization, receivership, arrangement, insolvency or liquidation proceedings
or other similar proceedings under any federal or state bankruptcy or similar
law. This Section 8.09 shall survive the termination of this Agreement.
8.10 FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE. The
Servicer shall maintain, at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, with coverage appropriate and customary
in the industry with responsible companies on all officers, employees or other
persons acting in any capacity with regard to the Contracts to handle funds,
money, documents and papers relating to the Contracts. Any such fidelity bond
and errors and omissions insurance shall protect and insure the Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons and shall be maintained in a form and amount that
would meet the requirements of a prudent institutional servicer. No provision of
this Section 8.10 requiring such fidelity bond and errors and omissions
insurance shall diminish or relieve the Servicer from its duties and obligations
as set forth in this Agreement. Any such fidelity bond or insurance policy shall
not be cancelled or modified in a materially adverse manner without ten days'
prior written notice to the Rating Agencies. Promptly upon receipt of any notice
from the surety or the insurer that such fidelity bond or insurance policy
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has been terminated or materially modified, the Servicer shall notify the
Trustee and the Rating Agency of any such termination or modification.
SECTION 9. THE CONTRIBUTOR
9.01 CORPORATE EXISTENCE OF THE CONTRIBUTOR. The Contributor
will keep in full force and effect its existence, rights and franchise as a
corporation under the laws of its jurisdiction of incorporation and will
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is necessary to protect the validity
and enforceability of any of the Contracts or to permit performance of the
Contributor's duties under this Agreement.
The Contributor shall not merge or consolidate with any other
Person unless (i) the entity surviving such merger or consolidation is a
corporation organized under the laws of the United States or any jurisdiction
thereof, (ii) the surviving entity, if not the Contributor, shall execute and
deliver to the Transferor, the Servicer and the Trustee, in form and substance
satisfactory to each of them, (x) an instrument expressly assuming all of the
obligations of the Contributor hereunder, and (y) an Officer's Certificate to
the effect that such Person is a corporation of the type described in the
preceding clause (i), has effectively assumed the obligations of the Contributor
hereunder, that all conditions precedent provided for in this Agreement relating
to such transaction have been complied with, and, that all UCC financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect the interest of the
Transferor, the Issuer and Trustee in the Trust Property, and reciting the
details of such filings, or stating that no such action shall be necessary to
preserve and protect such interest, (iii) the Contributor shall deliver to the
Trustee a letter from each Rating Agency to the effect that such consolidation,
merger or succession will not, in and of itself, result in a downgrading of the
ratings for the Notes and (iv) immediately after giving effect to such
transaction, no event of default under any Transaction Document, and no event
which, after notice or lapse of time, or both, would become an event of default
shall have occurred and be continuing.
9.02 FINANCIAL AND BUSINESS INFORMATION. The Contributor will
deliver to the Transferor, the Issuer, the Trustee and the Rating Agencies and,
upon request, to each Noteholder:
(a) promptly upon their becoming available, one copy
of each report (including DVI, Inc.'s annual report to shareholders and
reports on Form 8-K, 10-K, and 10-Q), proxy statement, registration
statement, prospectus and notice filed with or delivered to any
securities exchange, the Securities and Exchange Commission or any
successor agencies;
(b) promptly upon the Contributor's becoming aware of
(i) any proposed or pending investigation of
it by any governmental authority or agency, or
(ii) any court or administrative proceedings
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which individually or in the aggregate involves or may involve the
possibility of materially and adversely affecting the properties,
business, profits or conditions (financial or otherwise) of the
Contributor, a written notice specifying the nature of such
investigation or proceeding and what action the Contributor is taking
or proposes to take with respect thereto and evaluating its merits; and
(c) with reasonable promptness, any other data and
information which may be reasonably requested from time to time.
9.03 INSPECTION. The Contributor shall make available to the
Transferor, the Issuer or the Trustee or their respective duly authorized
representatives, attorneys or auditors and the Noteholders or their duly
authorized representatives, attorneys or auditors its accounts, records and
computer systems regarding any Contract maintained by the Contributor at such
times during normal operating hours as the Trustee, the Issuer or the Transferor
shall reasonably instruct which do not unreasonably interfere with the
Contributor's normal operations or customer or employee relations. Nothing in
this Section 9.03 shall affect the obligation of the Contributor to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Contributor to provide access to information as a result of
such obligation shall not constitute a breach of this Section 9.03. Any expense
incident to the exercise by the Trustee or any Noteholder during the continuance
of a Servicer Event of Default of any right under this Section 9.03 shall be
borne by the Servicer, but any expense due to the exercise of a right by any
such Person prior to the occurrence of a Servicer Event of Default shall be
borne by such Person.
9.04 NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR OR THE
ISSUER. The Contributor covenants and agrees it will not, prior to the date that
is one year and one day after the payment in full of all amounts owing pursuant
to the Indenture, institute against, or join any other Person in instituting
against, the Transferor or the Issuer, any bankruptcy, reorganization,
receivership, arrangement, insolvency or liquidation proceedings or other
similar proceedings under any federal or state bankruptcy or similar law. This
Section 9.04 shall survive the termination of this Agreement.
9.05 ACCOUNTS, BOOKS AND RECORDS.
(a) The Contributor shall maintain accounts and records as to
each Contract accurately and in sufficient detail to permit the reader thereof
to know at any time the status of such Contract, including payments and
recoveries made and payments owing (and the nature of each). Prior to the
transfer of the Contracts to the Transferor, the Contributor will clearly mark
its books and records and each Contract File (including each Contract) to
reflect each sale of a Contract and the Equipment subject thereto to the
Transferor, the resale to the Issuer and to show that the Issuer owns the
Contracts absolutely. The Contributor or the Transferor, as the case may be,
will cause the electronic ledger, the Contract File (including the Contract),
with respect to each Contract and the related Contract and the Contract Schedule
to be clearly and unambiguously marked to show that such Contract and the
related Contract has been contributed by Contributor to the Transferor, resold
by the Transferor to the Issuer and pledged by the Issuer to the Trustee for the
benefit of the Noteholders pursuant to the Indenture.
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(b) The Contributor shall maintain its computer systems so
that, from and after the time of sale hereunder of the Contracts to the
Transferor, the Contributor's master computer records (including archives) that
refer to a Contract and the related Contract shall indicate clearly the interest
of the Transferor in such Contract and that such Contract has been resold to the
Issuer and pledged by the Issuer to the Trustee for the benefit of the
Noteholders. Indication of the Transferor's ownership of a Contract, the resale
to the Issuer, and the pledge of such Contract by the Issuer to the Trustee for
the benefit of the Noteholders shall be deleted from or modified on the
Contributor's computer systems when, and only when, the Contract shall have been
paid in full or purchased or substituted by the Contributor pursuant to the
terms hereof.
9.06 TAX RETURNS. (a) At all times, so long as any of the
Notes or the other obligations secured by the Indenture remain outstanding, the
Contributor and the Transferor shall be members of the same affiliated group
within the meaning of Section 1504 of the Code (the "DVI Group") and shall join
in the filing of a consolidated return for federal income tax purposes.
(b) The Contributor shall promptly pay and discharge, or cause
the payment and discharge of, all federal income taxes (and all other material
taxes) when due and payable by Contributor, the DVI Group, or the Transferor,
except (i) such as may be paid thereafter without penalty or (ii) such as may be
contested in good faith by appropriate proceedings and for which an adequate
reserve has been established and is maintained in accordance with GAAP.
Contributor shall promptly notify the Transferor, the Trustee and the
Noteholders of any material challenge, contest or proceeding pending by or
against Contributor or the DVI Group before any taxing authority.
9.07 INSURANCE. The Contributor will at all times maintain
general liability and excess liability insurance policies in at least the amount
set forth in Section 2.26.
9.08 PROTECTION OF RIGHT, TITLE AND INTEREST.
(a) The Contributor shall not change its name, identity, or
corporate structure in any manner that would, could, or might make any UCC
financing statement or continuation statement filed by the Contributor in
accordance with Section 1.01(c) seriously misleading within the meaning of ss.
9-402(7) of the UCC, unless it shall have given the Transferor at least thirty
(30) days' prior written notice thereof and shall promptly file appropriate
amendments to all previously filed UCC financing statements or continuation
statements.
(b) If at any time the Contributor shall propose to sell,
grant a security interest in, or otherwise transfer any interest in contracts to
any prospective purchaser, lender, or other transferee, the Contributor 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 Contract, shall indicate clearly
that such Contract has been sold to the Transferor and then resold to the Issuer
and pledged by the Issuer to the Trustee for the benefit of the Noteholders.
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(c) The Contributor shall deliver to the Transferor, the
Rating Agencies and the Trustee promptly after the execution and delivery of
each amendment hereto, an opinion of counsel either (i) stating that, in the
opinion of such counsel, all UCC financing statements and continuation
statements necessary to preserve and protect fully the interest of the
Transferor, the Issuer and the Trustee in the Trust Property have been filed or,
with respect to the Equipment, are required to be filed within thirty (30) days
following the Closing Date or the Substitution Date, as applicable, or (ii)
stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interest.
9.09 OTHER LIENS OR INTERESTS. Except for the conveyances
hereunder, the Contributor will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any lien on the
Contracts or any other Trust Property or any interest therein, and the
Contributor shall defend the right, title, and interest of the Transferor, the
Issuer and the Trustee in, to and under the Contracts and the other Trust
Property against all claims of third parties claiming through or under the
Contributor; PROVIDED, HOWEVER, that the Contributor's obligations to the
Trustee under this Section 9.09 shall terminate upon the repayment in full of
the Notes and the expiration of any applicable preference period and, with
respect to any Contract, on the date it is paid in full or purchased by the
Contributor pursuant to Section 5.03 hereof.
9.10 COSTS AND EXPENSES. The Contributor agrees to pay all
reasonable costs and disbursements in connection with the performance of its
obligations hereunder and under the Indenture.
SECTION 10. EVENTS OF DEFAULT
10.01 SERVICER EVENTS OF DEFAULT. The following events and
conditions shall constitute Servicer Events of Default hereunder:
(i) failure on the part of the Servicer (or for so long
as the Contributor is the Servicer, the Transferor) to (A) remit any
payment to the Trustee within the time period required by Section 4.06
hereof or (B) make any Servicer Advance required by Section 5.01
hereof;
(ii) failure to pay to the Trustee on or before the date
when due in accordance with the terms hereof, any deposit required to
be made by the Servicer pursuant to Section 4.02 hereof;
(iii) failure on the part of either the Servicer (or for
so long as the Contributor is the Servicer, the Transferor) duly to
observe or perform in any material respect any other of their
respective covenants or agreements in this Agreement (including without
limitation, failure of the Servicer to deliver a Monthly Servicer
Report on the date required pursuant to Section 6.01 or the delivery of
a Monthly Servicer Report which is materially incorrect) which failure
materially and adversely affects the rights of the Noteholders and
continues unremedied for a period of 30 days after the Servicer becomes
aware of such
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failure or the giving of written notice of such failure (A) to the
Servicer (or the Transferor, if applicable) by the Trustee or (B) to
the Servicer (or the Transferor, if applicable) and the Trustee by
Noteholders evidencing not less than 66-2/3% of the Voting Rights,
taken together.
(iv) if any representation or warranty of the Servicer
made in this Agreement or in any certificate or other writing delivered
pursuant hereto or the Transaction Documents or made by any successor
Servicer in connection with such successor Servicer's assumption of the
duties of the Servicer shall prove to be incorrect in any material
respect as of the time when the same shall have been made;
(v) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Servicer
(or for so long as the Contributor is the Servicer, the Transferor) in
an involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or (B) a
decree or order adjudging the Servicer (or for so long as the
Contributor is the Servicer, the Transferor) bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of or in respect of the
Servicer (or for so long as the Contributor is the Servicer, the
Transferor) under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or
other similar official of the Servicer (or for so long as the
Contributor is the Servicer, the Transferor) or of any substantial part
of the property of either, or ordering the winding up or liquidation of
the affairs of either, and the continuance of any such decree or order
for relief or any such other decree or order unstayed and in effect for
a period of 90 consecutive days;
(vi) the commencement by the Servicer (or for so long as
the Contributor is the Servicer, the Transferor) of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent
by either to the entry of a decree or order for relief in respect of
the Servicer (or for so long as the Contributor is the Servicer, the
Transferor) in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization, or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against either, or the filing by either of a petition or
answer or consent seeking reorganization or relief under any applicable
federal or state law, or the consent by either to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator, or similar
official of the Servicer (or for so long as the Contributor is the
Servicer, the Transferor) or of any substantial part of the property of
either, or the making by either of an assignment for the benefit of
creditors, or the failure by the Servicer (or for so long as the
Contributor is the Servicer, the Transferor) to pay its debts generally
as they become due, or the taking of corporate action by the Servicer
(or for so long as the Contributor is the Servicer, the Transferor) in
furtherance of any such action;
(vii) any assignment by the Servicer, or any attempt by
the Servicer to assign its duties or rights hereunder, except as
specifically permitted hereunder;
37
<PAGE>
(viii) (A) the failure of the Servicer to make one or more
payments with respect to aggregate recourse indebtedness for borrowed
money exceeding $2,000,000 or (B) the occurrence of any other event or
the existence of any other condition, the effect of which event or
condition is to cause more than $2,000,000 of aggregate recourse
indebtedness for borrowed money of the Servicer to become due before
its (or their) stated maturity or before its (or their) regularly
scheduled dates of payment, so long as such failure, event or condition
specified in either clause (A) or (B) shall be continuing and shall not
have been waived by the Person or Persons entitled to performance;
(ix) the rendering against the Servicer of a final
judgment, decree or order (all possible appeals having been exhausted)
for the payment of money in excess of $2,000,000 which is uninsured,
and the continuance of such judgment, decree or order unsatisfied and
in effect for any period of 60 consecutive days without a stay of
execution; or
(x) the occurrence of an Amortization Event (so long as
the Contributor is the Servicer).
10.02 TERMINATION. If a Servicer Event of Default shall have
occurred and be continuing, the Trustee shall, upon the request of Noteholders
evidencing more than 66-2/3% of the Voting Rights, give written notice to the
Servicer of the termination of all of the rights and obligations of the Servicer
(but none of the Contributor's obligations hereunder, which shall survive any
such termination) under this Agreement. On the receipt by the Servicer of such
written notice, all rights and obligations of the Servicer under this Agreement,
including without limitation the Servicer's right hereunder to receive Servicing
Fees accruing subsequent to such termination date, but none of the Contributor's
obligations hereunder, shall cease and the same shall pass to and be vested in,
and assumed by, the Trustee pursuant to and under this Agreement and the
Indenture subject to the provisions of Section 10.03; and, without limitation,
the Trustee is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, any and all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and assignment of any Contract and
the related Contract and Equipment or such passing, vesting or assumption or to
cause Obligors to remit all future Contract Payments and other amounts due under
any Contract to such account as shall be specified by the Trustee. The Servicer
may be removed only pursuant to a Servicer Event of Default.
10.03 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 10.02 hereof, the Trustee (subject to subsection
(b) hereof) shall be the successor in all respects to the Servicer in its
capacity as servicer under this Agreement of the Contracts and, to such extent,
shall be subject to all the responsibilities, duties and liabilities (other than
the duty to advance funds and to indemnify) relating thereto placed on the
Servicer by the terms and provisions hereof (but not the obligations of the
Contributor contained herein which shall survive any such termination as above
provided) and shall be entitled to receive from the Transferor the Servicing Fee
and other servicing compensation provided for in Section 4.04 hereof; PROVIDED
that the Trustee shall in no
38
<PAGE>
way be responsible or liable for any action or actions of the Servicer before
the time the Servicer receives such a notice of termination.
(b) The Trustee may, if it is unwilling or unable to act as
the successor Servicer, give notice of such fact to each Noteholder and (i)
appoint a successor Servicer with a net worth of at least $15,000,000 and
reasonably acceptable to Noteholders evidencing more than 50% of the Voting
Rights and whose regular business includes the servicing of receivables arising
from equipment similar to the Equipment, as the successor Servicer hereunder to
assume all of the rights and obligations of the Servicer hereunder, including,
without limitation, the Servicer's right hereunder to receive the Servicing Fee
(but not the obligations of the Contributor contained herein) or, (ii) if no
such institution is so appointed, petition a court of competent jurisdiction to
appoint an institution meeting such criteria as the Servicer hereunder. Pending
appointment of a successor Servicer hereunder, the Trustee shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the Trustee shall cause such successor Servicer to enter into a
servicing agreement substantially in the form of this Agreement except that such
agreement shall not include any of the Contributor's representations, warranties
or obligations and the Trustee may make arrangements for the compensation of
such successor Servicer out of payments on Contracts and the related Contracts
as it and such successor Servicer shall agree; PROVIDED, HOWEVER, that no such
compensation shall be in excess of that provided in Section 4.04 hereof. Neither
the Trustee nor a Successor Servicer shall be deemed to be in default hereunder
by reason of its failure to make, or its delay in making, any distribution
hereunder or any portion thereof which failure or delay was caused by (i) the
failure of the prior Servicer to deliver, or any delay in delivering, cash,
documents or records to it, or (ii) restrictions imposed by any regulatory
authority having jurisdiction over the prior Servicer.
10.04 SERVICER TO COOPERATE. The Servicer hereby agrees to
cooperate with the successor Servicer appointed in accordance with Section 10.02
or 10.03 hereof, as applicable, in effecting the termination and transfer of the
responsibilities and rights of the Servicer hereunder to the successor Servicer,
including, without limitation, the execution and delivery of assignments of UCC
financing statements, and the transfer to the successor Servicer for
administration by it of all cash amounts which shall at the time be held by the
Servicer or thereafter received with respect to the Contracts and the related
Contracts. The Servicer hereby agrees to transfer to any successor Servicer its
electronic records and all other records, correspondence and documents relating
to the Contracts and the related Contracts in the manner and at such times as
the successor Servicer shall reasonably request. The Servicer hereby designates
the successor Servicer its agent and attorney-in-fact to execute transfers of
UCC financing statements (including any and all UCC financing statements naming
an individual Obligor as debtor and the Contributor as secured party) and any
other filings or instruments which may be necessary or advisable to effect such
transfer of the Servicer's responsibilities and rights hereunder. Upon any such
termination or appointment of a successor Servicer, the Trustee shall give
prompt written notice thereof to each Noteholder in the manner provided in the
Indenture.
10.05 REMEDIES NOT EXCLUSIVE. Nothing in the preceding
provisions of this Section 10 shall be interpreted as limiting or restricting
any rights or remedies which the Transferor, the Issuer, the Trustee, the
Noteholders or any other Person would otherwise have at law or in equity
39
<PAGE>
on account of the breach or violation of any provision of this Agreement by the
Servicer, including without limitation the right to recover full and complete
damages on account thereof to the extent not inconsistent with Section 8.02
hereof.
10.06 WAVIER OF PAST DEFAULTS. Holders of Notes evidencing
more than 50% of the Voting Rights 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 default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon except to the extent expressly so waived.
SECTION 11. ASSIGNMENT
11.01 ASSIGNMENT TO TRUSTEE. It is understood that this
Agreement and all rights of the Transferor hereunder and with respect to the
Contributed Property will be assigned by the Transferor to the Issuer, and then
assigned by the Issuer to the Trustee, for the benefit of the Trustee and the
Noteholders, and may be subsequently assigned by the Trustee to any successor
Trustee. Each of the Contributor and the Servicer hereby expressly agrees to
each such assignment and agrees that all of its duties, covenants, obligations,
indemnities, representations and warranties hereunder, and all of the rights and
remedies of the Transferor hereunder, shall be for the benefit of, and may be
enforced directly by, the Issuer, the Trustee, the Noteholders and any successor
to or assignee of any thereof.
11.02 ASSIGNMENT BY CONTRIBUTOR OR SERVICER. None of the
respective rights or obligations of the Contributor and the Servicer hereunder
may be assigned without the prior written consent of the Transferor and the
Trustee (acting upon the instructions of Noteholders evidencing not less than
66-2/3% of the Voting Rights); PROVIDED that nothing herein shall preclude the
Servicer from performing its duties hereunder through the use of agents to the
extent that such use is consistent with the Servicer's business practices in
dealing with similar contracts and equipment for its own account, and PROVIDED,
FURTHER, that the use of an agent shall not relieve the Servicer from any of its
obligations hereunder.
SECTION 12. NATURE OF CONTRIBUTOR'S OBLIGATIONS AND SECURITY THEREFOR
12.01 CONTRIBUTOR'S OBLIGATIONS ABSOLUTE. The obligations of
the Contributor hereunder, and the rights of the Issuer and the Trustee, as
assignee of the Transferor, in and to all amounts payable by the Contributor
hereunder, shall be absolute and unconditional and shall not be subject to any
abatement, reduction, setoff, defense, counterclaim or recoupment whatsoever
including, without limitation, abatements, reductions, setoffs, defenses,
counterclaims or recoupments due or alleged to be due to, or by reason of, any
past, present or future claims which the Contributor may have against the
Servicer, the Issuer, the Transferor, the Trustee, any holder of the Notes or
any other Person for any reason whatsoever; nor, except as otherwise expressly
40
<PAGE>
provided herein, shall this Agreement terminate, or the respective obligations
of the Transferor, the Contributor or the Servicer be otherwise affected, by
reason of any defect in any Contract or in any unit of Equipment or in the
respective rights and interests of the Transferor, the Issuer, the Contributor
and the Trustee in any thereof, or by reason of any liens, encumbrances,
security interests or rights of others with respect to any Contract or any unit
of Equipment, or any failure by the Transferor, or the Servicer to perform any
of its obligations herein contained, or by reason of any other indebtedness or
liability, howsoever and whenever arising, of the Transferor, the Issuer, the
Servicer, the Trustee or any holder of the Notes to the Contributor or any other
Person or by reason of any insolvency, bankruptcy, or similar proceedings by or
against the Contributor, the Servicer, the Transferor, the Issuer, the Trustee
or any other Person or for any other cause whether similar or dissimilar to the
foregoing, any present or future law to the contrary notwithstanding, it being
the intention of the parties hereto that all obligations of the Contributor
hereunder and all amounts payable by the Contributor hereunder shall continue to
be due and payable in all events and in the manner and at the times herein
provided unless and until the obligation to perform or pay the same shall be
terminated or limited pursuant to the express provisions of this Agreement;
PROVIDED that nothing in this Section 12.01 shall be interpreted as precluding
the Contributor from pursuing independently any claim it may have against the
Transferor, the Servicer, the Issuer, any holder of the Notes or any other
Person; PROVIDED, FURTHER, that any claims of the Contributor against the
Transferor shall be subordinate in right of payment to amounts due and owing to
the Trustee under the Indenture and any amounts received by the Contributor on
such claims shall be held in trust by the Contributor for the Trustee and turned
over to the Trustee until such time as all amounts due the Trustee under the
Transaction Document are fully paid.
12.02 POWER OF ATTORNEY. Each of the Contributor and Servicer
hereby grants to each of the Transferor and the Trustee the power as its
attorney-in-fact (i) to file UCC financing statements in the appropriate offices
evidencing the conveyance of the Contracts and other Contributed Property to the
Transferor and (ii) in the event an event of default exists under any
Transaction Document, to do any and all other acts as may be necessary or
appropriate to effect the transaction contemplated herein. The Contributor will
execute any document or instrument deemed necessary by the Transferor or the
Trustee to effect or to evidence this power of attorney. All costs associated
with such filings or instructions shall be paid by the Contributor.
SECTION 13. MISCELLANEOUS PROVISIONS
13.01 SALE. The Contributor agrees to treat the conveyances to
the Transferor of the Contributor's interest in the Contracts and Equipment
pursuant to the terms of this Agreement for all purposes other than taxes
measured by income (including, without limitation, financial accounting purposes
of the Contributor on a stand alone basis) as a sale of the Contributor's
interest in the Contracts and Equipment on all relevant books, records,
financial statements and other applicable documents. The execution and delivery
of this Agreement shall constitute an acknowledgment by the Contributor and the
Transferor that each intends that the assignment and transfer herein
contemplated constitutes an outright sale and assignment to the Transferor by
the Contributor of its interest in the Contracts and the other Contributed
Property, and not for security, conveying good title in such interests free and
clear of any liens, and that such interest shall not be
41
<PAGE>
a part of the Contributor's estate in the event of the bankruptcy or the
occurrence of another similar event, of, or with respect to, the Contributor. In
the event that such conveyance is determined to be made as security for a loan
made by the Transferor, the Issuer, the Trust or the Noteholders to the
Contributor, the parties intend that the Contributor shall have granted to the
Transferor, and its successors and assigns, a security interest in the Contracts
and other Contributed Property and that this Agreement shall constitute a
security agreement under applicable law.
For federal and state income tax purposes, the conveyance to
the Transferor shall be treated as a sale to the extent of cash remitted to the
Contributor and shall be treated as an additional contribution to the capital of
the Transferor to the extent of the excess of the Discounted Contract Balances
of the Contracts conveyed over the amount of such cash.
13.02 AMENDMENT. This Agreement may be amended from time to
time by the parties hereto, without the consent of any of the Noteholders, to
cure any ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein or to make any other provisions
with respect to matters or questions arising under this Agreement which shall
not be materially inconsistent with the provisions of this Agreement, PROVIDED
that such actions shall not adversely affect in any respect the interests of any
Noteholder.
This Agreement may also be amended from time to time by the
parties hereto with the consent of the Holders of Notes evidencing more than 50%
of the Voting Rights (and with prior written notice to the Rating Agencies) 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 such amendment may not, without
the consent of all of the Noteholders (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
Contracts or distributions that are required to be made for the benefit of such
Noteholders, (ii) reduce the aforesaid percentage of the Voting Rights which are
required to consent to any such amendment, or (iii) modify this Section 13.02.
The Servicer shall deliver copies of any amendment to this Agreement to each of
the Rating Agencies and each Noteholder.
13.03 WAIVERS. No failure or delay on the part of the
Transferor, the Issuer or the Trustee 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
further exercise thereof or the exercise of any other power, right or remedy.
13.04 NOTICES. All communications and notices pursuant hereto
to any party shall be in writing or by telegraph, telex or telecopy and
addressed or delivered to it at its address (or in case of telex or telecopy, at
its telex or telecopy number at such address) as follows or at such other
address as may be designated by it by notice to the other party and, if mailed
or sent by telegraph or telex, shall be deemed given when mailed, communicated
to the telegraph office or transmitted by telex or telecopy:
42
<PAGE>
(a) in the case of the Contributor or Servicer:
500 Hyde Park
Doylestown, Pennsylvania 18901
Attention: Securitization Manager
Telephone: (215) 230-6375
Telecopier: (215) 230-5328
(b) in the case of the Transferor:
500 Hyde Park
Doylestown, Pennsylvania 18901
Attention: Securitization Manager
Telephone: (215) 230-6375
Telecopier: (215) 230-5328
(c) in the case of the Trustee:
181 Fifth Street
St. Paul, Minnesota 55101
Attention: Structured Finance
Telephone: (612) 244-4452
Telecopier: (612) 244-0089
(d) in the case of the Rating Agencies:
Duff & Phelps Credit Rating Co.
55 East Monroe Street
Chicago, IL 60603
Attention: Asset Backed Monitoring Group
Telephone: (312) 368-3100
Telecopier: (312) 263-2852
43
<PAGE>
Fitch IBCA, Inc.
One State Street Plaza
New York, NY 10004
Attention: Ms. Wendy Geneen Cohn
Telephone: (212) 908-0681
Telecopier: (212) 480-4438
Moody's Investors Service, Inc.
99 Church Street, 4th Floor
New York, NY 10007
Attention: ABS Monitoring Department
Telephone: (212) 553-0300
Telecopier: (212) 553-3856
13.05 COSTS AND EXPENSES. The Contributor will pay all
reasonable expenses incident to the performance of its obligations under this
Agreement and any other Transaction Document and the Contributor agrees to pay
all reasonable out-of-pocket costs and expenses of the Transferor, including
fees and expenses of counsel, in connection with the enforcement of any
obligation of the Contributor hereunder.
13.06 THIRD PARTY BENEFICIARIES. The Issuer, the Trustee and
the Noteholders are express third party beneficiaries to this Agreement.
13.07 SURVIVAL OF REPRESENTATIONS. The respective agreements,
representations, warranties and other statements by the Contributor and the
Transferor set forth in or made pursuant to this Agreement shall remain in full
force and effect and will survive the Closing Date.
13.08 CONFIDENTIAL INFORMATION. The Transferor agrees that it
will neither use nor disclose to any person the names and addresses of the
Obligors, except in connection with the enforcement of the Transferor's rights
hereunder, under the Contracts, under the applicable Transaction Documents or as
required by law.
13.09 HEADINGS AND CROSS-REFERENCES. The various headings in
this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement. References in this
Agreement to Section names or numbers are to such Sections of this Agreement.
13.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF.
13.11 CONSENT TO JURISDICTION. Each of the parties hereto
irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in the Borough of Manhattan in the City of New York over any suit,
action or proceeding arising out of or relating to this Agreement. Each
44
<PAGE>
of the parties hereto irrevocably waives, to the fullest extent permitted by
law, any objection which it may have to the laying of the venue of any such
suit, action or proceeding brought in such a court and any claim that any such
suit, action or proceeding brought in such a court has been brought in any
inconvenient forum. Each of the parties hereto agrees that the final judgment in
any such suit, action or proceeding brought in such a court shall be conclusive
and binding upon each of the parties hereto and may be enforced by the courts of
New York (or any other courts to the jurisdiction of which it is subject) by a
suit upon such judgment, PROVIDED that service of process is effected upon it as
permitted by law; PROVIDED, HOWEVER, that each of the parties hereto does not
waive, and the foregoing provisions of this sentence shall not constitute or be
deemed to constitute a waiver of, (i) any right to appeal any such judgment, to
seek any stay or otherwise to seek reconsideration or review of any such
judgment or (ii) any stay of execution or levy pending an appeal from, or a
suit, action or proceeding for reconsideration or review of, any such judgment.
13.12 COUNTERPARTS. This Agreement may be executed in two or
more counterparts and by different parties on separate counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
45
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed by their respective officers thereunto duly authorized as of
the date first above written.
DVI FINANCIAL SERVICES INC.
By: /s/ Lisa J. Cruikshank
--------------------------
Name: Lisa J. Cruikshank
Title: Vice President
DVI RECEIVABLES CORP.
By: /s/ Lisa J. Cruikshank
--------------------------
Name: Lisa J. Cruikshank
Title: Vice President
<PAGE>
EXHIBIT A
CONTRACT SCHEDULE
-----------------
A-1
<PAGE>
EXHIBIT B
MONTHLY SERVICER REPORT
-----------------------
B-1
<PAGE>
EXHIBIT C
RESERVED
--------
C-1
<PAGE>
EXHIBIT D
SUBSTITUTE CONTRACT TRANSFER FORM
---------------------------------
DVI Financial Services Inc. (the "Contributor") and DVI
Receivables Corp. (the "Transferor"), pursuant to the Contribution and Servicing
Agreement, dated as of December 1, 1998 (the "Contribution and Servicing
Agreement"), hereby confirm their understanding with respect to the contribution
by the Contributor to the Transferor of those substitute Contracts listed on the
Schedule 1 attached hereto (the "Substitute Contracts"), together with a
security interest in all of the Contributor's right, title and interest in and
to the related Equipment and other related property described herein.
CONVEYANCE OF SUBSTITUTE CONTRACTS. The Contributor hereby
makes a capital contribution to the Transferor of all of Contributor's rights,
title and interest in, to, and under (i) the Substitute Contracts listed on
Schedule 1 hereto including, without limitation, its interests in the proceeds
of such Substitute Contracts, the right to receive all amounts due or to become
due thereunder after __________ (the "Cut-off Date"), but excluding any Retained
Interest, (ii) the Contract Files relating to such Contracts, (iii) a security
interest in the Equipment subject to such Substitute Contracts, (iv) any
remarketing agreement to the extent specifically relating to a Substitute
Contract, and all guarantees, cash deposits or credit support (other than any
accounts receivable of the related Obligor) supporting or securing payment of
any arrangements with the vendor, dealer or manufacturer of the Equipment to the
extent specifically relating to any Substitute Contract, (v) any insurance
carried by any Obligor under any Substitute Contract (or the related Equipment)
and (vi) all income, payments and proceeds of the foregoing.
The Contributor hereby confirms that:
(1) On or prior to ___________ (the "Substitution Date), the
Contributor shall have deposited in the Collection Account all collections in
respect of the Substitute Contracts that were due on or after the related
Cut-off Date;
(2) As of the Substitution Date, the Contributor was not
insolvent nor will it be made insolvent by such transfer nor is any of them
aware of any pending insolvency;
(3) Each Substitute Contract is an Eligible Contract;
(4) On or prior to the Substitution Date, the Contributor
shall have delivered to the Trustee the sole original, manually executed
counterpart of each Substitute Contract that constitutes "chattel paper" or an
"instrument", as such terms are defined in the UCC;
(5) The sum of the Discounted Contract Balances as of the
Cut-off Date of the Substitute Contracts listed on Schedule 1 attached hereto is
$__________;
(6) When the Substitute Contracts are added to the Trust
Property, all representations and warranties will be true and correct as of the
Substitution Date unless any breach
D-1
<PAGE>
of such representations and warranties resulting from the inclusion of such
Substitute Contract shall have been waived in advance by Noteholders evidencing
more than 50% of the Voting Rights;
(7) The Contributor has delivered to the Trustee evidence of
all UCC filings necessary to give the Trustee a perfected first priority
security interest in the Substitute Contract and the related Equipment (other
than Equipment relating to a Secured Equipment Note or Finance Lease and for
which the Original Equipment Cost is less than $20,000);
(8) Such Substitute Contract(s) shall be added to, and
constitute a part of, [Pool A] [Pool B]; and
(9) Such Substitute Contract(s) is/are being substituted
pursuant to [Section 5.03 of the Agreement] [Section 7.01(a)(1) of the
Agreement] [Section 7.01(a)(2) of the Agreement] [Section 7.01(b)(1) of the
Agreement] [Section 7.01(b)(2) of the Agreement].
All terms and conditions of the Contribution and Servicing
Agreement and the other Transaction Documents with respect to the Contributor
and the Substitute Contracts have been complied with and are hereby ratified,
confirmed and incorporated herein, PROVIDED that in the event of any conflict,
the provisions of this Substitute Contract Transfer Form shall control over the
conflicting provisions of the Contribution and Servicing Agreement.
Terms capitalized herein and not defined herein shall have
their respective meanings as set forth in the Contribution and Servicing
Agreement.
DVI FINANCIAL SERVICES INC.
By:______________________________
Name:____________________________
Title:___________________________
DVI RECEIVABLES CORP.
By:______________________________
Name:____________________________
Title:___________________________
D-2
<PAGE>
EXHIBIT E
FORM OF RE-ASSIGNMENT BY TRANSFEROR
PURSUANT TO SECTION 5.03(b) OR 7.01(c) OF THE
CONTRIBUTION AND SERVICING AGREEMENT
DVI Receivables Corp. (the "Transferor") pursuant to the
Contribution and Servicing Agreement, dated as of December 1, 1998, between the
Transferor and DVI Financial Services Inc. (the "Contributor") does hereby sell,
transfer, assign, deliver and otherwise convey to Contributor, without recourse,
representation or warranty, all of the Transferor's right, title and interest in
and to all of the Predecessor Contracts listed on Schedule A hereto and all
security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this ______
day of ___________.
DVI RECEIVABLES CORP.
By:______________________________
Name:____________________________
Title:___________________________
E-1
<PAGE>
EXHIBIT F
FORM OF OFFICER'S CERTIFICATE PURSUANT TO SECTION 7
---------------------------------------------------
The undersigned certifies that the undersigned is a duly
authorized officer of DVI Financial Services Inc. (the "Contributor"), and that,
as such the undersigned is authorized to execute and deliver this certificate on
behalf of the Contributor, and further certifies pursuant to Section 7.02 of the
Contribution and Servicing Agreement (the "Agreement") dated as of December 1,
1998, between the Contributor and DVI Receivables Corp. (the "Transferor"), that
to his or her knowledge, the Contributor's contribution to the Transferor of
those Substitute Contracts listed in Schedule 1 attached hereto, together with
all of the Contributor's right, title and interest in and to the related
Contracts and the related Contributed Property, is in compliance with Section 7
of the Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name.
Date:
DVI RECEIVABLES CORP.
By:______________________________
Name:____________________________
Title:___________________________
F-1
<PAGE>
EXHIBIT G
FORMS OF CONTRACTS
------------------
Copies are on file at the offices of US Bank Trust National
Association, as Indenture Trustee, and are available upon request.
G-1
<PAGE>
EXHIBIT H
UNDERWRITING GUIDELINES
-----------------------
Copies are on file at the offices of US Bank Trust National
Association, as Indenture Trustee, and are available upon request.
H-1
EXHIBIT 4.2
<PAGE>
================================================================================
POOLING AND TRUST AGREEMENT
------------------------------------
between
DVI RECEIVABLES CORP.,
as Transferor
and
WILMINGTON TRUST COMPANY,
as Owner Trustee of
DVI BUSINESS TRUST 1998-2,
Issuer
------------------------------------
dated as of
December 1, 1998
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.01. DEFINITIONS...................................................................-2-
ARTICLE II
ORGANIZATION OF ISSUER;
CONVEYANCE OF TRUST PROPERTY
SECTION 2.01. NAME..........................................................................-3-
SECTION 2.02. OFFICE........................................................................-3-
SECTION 2.03. PURPOSES AND POWERS...........................................................-3-
SECTION 2.04. APPOINTMENT OF THE OWNER TRUSTEE..............................................-4-
SECTION 2.05. DECLARATION OF TRUST; TAXES...................................................-4-
SECTION 2.06. CONVEYANCE OF TRANSFERRED PROPERTY............................................-4-
SECTION 2.07. TITLE TO TRANSFERRED PROPERTY.................................................-5-
SECTION 2.08. CONDITIONS TO TRANSFER........................................................-5-
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. ORGANIZATION AND GOOD STANDING.................................................-7-
SECTION 3.02. AUTHORIZATION..................................................................-7-
SECTION 3.03. BINDING OBLIGATION.............................................................-7-
SECTION 3.04. NO VIOLATION...................................................................-7-
SECTION 3.05. NO PROCEEDINGS.................................................................-7-
SECTION 3.06. APPROVALS......................................................................-8-
SECTION 3.07. ABILITY TO PERFORM.............................................................-8-
SECTION 3.08. EQUIPMENT AND CONTRACTS........................................................-8-
SECTION 3.09. PRINCIPAL EXECUTIVE OFFICE.....................................................-8-
SECTION 3.10. NO PRIOR ASSIGNMENTS...........................................................-9-
SECTION 3.11. FAIR CONSIDERATION.............................................................-9-
SECTION 3.12. NONCONSOLIDATION...............................................................-9-
SECTION 3.13. ORDINARY COURSE; NO INSOLVENCY................................................-10-
SECTION 3.14. ASSETS AND LIABILITIES........................................................-10-
SECTION 3.15. VALID TRANSFER................................................................-10-
SECTION 3.16. ABILITY TO PAY DEBTS..........................................................-10-
SECTION 3.17. BULK TRANSFER PROVISIONS......................................................-10-
SECTION 3.18. TRANSFER TAXES................................................................-10-
SECTION 3.19. REPRESENTATIONS AND WARRANTIES OF THE BANK...................................-11-
i
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ARTICLE IV
COVENANTS OF THE TRANSFEROR, THE ISSUER AND THE OWNER TRUSTEE
SECTION 4.01. COVENANTS OF THE TRANSFEROR..................................................-13-
SECTION 4.02. NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR................................-14-
SECTION 4.03. NO PETITION AGAINST TRANSFEROR OR ISSUER.....................................-14-
ARTICLE V
RIGHTS OF TRANSFEROR IN THE ISSUER
SECTION 5.01. RIGHTS OF TRANSFEROR.........................................................-15-
SECTION 5.02. TRANSFERS OF BENEFICIAL INTEREST IN ISSUER...................................-15-
ARTICLE VI
CONCERNING THE SERVICER
SECTION 6.01. SERVICING DUTIES.............................................................-16-
SECTION 6.02. ADMINISTRATIVE DUTIES........................................................-16-
ARTICLE VII
SUBSTITUTION OF CONTRACTS
SECTION 7.01. SUBSTITUTION..................................................................-19-
SECTION 7.02. NOTICE OF SUBSTITUTION.......................................................-19-
SECTION 7.03. CONTRIBUTOR'S AND TRANSFEROR'S SUBSEQUENT OBLIGATIONS........................-19-
SECTION 7.04. WARRANTY AND REPURCHASES.....................................................-19-
ARTICLE VIII
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE
SECTION 8.01. GENERAL AUTHORITY............................................................-20-
SECTION 8.02. SPECIFIC AUTHORITY...........................................................-20-
SECTION 8.03. PLEDGE OF TRUST PROPERTY.....................................................-20-
SECTION 8.04. SIGNATURE OF RETURNS.........................................................-20-
SECTION 8.05. RIGHT TO RECEIVE AND RELY UPON INSTRUCTIONS..................................-20-
SECTION 8.06. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN INSTRUCTIONS...........-22-
SECTION 8.07. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS...................-22-
SECTION 8.08. RESTRICTIONS ON ACTION.......................................................-22-
SECTION 8.09. NO IMPAIRING INTERESTS OR VALUE..............................................-22-
ARTICLE IX
CONCERNING THE OWNER TRUSTEE
SECTION 9.01. ACCEPTANCE OF TRUSTS AND DUTIES..............................................-23-
SECTION 9.02. FURNISHING OF DOCUMENTS......................................................-24-
ii
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SECTION 9.03. RELIANCE; ADVICE OF COUNSEL..................................................-24-
SECTION 9.04. NOT ACTING IN INDIVIDUAL CAPACITY............................................-24-
ARTICLE X
COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE
SECTION 10.01. FEES AND EXPENSES OF OWNER TRUSTEE..........................................-26-
SECTION 10.02. RESERVED....................................................................-26-
SECTION 10.03. INDEMNIFICATION.............................................................-26-
ARTICLE XI
TERMINATION OF TRUST
SECTION 11.01. TERMINATION OF TRUST........................................................-27-
SECTION 11.02. NATURE OF INTEREST IN TRANSFERRED PROPERTY..................................-27-
ARTICLE XII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 12.01. RESIGNATION, DISCHARGE OR REMOVAL OF AN OWNER TRUSTEE; SUCCESSOR............-28-
SECTION 12.02. APPOINTMENT OF ADDITIONAL OWNER TRUSTEES....................................-29-
SECTION 12.03. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE..................................-31-
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. AMENDMENT...................................................................-32-
SECTION 13.02. COUNTERPARTS................................................................-32-
SECTION 13.03. GOVERNING LAW...............................................................-33-
SECTION 13.04. NOTICES.....................................................................-33-
SECTION 13.05. SEVERABILITY OF PROVISIONS..................................................-33-
SECTION 13.06. ASSIGNMENT..................................................................-33-
SECTION 13.07. BINDING EFFECT..............................................................-33-
SECTION 13.08. SURVIVAL OF AGREEMENT.......................................................-34-
SECTION 13.09. CAPTIONS....................................................................-34-
SECTION 13.10. EXHIBITS....................................................................-34-
SECTION 13.11. INTEGRATION.................................................................-34-
SECTION 13.12. GENERAL INTERPRETIVE PRINCIPLES.............................................-34-
SECTION 13.13. THIRD PARTY BENEFICIARIES...................................................-35-
SECTION 13.14. CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO VENUE........................-35-
SECTION 13.15. WAIVER OF JURY TRIAL........................................................-35-
SECTION 13.16. COSTS AND EXPENSES..........................................................-35-
</TABLE>
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EXHIBIT A - Subsequent Contract Transfer Form
EXHIBIT B - Form of Officer's Certificate
EXHIBIT C - Form of Re-assignment
iv
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POOLING AND TRUST AGREEMENT
THIS POOLING AND TRUST AGREEMENT, dated as of December 1, 1998
(this "AGREEMENT"), is entered by and among DVI RECEIVABLES CORP. (the
"TRANSFEROR"), a Delaware corporation with its principal office located at 500
Hyde Park, Doylestown, Pennsylvania 19801 and WILMINGTON TRUST COMPANY, a
Delaware banking corporation, with its principal office located at 1100 N.
Market Street, Rodney Square North, Wilmington, Delaware 19890-0001 (herein
referred to in its individual capacity and not as Owner Trustee, as the "BANK",
and hereinafter referred to not in its individual capacity but solely as Owner
Trustee, as the "OWNER TRUSTEE").
W I T N E S E T H:
WHEREAS, the Transferor and the Owner Trustee have formed the
Issuer as a trust in accordance with the Trust Statute;
WHEREAS, the Transferor and the Owner Trustee intend that this
Agreement incorporate and supersede all prior agreements relating to the
formation of the trust and constitute the "governing instrument" of such trust;
WHEREAS, DVI Financial Services Inc. (the "SELLER")
contributed to the Transferor all of its right, title and interest in, to and
under the Contributed Property, in accordance with the terms of the Contribution
and Servicing Agreement (the "CONTRIBUTION AND SERVICING AGREEMENT"), dated as
of the date hereof, among the Seller and the Transferor;
WHEREAS, the Transferor desires to transfer, contribute and
assign all of its right, title and interest in, to and under the Contributed
Property and certain additional property to the Issuer, in exchange for 100% of
the beneficial ownership of the Issuer, upon the terms and conditions
hereinafter set forth; and
WHEREAS, it is contemplated that following such transfer,
contribution and assignment, the Issuer will pledge the Trust Property to the
Trustee, as security for the payment of Notes to be issued pursuant to the
Indenture (the "INDENTURE"), dated as of December 1, 1998, between the Issuer
and U.S. Bank Trust National Association, as indenture trustee (the "TRUSTEE");
and
WHEREAS, the Issuer will pledge and assign to the Trustee, for
the benefit of the Noteholders, its rights under this Agreement, and the
Transferor agrees that all representations, warranties, covenants and agreements
made by the Transferor herein shall be for the benefit of the Issuer, the
Trustee and the Noteholders;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms used but not
otherwise defined in this Agreement shall have the respective meanings set forth
in the Indenture. Capitalized terms used in this Agreement not otherwise defined
in the Indenture shall have the respective meanings assigned to such terms in
this Agreement.
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ARTICLE II
ORGANIZATION OF ISSUER;
CONVEYANCE OF TRUST PROPERTY
SECTION 2.01. NAME. The name of the trust created hereby shall
be DVI Business Trust 1998-2, in which name the Owner Trustee may conduct the
business and affairs of the trust, enter into contracts on behalf of the trust
and sue and be sued on behalf of the trust. The trust created hereunder may also
be referred to as the Issuer. The trust created hereby shall be a trust created
pursuant to the Trust Statute. This Agreement incorporates and supersedes all
prior agreements relating to the formation of the trust and constitutes the
"governing instrument" of such trust.
SECTION 2.02. OFFICE. The office of the Issuer shall be in
care of the Owner Trustee at the address set forth in Section 13.04, or at such
other address as the Owner Trustee may designate by notice to the Transferor,
the Contributor, the Servicer and the Trustee.
SECTION 2.03. PURPOSES AND POWERS. (a) The purpose of the
Issuer is to engage in the following activities:
(i) to issue, transfer and exchange the Notes
pursuant to the Indenture, to sell the Notes pursuant to the
Underwriting Agreement (or, with respect to any Notes not sold
thereby, pursuant to one or more Note Purchase Agreements) and
to make payments or cause payments to be made on the Notes;
(ii) to acquire the Transferred Property;
(iii) to hold and manage the Transferred Property;
(iv) to assign, grant, transfer, pledge, mortgage or
convey the Trust Property to the Trustee pursuant to the
Indenture;
(v) to enter into, perform its obligations under, and
perform any other activities contemplated by, this Agreement,
the Indenture, the Underwriting Agreement and any Note
Purchase Agreements; and
(vi) to engage only in those activities, including
the entering into agreements, that are necessary, suitable or
convenient to accomplish the foregoing or are incidental
thereto or connected therewith, subject to the explicit terms
of this Agreement.
The Issuer is hereby authorized to engage in the foregoing activities, and is
authorized and directed to execute and enter into the aforementioned agreements
and any documents necessary or incidental in connection therewith. The Issuer
shall not engage in any activities other than in connection with, or relating
to, the foregoing and other than those required or authorized by the terms of
this
-3-
<PAGE>
Agreement, the Indenture, the Underwriting Agreement and the Note Purchase
Agreements, except as are incidental to and necessary to accomplish such
activities.
(b) The Issuer shall always be a Special Purpose Entity.
The Owner Trustee shall not knowingly take any action in
contravention with any of the foregoing. The Transferor agrees not to instruct
the Owner Trustee to take any action that would violate the terms of this
Section 2.03.
SECTION 2.04. APPOINTMENT OF THE OWNER TRUSTEE. The Transferor
hereby appoints the Bank as Owner Trustee of the Issuer, effective as of the
date hereof, to have all the rights, powers and duties set forth herein and in
the Trust Statute and, in connection with the filing of the certificate of trust
in accordance with Section 3801 of the Trust Statute (the "CERTIFICATE OF
TRUST"), with respect to accomplishing the purposes of the trust created
hereunder. The Bank hereby accepts such appointment subject to the terms and
conditions of this Agreement.
SECTION 2.05. DECLARATION OF TRUST; TAXES. The Owner Trustee
hereby declares that it will hold the Trust Property in trust upon and subject
to the conditions set forth herein for the use and benefit of the Transferor and
the Noteholders. It is the intention of the parties hereto that the Issuer
constitute a trust under the Trust Statute and that this Agreement constitute
the governing instrument of the trust, and it is acknowledged that the Owner
Trustee has caused the filing of the Certificate of Trust with the Secretary of
State of the State of Delaware (the "Secretary of State"). It is the intention
of the parties hereto that the Issuer shall not be treated as an association
taxable as a corporation for federal income tax purposes, and each party hereto
agrees not to take any action that would be inconsistent with that intention.
The parties agree that, unless otherwise required by the Internal Revenue
Service, on the Closing Date, the Issuer will be disregarded as a separate
entity for federal income tax purposes. In the event the Issuer is subsequently
treated as a partnership for federal income tax purposes, the Owner Trustee
agrees to file or cause to be filed annual or other necessary returns, reports
and other forms consistent with the characterization of the Issuer as a
partnership.
SECTION 2.06. CONVEYANCE OF TRANSFERRED PROPERTY.
(a) CONVEYANCE. Upon the terms and conditions herein set
forth, in consideration of the issuance of 100% of the beneficial interest of
the Issuer to the Transferor and for other good and valuable consideration, the
Transferor hereby transfers, assigns and contributes to the Issuer on the
Closing Date and in the case of any Substitute Contracts, the related
Substitution Date, without recourse except as set forth herein, all of the
Transferor's right, title and interest in, to and under the Transferred Property
on the Closing Date and as set forth on any SCTF (as defined in Section 3.02).
All funds received by the Transferor on or in connection with the Transferred
Property that are payable on and after the applicable Cut-off Date shall be
received, held and applied by the Transferor in trust for the benefit of the
Issuer as owner of the Contracts.
(b) After giving effect to such transfer, assignment and
contribution, the ownership of each such Contract transferred on the related
Contribution Date shall be vested in the
-4-
<PAGE>
Issuer. Pursuant to the terms of the Indenture, the Contract Files and any other
documents relating to each Contract shall be held in trust by the Trustee for
the benefit of the Noteholders. The Transferor agrees to take no action
inconsistent with the Issuer's ownership of any Contract, to promptly indicate
to all parties with a valid interest inquiring as to the true ownership of each
Contract, that each Contract has been transferred, assigned and contributed to
the Issuer and to claim no ownership interest in any such Contracts and the
other Transferred Property.
(c) SUBSTITUTE CONTRACTS. In consideration for the transfer by
the Issuer to the Transferor of any Predecessor Contract transferred to the
Transferor by the Issuer in accordance with the terms and conditions of Article
7 hereof, the Transferor shall transfer to the Issuer on the Substitution Date
related thereto, and the Issuer shall accept, a Substitute Contract, PROVIDED
that such Substitute Contract is in accordance with the terms and conditions of
the Contribution and Servicing Agreement.
SECTION 2.07. TITLE TO TRANSFERRED PROPERTY. (a) Legal title
to all of the Transferred Property shall be vested in the name of the Issuer as
a separate legal entity, except where the laws of any jurisdiction where the
Trust Property may be located requires the property to be vested in the name of
a trustee in which case such property shall be vested in the Owner Trustee or a
co-trustee.
(b) The Issuer and the Transferor hereby confirm that the
transactions contemplated in this Agreement are intended as contributions and
sales rather than as loan transactions. In the event, for any reason, and solely
in such event, any transaction hereunder is construed by any court or regulatory
authority of competent jurisdiction as a loan or other than a contribution and
sale of any or all Transferred Property, then the Transferor shall be deemed to
have hereby pledged to the Issuer as security for the performance by the
Transferor of all of its obligations from time to time arising hereunder and
with respect to any and all purchases effected pursuant hereto, and shall be
deemed to have granted to the Issuer a first priority perfected security
interest in, all of the Transferred Property. In furtherance of the foregoing,
(i) this Agreement shall constitute a security agreement, (ii) the Trustee shall
be deemed to be a bailee for purposes of perfection of the security interest
granted to Issuer, (iii) Issuer shall have all of the rights of a secured party
with respect to the Transferred Property pursuant to applicable law and (iv) in
the manner consistent with the Indenture, the Transferor shall execute all
documents, including, but not limited to, UCC financing statements, to
effectively perfect and evidence Issuer's first priority security interest in
the Transferred Property (and the assignment of such security interest to the
Trustee). The Transferor also covenants not to pledge, assign or grant any
security interest to any other party in any of the Transferred Property. The
consideration received and to be received by the Transferor in exchange for the
assignment, transfer and contribution of the Transferred Property is intended to
be fair consideration having value equivalent to or in excess of the value of
the assets being transferred by the Transferor.
SECTION 2.08. CONDITIONS TO TRANSFER. The Transferor shall not
assign, transfer or contribute any Contracts on the Closing Date or Substitution
Date unless the Transferor, on such date, shall have executed, if applicable,
and delivered to the Issuer, the following:
-5-
<PAGE>
(a) an Officer's Certificate from Transferor to the effect
that, on the Closing Date or Substitution Date, as applicable (after giving
effect to the sale of the Substitute Contracts on such date), all
representations and warranties of the Transferor contained herein shall be true
and correct in all respects, with respect to each Contract individually and all
Contracts in the aggregate, with the same force and effect as though such
representations and warranties had been made on and as of such date (unless such
representations and warranties specifically relate to an earlier date).
(b) an Officer's Certificate from the Contributor to the
effect that, on the Closing Date or Substitution Date, as applicable (after
giving effect to the sale of Substitute Contracts on such date), all
representations and warranties of the Contributor contained in Section 2 of the
Contribution and Servicing Agreement shall be true and correct in all respects,
with respect to each Contract individually and all Contracts in the aggregate as
stated therein, with the same force and effect as though such representations
and warranties had been made on the Closing Date or Substitution Date (unless
such representations and warranties specifically relate to an earlier date).
-6-
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Transferor hereby makes the following representations and
warranties for the benefit of the Issuer, the Owner Trustee, the Trustee and the
Noteholders on which the Issuer relies in acquiring the Transferred Property and
the Trustee and Noteholder rely in participating in the Note financing for the
Issuer pursuant to the Indenture. Such representations and warranties are and
will be true and correct on the Closing Date and on each Substitution Date,
(unless an earlier date is specified therein) and shall survive each
contribution, transfer and assignment to the Issuer of the Transferred Property
and the subsequent pledge thereof by the Issuer pursuant to the Indenture.
SECTION 3.01. ORGANIZATION AND GOOD STANDING. The Transferor
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.
SECTION 3.02. AUTHORIZATION. Transferor has all requisite
power and authority and all necessary licenses and permits to enter into and
perform its obligations under this Agreement and each Subsequent Contract
Transfer Form, in the form substantially similar to Exhibit A hereto (each, a
"SCTF") and the transactions contemplated hereby, and the execution, delivery,
and performance of this Agreement has been duly authorized by the Transferor by
all necessary corporate action.
SECTION 3.03. BINDING OBLIGATION. This Agreement and each SCTF
has been duly and validly executed and delivered by the Transferor and
constitutes a legal, valid and binding obligation of the Transferor, enforceable
against the Transferor in accordance with its terms, subject to bankruptcy,
insolvency and other laws of general application affecting the rights of
creditors and equitable principals (whether considered in a proceeding at law or
in equity).
SECTION 3.04. NO VIOLATION. The consummation of the
transactions contemplated by this Agreement and each SCTF and the fulfillment of
the terms thereof will not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice, lapse of time or
both) a default under the certificate of incorporation or bylaws of the
Transferor, or any indenture, agreement, mortgage, deed of trust or other
instrument to which the Transferor 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 such indenture, agreement, mortgage, deed of trust or other such
instrument, other than this Agreement, or violate any law, or, to the best of
the Transferor's knowledge, any order, rule or regulation applicable to it of
any court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Transferor or
any of its properties.
SECTION 3.05. NO PROCEEDINGS. The Transferor is not subject to
any injunction, writ, action, suit, restraining order or other order of any
nature, and there are no actions, suits, proceedings or investigations to which
the Transferor is a party pending or, to the knowledge of the Transferor,
threatened, before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality (A) asserting the invalidity of any of
this Agreement or any SCTF, (B) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement
-7-
<PAGE>
or any SCTF or (C) seeking any determination or ruling that would materially and
adversely affect the performance by the Transferor of its obligations under, or
the validity or enforceability of, this Agreement or any SCTF.
SECTION 3.06. APPROVALS. All approvals, authorizations,
consents, orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or official, required
in connection with the execution and delivery of, and compliance with the terms
of, this Agreement and each SCTF, have been or will be taken or obtained on or
prior to the related Contribution Date.
SECTION 3.07. ABILITY TO PERFORM. The Transferor has the
ability to perform all of its obligations under this Agreement, each SCTF and
the Contribution and Servicing Agreement.
SECTION 3.08. EQUIPMENT AND CONTRACTS. With respect to each
Contract, the Transferor hereby represents and warrants to the Issuer, as of
each Contribution Date or Substitution Date, as the case may be, that:
(a) The transfer to the Issuer of the Transferor's interest in
such Contract(s) transferred on such date and the grant or assignment of the
Transferor's security interest in the Equipment related thereto pursuant to
Section 2.06 and 2.07 hereof constitutes a valid transfer of all of Transferor's
right, title and interest in such Transferred Property or a grant of a
first-priority perfected security interest therein from the Transferor in favor
of the Issuer, free and clear of any and all claims, charges, liens or security
interests created by the Transferor or any of its affiliates.
(b) The Transferor did not, in the exercise of its interest in
any such Transferred Property, waive, discharge, release or otherwise permit any
modification thereto not in effect or agreed to at the time the Transferor
acquired its interest therein.
(c) Notwithstanding the foregoing clauses (a) and (b), the
Transferor makes no representation or warranty with respect to claims, charges,
liens or security interests created, or waivers, discharges, releases or
modifications made, by the Contributor.
The representations and warranties described in this Section
3.08 shall survive the conveyance of the Transferred Property to the Issuer.
SECTION 3.09. PRINCIPAL EXECUTIVE OFFICE. The principal
executive office of the Transferor is located at 500 Hyde Park, Doylestown, PA
18901, and has been so located for at least four months immediately preceding
the Closing Date. The Transferor has no trade names, fictitious names, assumed
names or "doing business as" names. If (i) any change in either the Transferor's
name, structure or the location of its principal place of business or chief
executive office occurs, then the Transferor shall deliver thirty (30) days'
prior written notice of such change or relocation to the Issuer and the Trustee
and (ii) if the Transferor becomes aware of the change in location of any
Equipment, then, no later than sixty (60) days after the effective date of such
change or relocation, shall file such amendments or statements as may be
required to preserve and protect the Issuer's and the Trustee's interest in the
Contracts, the Equipment and the other Transferred Property. The
-8-
<PAGE>
Transferor shall pay all filing fees or taxes payable in respect of any UCC
financing or continuation statements required to be filed pursuant to Section
1.03 of the Contribution and Servicing Agreement and not paid by the
Contributor.
SECTION 3.10. NO PRIOR ASSIGNMENTS. The Transferor has not
pledged, assigned or encumbered or terminated, in whole or in part, any of the
Transferred Property.
SECTION 3.11. FAIR CONSIDERATION. The consideration received
by the Transferor in connection with the contribution and sale of the
Transferred Property constitutes reasonably equivalent value and fair
consideration for the Transferred Property.
SECTION 3.12. NONCONSOLIDATION. The Transferor is operated in
such a manner that it would not be substantively consolidated with DVI, such
that the separate existence of the Transferor and DVI would not be disregarded
in the event of a bankruptcy or insolvency of the Transferor or DVI, and in such
regard, among other things:
(a) the Transferor is not involved in the day to day
management of DVI;
(b) the Transferor maintains separate corporate records and
books of account from DVI and otherwise observes corporate formalities and has a
separate business office from DVI (which may be at the same address as DVI
PROVIDED that the Transferor and DVI have entered into a written agreement
specifying a reasonable allocation of expenses with respect to overhead and
other shared costs with respect to such premises or a lease agreement);
(c) the financial statements and books and records of the
Transferor prepared after the date of creation of DVI reflect and will reflect
the separate existence of DVI;
(d) the Transferor maintains its assets separately from the
assets of DVI (including through the maintenance of a separate bank account),
the Transferor's funds and assets, and records relating thereto, have not been
and are not commingled with those of DVI and the separate creditors of DVI will
be entitled to be satisfied out of DVI's assets prior to any value in DVI
becoming available to DVI's equityholders or the Transferor's creditors;
(e) all business correspondence of the Transferor and other
communications are conducted in the Transferor's own name and on its own
stationery;
(f) DVI does not act as an agent of the Transferor in any
capacity and the Transferor does not act as agent for DVI, but instead presents
itself to the public as a corporation separate from DVI; PROVIDED that DVI is
the Servicer under the Contribution and Servicing Agreement;
(g) the Transferor will cause its accounting records to be
clearly and unambiguously marked to show that each Contract transferred to the
Issuer has been transferred by the Transferor to the Issuer and pledged by the
Issuer to the Trustee for the benefit of the Noteholders; and
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<PAGE>
(h) the Transferor will at all times maintain two Independent
Directors (as such term is defined in the certificate of incorporation of the
Transferor).
SECTION 3.13. ORDINARY COURSE; NO INSOLVENCY. The transactions
contemplated by this Agreement are being consummated by the Transferor and the
Issuer, respectively, in furtherance of the Transferor's ordinary business
purposes and constitute a practical and reasonable course of action by the
Transferor designed to improve the financial position of the Transferor with no
contemplation of insolvency and with no intent to hinder, delay or defraud any
of its present or future creditors. Neither as a result of the transactions
contemplated by this Agreement, nor immediately before or after such
transactions, will the Transferor be insolvent, and the Transferor has adequate
capital for the conduct of its business and the payment of anticipated
obligations.
SECTION 3.14. ASSETS AND LIABILITIES.
(a) Both immediately before and after the assignment, transfer
and contribution of Contracts (including the right to receive all payments due
or to become due thereunder) and the other Transferred Property, the present
fair salable value of the Transferor's assets will be in excess of the amount
that will be required to pay the Transferor's probable liabilities as they then
exist and as they become absolute and matured.
(b) Both immediately before and after the assignment and
transfer of Contracts and the other Transferred Property, the sum of the
Transferor's assets will be greater than the sum of the Transferor's debts,
valuing the Transferor's assets at a fair salable value.
SECTION 3.15. VALID TRANSFER. This Agreement effects a valid
assignment, transfer and contribution of the Transferor's interest in the
Transferred Property, enforceable against creditors of the Transferor.
SECTION 3.16. ABILITY TO PAY DEBTS. Neither as a result of the
transactions contemplated by this Agreement nor otherwise does the Transferor
believe that it will incur debts beyond its ability to pay or which would be
prohibited by its charter documents or by-laws. The Transferor's assets and cash
flow enable it to meet its present obligations in the ordinary course of
business as they become due.
SECTION 3.17. BULK TRANSFER PROVISIONS. No transfer,
assignment or conveyance of Contracts or the other Transferred Property by the
Transferor to the Issuer contemplated by this Agreement will be subject to the
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction.
SECTION 3.18. TRANSFER TAXES. No transfer, assignment or
conveyance of Transferred Property contemplated by this Agreement is subject to
or will result in any tax, fee or governmental charge payable by the Transferor
or the Issuer to any federal, state or local government ("TRANSFER TAXES"). In
the event that the Transferor or the Issuer receives actual notice of any
Transfer Taxes arising out of the transfer, assignment and conveyance of any
Transferred Property, on written demand by the Issuer, or upon the Transferor
otherwise being given notice thereof, the
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<PAGE>
Transferor shall pay, and otherwise indemnify and hold the Issuer, the Trustee
and the holders of the Notes harmless, on an after-tax basis, from and against
any and all such Transfer Taxes (it being understood that neither the holders of
the Notes nor the Trustee shall have any obligation to pay such Transfer Taxes).
SECTION 3.19. REPRESENTATIONS AND WARRANTIES OF THE BANK. The
Bank hereby makes the following representations and warranties on which the
Transferor relies in contributing, assigning and transferring the Transferred
Property and on which the Noteholders are relying in purchasing the Notes. Such
representations and warranties are made as of the Closing Date, but shall
survive each contribution, assignment and transfer of the respective Transferred
Property to the Issuer and its successors and assigns:
(i) ORGANIZATION. The Bank is a banking corporation
duly organized, validly existing and in good standing under
the laws of the state of its incorporation.
(ii) AUTHORIZATION. EXECUTION AND DELIVERY. The Bank
has all requisite corporate power, authority and legal right
to act as Owner Trustee under this Agreement and has full
trust powers to enter into and perform the obligations of the
Owner Trustee under this Agreement and such actions do not
contravene its certificate of incorporation or by-laws. The
Bank has duly authorized, executed and delivered this
Agreement.
(iii) BINDING OBLIGATION. This Agreement, assuming
due authorization, execution and delivery by the Transferor,
constitutes a legal, valid and binding obligation of the Bank,
enforceable against the Bank in accordance with its terms,
except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter
in effect relating to creditors' rights generally and (B) the
remedy of specific performance and injunctive and other forms
of equitable relief may be subject to certain equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether a proceeding at
law or in equity;
(iv) NO VIOLATIONS. The execution, delivery and
performance by the Bank of this Agreement shall not violate
any provision of any Delaware or federal law or regulation
governing the banking or trust powers of the Bank or any
order, writ, judgment or decree of any court, arbitrator or
governmental authority applicable to the Bank or-any of its
assets;
(v) NO LIENS. The Transferred Property is free of any
Lien attributable to the Bank in its individual capacity and
unrelated to the performance of its duties as Owner Trustee,
except for the rights of the parties to this Agreement, the
Indenture and the transactions contemplated hereby and
thereby;
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(vi) NO PROCEEDINGS. There are no Proceedings or
investigations to which the Bank is a party pending or, to the
knowledge of the Bank, threatened, before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality (A) asserting the invalidity of
this Agreement, (B) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or (C)
seeking any determination or ruling that would materially and
adversely affect the performance by the Bank of its
obligations under, or the validity or enforceability of, this
Agreement; and
(vii) PLACE OF BUSINESS. The Bank's principal place
of business and chief executive office is at Rodney Square
North, 1100 N. Market Street, Wilmington, Delaware 19890-0001.
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ARTICLE IV
COVENANTS OF THE TRANSFEROR, THE ISSUER AND THE OWNER TRUSTEE
SECTION 4.01. COVENANTS OF THE TRANSFEROR. The Transferor
hereby covenants and agrees with the Issuer as follows:
(a) BOOKS AND RECORDS. The Transferor will clearly mark its
books and records to reflect each contribution, assignment and transfer to the
Issuer of all Transferred Property and to show that the Issuer owns the
Transferred Property absolutely.
(b) PRESERVATION OF OFFICE. The Transferor will give the
Issuer and the Trustee 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.
(c) LIENS. The Transferor shall defend the right, title and
interest of the Issuer in the Transferred Property against all claims of third
parties claiming through or under the Transferor (excluding claims arising from
actions of the Contributor, in its capacity as Servicer under the Contribution
and Servicing Agreement, or any agent of DVI as such Servicer).
(d) NO BANKRUPTCY PETITION AGAINST THE ISSUER. The Transferor
covenants and agrees it will not, prior to the date that is one year and one day
after the payment in full of all amounts owing pursuant to the Transaction
Documents, institute against, or join any other Person in instituting against,
either the Issuer or itself, any bankruptcy, reorganization, receivership,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under any federal or state bankruptcy or similar law. This Section 4.01(d) shall
survive the termination of this Agreement.
(e) PROTECTION OF RIGHT, TITLE AND INTEREST.
(i) The Transferor shall not change its name,
identity, or corporate structure in any manner that would,
could, or might make any UCC financing statement or
continuation statement filed by the Contributor in accordance
with Section 1.01(d) of the Contribution and Servicing
Agreement seriously misleading within the meaning of ss.
9-402(7) of the UCC, unless it shall have given the Issuer at
least thirty (30) days' prior written notice thereof and shall
promptly file appropriate amendments to all previously filed
UCC financing statements or continuation statements.
(ii) If at any time the Transferor shall propose to
sell, grant a security interest in, or otherwise transfer any
interest in the Contracts to any prospective lender, or other
transferee, the Transferor shall give to such prospective
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 Contract,
shall
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indicate clearly that such Contract have been sold to the
Issuer and pledged by the Issuer to the Trustee for the
benefit of the Noteholders.
(iii) The Transferor shall deliver to the Issuer, the
Rating Agencies and the Trustee promptly after the execution
and delivery of any amendment hereto that, in the reasonably
commercial judgment of the Trustee, is reasonably likely to
have a material effect upon the Trustee's interests in the
Trust Property, an opinion of counsel either (i) stating that,
in the opinion of such counsel, all UCC financing statements
and continuation statements necessary to preserve and protect
fully the interest of the Transferor, the Issuer and the
Trustee in the Trust Property have been filed or, with respect
to the Equipment, are required to be filed within thirty (30)
days following the related Contribution Date, or (ii) stating
that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
(f) In accordance with the directions of the Issuer or the
Owner Trustee, the Transferor shall administer, perform or supervise the
performance of activities in connection with the Trust Property as are not
covered by any of the provisions set forth in Section 6.02(b) and as are
expressly requested by the Issuer or the Owner Trustee and are reasonably within
the capability of the Transferor.
(g) The Transferor shall not amend its certificate of
incorporation without the prior written consent of the Rating Agencies.
(h) The Transferor shall not issue any securities or cause any
Person of which it is the sole shareholder or economic owner to issue any
securities (other than the Notes, the Class F Instruments and any securities
issued prior to the Closing Date) unless it shall have received from the Rating
Agencies a written confirmation that the issuance of such securities will not
result in a Ratings Effect with respect to any class of Notes.
SECTION 4.02. NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR.
The Issuer covenants and agrees it will not, prior to the date that is one year
and one day after the payment in full of all amounts owing pursuant to the
Transaction Documents, institute against, or join any other Person in
instituting against, either the Transferor or itself, any bankruptcy,
reorganization, receivership, arrangement, insolvency or liquidation proceedings
or other similar proceedings under any federal or state bankruptcy or similar
law. This Section 4.02 shall survive the termination of this Agreement.
SECTION 4.03. NO PETITION AGAINST TRANSFEROR OR ISSUER. The
Owner Trustee hereby covenants and agrees it will not, prior to the date that is
one year and one day after the payment in full of all amounts owing pursuant to
the Transaction Documents, institute against, or join any other Person in
instituting against, either the Transferor or the Issuer, any bankruptcy,
reorganization, receivership, arrangement, insolvency or liquidation proceedings
or other similar proceedings under any federal or state bankruptcy or similar
law. This Section 4.03 shall survive the termination of this Agreement.
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ARTICLE V
RIGHTS OF TRANSFEROR IN THE ISSUER
SECTION 5.01. RIGHTS OF TRANSFEROR. In addition to its rights
under the Transaction Documents, the Transferor shall be entitled to all rights
provided to it under the Trust Statute. No certificate or other written
instrument shall be necessary to evidence the beneficial ownership interest of
the Transferor in the Issuer.
SECTION 5.02. TRANSFERS OF BENEFICIAL INTEREST IN ISSUER. (a)
Notwithstanding anything to the contrary in any other Transaction Document, the
Transferor shall not sell, assign, transfer, mortgage, charge or otherwise
encumber, or suffer any third party to sell, assign, transfer, mortgage, charge
or otherwise encumber, or contract to do or permit any of the foregoing, whether
voluntarily or by operation of law (herein sometimes collectively called a
"TRANSFER" or a "TRANSFER") its beneficial interest in Issuer, although it may
transfer its right to distributions in respect thereof in connection with a
pledge of such right to distributions.
(b) Any purported Transfer of the Transferor's beneficial
interest in Issuer shall be null and void and of no effect whatsoever.
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ARTICLE VI
CONCERNING THE SERVICER
SECTION 6.01. SERVICING DUTIES. Pursuant to the Contribution
and Servicing Agreement, the Servicer has agreed to act as Servicer thereunder
in accordance with the provisions thereof, including, without limitation,
provisions relating to servicing the Contributed Property and its resignation,
liability and removal as Servicer.
SECTION 6.02. ADMINISTRATIVE DUTIES.
(a) DUTIES WITH RESPECT TO THE INDENTURE. The Issuer hereby
appoints the Servicer to act, and the Servicer hereby agrees to act, as an
administrative agent of the Issuer to perform all of the administrative duties
of the Issuer under the Indenture. In addition, the Servicer shall consult with
the Owner Trustee as the Servicer deems appropriate regarding the administrative
duties of the Issuer under the Indenture. The Servicer shall monitor the
performance of the Issuer and shall advise the Owner Trustee when action is
necessary to comply with the Issuer's administrative duties under the Indenture.
The Servicer shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate Persons of all such documents, accounting and
other reports, filings, instruments, certificates and opinions as it shall be
the duty of the Issuer to prepare, file or deliver pursuant to the Indenture. In
furtherance of the foregoing, the Servicer shall take all necessary action that
it is the administrative duty of the Issuer to take pursuant to the Indenture.
(b) DUTIES WITH RESPECT TO THE ISSUER.
(i) In addition to the duties of the Servicer set
forth in the Transaction Documents to which it is a party, the
Servicer shall perform such calculations and shall prepare for
execution by the Issuer or the Owner Trustee or shall cause
the preparation by other appropriate Persons of all such
documents, accounting and other reports, filings, instruments,
certificates and opinions as it shall be the duty of the
Issuer or the Owner Trustee to prepare, file or deliver
pursuant to this Agreement or any of the Transaction Documents
or under state and federal tax and securities laws, and at the
request of the Owner Trustee shall take all appropriate action
that it is the administrative duty of the Issuer to take
pursuant to this Agreement or any of the Transaction Documents
to which the Issuer is a party; PROVIDED, HOWEVER, that once
prepared by the Servicer the Owner Trustee shall retain
responsibility for the distribution of the Schedule K-1s
necessary to enable the Transferor to prepare its federal and
state income tax returns.
(ii) Notwithstanding anything in this Agreement or any
of the Transaction Documents to the contrary, the Servicer
shall be responsible for promptly notifying the Owner Trustee
and the Trustee in the event that any withholding tax is
imposed on the Issuer's payments (or allocations of income) to
Noteholder as contemplated under the Indenture. Any such
notice shall be writing and specify the amount of any
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withholding tax required to be withheld by the Owner Trustee
or the Trustee pursuant to such provision.
(iii) In carrying out the foregoing duties or any of
its other obligations under this Agreement, the Servicer may
enter into transactions with or otherwise deal with any of its
Affiliates; PROVIDED, HOWEVER, that the terms of any such
transactions or dealings shall be in accordance with any
directions received from the Issuer and shall be, in the
Servicer's opinion, no less favorable to the Issuer in any
material respect.
(c) TAX MATTERS. The Servicer shall prepare and file, on
behalf of the Transferor all tax returns, tax elections, financial statements
and such annual or other reports attributable to the activities engaged in by
the Issuer as are necessary for preparation of tax reports, including without
limitation forms 1099. All tax returns will be signed by the Transferor.
(d) NON-MINISTERIAL MATTERS. With respect to matters that in
the reasonable judgment of the Servicer are non-ministerial, the Servicer shall
not take any action pursuant to this Article unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Trustee of the proposed action and the Owner Trustee and, with
respect to items (A), (B), (C) and (D) below, the Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the
Indenture;
(B) the initiation of any claim or lawsuit by the
Issuer and the compromise of any action, claim or lawsuit
brought by or against the Issuer (other than in connection
with the collection of the Contracts);
(C) the amendment, change or modification of this
Agreement or any of the Transaction Documents;
(D) the appointment of successor Note Registrars and
successor Trustees pursuant to the Indenture or the
appointment of Successor Servicers or the consent to the
assignment by the Note Registrar or Trustee of its obligations
under the Indenture; and
(E) the removal of the Trustee.
(e) EXCEPTIONS. Notwithstanding anything to the contrary in
this Agreement, except as expressly provided herein or in the other Transaction
Documents, the Servicer, in its capacity hereunder, shall not be obligated to,
and shall not, (1) make any payments to the Noteholders under the Transaction
Documents, (2) take any other action that the Issuer directs the Servicer not to
take on its behalf or (3) in connection with its duties hereunder assume any
indemnification obligation of any other Person.
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(f) No successor Servicer shall be responsible for any
obligations or duties of the Servicer set forth under this Section 6.01;
provided, however, that in the event DVI is no longer Servicer, DVI shall be
responsible for any obligations or duties of the Servicer set forth under this
Section 6.01.
(g) RECORDS. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer at
any time during normal business hours.
(h) ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Servicer shall furnish to the Issuer from time to time such additional
information regarding the Trust Property as the Issuer shall reasonably request.
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ARTICLE VII
SUBSTITUTION OF CONTRACTS
SECTION 7.01. SUBSTITUTION. In the event that the Contributor
contributes and assigns a Substitute Contract to the Transferor pursuant to
Section 5.03 or Section 7.01 of the Contribution and Servicing Agreement, the
Transferor hereby agrees to contribute, transfer and assign any such Substitute
Contract and any security interest in the related Equipment to the Issuer. In
addition, the Issuer and the Transferor hereby agree to take any action to
facilitate the transfer to the Contributor of any Predecessor Contract,
including (i) delivery to the Transferor by the Issuer of an instrument,
substantially in the form of Exhibit C hereto, transferring to the Transferor,
without representation or warranty, all of the Issuer's right, title and
interest in and to the Predecessor Contract, (ii) delivery to the Contributor by
the Transferor of an instrument, substantially in the form of Exhibit E of the
Contribution and Servicing Agreement, transferring to the Contributor, without
representation or warranty, all of the Transferor's right, title and interest in
and to the Predecessor Contract, (iii) delivery to the Trustee of the original,
manually executed counterpart of each Contract that constitutes "chattel paper"
or an "instrument" under the UCC as appropriate for the purposes of perfecting a
security interest under the UCC, and (iv) delivery to the Trustee of an
amendment to the Contract Schedule, reflecting the deletion of the Predecessor
Contract and the addition of the Substitute Contract.
SECTION 7.02. NOTICE OF SUBSTITUTION. Pursuant to the
Contribution and Servicing Agreement, in the Monthly Servicer Report to be
delivered on each Determination Date, the Servicer shall give written notice to
the Trustee, the Issuer and the Transferor of each substitution of Contracts
pursuant to Section 7.01 hereof during the preceding Collection Period. Such
Monthly Servicer Report or other written notice shall (i) specify the amount of
each periodic Contract Payment under the Predecessor Contract and the amount of
each periodic Contract Payment under each Substitute Contract, (ii) specify the
residual values of the Equipment subject to the Predecessor Contract and the
Equipment subject to the Substitute Contract, (iii) specify the Discounted
Contract Balance of the Predecessor Contracts, the Discounted Contract Balance
of the Substitute Contracts, and any amounts to be deposited in the Collection
Account in connection with such Substitute Contracts and (iv) with respect to a
substitution pursuant to Section 7.01 hereof, be accompanied by an Officer's
Certificate of the Transferor, substantially in the form of Exhibit B hereto,
certifying as to compliance with the provisions of Section 7.01 hereof.
SECTION 7.03. CONTRIBUTOR'S AND TRANSFEROR'S SUBSEQUENT
OBLIGATIONS. Upon any substitution of Contracts in accordance with the
provisions of this Article VII, the Contributor's and the Transferor's
obligations hereunder with respect to the Predecessor Contract shall cease but
the Contributor and the Transferor shall each thereafter have the same
obligations with respect to the Substitute Contract substituted as it has with
respect to all other Contracts subject to the terms hereof.
SECTION 7.04. WARRANTY AND REPURCHASES. The Transferor hereby
conveys to the Issuer its rights and interests granted pursuant to Section 5.03
and Section 4.02(b) of the Contribution and Servicing Agreement.
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ARTICLE VIII
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE
SECTION 8.01. GENERAL AUTHORITY. The Owner Trustee is
authorized to take all actions required or permitted to be taken by the Owner
Trustee pursuant to the terms of this Agreement. It shall be the duty of the
Owner Trustee to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and to administer the
Transferred Property pursuant to the terms of this Agreement.
SECTION 8.02. SPECIFIC AUTHORITY. The Owner Trustee is
authorized, empowered and directed to:
(a) take such action as Transferor shall require in a written
direction delivered to the Owner Trustee; and
(b) take whatever other action shall be required to be taken
by the Owner Trustee by the express terms, and subject to the terms, of
this Agreement.
SECTION 8.03. PLEDGE OF TRUST PROPERTY. (a) On the Closing
Date, the Owner Trustee, on behalf of the Issuer, is hereby authorized,
empowered and directed to execute and deliver such documents and instruments and
take such other actions to cause the Issuer to grant, assign, transfer, pledge,
mortgage, convey and deliver the Trust Property to the Trustee under the
Indenture.
(b) Except as otherwise provided herein, the Owner Trustee is
hereby authorized, empowered and directed to execute and deliver to the Trustee
any notice, instrument, document, agreement or other papers that the Servicer,
any subservicer or the Owner Trustee has determined to be necessary or desirable
in order to enable the Trustee to preserve, perfect, substantiate, continue,
validate or realize upon (in accordance with this Agreement and the Indenture)
the lien of the Indenture.
SECTION 8.04. SIGNATURE OF RETURNS. The Owner Trustee shall
sign on behalf of the Issuer the tax returns and other periodic filings, if any,
required to be filed by the Issuer, unless applicable law requires the
Transferor to sign such documents, in which case the Transferor shall sign such
document.
SECTION 8.05. RIGHT TO RECEIVE AND RELY UPON INSTRUCTIONS. (a)
Subject to the restrictions set forth in Section 8.08 hereof, the Owner Trustee
shall take such action or shall refrain from taking such action under this
Agreement as it shall be directed in writing pursuant to an express provision of
this Agreement or as it shall be directed by the Transferor PROVIDED that such
direction shall not be inconsistent with the terms of this Agreement. The
Transferor agrees that no direction given by it shall be inconsistent with the
terms of this Agreement.
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Without limiting the generality of the foregoing, the Owner
Trustee shall take no action in connection with non-ministerial matters
(including, but not limited to, the following) unless it receives written
approval from the Transferor:
(i) the satisfaction and discharge of the Indenture or
exercise of the Issuer's option to prepay the Notes in
accordance with Article X of the Indenture;
(ii) the initiation of any claim or lawsuit by the
Issuer and the compromise of any claim or lawsuit brought by
or against the Issuer;
(iii) the appointment of successor registrars or
successor Trustees pursuant to the Indenture;
(iv) the decision to remove the Note Registrar or the
Trustee pursuant to the Indenture;
(v) the amendment, change or modification of this
Agreement, the Indenture, the Underwriting Agreement, any Note
Purchase Agreement and any other agreement to which the Issuer
is a party;
(vi) the employment of and direction of any actions of
a co-trustee or separate trustee pursuant to Section 12.02
hereof;
(vii) the designation of successor Rating Agencies;
(viii) the request for release from a Lien;
(ix) the adoption of a plan of liquidation of the
Issuer;
(x) the preparation and filing of tax returns and the
payment of taxes.
(b) Whenever the Owner Trustee is (i) required by the terms of
this Agreement to decide between alternative courses of action, or (ii) unsure
as to the application, intent, interpretation or meaning of any provision of
this Agreement or any other agreement relating to the transactions contemplated
hereby or thereby, or if such provision is ambiguous, the Owner Trustee shall
request instructions in such form as shall be appropriate under the
circumstances from the Transferor with respect to the interpretation of this
Agreement or any other agreement related to the transactions contemplated hereby
or by the Indenture, or from the Trustee with respect to the interpretation of
the Indenture, as to the course of action to be adopted and, to the extent the
Owner Trustee acts in good faith in accordance with such instructions, the Owner
Trustee shall not be liable to any Person; PROVIDED, HOWEVER, that in the event
the Owner Trustee does not receive such instructions within ten days of such
request (or within such shorter reasonable period of time as may be specified in
such request) it may, but shall be under no duty to, take or refrain from taking
such action, not inconsistent with this Agreement, as it shall deem to be in the
best interests of the Transferor.
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SECTION 8.06. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT
OR IN INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to
manage, make any payment in respect of, register, record, sell, dispose of or
otherwise deal with the Transferred Property, or to otherwise take or refrain
from taking any action under, or in connection with, any document contemplated
hereby to which the Issuer is a party, except as expressly provided by the terms
of this Agreement or the Indenture, and no implied duties or obligations shall
be read into this Agreement against the Owner Trustee. Without limiting the
generality of the foregoing, in no event shall the Owner Trustee have any
responsibility to perform any of the duties of the Trustee under the Indenture.
SECTION 8.07. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not deal with any part of the Transferred
Property except (i) in accordance with the powers granted to and the authority
conferred upon the Owner Trustee pursuant to this Agreement, or (ii) in
accordance with instructions delivered to the Owner Trustee pursuant to Section
8.05 hereof.
SECTION 8.08. RESTRICTIONS ON ACTION. The Owner Trustee shall
not take any action (a) that is inconsistent with the purposes set forth in
Section 2.03 hereof, (b) that would result in the Issuer being treated as an
association taxable as a corporation for federal income tax purposes, (c) if the
Owner Trustee has been notified that such action would cause any of the Rating
Agencies to downgrade its rating of any class of the Notes or (d) to cause or to
consent to the filing of a petition in bankruptcy against the Issuer for any
reason until at least 367 days after payment in full of all the Notes, and the
Transferor shall not direct the Owner Trustee to take any such action. The Owner
Trustee shall be under no obligation to exercise any of its rights or powers
vested in it hereunder if the Bank reasonably concludes that the security and
indemnity provided for in Article X of this Agreement is not, at such time,
adequate to cover all reasonable liabilities, fees, costs, expenses (including
outside attorneys' fees) and related charges which are likely to be incurred in
connection with the taking of such action; PROVIDED, HOWEVER, that the decision
of the Owner Trustee to refrain from taking any such action shall not be
construed to relieve the Issuer of any of its obligations under the Notes.
SECTION 8.09. NO IMPAIRING INTERESTS OR VALUE. The Bank, in
its individual capacity, and the Owner Trustee shall take no action which could
impair the interests of the Issuer or the Noteholders in any of the Trust
Property or impair the value of any of the Trust Property. In furtherance but
not in limitation of the foregoing, the Bank agrees that it will not create,
incur, assume or suffer to exist any Lien attributable to it in its individual
capacity upon any of the Trust Property. The Bank agrees that it will, at its
personal cost and expense, and not at the cost and expense of the Trust
Property, the Issuer or any other Person, promptly take such action as may be
necessary to promptly and duly discharge any Lien attributable to it in its
individual capacity and unrelated to the performance of its duties under this
Agreement and the Indenture, and the transactions contemplated hereby. If the
Bank or the Owner Trustee fails to promptly discharge any such Lien, then the
Trustee or the Transferor may discharge such Lien and apply the amounts payable
to the Owner Trustee pursuant to Article X towards reimbursement of such
expenditure.
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ARTICLE IX
CONCERNING THE OWNER TRUSTEE
SECTION 9.01. ACCEPTANCE OF TRUSTS AND DUTIES. (a) The Owner
Trustee accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to the same but only upon the terms of this Agreement.
The Owner Trustee also agrees to disburse all moneys actually received by it
constituting an asset of the Issuer in accordance with the terms of this
Agreement. The Owner Trustee shall not be liable to any Person under any
circumstances, except (i) as specifically set forth in Section 8.09 hereof, (ii)
for damages resulting from the breach of any of the representations and
warranties set forth in Section 3.19 hereof, (iii) for taxes, fees or other
charges on, based on or measured by any fees, commissions or compensation
received by, the Owner Trustee in connection with any of the transactions
contemplated by this Agreement or (iv) for its own willful misconduct, bad faith
or gross negligence.
(b) In particular, but not by way of limitation:
(i) the Owner Trustee shall not be liable for any
error of judgment made in good faith by an authorized officer
of the Owner Trustee, other than any error of judgment
involving willful misconduct, bad faith or gross negligence by
such officer.
(ii) except as set forth in Sections 8.09 and 9.01(a)
hereof, the Owner Trustee shall not be required to expend or
risk its personal funds or otherwise incur any financial
liability in the performance of any of its rights or powers
hereunder, if the Owner Trustee shall have reasonable grounds
for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured or provided to it (the unsecured indemnity of an
institutional Noteholder being deemed satisfactory for such
purpose) PROVIDED, HOWEVER, that nothing contained herein
shall relieve the Owner Trustee of the obligation to exercise
its duties under this Agreement;
(iii) under no circumstance shall the Owner Trustee be
personally liable for any representation, warranty, covenant,
agreement or indebtedness of the Issuer under this Agreement
or the Indenture or any other document contemplated hereby or
thereby;
(iv) the Owner Trustee shall not be personally
responsible for or in respect of the validity or sufficiency
of this Agreement or for the due execution hereof by the
Transferor, or for the form, character, genuineness,
sufficiency, value or validity of the Transferred Property;
and
(v) notwithstanding anything contained herein or in
any document contemplated hereby, the Owner Trustee shall not
be required to take any action in any jurisdiction other than
in the State of Delaware if the taking of such action will (A)
require the consent or approval or authorization or order of
or the giving of notice
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to, or the registration with any state or other governmental
authority or agency of any jurisdiction other than the State
of Delaware, or (B) result in any fee, tax or other
governmental charge becoming payable by the Bank under the
laws of any jurisdiction or any political subdivisions other
than the State of Delaware, or (C) subject the Bank or the
Owner Trustee to personal jurisdiction in any jurisdiction
other than the State of Delaware.
SECTION 9.02. FURNISHING OF DOCUMENTS. The Owner Trustee shall
furnish to the Transferor, promptly upon receipt thereof, duplicates or copies
of all reports, notices, requests, demands, certificates, financial statements
and any other instruments furnished to the Owner Trustee hereunder (other than
documents originated by or otherwise furnished by the Transferor).
SECTION 9.03. RELIANCE; ADVICE OF COUNSEL. (a) The Owner
Trustee shall not be personally liable to any Person in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper believed by an authorized
officer of the Owner Trustee to be genuine and believed by an authorized officer
of the Owner Trustee to be signed by the proper party or parties. The Owner
Trustee may accept a certified copy of a resolution of the board of directors or
other governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the manner of ascertainment of which is not
specifically prescribed herein, the Owner Trustee may for all purposes hereof
rely on a certificate, signed by the President or any Vice President of the
relevant party, as to such fact or matter, and such certificate shall constitute
full protection to the Owner Trustee against personal liability for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the Issuer hereunder
and in the performance of its duties and obligations under this Agreement, the
Owner Trustee (i) may act directly or through agents or attorneys pursuant to
agreements entered into with any of them, and shall not be personally liable for
the default or misconduct of such agents or attorneys if such agents or
attorneys shall have been selected by the Owner Trustee with reasonable care;
and (ii) may consult with counsel, accountants and other skilled professionals
to be selected with reasonable care and employed by it, and shall not be
personally liable for anything done, suffered or omitted in good faith by it as
the Owner Trustee in accordance with the advice or opinion of any such counsel,
accountants or other skilled professionals.
SECTION 9.04. NOT ACTING IN INDIVIDUAL CAPACITY. Except as
expressly provided in Sections 3.19, 8.09 or 9.01 hereof, in accepting the
trusts hereby created hereunder the Owner Trustee acts solely as trustee
hereunder and not in its individual capacity, and no Person having any claim
against the Issuer by reason of the transactions contemplated by this Agreement
or the Indenture shall look to the Owner Trustee for payment or satisfaction
thereof.
SECTION 9.05. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN
MATTERS. THE BANK DOES NOT MAKE AND SHALL NOT BE DEEMED TO HAVE MADE AND HEREBY
EXPRESSLY DISCLAIMS (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS
TO THE TITLE, VALUE, CONDITION, QUALITY, WORKMANSHIP, DESIGN,
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OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE EQUIPMENT (OR ANY PART
THEREOF), COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION, PERFORMANCE, CONDITION,
FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT, ABSENCE OF LATENT OR OTHER
DEFECTS WHETHER OR NOT DISCERNIBLE OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE EQUIPMENT (OR ANY
PART THEREOF), except that the Bank represents and warrants to the Transferor,
the Trustee and the Noteholders, that, on the Closing Date or Substitution Date,
as the case may be, the Owner Trustee shall have received whatever right, title
and interest as was conveyed to it by the Transferor; or (b) any representation
or warranty as to the validity, legality or enforceability of this Agreement or
any other Transaction Document, or any other document or instrument, or as to
the correctness of any statement contained in any thereof, except to the extent
that any such statement is expressly made as a representation or warranty by the
Bank or the Owner Trustee.
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ARTICLE X
COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE
SECTION 10.01. FEES AND EXPENSES OF OWNER TRUSTEE. (a) The
Owner Trustee and the Transferor by separate agreement shall fix and arrange for
payment of reasonable compensation to the Owner Trustee for all services
rendered by it hereunder and the Owner Trustee shall continue to serve
regardless of any failure to pay such compensation until a successor is
appointed and qualified.
(b) In addition, the Owner Trustee shall be reimbursed under
such separate agreement for all reasonable out-of-pocket expenses, disbursements
and advances incurred by the Owner Trustee in accordance with any of the
provisions of this Agreement, including the reasonable compensation, reasonable
expenses and reasonable disbursements of its counsel and of all Persons not in
its employ; PROVIDED, HOWEVER, that the Owner Trustee shall not be entitled to
reimbursement for (i) any such amounts resulting from, or arising as a result
of, the gross negligence, bad faith or willful misconduct of the Owner Trustee
or (ii) any amounts for which the Owner Trustee shall have liability as set
forth in Section 9.01 hereof.
SECTION 10.02. RESERVED.
SECTION 10.03. INDEMNIFICATION. The Owner Trustee and its
directors, officers, employees, attorneys and agents, and their respective
successors and assigns (each being an "Indemnified Party") shall be entitled to
be indemnified by the Transferor from and against any and all liabilities,
including, without limitation, any damages, penalties, taxes (other than any
income taxes on fees or other compensation received by the Owner Trustee),
claims (including, without limitation, claims involving strict liability in
tort), actions, suits, costs, expenses and disbursements (including, without
limitation, reasonable legal fees and expenses) of any kind and nature
whatsoever which may be imposed on, incurred by or asserted at any time against
an Indemnified Party in any way relating to this Agreement, the Trust Property,
any of the transactions contemplated in this Agreement or the performance or
enforcement of any of the terms thereof, or in any way relating to or arising
out of the Trust Property or any part thereof or any accident in connection
therewith (including, without limitation, latent and other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Property or the action or inaction of the Owner Trustee under this
Agreement, except only that no indemnification shall be made for liabilities
arising or resulting in any of the circumstances described in the last sentence
of Section 11.01(a). The indemnities contained in this Section 12.03 shall
survive the termination of this Agreement. In the event of any claim, action or
proceeding for which indemnity will be sought pursuant to this Section 12.03,
the Owner Trustee's choice of legal counsel shall be subject to the approval of
the Transferor, which approval shall not be unreasonably withheld.
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ARTICLE XI
TERMINATION OF TRUST
SECTION 11.01. TERMINATION OF TRUST. (a) The trust created by
this Agreement shall wind up, dissolve and terminate and this Agreement shall
terminate and be of no further force or effect, and the remaining trust assets
shall revert to the Transferor upon the earlier of (i) the date on which the
Indenture shall have been terminated in accordance with the provisions thereof
and (ii) 21 years less one day after the death of the survivor of the
descendants living on the date of this Agreement of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St.
James.
(b) The Transferor shall not be entitled to revoke the trust
established hereunder prior to the date of its termination pursuant to the
Section 11.01.
(c) Upon the winding up of the trust and its termination as
aforesaid, the Owner Trustee shall cause the Certificate of Trust to be
cancelled by filing a certificate of cancellation with the Delaware Secretary of
State in accordance with the provisions of Section 3810 of the Trust
Statute.
(d) Upon the winding up of the trust and its termination as
aforesaid, the obligations of the Servicer, the Transferor and the Owner Trustee
under this agreement will terminate.
SECTION 11.02. NATURE OF INTEREST IN TRANSFERRED PROPERTY. The
Transferor shall not have legal title to any part of the Transferred Property or
any other assets of the Issuer. The Transferor shall only be entitled to receive
distributions with respect to its beneficial interest therein pursuant to this
Article XI and Section 303 of the Indenture.
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ARTICLE XII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 12.01. RESIGNATION, DISCHARGE OR REMOVAL OF AN OWNER
TRUSTEE; SUCCESSOR. (a) The Owner Trustee may resign and be discharged of its
obligations under this Agreement by executing an instrument in writing and
mailing a copy to the Transferor and to the Trustee not less than 30 days before
the date specified in such instrument when such resignation is to take effect.
Upon receiving such notice of resignation, the Transferor shall, subject to the
approval of the Trustee, acting at the direction of the Majority of Holders, use
its best efforts promptly to appoint a successor Owner Trustee in the manner and
meeting the qualifications hereinafter provided in this Section 12.01 hereof by
written instrument or instruments delivered to such resigning Owner Trustee and
the successor Owner Trustee, such approval to be deemed given by the Trustee and
the holders of Notes evidencing not less than 662/3% in aggregate outstanding
principal amount of such Notes (the "SUPERMAJORITY HOLDERS") if the Trustee has
not otherwise informed the Transferor in writing within five Business Days after
the date on which the Trustee's approval is sought. In addition, Supermajority
Holders may remove the Owner Trustee for any reason and appoint a successor
Owner Trustee by written instrument or instruments delivered to the Owner
Trustee being removed, the Transferor and the successor Owner Trustee. In any
event, any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to this Section 12.01 shall become effective
only upon acceptance of the appointment by the successor Owner Trustee and the
resigning Owner Trustee shall continue to serve until such acceptance or until
the court appoints a successor Owner Trustee pursuant to Section 12.01(b)
hereof. The Transferor will give notice of each resignation and each removal of
the Owner Trustee and each appointment of a successor Owner Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to all
Noteholders, as their names and addresses appear in the Note Register. Each
notice shall include the name of the successor Owner Trustee and the address of
its principal corporate trust office.
(b) In case at any time an Owner Trustee shall resign or be
removed and no successor Owner Trustee shall have been appointed within 30 days
after notice of such resignation or removal has been filed and mailed as
required by Section 12.01 hereof, the resigning or removed Owner Trustee may
forthwith apply to a court of competent jurisdiction for the appointment of a
successor Owner Trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor Owner Trustee.
(c) Any successor Owner Trustee appointed hereunder shall
promptly execute and deliver to the Transferor, the resigning or removed Owner
Trustee, and the Trustee an instrument accepting such appointment hereunder, and
the substitute or successor Owner Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally named
an Owner Trustee herein and shall be bound by all the terms and conditions of
this Agreement and the Transferred Property. Upon the request of the Transferor
or the successor Owner Trustee, the resigning or removed Owner Trustee shall
execute and deliver an instrument transferring to the successor Owner Trustee
all the rights and powers of the resigning or removed Owner Trustee; and the
resigning or removed Owner Trustee shall transfer, deliver and pay over to the
successor Owner Trustee all of
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the Transferred Property at the time held by it, if any, together with all
necessary or appropriate instruments of transfer and assignment and other
documents properly executed necessary to effect such transfer and such of the
records or copies thereof maintained by the resigning or removed Owner Trustee
in the administration hereof as may be requested by the successor Owner Trustee
and shall thereupon be discharged from all duties and responsibilities under
this Agreement.
(d) Any Person into which the Owner Trustee may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Owner Trustee shall be a party, or any Person
succeeding to all or substantially all of the Owner Trustee's corporate trust
business, shall be a successor Owner Trustee under this Agreement without the
execution, delivery or filing of any paper, instrument or further act to be done
on the part of the parties hereto, notwithstanding anything to the contrary
herein, or in any agreement relating to such merger or consolidation, by which
the predecessor Person may seek to retain certain powers, rights and privileges
theretofore obtaining for any period of time following such merger or
consolidation. Notice of any such merger or consolidation shall be promptly
given to the Rating Agencies.
(e) Upon the happening of any of the events described in
subparagraphs (a) through (d) of this Section 12.01, the successor Owner Trustee
shall (x) cause an amendment to the Certificate of Trust to be filed with the
Secretary of State of the State of Delaware indicating the change with respect
to the Owner Trustee's identity and (y) promptly notify the Trustee, the
Servicer and the Rating Agencies of its appointment.
SECTION 12.02. APPOINTMENT OF ADDITIONAL OWNER TRUSTEES. (a)
At any time or times, for the purpose of meeting any legal requirements of any
jurisdiction in which any of the Transferred Property may at the time be
located, or the Transferor shall be advised by counsel satisfactory to it that
it is necessary or prudent to do so, the Owner Trustee shall, as directed by the
Transferor pursuant to Section 8.06 hereof, appoint one or more individuals or
corporations either to act as co-trustee or co-trustees jointly with the Owner
Trustee of all or any part of the Transferred Property or to act as separate
Trustee or separate trustees of all or any part of the Transferred Property and
to vest in such Person or Persons, in such capacity, such title to the
Transferred Property or any part thereof, and such rights, powers, duties,
trusts or obligations as may be necessary for the Owner Trustee to perform
hereunder, subject to the remaining provisions of this Section 12.02.
(b) Unless otherwise provided in the instrument appointing
such co-trustee or separate trustee, every co-trustee or separate trustee shall,
to the extent permitted by law, be appointed subject to the following terms:
(i) all rights, powers, trusts, duties and obligations
conferred by this Agreement upon the Owner Trustee in respect
of the custody or control of moneys, papers, securities and
other personal property shall be exercised solely by the Owner
Trustee;
(ii) all rights, powers, trusts, duties and
obligations conferred or imposed by this Agreement upon the
trustees shall be conferred or imposed upon and
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<PAGE>
exercised or performed by the Owner Trustee, or by the Owner
Trustee and such co-trustee or co-trustees, or separate
trustee and separate trustees jointly, except to the extent
that, under the law of any jurisdiction in which any
particular act or acts are to be performed, the Owner Trustee
shall be incompetent or unqualified to perform such act or
acts, in which event such act or acts shall be performed by
such co-trustee or co-trustees or separate trustee or separate
trustees;
(iii) any request in writing by the Owner Trustee to
any co-trustee or separate trustee to take or to refrain from
taking any action hereunder shall be sufficient warrant for
the taking, or the refraining from taking, of such action by
such co-trustee or separate trustee;
(iv) any co-trustee or separate trustee to the extent
permitted by law may delegate to the Owner Trustee the
exercise of any right, power, trust, duty or obligation,
discretionary or otherwise;
(v) the Owner Trustee at any time, by an instrument in
writing may accept the resignation of or remove any co-trustee
or separate trustee appointed under this Section 12.02. A
successor to any co-trustee or separate trustee so resigned or
removed may be appointed in the manner provided in this
Section 12.02.
(vi) neither the Owner Trustee nor any co-trustee or
separate trustee appointed hereunder shall be personally
liable by reason of any act or omission of any other trustee
hereunder selected by it with reasonable care;
(vii) any demand, request, direction, appointment,
removal, notice, consent, waiver or other action in writing
executed by the Transferor and delivered to the Owner Trustee
shall be deemed to also have been delivered to each such
co-trustee or separate trustee; and
(viii) any moneys, papers, securities or other items
of personal property received by any such co-trustee or
separate trustee hereunder shall forthwith, so far as may be
permitted by law, be turned over to the Owner Trustee to be
held pursuant
to the terms hereof.
(c) Upon the acceptance in writing of such appointment by any
such co-trustee or separate trustee, it shall be vested with the estates or
property specified in the instrument of appointment, subject to all the terms
hereof. Every such acceptance shall be filed with the Owner Trustee .
(d) In case any co-trustee or separate trustee shall become
incapable of acting, resign or be removed, all of its estates, properties,
rights and trusts shall, so far as permitted by law, vest in and be exercised by
the Owner Trustee.
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SECTION 12.03. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The
Owner Trustee shall at all times be a national banking association or a banking
corporation approved by the Trustee, acting at the direction of the Majority of
Holders (such approval to be deemed given if the Trustee has not otherwise
informed the Transferor in writing within five Business Days after the date on
which the Trustee's approval is sought), authorized to exercise corporate trust
powers and which maintains its principal place of business in the State of
Delaware such that it satisfies the requirements of Section 3807 of the Trust
Statute.
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. AMENDMENT. (a) This Agreement may be amended
from time to time by the Owner Trustee and the Transferor with the consent of
the Rating Agencies (but without the consent of the Trustee or any of the
Noteholders), to cure any ambiguity, to correct or supplement any provision
herein that may be inconsistent with any other provisions herein, or to add or
amend any other provisions with respect to matters or questions arising under
this Agreement; PROVIDED, HOWEVER, that such action shall not (i) alter the
provisions of Section 5.02 hereof or (ii) adversely affect in any material
respect the interests of the Trustee or the Noteholders, unless so consented to
by each entity so affected.
(b) This Agreement may also be amended from time to time by
the Owner Trustee and the Transferor, with the consent of the Rating Agencies
and the Majority of Holders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement;
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 Contracts or payments that are required to be made on any Note
without the consent of the Holder of such Note, (b) reduce the aforesaid
percentage required to consent to any such amendment, (c) adversely affect in
any material respect the interests of the Trustee or any Noteholder without, in
each instance, the consent of each entity so affected or (d) alter the
provisions of Section 5.02.
(c) Approval of the particular form of any proposed amendment
or consent shall not be necessary for the consent of the Noteholders under
Section 13.01(b), but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Noteholders shall be subject to such
reasonable requirements as the Trustee may prescribe.
(d) Prior to the execution of any such amendment to this
Agreement proposed in accordance with paragraph 13.01(b), the Owner Trustee
shall deliver a copy of the proposed amendment to the Transferor, the Rating
Agencies and the Trustee.
(e) In executing any amendment to this Agreement pursuant to
this Section 13.01, the Owner Trustee shall be entitled to receive (i) an
Officer's Certificate of the Transferor stating that all conditions precedent
for entering into such amendment as set forth in this Agreement have been met,
and (ii) an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any amendment which adversely affects the Owner
Trustee's own rights, duties, protections, or immunities under this Agreement.
SECTION 13.02. COUNTERPARTS. For the purpose of facilitating
the execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
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SECTION 13.03. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with the internal laws of the State of Delaware,
without regard to the conflicts of laws provisions of such state.
SECTION 13.04. NOTICES. All demands, notices and
communications hereunder shall be in writing, personally delivered or mailed by
certified mail-return receipt requested, or delivered by courier, or delivered
by facsimile to a facsimile and telephone number provided by the relevant Person
in writing, with subsequent telephone confirmation of the receipt thereof, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Trustee, at the following address: 180 East Fifth Street, St. Paul, Minnesota
55101, Attention: Structured Finance, Facsimile: (612) 244-0089, (b) in the case
of the Servicer, at the following address: 500 Hyde Park, Doylestown,
Pennsylvania 18901, Attention: Securitization Manager, Facsimile: (215)
230-5328, (c) in the case of the Issuer, in care of the Owner Trustee at the
address set forth in clause (e) below, with a copy to the Servicer at the
address set forth in clause (b) above, (d) in the case of the Transferor at the
following address: 500 Hyde Park, Doylestown, Pennsylvania 18901, Attention:
Securitization Manager, Facsimile: (215) 230-5328, (e) in the case of Owner
Trustee, at the following address: Wilmington Trust Company, Rodney Square
North, 1100 N. Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration, Facsimile: (302) 651-8882, (f) in the case of
the Rating Agencies, to the following addresses: Duff & Phelps Credit Rating
Co., 55 East Monroe St., Chicago, Illinois 60603, Attention: Asset Backed
Monitoring Group, Facsimile: (312) 263-2852; Fitch IBCA, Inc., One State Street
Plaza, New York, New York 10004, Attention: Ms. Wendy Geneen Cohn, Facsimile:
(212) 480-4438; and Moody's Investors Service, Inc., 99 Church Street, 4th Fl.,
New York, New York 10007, Attention: ABS Monitoring Department, Facsimile: (212)
553-3856, or at other such respective address as shall be designated by such
party in a written notice to the other parties. Any notice required or permitted
to be mailed to a Noteholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Note Register. Any notice
so mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Noteholder receives such
notice.
SECTION 13.05. SEVERABILITY OF PROVISIONS. If any one or more
of the covenants, agreements, provisions, or terms of this Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect the
validity or enforceability of the other provisions of this Agreement.
SECTION 13.06. ASSIGNMENT. The obligations of the Transferor
under this Agreement may not be delegated by it without the prior written
consent of the Owner Trustee and the Trustee. The rights of the Owner Trustee
under this Agreement may be assigned by it to the Trustee pursuant to the
Indenture.
SECTION 13.07. BINDING EFFECT. This Agreement shall inure to
the benefit of, and shall be binding upon, the Transferor and the Owner Trustee
and their respective successors and
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permitted assigns (including the Trustee and the Noteholders), subject, however,
to the limitations contained in this Agreement.
SECTION 13.08. SURVIVAL OF AGREEMENT. All covenants,
agreements, representations and warranties made herein and in the other
documents delivered pursuant hereto shall survive the contribution of the
Transferred Property and shall continue in full force and effect until all
principal and interest on the Notes shall have been paid in full or otherwise
discharged.
SECTION 13.09. CAPTIONS. The captions or headings in this
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Agreement.
SECTION 13.10. EXHIBITS. The exhibits and schedule to this
Agreement are hereby incorporated herein and made a part hereof and are an
integral part of this Agreement.
SECTION 13.11. INTEGRATION. This Agreement contains the entire
understanding and agreement among the Transferor and the Owner Trustee with
respect to the subject matter hereof and supersede any prior or contemporaneous
understandings, agreements, covenants, statements, representations or
warranties, if any, with regard to the subject matter hereof.
SECTION 13.12. GENERAL INTERPRETIVE PRINCIPLES. For purposes
of this Agreement except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Agreement include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections". "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Agreement;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
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SECTION 13.13. THIRD PARTY BENEFICIARIES. The Transferor and
the Owner Trustee hereby agree that each of the Contributor and the Trustee
shall be third party beneficiaries with respect to the rights, duties and
obligations of the various parties to this Agreement.
SECTION 13.14. CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO
VENUE. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF DELAWARE, EACH OF THE ISSUER AND THE TRANSFEROR HEREBY
AGREED TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITH THE
STATE OF NEW YORK. EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE NON-
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK, AND
EACH PARTY IRREVOCABLY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY
OF THE AFOREMENTIONED COURTS AND CONSENT TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
SECTION 13.15. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, EACH OF THE OWNER TRUSTEE AND THE TRANSFEROR WAIVES ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF
THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
SECTION 13.16. COSTS AND EXPENSES. The Transferor will pay all
reasonable expenses incident to the performance of its obligations under this
Agreement and the Indenture and the Transferor agrees to pay all reasonable
out-of-pocket costs and expenses of the Owner Trustee, including fees and
expenses of counsel, in connection with the enforcement of any obligation of the
Transferor hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers, all as of the day
and year first above written.
DVI RECEIVABLES CORP.,
as Transferor
By: /s/ Lisa J. Cruikshank
------------------------------------
Name: Lisa J. Cruikshank
Title: Vice President
WILMINGTON TRUST COMPANY, as
the Bank and as Owner Trustee of the
Issuer
By: /s/ Debra Eberly
------------------------------------
Name: Debra Eberly
Title: Administrative Account Manager
ACKNOWLEDGED AND AGREED,
as to Article VI hereof:
DVI FINANCIAL SERVICES INC.,
as Servicer
By: /s/ Lisa J. Cruikshank
------------------------------------
Name: Lisa J. Cruikshank
Title: Vice President
<PAGE>
EXHIBIT A
SUBSEQUENT CONTRACT TRANSFER FORM
[DATE]
DVI Receivables Corp. (the "TRANSFEROR") and DVI Business
Trust 1998-2 ("the Issuer"), pursuant to the Pooling and Trust Agreement, dated
as of December 1, 1998 (the "POOLING AND TRUST AGREEMENT"), hereby confirm their
understanding with respect to the contribution, assignment and transfer by the
Transferor to the Issuer of those Contracts listed on the Schedule 1 attached
hereto (the "CONTRACTS"), together with an assignment of or the grant of a
security interest in all of the Transferor's right, title and interest in and to
the related Equipment and other related property described herein.
CONVEYANCE OF CONTRACTS. The Transferor hereby transfers to
the Issuer all of the Transferor's right, title and interest in, to, and under
the Contracts listed on Schedule 1 hereto (the "Substitute Contracts")
including, without limitation, its interests in the proceeds of such Substitute
Contracts, the right to receive all amounts due or to become due thereunder
after __________ (the "CUT-OFF DATE") together with all items of Transferred
Property related thereto.
The Transferor hereby confirms that:
(1) On or prior to the date hereof (the "SUBSEQUENT CONTRACT
TRANSFER DATE"), the Contributor shall have deposited in the Collection Account
all collections in respect of the Substitute Contracts that were due on or after
the Cut-off Date;
(2) Each representation and warranty of the Transferor under
the Contribution and Servicing Agreement and the Pooling and Trust Agreement is
true and correct as of the date hereof, the Transferor was not insolvent nor
will it be made insolvent by the transfer contemplated herein nor is it aware of
any pending insolvency and the Transferor is not in breach of any covenant under
any Transaction Document to which it is a party with respect to such Substitute
Contract;
(3) Each Substitute Contract contributed pursuant hereto is an
Eligible Contract;
(4) On or prior to the Subsequent Contract Transfer Date, the
Transferor shall have delivered to the Trustee the sole original, manually
executed counterpart of each Substitute Contract;
(5) The sum of the Discounted Contract Balances as of the
Cut-off Date of the Substitute Contracts listed on Schedule 1 attached hereto is
$__________ (calculated using a Discount Rate of _____%);
(6) The Commitment Period has not terminated as of the date
hereof;
A-1
<PAGE>
(7) When the Substitute Contracts are added to the Transferred
Property, all representations and warranties of the Transferor in the Pooling
and Trust Agreement will be true and correct as of the date hereof unless any
breach of such representations and warranties resulting from the inclusion of
such Substitute Contract shall have been waived in advance by Noteholders
evidencing more than 50% of the Voting Rights; and
(8) The Contributor has delivered to the Trustee (i)
amendments to, or executed originals of, the UCC financing statements referred
to in Section 1.01(d) of the Contribution and Servicing Agreement reflecting the
addition of the Substitute Contract(s) and (ii) an amendment to the Contract
Schedule.
All terms and conditions of the Pooling and Trust Agreement
with respect to the Transferor and the Substitute Contracts have been complied
with and are hereby ratified, confirmed and incorporated herein, PROVIDED that
in the event of any conflict, the provisions of this Subsequent Contract
Transfer Form shall control over the conflicting provisions of the Contribution
and Servicing Agreement.
Terms capitalized herein and not defined herein shall have
their respective meanings as set forth in the Pooling and Trust Agreement.
DVI RECEIVABLES CORP.
By:_____________________________
Name:
Title:
DVI BUSINESS TRUST 1998-2
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By:_____________________________
Name:
Title:
A-2
<PAGE>
EXHIBIT B
FORM OF OFFICER'S CERTIFICATE
-----------------------------
The undersigned certifies that the undersigned duly authorized
officer of DVI Receivables Corp. (the "TRANSFEROR"), and that, as such the
undersigned is authorized to execute and deliver this certificate on behalf of
the Transferor, and further certifies pursuant to Section 7.02 of the Pooling
and Trust Agreement (the "AGREEMENT") dated as of December 1, 1998 between the
Transferor and Wilmington Trust Company as Owner Trustee for DVI Business Trust
1998-2 (the "ISSUER"), that to his or her knowledge, the Transferor's
contribution to the Issuer of those Substitute Contracts listed in Schedule 1
attached hereto, together with all of the Transferor's right, title and interest
in and to the related Contracts and the related Transferred Property, is in
compliance with Section 7 of the Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name.
Date:
DVI RECEIVABLES CORP.
By:_____________________________
Name:
Title:
B-1
<PAGE>
EXHIBIT C
FORM OF RE-ASSIGNMENT BY ISSUER
PURSUANT TO SECTION 7.01 OF THE
POOLING AND TRUST AGREEMENT
DVI Business Trust 1998-2 (the "Issuer") pursuant to the
Pooling and Trust Agreement, dated as of December 1, 1998, between DVI
Receivables Corp. (the "Transferor") and Wilmington Trust Company as owner
trustee (the "Owner Trustee"), does hereby sell, transfer, assign, deliver and
otherwise convey to the Transferor, without recourse, representation or
warranty, all of the Issuer's right, title and interest in and to all of the
Predecessor Contracts listed on Schedule A hereto and all security and documents
relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this ______
day of ___________.
DVI BUSINESS TRUST 1998-2
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By:_______________________________
Name:_____________________________
Title:____________________________
C-1
EXHIBIT 4.3
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DVI BUSINESS TRUST 1998-2
ISSUER
AND
U.S. BANK TRUST NATIONAL ASSOCIATION,
TRUSTEE
INDENTURE
Dated as of December 1, 1998
$210,069,865 in aggregate principal amount of Asset-Backed Notes
consisting of:
$35,882,000 5.242% ASSET BACKED NOTES, SERIES 1998-2, CLASS A-1
$117,000,000 5.64% ASSET BACKED NOTES, SERIES 1998-2, CLASS A-2
$38,090,000 5.76% ASSET BACKED NOTES, SERIES 1998-2, CLASS A-3
$4,365,000 5.93% ASSET BACKED NOTES, SERIES 1998-2, CLASS B
$4,910,955 6.37% ASSET BACKED NOTES, SERIES 1998-2, CLASS C
$4,910,955 7.39% ASSET BACKED NOTES, SERIES 1998-2, CLASS D
$4,910,955 9.42% ASSET BACKED NOTES, SERIES 1998-2, CLASS E
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
RECITALS OF THE ISSUER ..........................................................................1
GRANTING CLAUSE ..........................................................................1
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01 DEFINITIONS..........................................................................3
SECTION 1.02 COMPLIANCE CERTIFICATES..............................................................3
SECTION 1.03 FORM OF DOCUMENTS DELIVERED TO TRUSTEE...............................................3
SECTION 1.04 ACTS OF NOTEHOLDERS, ETC.............................................................4
SECTION 1.05 NOTICES..............................................................................5
SECTION 1.06 NOTICE TO NOTEHOLDERS; WAIVER........................................................6
SECTION 1.07 TABLE OF CONTENTS, HEADINGS, ETC.....................................................6
SECTION 1.08 SUCCESSORS AND ASSIGNS...............................................................6
SECTION 1.09 SEVERABILITY CLAUSE..................................................................7
SECTION 1.10 BENEFITS OF INDENTURE................................................................7
SECTION 1.11 GOVERNING LAW........................................................................7
SECTION 1.12 LEGAL HOLIDAYS.......................................................................7
SECTION 1.13 EXECUTION IN COUNTERPARTS............................................................7
SECTION 1.14 INSPECTION...........................................................................7
SECTION 1.15 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................................8
SECTION 1.16 INCORPORATION BY REFERENCE TO TRUST INDENTURE ACT....................................8
SECTION 1.17 COMMUNICATIONS BY NOTEHOLDERS WITH OTHER NOTEHOLDERS.................................8
SECTION 1.18 STATEMENTS REQUIRED IN OFFICER'S CERTIFICATE.........................................8
SECTION 1.19 WHEN TREASURY SECURITIES ARE DISREGARDED.............................................9
SECTION 1.20 RULES BY TRUSTEE.....................................................................9
SECTION 1.21 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS........................................9
SECTION 1.22 NO RECOURSE AGAINST OTHERS...........................................................9
SECTION 1.23 INDEPENDENCE OF COVENANTS............................................................9
SECTION 1.24 CONSENT TO JURISDICTION..............................................................9
SECTION 1.25 NO BANKRUPTCY PETITION..............................................................10
SECTION 1.26 VOTING RIGHTS OF CLASS F INSTRUMENTS................................................10
SECTION 1.27 INDEBTEDNESS TREATMENT..............................................................10
ARTICLE II
THE NOTES
SECTION 2.01 GENERAL PROVISIONS..................................................................11
i
<PAGE>
PAGE
SECTION 2.02 GLOBAL NOTES........................................................................12
SECTION 2.03 EXECUTION, AUTHENTICATION, DELIVERY AND DATING......................................15
SECTION 2.04 REGISTRATION, TRANSFER AND EXCHANGE.................................................16
SECTION 2.05 MUTILATED, DESTROYED, LOST AND STOLEN NOTES.........................................18
SECTION 2.06 DELIVERY OF CLASS F INSTRUMENTS.....................................................18
SECTION 2.07 PAYMENT OF INTEREST AND PRINCIPAL; RIGHTS PRESERVED.................................19
SECTION 2.08 PERSONS DEEMED OWNERS...............................................................20
SECTION 2.09 CANCELLATION........................................................................20
SECTION 2.10. NOTEHOLDER LISTS; COMMUNICATIONS TO NOTEHOLDERS.....................................20
SECTION 2.11. ERISA DEEMED REPRESENTATIONS........................................................21
ARTICLE III
ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION
AND APPLICATION OF MONEYS; REPORTS
SECTION 3.01 ACCOUNTS; INVESTMENTS BY TRUSTEE....................................................22
SECTION 3.02 RESERVED............................................................................24
SECTION 3.03 COLLECTION OF MONEYS................................................................24
SECTION 3.04 COLLECTION ACCOUNT..................................................................25
SECTION 3.05 Class A Distribution Sub-account; Class B Distribution Sub-
Account; Class C Distribution Sub-account; Class D Distribution
Sub-account; Class E Distribution Sub-account; Class F
DISTRIBUTION SUB-ACCOUNT............................................................29
SECTION 3.06 RESERVED............................................................................30
SECTION 3.07 RESERVED............................................................................31
SECTION 3.08 RESERVE ACCOUNT.....................................................................31
SECTION 3.09 REPORTS; NOTICES OF CERTAIN PAYMENTS................................................31
SECTION 3.10. TRUSTEE MAY RELY ON CERTAIN INFORMATION FROM CONTRIBUTOR AND
SERVICER............................................................................32
ARTICLE IV
CONTRACTS AND EQUIPMENT
SECTION 4.01 REPRESENTATIONS AND WARRANTIES OF THE ISSUER........................................33
SECTION 4.02 PURCHASE UPON BREACH; CONTRIBUTION AND SERVICING AGREEMENT..........................33
SECTION 4.03 RELEASE OF CONTRACTS AND EQUIPMENT FOLLOWING SUBSTITUTION OR
PURCHASE............................................................................34
SECTION 4.04 RELEASE OF CONTRACTS AND EQUIPMENT UPON FINAL CONTRACT PAYMENT......................34
SECTION 4.05 EXECUTION OF DOCUMENTS..............................................................35
ii
<PAGE>
PAGE
ARTICLE V
SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER
SECTION 5.01 SERVICER EVENTS OF DEFAULT..........................................................36
SECTION 5.02 SUBSTITUTE SERVICER.................................................................36
SECTION 5.03 NOTIFICATION TO NOTEHOLDERS AND RATING AGENCIES.....................................36
ARTICLE VI
EVENTS OF DEFAULT; REMEDIES
SECTION 6.01 EVENTS OF DEFAULT...................................................................37
SECTION 6.02 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT..................................38
SECTION 6.03 OTHER REMEDIES......................................................................39
SECTION 6.04 TRUSTEE MAY FILE PROOFS OF CLAIM....................................................39
SECTION 6.05 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES..............................40
SECTION 6.06 APPLICATION OF MONEY COLLECTED......................................................41
SECTION 6.07 LIMITATION ON SUITS.................................................................42
SECTION 6.08 UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE PAYMENT...............................43
SECTION 6.09 RESTORATION OF RIGHTS AND REMEDIES..................................................43
SECTION 6.10. RIGHTS AND REMEDIES CUMULATIVE......................................................44
SECTION 6.11 DELAY OR OMISSION NOT WAIVER........................................................44
SECTION 6.12 CONTROL BY NOTEHOLDERS..............................................................44
SECTION 6.13 WAIVER OF DEFAULTS AND EVENTS OF DEFAULT............................................44
SECTION 6.14 WAIVER OF STAY OR EXTENSION LAWS....................................................45
SECTION 6.15 SALE OF TRUST PROPERTY..............................................................45
SECTION 6.16 UNDERTAKING FOR COSTS...............................................................46
ARTICLE VII
THE TRUSTEE
SECTION 7.01 CERTAIN DUTIES AND RESPONSIBILITIES.................................................47
SECTION 7.02 NOTICE OF DEFAULTS OR EVENTS OF DEFAULT.............................................48
SECTION 7.03 CERTAIN RIGHTS OF TRUSTEE...........................................................48
SECTION 7.04 TRUSTEE'S DISCLAIMER................................................................49
SECTION 7.05 MONEY HELD IN TRUST.................................................................49
SECTION 7.06 COMPENSATION, REIMBURSEMENT, ETC....................................................49
SECTION 7.07 ELIGIBILITY; DISQUALIFICATION.......................................................50
SECTION 7.08 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR...................................51
SECTION 7.09 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR..............................................52
SECTION 7.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.........................52
iii
<PAGE>
PAGE
SECTION 7.11 CO-TRUSTEES AND SEPARATE TRUSTEES...................................................52
SECTION 7.12 TRUSTEE TO HOLD CONTRACTS...........................................................54
SECTION 7.13 FINANCING STATEMENTS................................................................54
SECTION 7.14 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR............................................54
SECTION 7.15 REPORTS BY TRUSTEE TO HOLDERS.......................................................55
SECTION 7.16 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER....................................55
ARTICLE VIII
COVENANTS
SECTION 8.01 PAYMENT OF PRINCIPAL AND INTEREST...................................................56
SECTION 8.02 MAINTENANCE OF OFFICE OR AGENCY; CHIEF EXECUTIVE OFFICE.............................56
SECTION 8.03 MONEY FOR PAYMENTS TO NOTEHOLDERS TO BE HELD IN TRUST...............................56
SECTION 8.04 ISSUER EXISTENCE; ETC...............................................................57
SECTION 8.05 PROTECTION OF TRUST PROPERTY; FURTHER ASSURANCES....................................58
SECTION 8.06 COMPLIANCE CERTIFICATES.............................................................59
SECTION 8.07 PERFORMANCE OF OBLIGATIONS; CONTRIBUTION AND SERVICING AGREEMENT....................59
SECTION 8.08 NEGATIVE COVENANTS..................................................................60
SECTION 8.09 INFORMATION AS TO THE ISSUER........................................................61
SECTION 8.10. PAYMENT OF TAXES AND OTHER CLAIMS...................................................62
SECTION 8.11 INDEMNIFICATION.....................................................................62
SECTION 8.12 CONTRACT FILES TO TRUSTEE...........................................................63
SECTION 8.13 PAYMENT ADVICES.....................................................................63
ARTICLE IX
AMENDMENTS AND SUPPLEMENTAL INDENTURES
SECTION 9.01 AMENDMENTS AND SUPPLEMENTAL INDENTURES..............................................64
SECTION 9.02 EXECUTION OF AMENDMENTS AND SUPPLEMENTAL INDENTURES.................................64
SECTION 9.03 EFFECT OF AMENDMENTS AND SUPPLEMENTAL INDENTURES....................................65
SECTION 9.04 REFERENCE IN NOTES TO AMENDMENTS AND SUPPLEMENTAL INDENTURES........................65
SECTION 9.05 COMPLIANCE WITH TRUST INDENTURE ACT.................................................65
SECTION 9.06 REVOCATION AND EFFECT OF CONSENTS...................................................65
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01 OPTIONAL REDEMPTION; ELECTION TO REDEEM.............................................66
SECTION 10.02 NOTICE TO TRUSTEE...................................................................66
iv
<PAGE>
PAGE
SECTION 10.03 NOTICE OF REDEMPTION OR PARTIAL REDEMPTION BY THE ISSUER............................66
SECTION 10.04 DEPOSIT OF THE REDEMPTION PRICE OR PARTIAL REDEMPTION PRICE.........................67
SECTION 10.05 NOTES PAYABLE ON REDEMPTION DATE....................................................67
ARTICLE XI
SATISFACTION AND DISCHARGE
SECTION 11.01 SATISFACTION AND DISCHARGE OF INDENTURE.............................................69
SECTION 11.02 APPLICATION OF TRUST MONEY..........................................................70
SECTION 11.03 REINSTATEMENT.......................................................................70
SECTION 11.04 LIMITATION OF LIABILITY OF OWNER TRUSTEE............................................70
</TABLE>
v
<PAGE>
SCHEDULES
Schedule 1 - Contract Schedule
EXHIBITS
Exhibit A-1 - Form of Class A-1 Note
Exhibit A-2 - Form of Class A-2 Note
Exhibit A-3 - Form of Class A-3 Note
Exhibit B - Form of Class B Note
Exhibit C - Form of Class C Note
Exhibit D - Form of Class D Note
Exhibit E - Form of Class E Note
Exhibit F - Form of Class F Instrument
Exhibit G - Investment Letter
Exhibit H - Reserved
Exhibit I - Tax Certificate
APPENDICES
Appendix I - Defined Terms
vi
<PAGE>
INDENTURE
This INDENTURE dated as of December 1, 1998, is between DVI
BUSINESS TRUST 1998-2 a Delaware business trust (herein called the "ISSUER"),
and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, as
trustee (herein called the "TRUSTEE").
RECITALS OF THE ISSUER
The Issuer has duly authorized the issuance of $35,882,000 in
aggregate principal amount of its 5.242% Asset Backed Notes, Series 1998-2,
Class A-1 (the "CLASS A-1 NOTES"), $117,000,000 in aggregate principal amount of
its 5.64% Asset Backed Notes, Series 1998-2, Class A-2 (the "CLASS A-2 NOTES"),
$38,090,000 in aggregate principal amount of its 5.76% Asset Backed Notes,
Series 1998-2, Class A-3 (the "CLASS A-3 NOTES", and, together with the Class
A-1 Notes and Class A-2 Notes, the "CLASS A NOTES"), $4,365,000 in aggregate
principal amount of its 5.93% Asset Backed Notes, Series 1998-2, Class B (the
"CLASS B NOTES") $4,910,955 in aggregate principal amount of its 6.37% Asset
Backed Notes, Series 1998-2, Class C (the "CLASS C NOTES"), $4,910,955 in
aggregate principal amount of its 7.39% Asset Backed Notes, Series 1998-2, Class
D (the "CLASS D NOTES") and $4,910,955 in aggregate principal amount of its
9.42% Asset Backed Notes, Series 1998-2, Class E (the "CLASS E NOTES" and
together with the Class A Notes, the Class B Notes, the Class C Notes and the
Class D Notes, the "OFFERED NOTES"), of substantially the tenor hereinafter set
forth, and to provide therefor the Issuer has duly authorized the execution and
delivery of this Indenture.
Subsequent to the execution and delivery of this Indenture,
the Issuer may, subject to the restrictions described herein, enter into a
Supplement directing the issuance of a sixth class of securities (the "CLASS F
INSTRUMENTS", and together with the Offered Notes, the "NOTES") which will be
subordinate to the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes and the Class E Notes.
All things necessary to make the Notes, when executed by the
Issuer and authenticated and delivered hereunder, the valid obligations of the
Issuer, and to make this Indenture a valid agreement of the Issuer, in
accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Notes by the holders thereof, it is mutually covenanted and agreed, for the
benefit of all Noteholders, as follows:
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee, for the benefit and
security of the Noteholders and the Trustee as their interests appear herein,
all of the Issuer's right, title and interest in and to the Trust Property. The
Issuer also hereby assigns to the Trustee, for the benefit of the Noteholders
and
<PAGE>
the Trustee, its security interest in the Equipment (which shall be a first
priority perfected security interest in Equipment other than Equipment relating
to a Secured Equipment Note or Finance Lease and for which the Original
Equipment Cost is less than $20,000) subject to the underlying equipment lease
related to the Contracts and all of the Issuer's rights in all income, payments
and proceeds related thereto. The Grants of the Trust Property effected by this
Indenture shall include all rights, powers, and options (but none of the
obligations) of the Issuer with respect thereto, including, without limitation,
the immediate and continuing right to claim for, collect, receive, and give
receipts for Contract Payments in respect of the Contracts and all other moneys
payable thereunder, to give and receive notices and other communications, to
recover on the Equipment pursuant thereto, to make waivers, amendments or other
agreements, to exercise all rights and options, to bring judicial proceedings in
the name of the Issuer or otherwise, to terminate a Contract pursuant to the
terms thereof, enforce all rights and remedies of the Issuer with respect to the
duties, covenants, obligations, indemnities, representations and warranties of
the Contributor and the Servicer under the Contribution and Servicing Agreement
and generally to do and receive anything that the Issuer is or may be entitled
to do or receive thereunder or with respect thereto. Such Grants are made in
trust to secure (i) the payment of all amounts due on the Notes in accordance
with their terms, equally and ratably without prejudice, priority, or
distinction between any Note of the same class and any other Note of the same
class by reason of differences in time of issuance or otherwise, except as
otherwise may be provided in this Indenture or any Supplement, (ii) the payment
of all other sums payable under this Indenture and (iii) compliance with the
provisions of this Indenture and any Supplement with respect to the Notes.
The Trustee acknowledges such Grants, accepts the trusts
hereunder in accordance with the provisions hereof, and agrees to perform the
duties herein required to the best of its ability and to the end that the
interests of the Noteholders may be adequately and effectively protected as
hereinafter provided.
2
<PAGE>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01 DEFINITIONS.
For purposes of this Indenture, capitalized terms used herein
but not otherwise defined shall have the respective meaning assigned to such
terms in Appendix I hereto.
SECTION 1.02 COMPLIANCE CERTIFICATES.
Upon any application or request by the Issuer to the Trustee
to take any action under any provision of this Indenture or any Supplement,
other than any request that (i) the Trustee authenticate the Notes specified in
such request, (ii) the Trustee invest moneys in the Collection Account or the
Reserve Account pursuant to the written directions specified in such request, or
(iii) the Trustee pay moneys due and payable to the Issuer hereunder to the
Issuer's beneficial owner or other assignee specified in such request, the
Trustee may require the Issuer to furnish to the Trustee an Officer's
Certificate stating that all conditions precedent, if any, provided for in this
Indenture or any Supplement relating to the proposed action have been complied
with, except that in the case of any such requested action as to which other
evidence of satisfaction of the conditions precedent thereto is specifically
required by any provision of this Indenture or any Supplement, no additional
certificate need be furnished.
SECTION 1.03 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 Officer's Certificate delivered to the Trustee may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such Officer's Certificate or opinion and any Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an Authorized Officer or Authorized Officers
of the Transferor as to such factual matters unless such Authorized Officer or
counsel of the Transferor knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. Any Opinion of Counsel may be based on the written
opinion of other counsel, in which event such Opinion of Counsel shall be
accompanied by a copy of such other counsel's opinion.
3
<PAGE>
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 or any Supplement, they may, but need
not, be consolidated and form one instrument.
Wherever in this Indenture or any Supplement, 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 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 Section 7.01(a)(ii).
SECTION 1.04 ACTS OF NOTEHOLDERS, ETC.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture or any Supplement 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, with a copy (or if expressly required
an original) to the Issuer and the Servicer. 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 or any Supplement and
(subject to Section 7.01) conclusive in favor of the Trustee and the Issuer, if
made in the manner provided in this Section 1.04.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the holder of any Note shall bind every future
holder of the same Note and the holder of every Note issued upon the
registration of transfer thereof or in exchange 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.
(d) By accepting the Notes issued pursuant to this Indenture
and any Supplement, each Noteholder irrevocably appoints the Trustee hereunder
as the special attorney-in-fact for such
4
<PAGE>
Noteholder vested with full power on behalf of such Noteholder to effect and
enforce the rights of such Noteholder pursuant hereto and the provisions hereof
for the benefit of such Noteholder.
(e) Each holder of a Note, by acceptance of such Note, agrees
to treat such Note as indebtedness for federal, state and local income or
franchise tax purposes.
SECTION 1.05 NOTICES.
Any request, demand, authorization, direction, notice,
consent, waiver, Act of Noteholders, or other document provided or permitted by
this Indenture or any Supplement to be made upon, given or furnished to, or
filed with, the Trustee, the Issuer or the Servicer shall be sufficient for
every purpose hereunder if in writing and telexed, telecopied (with the original
of the telexed or telecopied material sent to the recipient by overnight courier
on the day of the telex or telecopy), mailed, first-class postage prepaid, or
hand delivered. Unless otherwise specifically provided herein, no such request,
demand, authorization, direction, notice, consent, waiver, Act of Noteholders or
other document shall be effective until received and any provision hereof
requiring the making, giving, furnishing, or filing of the same on any date
shall be interpreted as requiring the same to be sent or delivered in such
fashion that it will be received on such date. Any such request, demand,
authorization, direction, notice, consent, waiver, Act of Noteholders, or other
document shall be sent or delivered to the following addresses:
(i) if to the Trustee, at the Corporate Trust Office,
Attention: Structured Finance, 180 Fifth Street, St. Paul, Minnesota,
55101 (Number for telecopy: (612) 244-0089; Number for telephonic
confirmation: (612) 244-0727;
(ii) if to the Issuer, c/o the Owner Trustee at the
address set forth in clause (v) below, with a copy to the Servicer at
the address set forth in clause (iv) below;
(iii) if to the Contributor, Attention: Securitization
Manager at 500 Hyde Park, Doylestown, Pennsylvania 18901 (Number for
telecopy: (215) 230-5328; Number for telephonic confirmation: (215)
230-6375) or at any other address previously furnished in writing to
the Trustee, the Issuer and the Servicer by the Contributor;
(iv) if to the Servicer, Attention: Servicing Manager
at 500 Hyde Park, Doylestown, Pennsylvania 18901 (Number for telecopy:
(215) 230-5328; Number for telephonic confirmation: (215) 489-8025) or
at any other address previously furnished in writing to the Trustee,
the Issuer and the Contributor by the Servicer;
(v) if to the Owner Trustee, Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration (Number for
telecopy: (302) 651-8882);
(vi) if to Duff & Phelps, at 55 East Monroe Street,
Suite 3800, Chicago, Illinois 60603, Attention: Structured Finance
Group (Number for telecopy: (312) 263-2650), or at any other address
previously furnished in writing to the Trustee, the Issuer and the
Servicer;
5
<PAGE>
(vii) if to Moody's, at 99 Church Street, New York, New
York 10007, Attention: ABS Monitoring Department (Number for telecopy:
(212) 553-3856), or at any other address or telecopy number previously
furnished in writing to the Trustee, the Issuer and the Servicer by
Moody's; or
(viii) if to Fitch, at 1 State Street Plaza, New York, New
York 10004, Attention: ABS Group (Number for telecopy: (212) 514-9879),
or at any other address or telecopy number previously furnished in
writing to the Trustee, the Issuer and the Servicer
by Fitch.
SECTION 1.06 NOTICE TO NOTEHOLDERS; WAIVER.
(a) Where this Indenture or any Supplement provides for notice
to Noteholders of any event, or the mailing of any report to Noteholders, such
notice or report shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first class postage prepaid, or sent by
private courier or confirmed telecopy (with a copy of the telecopied material
sent to the recipient by overnight courier on the day of the telecopy) to each
Noteholder affected by such event or to whom such report is required to be
mailed, at such Noteholder's address as it appears in the Note Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice or the mailing of such report. In any case where a
notice or report to Noteholders is mailed, neither the failure to mail such
notice or report, nor any defect in any notice or report so mailed, to any
particular Noteholder shall affect the sufficiency of such notice or report with
respect to other Noteholders. Where this Indenture or any Supplement provides
for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Noteholders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
(b) In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to mail or
send notice to Noteholders, in accordance with Section 1.06(a), of any event or
any report to Noteholders when such notice or report is required to be delivered
pursuant to any provision of this Indenture or any Supplement, then such
notification or delivery as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.07 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents and the Article and Section headings are
for convenience only and shall in no way modify or restrict any of the terms or
provisions hereof.
SECTION 1.08 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Issuer
or the Trustee shall bind its respective successors and permitted assigns,
whether so expressed or not.
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SECTION 1.09 SEVERABILITY CLAUSE.
In case any provision in this Indenture, any Supplement 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 1.10 BENEFITS OF INDENTURE.
Nothing in this Indenture, any Supplement or in the Notes,
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder, any separate trustee or co-trustee appointed under
Section 7.11 and the holders of Notes, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.11 GOVERNING LAW.
THIS INDENTURE, ANY SUPPLEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. THIS INDENTURE IS SUBJECT TO
THE TRUST INDENTURE ACT OF 1939, AS AMENDED FROM TIME TO TIME, AS IN EFFECT ON
ANY RELEVANT DATE (THE "TIA") AND SHALL BE GOVERNED THEREBY OR CONSTRUED IN
ACCORDANCE THEREWITH.
SECTION 1.12 LEGAL HOLIDAYS.
In any case where any Payment Date or the Stated Maturity Date
or any other date on which principal of or interest on any Note is proposed to
be paid shall not be a Business Day, then (notwithstanding any other provision
of this Indenture or of the Notes) such payment shall be made on the next
succeeding Business Day, and no interest shall accrue for the intervening
period.
SECTION 1.13 EXECUTION IN COUNTERPARTS.
This Indenture may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the
same instrument.
SECTION 1.14 INSPECTION.
The Issuer agrees that, on reasonable prior notice, it will
permit the representatives of the Trustee or any Noteholder, during the Issuer's
normal business hours, to examine all of the books of account, records, reports
and other papers of the Issuer, to make copies thereof and extracts therefrom,
to cause such books to be audited by independent accountants selected by the
Issuer and reasonably acceptable to the Trustee or such Noteholder, as the case
may be, and to discuss its affairs, finances and accounts with its officers,
employees and independent accountants with an Authorized Officer of the
Transferor (as sole beneficiary of the Issuer) present (and by this provision
the Issuer hereby authorizes its accountants to discuss with such
representatives such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested for the purpose of reviewing
or evaluating the financial condition or affairs of the Issuer or the
performance of and compliance
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with the covenants and undertakings of the Issuer in this Indenture, the
Contribution and Servicing Agreement, the other Transaction Documents, or any of
the other documents referred to herein or therein. Any expense incident to the
exercise by the Trustee or any Noteholder during the continuance of any Default
or Indenture Event of Default of any right under this Section 1.14 shall be
borne by the Issuer, but any expense due to the exercise of a right by any such
Person prior to the occurrence of a Default or Indenture Event of Default shall
be borne by such Person.
SECTION 1.15 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations, warranties and certifications of the
Issuer made in this Indenture or in any certificate or other writing delivered
by the Issuer pursuant hereto shall survive the authentication and delivery of
the Notes hereunder, but unless explicitly provided to the contrary,
they are made only as of the Closing Date.
SECTION 1.16 INCORPORATION BY REFERENCE TO TRUST INDENTURE
ACT.
The provisions of TIA Sections 310 through 317 inclusive that
impose duties on any Person (including the provisions automatically deemed
included herein unless expressly excluded by the provisions of this Indenture)
are a part of and govern this Indenture, whether or not physically contained
herein.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision of the TIA shall
control.
SECTION 1.17 COMMUNICATIONS BY NOTEHOLDERS WITH OTHER
NOTEHOLDERS.
A Noteholder may communicate with other Noteholders pursuant
to TIA Section 312(b) with respect to their rights under this Indenture or the
Notes. The Issuer, the Trustee and anyone else
shall have the protection of Section 312(c) of the TIA.
SECTION 1.18 STATEMENTS REQUIRED IN OFFICER'S CERTIFICATE.
Each Officer's Certificate with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that the Person making such
certification has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in
such certificate are based;
(iii) a statement that, in the opinion of such Person, he
or she has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
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(iv) a statement as to whether or not, in the opinion
of such Person, such covenant or condition has been complied with.
SECTION 1.19 WHEN TREASURY SECURITIES ARE DISREGARDED.
In determining whether the Noteholders of the required
principal amount of Notes have concurred in any direction, waiver or consent
hereunder, Notes owned by the Issuer or any other obligor on the Notes or by any
Affiliate of the Issuer or such obligor related thereto shall be disregarded,
except that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Notes which
a Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded. Notes so owned which have been pledged in good faith shall not be
disregarded if the pledgee establishes to the reasonable satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer or any other obligor upon the Notes or any Affiliate
of the Issuer or such obligor.
SECTION 1.20 RULES BY TRUSTEE.
The Trustee may make reasonable rules for action by or at a
meeting of Noteholders.
SECTION 1.21 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Issuer or an Affiliate of the Issuer. Any such
indenture, loan or debt agreement may not be
used to interpret this Indenture.
SECTION 1.22 NO RECOURSE AGAINST OTHERS.
All liability described in the Notes of any director, officer,
employee or member, as such, of the Issuer is waived and released.
SECTION 1.23 INDEPENDENCE OF COVENANTS.
All covenants and agreements in this Indenture shall be given
independent effect so that if any particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Indenture Event of Default if such
action is taken or condition exists.
SECTION 1.24 CONSENT TO JURISDICTION.
Each of the Issuer and the Trustee irrevocably submits to the
jurisdiction of any New York State or Federal court sitting in the Borough of
Manhattan in the City of New York over any suit, action or proceeding arising
out of or relating to this Indenture or any Note. Each of the Issuer and the
Trustee irrevocably waives, to the fullest extent permitted by laws, any
objection which it may have to the laying of the venue of any such suit, action
or proceeding brought in such a court and any claim that any such suit, action
or proceeding brought in such a court has been brought in
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any inconvenient forum. Each of the Issuer and the Trustee agrees that final
judgment in any such suit, action or proceeding brought in such a court shall be
conclusive and binding upon the Issuer or the Trustee, as the case may be, and
may be enforced in the courts of New York (or any other courts to the
jurisdiction of which the Issuer or the Trustee, as the case may be, is subject)
by a suit upon such judgment, provided that service of process is effected upon
the Issuer as permitted by law; PROVIDED, HOWEVER, that each of the Issuer and
the Trustee does not waive, and the foregoing provisions of this sentence shall
not constitute or be deemed to constitute a waiver of, (i) any right to appeal
any such judgment, to seek any stay or otherwise to seek reconsideration or
review of any such judgment or (ii) any stay of execution or levy pending an
appeal from, or a suit, action or proceeding for reconsideration or review of,
any such judgment.
SECTION 1.25 NO BANKRUPTCY PETITION.
Notwithstanding any provision contained herein, each of the
Noteholders and the Trustee covenants and agrees that prior to the date which is
one year and one day after the payment in full of all Notes issued by the
Issuer, it will not institute against, or join any other Person in instituting
against, the Issuer or its Owner Trustee or beneficial owner any bankruptcy,
reorganization, receivership, arrangement, insolvency or liquidation
proceedings, or other similar proceedings under any federal or state bankruptcy
or similar law. The Issuer represents, warrants, and covenants that it and its
Owner Trustee have obtained, and will in the future obtain, a no-petition
agreement from each and every Person that enters into any agreement of any kind
with the Issuer or its Owner Trustee or beneficial owner. This Section 1.25
shall survive the termination of this Indenture.
SECTION 1.26 VOTING RIGHTS OF CLASS F INSTRUMENTS.
Upon the irrevocable payment in full of all of the Class A
Notes, the Class B Notes the Class C Notes, the Class D Notes and the Class E
Notes, all voting and consent rights otherwise granted to the Class A
Noteholders, the Class B Noteholders, the Class C Noteholders, the Class D
Noteholders and the Class E Noteholders shall be exercised by the requisite
percentage of holders of the Class F Instruments, if any.
SECTION 1.27 INDEBTEDNESS TREATMENT.
This Indenture and the Notes have been structured with the
intention that the Notes will qualify under applicable tax law as indebtedness.
Each Noteholder agrees to treat the Notes for purposes of federal, state and
local income or franchise taxes (and any other tax imposed on or measured by
income) as indebtedness and to cause any Person acquiring an interest in a Note
by, through or under it to acknowledge the characterization of the Notes as
indebtedness and to agree to treat the Notes as indebtedness for such tax
purposes.
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ARTICLE II
THE NOTES
SECTION 2.01 GENERAL PROVISIONS.
(a) The Notes issuable hereunder shall be issued as registered
Notes without coupons in no more than five classes as from time to time shall be
authorized by the Issuer. The Notes of all classes shall be known and entitled
generally as the "DVI Business Trust 1998-2 Asset-Backed Notes, Series 1998-2"
The Notes of each class shall have further particular designation as the Issuer
may adopt for each class, and each Note issued hereunder shall bear upon the
face thereof the designation so adopted for the class to which it belongs. The
Trustee is hereby authorized and directed upon the written order of the Issuer
to authenticate and deliver Notes to be issued hereunder in five classes, and,
with respect to the Class A Notes only, in three tranches, entitled "5.242%
Asset-Backed Notes, Series 1998-2, Class A-1", "5.64% Asset-Backed Notes, Series
1998-2, Class A-2", "5.76% Asset- Backed Notes, Series 1998-2 Class A-3", "5.93%
Asset-Backed Notes, Series 1998-2, Class B", "6.37% Asset-Backed Notes, Series
1998-2, Class C" "7.39% Asset-Backed Notes, Series 1998-2, Class D" and "9.42%
Asset-Backed Notes, Series 1998-2, Class E", respectively. The Issuer may issue
in accordance with Section 2.06 hereof, the Class F Instruments which will be
subordinate to the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes and the Class E Notes by entering into a Supplement. The form of
each class of Offered Notes and of the Trustee's certificate of authentication
shall be in substantially the forms set forth in Exhibits A-1, A-2, A-3, B, C, D
and E hereto, with such appropriate insertions, omissions, substitutions, and
other variations as are required or permitted by this Indenture. The aggregate
principal amount of Notes which may be authenticated and delivered under this
Indenture is limited to $210,069,865 except for Notes authenticated and
delivered upon registration of, transfer of, or in exchange for, or in lieu of,
other Notes pursuant to Section 2.04, 2.05, or 9.04. The Notes shall be issuable
only in registered form and only in denominations of at least $500,000 and
integral multiples of $1,000 thereof; PROVIDED that the foregoing shall not
restrict or prevent the transfer or issuance in accordance with Section 2.04 or
2.05 of any Note having a remaining outstanding principal amount of less than
$500,000; PROVIDED, FURTHER, that a single Note of each Class may be issued in a
different amount as may be necessary so that the Notes of such Class evidence
the full initial principal balance thereof. The Class F Instruments, if any,
shall be issued in the minimum denominations indicated in the related
Supplement.
(b) The aggregate amount of principal due and payable on each
class of Notes on each Payment Date shall be equal to the sum of (i) Monthly
Principal for such class and (ii) any other due and unpaid principal for such
class. Except (i) for optional redemption pursuant to Section 10.01, (ii) for
Prepayment Amounts or Partial Prepayment Amounts or (iii) as otherwise provided
in Section 6.02, no part of the principal of any Note shall be paid prior to the
Payment Date on which such principal is due in accordance with the preceding
provisions of this Section 2.01(b).
(c) Interest and principal on the Notes shall be payable on
each Payment Date commencing with the Initial Payment Date to Noteholders of
record on the Record Date. Interest on the Notes is required to be paid to
Noteholders in an amount equal to the Monthly Interest plus Overdue Interest.
Interest on the Notes shall be computed on the basis of a 360-day year
consisting
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of twelve 30-day months PROVIDED that for Class A-1, interest shall be computed
using the actual number of days elapsed over a 360-day year.
(d) All payments made with respect to any Note shall be made
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts and shall be
applied first to the interest then due and payable on such Notes and then to the
principal thereof.
(e) All Notes of the same class issued under this Indenture or
any Supplement shall be in all respects equally and ratably entitled to the
benefits hereof and thereof without preference, priority or distinction on
account of the actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Indenture or any Supplement.
Payments of principal and interest on Notes of the same class shall be made pro
rata among all outstanding Notes of such class, without preference or priority
of any kind.
(f) The Issuer, the Trustee and each Class A, Class B, Class
C, Class D and Class E Noteholder by acceptance of its Class A, Class B, Class
C, Class D or Class E Note (and any Person that is a beneficial owner of any
interest in a Class A, Class B, Class C, Class D or Class E Note, by virtue of
such Person's acquisition of a beneficial interest therein) agrees to treat such
Note(s) for purposes of federal, state and local income or franchise taxes (and
any other tax imposed on or measured by income) as indebtedness. Each Class A,
Class B, Class C, Class D and Class E Noteholder agrees that it will cause any
Person acquiring an interest in a Class A, Class B, Class C, Class D or Class E
Note through it to acknowledge the Class A, Class B, Class C, Class D or Class E
Notes' characterization as indebtedness and to agree to comply with this
Indenture as to treatment of such Notes as indebtedness for such tax purposes.
SECTION 2.02 GLOBAL NOTES.
(a) Initially, the Class A Notes, the Class B Notes and the
Class C Notes shall be issued in the form of one or more Public Global Notes and
the Class D and Class E Notes shall be issued in the form of one or more Rule
144A Global Note(s) which (i) shall represent, and shall be denominated in an
aggregate amount equal to, the aggregate principal amount of all Class A Notes,
the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes to
be issued hereunder, (ii) shall be delivered as one or more Notes held by the
Book Entry Custodian, or, if appointed to hold such Notes as provided below, the
Depositary shall be registered in the name of the Depositary or its nominee,
(iii) shall be substantially in the form of the Note specified pursuant to
Section 2.01, with such changes therein as may be necessary to reflect that each
such Note is a global security, and (iv) shall each bear a legend substantially
to the effect included in the form of the face of the Notes as set forth in
Exhibits A-1, A-2, A-3, B, C, D and E hereto. Notwithstanding anything in any
Transaction Document to the contrary, no Class D Note or Class E Note shall be
purchased by a Person who is not a U.S. Person, as defined herein and no Class D
Note or Class E Note shall be purchased by a Person who is not a "qualified
institutional buyer" as defined in Rule 144A of the Securities Act.
(b) Notwithstanding any other provisions of this Section 2.02
or of Section 2.04, unless and until a Global Note is exchanged in whole for
Notes in definitive form, a Global Note may be transferred, in whole, but not in
part, and in the manner provided in this Section 2.02, only by the
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Depositary to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor Depositary selected or approved by the Issuer or
to a nominee of such successor Depositary or in the manner specified in Section
2.02(c). The Depositary shall order the Note Registrar to authenticate and
deliver the following Book-Entry Notes: with respect to the Class D and E Notes
only, a Rule 144A Global Note having an aggregate initial Outstanding principal
balance equal to the Initial Class Note Balance of such Class, and, with respect
to the Class A Notes, the Class B Notes and the Class C Notes only, a Public
Global Note, having an initial Outstanding principal balance equal to zero. Note
Owners shall hold their respective Ownership Interests in and to such Notes
through the book-entry facilities of the Depositary. Without limiting the
foregoing, Class A, Class B and Class C Note Owners shall hold their respective
Ownership Interests, if any, in Public Global Notes only through Depositary
Participants, Euroclear or Cedel.
(c) If (i) the Depositary for the Notes represented by one or
more Global Notes at any time notifies the Issuer that it is unwilling or unable
to continue as Depositary of the Notes or if at any time the Depositary shall no
longer be a clearing agency registered under the Exchange Act and any other
applicable statute or regulation, and a successor Depositary is not appointed or
approved by the Issuer within 90 days after the Issuer receives such notice or
becomes aware of such condition, as the case may be, (ii) the Trustee, at the
direction of Noteholders evidencing not less than 66 2/3% of the Voting Rights,
elects to terminate the book-entry system through the Depositary or (iii) after
an Indenture Event of Default or a Servicer Event of Default, Noteholders
representing more than 50% of the Voting Rights advise the Depositary, or Book
Entry Custodian, as the case may be, in writing that the continuation of a
book-entry system through the Depositary, or the Book Entry Custodian, as the
case may be, is no longer in such Noteholder's best interest upon the request of
such Noteholder, but only with respect to the interests of such Noteholder, the
Issuer will promptly execute, and the Trustee, upon receipt of an Officer's
Certificate evidencing such determination by the Issuer, will promptly
authenticate and make available for delivery, Notes in definitive form without
coupons, in authorized denominations and in an aggregate principal amount equal
to the principal amount of the Global Note or Notes then outstanding in exchange
for such Global Note or Notes and this Section 2.02 shall no longer be
applicable to the Notes. Upon the exchange of the Global Notes for such Notes in
definitive form without coupons, in authorized denominations, such Global Notes
shall be canceled by the Trustee. Such Notes in definitive form issued in
exchange of the Global Notes pursuant to this Section 2.02(c) shall be
registered in such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee may conclusively rely on any such
instructions furnished by the Depositary and shall not be liable for any delay
in delivery of such instructions. The Trustee shall make such Notes available
for delivery to the Persons in whose names such Notes are so registered.
(d) As long as the Notes outstanding are represented by one or
more Global Notes:
(i) the Note Registrar and the Trustee may deal with
the Depositary for all purposes (including the payment of principal of
and interest on the Notes) as the authorized
representative of the Note Owners;
(ii) the rights of Note Owners shall be exercised only
through the Depositary and shall be limited to those established by law
and agreements between such Note Owners
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and the Depositary and/or the Depositary Participants. Unless and until
Definitive Notes are issued, the Depositary will make book-entry
transfers among the Depositary Participants and receive and transmit
payments of principal of and interest on the Notes to such Depositary
Participants; and
(iii) 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 Voting Rights, the Depositary
shall be deemed to represent such percentage only to the extent that it
has received instructions to such effect from Note Owners and/or
Depositary Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes (or Class
of Notes) and has delivered such instruction to the Trustee.
(e) If Notes are to be issued in global form other than as
Global Notes, the provisions governing such Notes shall be specified pursuant to
an Officer's Certificate with respect thereto and by an indenture supplemental
hereto.
(f) Whenever a notice or other communication to the
Noteholders is required under this Indenture, unless and until Notes have been
issued in definitive form to Note Owners, the Trustee shall give all such
notices and communications to the Depositary.
(g) The Trustee is hereby initially appointed as the Book
Entry Custodian and hereby agrees to act as such in accordance with the
agreement that it has with the Depositary authorizing it to act as such. The
Book Entry Custodian may, and, if it is no longer qualified to act as such, the
Book Entry Custodian shall, appoint, by written instrument delivered to the
Issuer and the Depositary, any other transfer agent (including the Depositary or
any successor Depositary) to act as Book Entry Custodian under such conditions
as the predecessor Book Entry Custodian and the Depositary or any successor
Depositary may prescribe, PROVIDED that the predecessor Book Entry Custodian
shall not be relieved of any of its duties or responsibilities by reason of any
such appointment of other than the Depositary. If the Trustee resigns or is
removed in accordance with the terms hereof, the successor Trustee or, if it so
elects, the Depositary shall immediately succeed to its predecessor's duties as
Book Entry Custodian. The Issuer shall have the right to inspect, and to obtain
copies of, any Notes held as Book-Entry Notes by the Book Entry Custodian.
(h) The provisions of this Section 2.02(h) shall apply to all
transfers of Definitive Notes, if any, issued in respect of Ownership Interests
in the Rule 144A Global Notes.
(1) No transfer of any Class of Note or interest therein shall
be made unless that transfer is made pursuant to an effective
registration statement under the Securities Act, and effective
registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. If a transfer of any Definitive Note is to be made
without registration under the Securities Act (other than in connection
with the initial issuance thereof or a transfer thereof by the
Depositary or one of its Affiliates), then the Note Registrar shall
refuse to register such transfer unless it receives (and upon receipt,
may conclusively rely upon) either: (i) a certificate from such
Noteholder substantially in the form attached as Exhibit G hereto or
such other certification reasonably acceptable to the Trustee and a
certificate from such Noteholder's prospective transferee substantially
in the form attached
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as Exhibit G hereto or such other certification reasonably acceptable
to the Trustee; or (ii) an Opinion of Counsel satisfactory to the
Trustee to the effect that such transfer may be made without
registration under the Securities Act (which Opinion of Counsel shall
not be an expense of the Issuer or any Affiliate thereof that is a
trust or of the Depositary, the Servicer, the Trustee or the Note
Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from
the Noteholder desiring to effect such transfer and/or such
Noteholder's prospective transferee on which such Opinion of Counsel is
based. If such a transfer of any interest in a Book-Entry Note is to be
made without registration under the Securities Act, the transferor will
be deemed to have made each of the representations and warranties set
forth on Exhibit G hereto in respect of such interest as if it was
evidenced by a Definitive Note and the transferee will be deemed to
have made each of the representations and warranties set forth in
either Exhibit G hereto in respect of such interest as if it was
evidenced by a Definitive Note. None of the Depositary, the Trustee or
the Note Registrar is obligated to register or qualify any Class of
Notes under the Securities Act or any other securities law or to take
any action not otherwise required under this Indenture to permit the
transfer of any Note or interest therein without registration or
qualification. Any Noteholder or Note Owner desiring to effect such a
transfer shall, and does hereby agree to, indemnify the Depositary, the
Trustee and the Note Registrar against any liability that may result if
the transfer is not so exempt or is not made in accordance with such
federal and state laws.
SECTION 2.03 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
(a) The Notes shall be executed manually or by facsimile
signature on behalf of the Issuer by a corporate trust officer of the Owner
Trustee.
(b) Any Note bearing the signature of an individual who was at
the time of execution thereof a proper authorized signatory of the Issuer shall
bind the Issuer, notwithstanding that such individual did not hold such office
at the date of such Note.
(c) No Note shall be entitled to any benefit under this
Indenture or any Supplement 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 manual signature, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder. Each Note
shall be dated the date of its authentication.
(d) The Notes may from time to time be executed by the Issuer
and delivered to the Trustee for authentication together with an Issuer Request
to the Trustee directing the authentication and delivery of such Notes and
thereupon the same shall be authenticated and delivered by the Trustee in
accordance with such Issuer Request.
All Notes and the interest thereon shall be nonrecourse
obligations of the Issuer and shall be payable from and secured by the Trust
Property. The Notes shall never constitute obligations of the Trustee, the Owner
Trustee, the Contributor, the Servicer, the Transferor or of any shareholder or
any Affiliate of such parties (other than any Affiliate that guarantees any
Notes) or any officers, directors, employees or agents of any thereof, and no
recourse may be had under or upon any obligation, covenant or agreement of this
Indenture, any Supplement or of any Notes, or for any claim based thereon
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or otherwise in respect thereof, against any incorporator or against any past,
present, or future owner, partner of an owner or any officer, employee or
director thereof or of any successor entity, or any other Person, either
directly or through the Issuer, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise;
it being expressly agreed that this Indenture and the obligations issued
hereunder are solely obligations of the Issuer, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, any other
Person under or by reason of this Indenture, any Supplement or any Notes or
implied therefrom, or for any claim based thereon or in respect thereof, all
such liability and any and all such claims being hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of such Notes. Except as provided in any Supplement, no
Person other than the Issuer shall be liable for any obligation of the Issuer
under this Indenture or any Note or any losses incurred by any Noteholder.
SECTION 2.04 REGISTRATION, TRANSFER AND EXCHANGE.
(a) The Issuer shall cause to be kept at the Corporate Trust
Office a register (the "NOTE REGISTER") in which, subject to such reasonable
regulations as the Trustee may prescribe, the Issuer shall provide for the
registration of Notes and of transfers of Notes. The Trustee is hereby appointed
"NOTE REGISTRAR" for the purpose of registering Notes and transfers of Notes as
herein provided.
(b) Upon surrender for registration of transfer of any Note at
the Corporate Trust Office, the Issuer shall execute and the Trustee upon
request shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of the same class, of any authorized
denominations and of a like aggregate original principal amount.
(c) 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 and any
Supplement, as the Notes surrendered upon such registration of transfer or
exchange.
(d) Every Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Issuer or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Trustee duly executed, by the holder thereof
or his attorney duly authorized in writing.
(e) No service charge shall be made for any registration of
transfer or exchange of Notes but 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,
but this provision shall not apply to any exchange pursuant to Section 9.04 not
involving any transfer.
(f) If Notes are issued or exchanged in definitive form under
Section 2.02, such Notes will not be registered by the Trustee unless each
prospective initial Noteholder acquiring a Note, each prospective transferee
acquiring a Note and each prospective owner (or transferee thereof) of a
beneficial interest in Notes acquiring such beneficial interest provides the
Servicer, the Issuer, the Trustee and any successor Servicer with a
representation that the statements in either subsections (1)
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or (2) of Section 2.11 is an accurate representation as to all sources of funds
to be used to pay the purchase price of the Notes.
(g) No transfer of a Note shall be deemed effective unless the
registration and prospectus delivery requirements of Section 5 of the Securities
Act of 1933, as amended, and any applicable state securities laws are complied
with, or such transfer is exempt from the registration and prospectus delivery
requirements under said Securities Act and laws. In the event that a transfer is
to be made without registration or qualification, such Noteholder's prospective
transferee shall deliver to the Trustee an investment letter substantially in
the form of Exhibit G hereto (the "INVESTMENT LETTER"). The Trustee is not under
any obligation to register the Notes under said Act or any other securities law
or to bear any expense with respect to such registration by any other Person or
monitor compliance of any transfer with the securities laws of the United States
regulations promulgated in connection thereto or ERISA unless the Notes are
issued or exchanged in definitive form under Section 2.02..
(h) No Class D or Class E Noteholder shall transfer, sell,
assign, pledge or otherwise grant a security interest in ("TRANSFER"), a Class D
Note or Class E Note to any Person that is not a United States person within the
meaning of section 7701(a)(30) of the Code. In the event of any Transfer with
respect to a Class D or Class E Note, the Trustee shall require, in addition to
any other applicable requirements set forth in this Indenture, including without
limitation, the delivery of the Investment Letter, (A) the purchaser to execute
a Tax Certificate in substantially the form attached as Exhibit I hereto
certifying to the transferor and the Trustee as to the matters set forth therein
and (B) the transferee to certify, in form and substance reasonably acceptable
to the Trustee, that (1) the transferee is acquiring the Class D or Class E Note
for its own behalf and is not acting as agent or custodian for any other person
or entity in connection with such acquisition and (2) the transferee is a United
States person within the meaning of section 7701(a)(30) of the Code.
In addition, no Class D or Class E Noteholder shall Transfer a
Class D Note or Class E Note to any Person that is a grantor trust, partnership
or S corporation (each a "Pass-Through Entity") if substantially all of the
value of the assets of the Pass-Through Entity is attributable to the
Pass-Through Entity's ownership interest in securities of the Issuer other than
the Class A, Class B and Class C Notes, nor may the Class D or Class E Notes be
Transferred or sold to any Person if, for the purposes of Section 7704 of the
Code and the Treasury regulations promulgated thereunder, after giving effect to
such Transfer the Issuer would be treated under the Code (by virtue of
calculating the aggregate number of Class D Noteholders, Class E Noteholders and
holders of the Class F Instrument (if issued)) as being owned by more than 100
persons. In the event of any Transfer with respect to a Class D or Class E Note,
the Trustee shall require, in addition to any other applicable requirements set
forth in this Agreement, including without limitation, the delivery of the
Investment Letter, (A) the purchaser to execute a Tax Certificate substantially
in the form attached as Exhibit I hereto in form and substance reasonably
acceptable to the Trustee certifying to the transferor and the Trustee as to the
matters set forth therein and (B) the transferee to certify, in form and
substance reasonably acceptable to the Trustee, that (1) the transferee is
acquiring the Class D or Class E Note for its own behalf and is not acting as
agent or custodian for any other person or entity in connection with such
acquisition and (2) the transferee is (x) not a Pass-through Entity or (y) is a
Pass-through Entity but after giving effect to such purchase of such Class D
Note or Class E Note by such person, substantially all of the value of the
assets of the Pass-Through Entity is not attributable to the Pass-Through
Entity's ownership interest in the Class D and Class E Notes.
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SECTION 2.05 MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
(a) If any mutilated Note is surrendered to the Trustee, the
Issuer shall execute and the Trustee shall authenticate and deliver in exchange
therefor a replacement Note of the same class, of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
(b) If there shall be delivered to the Issuer and the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of any Note
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of actual
notice to the Issuer 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 lieu of any such destroyed, lost or stolen Note, a
replacement Note of the same class, of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
(c) In case the final installment of principal on any such
mutilated, destroyed, lost or stolen Note has become or will at the next Payment
Date become due and payable, the Issuer in its discretion may, instead of
issuing a replacement Note, pay such Note.
(d) Upon the issuance of any replacement Note under this
Section, the Issuer or the Trustee may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed as a result of
the issuance of such replacement Note.
(e) Every replacement Note issued pursuant to this Section in
lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture and any Supplement equally and
proportionately with any and all other Notes of the same class, duly issued
hereunder.
(f) 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 DELIVERY OF CLASS F INSTRUMENTS.
(a) The Issuer may issue the Class F Instruments upon delivery
to the Trustee of the following: (i) a Supplement in form reasonably
satisfactory to the Trustee executed by the Issuer, the Trustee and any other
applicable party and specifying the items provided in Section 2.06(c) and any
other terms (the "PRINCIPAL TERMS"), (ii) any related credit enhancement
agreements as contemplated by such Supplement, (iii) written confirmation from
each Rating Agency that the issuance of such Class F Instruments will not result
in a Ratings Effect with respect to any class of Notes; PROVIDED, HOWEVER, that
no such written confirmation shall be required if the Class F Instruments are
issued on the Closing Date, (iv) such other closing documents, certificates and
Opinions of Counsel as may be required by this Indenture or the applicable
Supplement and (v) an Officer's Certificate from the Issuer stating that each of
the conditions to the issuance of the Class F Instruments set forth in this
Section 2.06 have been satisfied. In no event shall the Issuer issue a Class F
Instrument to the order of the Issuer or an Affiliate.
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(b) Any such Class F Instrument shall be substantially in the
form of Exhibit F hereto and shall bear, upon its face, the designation for such
class to which it belongs so selected by the Issuer and set forth in the related
Supplement. All Class F Instruments shall be identical in all respects except
for the denominations thereof and shall be equally and ratably entitled among
themselves to the benefits of this Indenture and any Supplement thereof without
preference, priority or distinction on account of the actual title or times of
authentication and delivery, all in accordance with the terms and provisions of
this Indenture and such Supplement. Notwithstanding anything contained in any
Supplement, such Class F Instruments, if any, shall be subordinate to the Class
A Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E
Notes, and no Class F Instruments shall adversely affect the method of
allocating Available Funds to Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes or the Class E Notes for any period or alter or affect
the manner or timing of distributions to the Class A, Class B, Class C, Class D
or Class E Noteholders or the rights or priority of such holders in and to the
Trust Property.
(c) Any Supplement relating to Class F Instruments shall
define or provide for, but shall not be limited to, the following Principal
Terms: (i) the name or designation of the Class F Instruments, (ii) the initial
balance of the Class F Instrument (or method for calculating such amount), (iii)
the rate of interest applicable to such Class F Instrument (or formula for the
determination thereof, which may provide that such rate is a floating rate),
(iv) the Class F Percentage, (v) the Stated Maturity Date, (vi) the Redemption
Price, if any, (vii) the Payment Dates and the date or dates from which interest
shall accrue and (viii) if the Class F Instruments are entitled to receive less
than the entire amount distributable to the Issuer or its designee pursuant to
Section 3.04(b)(xiii), the amount that the Class F Instruments are entitled to
receive; PROVIDED that no such Supplement shall conflict with the terms of this
Indenture in any respect.
(d) The Issuer will not issue, sell, assign, pledge or
otherwise grant a security interest in, the Class F Instruments without an
Opinion of Counsel acceptable in form and substance to the Trustee and addressed
to the Trustee delivered by outside counsel to the Issuer to the effect that for
federal income tax purposes (i) such issuance, sale, assignment, pledge or grant
of a security interest in the Class F Instruments will not affect the tax
characterization of any of the Class A Notes, Class B Notes or Class C Notes as
indebtedness or Class D Notes or Class E Notes as indebtedness or partnership
interests, (ii) such issuance, sale, assignment, pledge or grant of a security
interest in the Class F Instruments will not constitute a deemed reissuance of
the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes or
the Class E Notes under Treasury Regulations ss.1.1001-3 and (iii) such
issuance, sale, assignment, pledge or grant of a security interest in the Class
F Instruments will not prevent the income from the Trust Property from being
properly included in the consolidated federal income tax return of the DVI
Group.
SECTION 2.07 PAYMENT OF INTEREST AND PRINCIPAL; RIGHTS
PRESERVED.
(a) Any installment of interest or principal payable on any
Note that is paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Note was registered at the
close of business on the Record Date for such Payment Date by wire transfer of
immediately available funds to the account and number specified in the Note
Register on such Record Date for such Person or, if no such account or number is
so specified, then by check mailed to such Person's address as it appears in the
Note Register on such Record Date.
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(b) All reductions in the principal amount of a Note effected
by payments of installments of principal made on any Payment Date shall be
binding upon all holders of such Note and of any Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof,
whether or not such payment is noted on such Note. All payments on the Notes
shall be paid without any requirement of presentment but each holder of any Note
shall be deemed to agree, by its acceptance of the same, to surrender such Note
at the Corporate Trust Office for the payment of the final installment of
principal on such Note.
SECTION 2.08 PERSONS DEEMED OWNERS.
Prior to due presentment of a Note for registration or
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Noteholder as the owner of such Note for the purpose of receiving
payment of principal of and interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Issuer, the
Trustee nor any agent of the Issuer or the Trustee shall be affected by notice
to the contrary.
SECTION 2.09 CANCELLATION.
All Notes surrendered for registration of transfer or exchange
or final payment shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. 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 cancelled by the
Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Notes held by the Trustee may be disposed of in the
normal course of its business or as directed by an Issuer Order.
SECTION 2.10. NOTEHOLDER LISTS; COMMUNICATIONS TO NOTEHOLDERS.
(a) The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Noteholders. If the Trustee is not the Note Registrar, the Issuer
or other obligor, if any, shall furnish to the Trustee at least three Business
Days prior to each Record Date and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Noteholders.
(b) If any Noteholder (herein referred to as an "APPLICANT")
applies in writing to the Trustee, and such application states that the
applicant desires to communicate with other Noteholders with respect to their
rights under this Indenture or under the Notes, then the Trustee shall, within
three Business Days after the receipt of such application, afford such
applicant(s) access to the information preserved at the time by the Trustee in
accordance with Section 2.10(a).
(c) Every Noteholder, by receiving and holding the same,
agrees with the Issuer and the Trustee that neither the Issuer nor the Trustee
nor any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Noteholders in accordance with Section 2.10(b), regardless of the source from
which such information
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was derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under Section 2.10(b).
SECTION 2.11. ERISA DEEMED REPRESENTATIONS
Each prospective initial Noteholder acquiring Notes, each
prospective transferee acquiring the Notes, and each prospective owner (or
transferee thereof) of a beneficial interest in Notes (each a "Prospective
Owner") will be deemed to have represented by such purchase to the Issuer, the
Trustee, the Servicer and any successor Servicer that either (1) it is not
acquiring the Notes with the assets of a Plan; or (2) the acquisition and
holding of the Notes will not give rise to a nonexempt prohibited transaction
under Section 406(a) of ERISA or Section 4975 of the Code.
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ARTICLE III
ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION
AND APPLICATION OF MONEYS; REPORTS
SECTION 3.01 ACCOUNTS; INVESTMENTS BY TRUSTEE.
(a) The Servicer, pursuant to a Lock-Box Agreement, shall
establish a Lock-Box Account, which account shall be an Eligible Deposit
Account, in the name of the Trustee for the benefit of the Noteholders. Each
Lock-Box Account shall be a segregated account initially established and
maintained with First Union National Bank, First National Bank of Chicago or
such other Lock-Box Bank as the Servicer may select; PROVIDED, HOWEVER, that the
Servicer (i) shall give the Trustee and the Rating Agencies written notice of
any change in the location of a Lock-Box Account and (ii) shall give at least 10
days' prior written notice of the new location to each Obligor.
In addition, on or before the Closing Date, the Trustee
shall establish in the name of the Trustee for the benefit of the Noteholders
and the Issuer to the extent of their interests therein as provided in this
Indenture and in the Contribution and Servicing Agreement, the following
accounts, which accounts shall be trust accounts maintained at the Corporate
Trust Office:
(i) Collection Account;
(ii) Distribution Account; and
(iii) Reserve Account.
Each of such accounts shall be established and maintained as an Eligible Deposit
Account. In addition, the Trustee shall establish a sub-account to the
Distribution Account for each Class of Notes (such sub-accounts the "CLASS A
DISTRIBUTION SUB-ACCOUNT," the "CLASS B DISTRIBUTION SUB-ACCOUNT," the "CLASS C
DISTRIBUTION SUB-ACCOUNT" the "CLASS D DISTRIBUTION SUB-ACCOUNT," the "CLASS E
DISTRIBUTION SUB-ACCOUNT" and, if necessary, the "CLASS F DISTRIBUTION
SUB-ACCOUNT"). Subject to the further provisions of this Section 3.01(a), the
Trustee shall, upon receipt or upon transfer from another account, as the case
may be, deposit into such accounts all amounts received by it which are required
to be deposited therein in accordance with the written direction of the Servicer
and the provisions of this Indenture. All such amounts and all investments made
with such amounts, including all income and other gain from such investments,
shall be held by the Trustee in such accounts as part of the Trust Property as
herein provided, subject to withdrawal by the Trustee in accordance with, and
for the purposes specified in the written direction of the Servicer pursuant to
the provisions of, this Indenture.
The Collection Account shall be comprised of more than one
such Eligible Deposit Account, but shall, for the purposes of the Transaction
Documents, be deemed to be one account. Funds shall be withdrawn equally from
each such Eligible Account that constitutes the Collection Account to make all
payments from the Collection Account in accordance with the terms and conditions
of this Indenture.
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(b) The Trustee shall hold in trust but shall not be required
to deposit in any account specified in Section 3.01(a) any payment received by
it until such time as the Trustee shall have identified to its reasonable
satisfaction the nature of such payment and, on the basis thereof, the proper
account or accounts into which such payment is to be deposited. In determining
into which of the accounts, if any, referred to above any amount received by the
Trustee is to be deposited, the Trustee may conclusively rely (in the absence of
bad faith on the part of the Trustee) on the written instructions of the
Servicer. Unless otherwise advised in writing by the Servicer, the Trustee shall
assume that any amount remitted to it is to be deposited into the Collection
Account pursuant to Section 3.03(b). The Trustee may establish from time to time
such deadline or deadlines as it shall determine are reasonable or necessary in
the administration of the Trust Property after which all amounts received or
collected by the Trustee on any day shall not be deemed to have been received or
collected until the next succeeding Business Day.
(c) The Trustee shall have no right of set-off with respect to
any Lock-Box Account, the Collection Account, the Reserve Account, the
Distribution Account, the Class A Distribution Sub- Account, the Class B
Distribution Sub-Account, the Class C Distribution Sub-Account, the Class D
Distribution Sub-Account, the Class E Distribution Sub-Account, the Class F
Distribution Sub-Account or any investment therein, or any Trust Property,
including collections or proceeds with respect thereto regardless of when or how
held by the Trustee and whether or not commingled.
(d) So long as no Default or Indenture Event of Default shall
have occurred and be continuing, the amounts in the Collection Account and the
Reserve Account shall be invested and reinvested by the Trustee pursuant to a
Servicer Order in one or more Eligible Investments. Subject to the restrictions
on the maturity of investments set forth in Section 3.01(f), each such Servicer
Order may authorize the Trustee to make the specific Eligible Investments set
forth therein, to make Eligible Investments from time to time consistent with
the general instructions set forth therein, or to make specific Eligible
Investments pursuant to instructions received in writing or by telegraph or
facsimile transmission from the employees or agents of the Servicer identified
therein, in each case in such amounts as such Servicer Order shall specify. The
Issuer, and any Class F Instrumentholder, agrees to report as income for
financial reporting and tax purposes (to the extent reportable) all investment
earnings on amounts in the Collection Account and the Reserve Account.
(e) In the event that either (i) the Servicer shall have
failed to give investment directions to the Trustee by 12:00 P.M. New York time
on any Business Day on which there may be uninvested cash or (ii) a Default or
Indenture Event of Default shall have occurred and be continuing, then the
Trustee shall invest and reinvest the funds then in the Collection Account, the
Reserve Account, as the case may be, to the fullest extent practicable in one or
more Eligible Investments as specified in paragraph (vii) of the definition of
Eligible Investments. All investments made by the Trustee shall mature no later
than the maturity date therefor permitted by Section 3.01(f).
(f) No investment of any amount held in the Collection Account
or the Reserve Account shall mature later than the second Business Day
immediately preceding the Payment Date which is scheduled to occur immediately
following the date of investment; all such investments shall be held to
maturity. All income or other gains from the investment of moneys deposited in
the Collection Account or the Reserve Account shall be deposited by the Trustee
in such account immediately upon receipt. Any net loss of principal (determined
on a month by month basis) resulting from such investment
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of amounts in the Collection Account or the Reserve Account shall be charged to
the Issuer, and the Issuer shall reimburse such account for such loss within
three Business Days.
(g) Any investment of any funds in the Collection Account or
the Reserve Account, and any sale of any investment held in such accounts, shall
be made under the following terms and
conditions:
(i) each such investment shall be made in the name of
the Trustee (in its capacity as such) for the benefit of the
Noteholders or in the name of a nominee of the Trustee;
(ii) the investment earnings of any investment shall be
credited to the account for which such investment was made;
(iii) any certificate or other instrument evidencing
such investment shall be delivered directly to the Trustee or its agent
and the Trustee shall have sole possession of such instrument, and all
income on such investment; and
(iv) the proceeds of any sale of an investment shall be
remitted by the purchaser thereof directly to the Trustee for deposit
in the account in which such investment was held.
(h) The Trustee shall not in any way be held liable by reason
of any insufficiency in the Collection Account or the Reserve Account, resulting
from losses on investments made in accordance with the provisions of this
Section 3.01 (but the institution serving as Trustee shall at all times remain
liable for its own debt obligations, if any, constituting part of such
investments). The Trustee shall not be liable for any investment losses or any
liquidation prior to its maturity or any investment made by it in accordance
with this Section 3.01 on the grounds that it could have made a more favorable
investment.
SECTION 3.02 RESERVED.
SECTION 3.03 COLLECTION OF MONEYS.
(a) 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 the Trust Property, the
Trustee may take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
proceedings. Notwithstanding the foregoing, the Trustee shall not be obligated
to act as Servicer prior to its being appointed Successor Servicer. 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 VI. If at any time the Issuer shall receive any payment on or in respect
of any Contract or Equipment (including any Residual Payment), it shall hold
such payment in trust for the benefit of the Trustee and the Noteholders, shall
segregate such payment
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from the other property of the Issuer, and shall, within two Business Days of
receipt, deliver such payment in immediately available funds to the Trustee.
(b) If at any time the Trustee shall receive any payment on or
in respect of any Contract or Equipment (including any Residual Payment), it
shall, within two Business Days of receipt, deposit such payment by it into the
Collection Account in accordance with the written direction of the
Servicer.
SECTION 3.04 COLLECTION ACCOUNT.
(a) The Trustee shall deposit the following into the
Collection Account in accordance with the written instructions delivered to the
Trustee by the Servicer:
(i) promptly upon receipt, each Contract Payment or
Servicer Advance received by the Trustee, including all Contract
Payments deposited with the Trustee by the Contributor on the Closing
Date;
(ii) promptly upon receipt, the proceeds of any purchase
of Contracts and Equipment pursuant to Section 4.02 of this Indenture;
(iii) promptly upon receipt, each Prepayment Amount or
Partial Prepayment Amount received by the Trustee and any amounts
remitted by the Contributor in connection with any substitution of
Contracts;
(iv) promptly upon receipt, any amount required to be
deposited in the Collection Account pursuant to this Indenture;
(v) promptly upon receipt, each Residual Payment
received by the Trustee;
(vi) promptly upon receipt, any proceeds received by the
Trustee pursuant to any insurance policy covering Equipment or any
other amounts received by the Trustee relating to a Contract or
Equipment; and
(vii) promptly upon receipt, any amounts the Trustee
receives pursuant to Section 3.03 of this Indenture.
(b) Unless the Notes have been declared due and payable
pursuant to Section 6.02 hereof and moneys collected by the Trustee are being
applied in accordance with Section 6.06 hereof, the Trustee shall by 3:00 P.M.,
New York City time, on each Payment Date disburse all Available Funds deposited
in the Collection Account (including any investment income with respect to
monies on deposit in the Collection Account) in the amounts required, and in the
following order of priority in accordance with the Monthly Servicer Report:
(i) to the Servicer, the Servicing Fee due to the
Servicer on such Payment Date;
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(ii) to the Servicer, any unreimbursed Nonrecoverable
Advances or Servicer Advances previously made with respect to
Delinquent Contracts in accordance with Section 5.01 of the
Contribution and Servicing Agreement;
(iii) first, to the Class A Distribution Sub-Account, in
the following order of priority, the sum of: (A) the Class A-1 Monthly
Interest; and (B) the Class A-1 Overdue Interest, if any; second, to
the Class A Distribution Sub-Account, in the following order of
priority, the sum of: (A) the Class A-2 Monthly Interest; and (B) the
Class A-2 Overdue Interest, if any; and third, to the Class A
Distribution Sub-Account, in the following order of priority, the sum
of: (A) the Class A-3 Monthly Interest; and (B) the Class A-3 Overdue
Interest, if any;
(iv) to the Class B Distribution Sub-Account, in the
following order of priority, in the sum of:
(A) the Class B Monthly Interest; and
(B) the Class B Overdue Interest, if
any;
(v) to the Class C Distribution Sub-Account, in the
following order of priority, the sum of:
(A) the Class C Monthly Interest; and
(B) the Class C Overdue Interest, if
any;
(vi) to the Class D Distribution Sub-Account, in the
following order of priority, in the sum of:
(A) the Class D Monthly Interest; and
(B) the Class D Overdue Interest, if
any;
(vii) to the Class E Distribution Sub-Account, in the
following order of priority, the sum of:
(A) the Class E Monthly Interest; and
(B) the Class E Overdue Interest, if
any;
(viii) PROVIDED that no Amortization Event shall have
occurred and be continuing, to the Class A Distribution Sub-Account, in
the following order of priority, the sum of:
(A) the Class A-1 Overdue Principal, if
any;
(B) the Class A-1 Monthly Principal;
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(C) the Class A-2 Overdue Principal, if
any;
(D) the Class A-2 Monthly Principal;
(E) the Class A-3 Overdue Principal, if
any; and
(F) the Class A-3 Monthly Principal;
(ix) PROVIDED that no Amortization Event shall have
occurred and be continuing, to the Class B Distribution Sub-Account, in
the following order of priority, the sum of:
(A) the Class B Overdue Principal, if
any; and
(B) the Class B Monthly Principal;
(x) PROVIDED that no Amortization Event shall have
occurred and be continuing, to the Class C Distribution Sub-Account, in
the following order of priority, the sum of:
(A) the Class C Overdue Principal, if
any; and
(B) the Class C Monthly Principal;
(xi) PROVIDED that no Amortization Event shall have
occurred and be continuing, to the Class D Distribution Sub-Account, in
the following order of priority, the sum of:
(A) the Class D Overdue Principal, if
any; and
(B) the Class D Monthly Principal;
(xii) PROVIDED that no Amortization Event shall have
occurred and be continuing, to the Class E Distribution Sub-Account, in
the following order of priority, the sum of:
(A) the Class E Overdue Principal, if
any; and
(B) the Class E Monthly Principal;
(xiii) PROVIDED that no Amortization Event shall have
occurred and be continuing, to the Reserve Account, the Reserve Account
Deposit Amount;
(xiv) if an Amortization Event shall have occurred and is
continuing and is not subject to a continuing waiver from Noteholders
evidencing not less than 662/3% of the Voting Rights, in the following
order of priority:
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FIRST, to the Class A Distribution
Sub-Account the amount necessary to reduce the Class
A-1 Note Balance to zero; then, to the Class A
Distribution Sub-Account, the amount necessary to
reduce the Class A-2 Note Balance to zero and then,
to the Class A Distribution Sub-Account, the amount
necessary to reduce the Class A-3 Note Balance to
zero; PROVIDED, HOWEVER, that upon the occurrence of
a Subordination Deficiency Event, after the Class A-1
Note Balance has been reduced to zero, the Class A-2
Note Balance and the Class A-3 Note Balance will be
paid on a PRO RATA, PARI PASSU basis; and
SECOND, to the Class B Distribution
Sub-Account the amount necessary to reduce the Class
B Note Balance to zero; and
THIRD, to the Class C Distribution
Sub-Account the amount necessary to reduce the Class
C Note Balance to zero;
FOURTH, to the Class D Distribution
Sub-Account the amount necessary to reduce the Class
D Note Balance to zero; and
FIFTH, to the Class E Distribution
Sub-Account the amount necessary to reduce the Class
E Note Balance to zero;
(xv) if the Servicer is no longer DVI, and the Servicer
has, in its good faith and reasonable business judgment, deemed the
Servicing Fee to be commercially unreasonable, then, to the Servicer,
the amount agreed upon between the then Servicer and the Trustee, each
in their good faith and commercially reasonable judgment, as necessary
to make the Servicing Fee commercially reasonable and to cover the
reasonable costs in transferring the servicing obligations; and
(xvi) any remaining Available Funds on deposit in the
Collection Account shall be paid to DVI Receivables Corp., as sole
beneficial owner of the Issuer, or, if the Class F Instrument has been
issued, to the Class F Distribution Sub-Account.
Noteholders evidencing not less than 662/3% of the Voting Rights shall have the
ability to waive or defer any Amortization Event by written notice delivered to
the Trustee. If at any time any amount or portion thereof previously distributed
pursuant to this Section 3.04(b) shall have been recovered, or shall be subject
to recovery, in any proceeding with respect to the Issuer or otherwise, then for
purposes of determining future distributions pursuant to this Section 3.04(b)
such amount or portion thereof shall be deemed not to have been previously so
distributed. The Trustee shall make the disbursements in accordance with the
Monthly Servicer Report on each Payment Date to the extent of Available Funds
for such Payment Date.
(c) If on any Payment Date, the Available Funds on deposit in
the Collection Account (the "DEPOSITED AVAILABLE FUNDS") are less than the sum
necessary to make the payments required pursuant to Section 3.04(b), clauses
(iii) through (xii) inclusive and clause (xiv), each as applicable (the sum of
such payments, the "PRIORITY PAYMENTS"), then the Trustee shall withdraw from
the Reserve Account, to the extent that such funds are on deposit in the Reserve
Account and after taking into account
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payments to be made pursuant to clauses (i) and (ii) of Section 3.04(b), and
deposit into the Distribution Account for payment on such Payment Date, funds
equal to the amount of the Priority Payments less any Deposited Available Funds
(such funds, the "AVAILABLE RESERVE ACCOUNT FUNDS") for payment in accordance
with Section 3.04(b)(iii) through and including (xii) and (xiv) hereof, as
applicable.
SECTION 3.05 Class A Distribution Sub-Account; Class B
Distribution Sub-Account; Class C Distribution Sub-Account; Class D Distribution
Sub-Account; Class E DISTRIBUTION SUB-ACCOUNT; CLASS F DISTRIBUTION SUB-ACCOUNT.
(a) On each Payment Date in accordance with the Monthly
Servicer Report the Trustee shall pay to the Class A Noteholders the amounts
then on deposit in the Class A Distribution Sub- Account. Such payments are to
be made, first to the Class A-1 Noteholders, PRO RATA, in the following
order of priority:
(i) the Class A-1 Monthly Interest;
(ii) the Class A-1 Overdue Interest, if
any;
(iii) the Class A-1 Overdue Principal, if
any;
(iv) the Class A-1 Monthly Principal; and
(v) any additional principal payable
pursuant to the Indenture;
second, to the Class A-2 Noteholders the amount then on
deposit in the Class A Distribution Sub-Account. Such payments to the Class A-2
Noteholders, PRO RATA, shall be made in the following order of priority:
(vi) the Class A-2 Monthly Interest;
(vii) the Class A-2 Overdue Interest, if
any;
(viii) the Class A-2 Overdue Principal, if
any;
(ix) the Class A-2 Monthly Principal; and
(x) any additional principal payable
pursuant to the Indenture;
and third, to the Class A-3 Noteholders the amount then on
deposit in the Class A Distribution Sub-Account. Such payments to the Class A-3
Noteholders, PRO RATA, shall be made in the following order of priority:
(xi) the Class A-3 Monthly Interest;
(xii) the Class A-3 Overdue Interest, if
any;
(xiii) the Class A-3 Overdue Principal, if
any;
(xiv) the Class A-3 Monthly Principal; and
(xv) any additional principal payable
pursuant to the Indenture;
PROVIDED, HOWEVER, that in the event that a Subordination Deficiency Event has
occurred and is continuing, after the Class A-1 Note Balance has been reduced to
zero, the Class A-2 Note Balance and the Class A-3 Note Balance will be paid on
a PRO RATA, PARI PASSU basis.
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(b) On each Payment Date in accordance with the Monthly
Servicer Report the Trustee shall pay to the Class B Noteholders, PRO RATA, the
amount then on deposit in the Class B Distribution Sub-Account. Such payments to
the Class B Noteholders shall be made in the following order of
priority:
(i) the Class B Monthly Interest;
(ii) the Class B Overdue Interest, if
any;
(iii) the Class B Overdue Principal, if
any;
(iv) the Class B Monthly Principal; and
(v) any additional principal payable
pursuant to the Indenture.
(c) On each Payment Date in accordance with the Monthly
Servicer Report the Trustee shall pay to the Class C Noteholders, PRO RATA, the
amount then on deposit in the Class C Distribution Sub-Account. Such payments to
the Class C Noteholders shall be made in the following order of priority:
(i) the Class C Monthly Interest;
(ii) the Class C Overdue Interest, if
any;
(iii) the Class C Overdue Principal, if
any;
(iv) the Class C Monthly Principal; and
(v) any additional principal payable
pursuant to the Indenture.
(d) On each Payment Date in accordance with the Monthly
Servicer Report the Trustee shall pay to the Class D Noteholders, PRO RATA, the
amount then on deposit in the Class D Distribution Sub-Account. Such payments to
the Class D Noteholders shall be made in the following order of priority:
(i) the Class D Monthly Interest;
(ii) the Class D Overdue Interest, if
any;
(iii) the Class D Overdue Principal, if
any;
(iv) the Class D Monthly Principal; and
(v) any additional principal payable
pursuant to the Indenture.
(e) On each Payment Date in accordance with the Monthly
Servicer Report the Trustee shall pay to the Class E Noteholders, PRO RATA, the
amount then on deposit in the Class E Distribution Sub-Account. Such payments to
the Class E Noteholders shall be made in the following order of priority:
(i) the Class E Monthly Interest;
(ii) the Class E Overdue Interest, if
any;
(iii) the Class E Overdue Principal, if
any;
(iv) the Class E Monthly Principal; and
(v) any additional principal payable
pursuant to the Indenture.
(f) If the Class F Instruments have been issued, on each
Payment Date in accordance with the Monthly Servicer Report the Trustee shall
distribute to the Class F Instrumentholders, PRO RATA, the amount then on
deposit in the Class F Distribution Sub-Account in the priority set forth in the
Supplement.
SECTION 3.06 RESERVED.
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SECTION 3.07 RESERVED.
SECTION 3.08 RESERVE ACCOUNT.
(a) On each Payment Date the Trustee shall promptly deposit
into the Reserve Account all amounts required to be deposited into the Reserve
Account and actually received by the Trustee pursuant to this Indenture. The
obligation of the Trustee to deposit amounts into the Reserve Account in
accordance with the terms of this Indenture shall be limited to the deposit of
amounts in the Collection Account pursuant to Section 3.04(b) hereof. The
Trustee shall not have any responsibility to determine the amount or adequacy of
funds on deposit in the Reserve Account, or the amount of any deposits to or
withdrawals from the Reserve Account. The Issuer, or Class F Instrumentholder,
if any, by its acceptance of the Class F Instrument, agrees to treat such assets
(and all earnings thereon) (the "RESERVE ACCOUNT PROPERTY") as its assets (and
earnings) for federal, state and local tax purposes and not to sell, transfer or
otherwise dispose of its interest therein.
(b) On each Payment Date, the Trustee shall, on the basis of
the Monthly Servicer Report, deposit in the Reserve Account, pursuant to Section
3.04(b), an amount equal to the Reserve Account Deposit Amount. If on any
Payment Date, Deposited Available Funds are less than the Priority Payments, the
Trustee shall withdraw from the Reserve Account the excess of the Priority
Payments over the Available Funds in accordance with Section 3.04(c) hereof. On
each Payment Date, if, after giving effect to all deposits and withdrawals
therefrom on such Payment Date, the balance in the Reserve Account is greater
than the Reserve Account Requirement, the Trustee shall release and, at the
instruction of the Servicer, shall pay the amount (such amount, a "RESERVE
ACCOUNT WITHDRAWAL") of the excess to the Issuer or its designee, or Class F
Instrumentholder, if any. Amounts properly paid to the Issuer or its designee,
or Class F Instrumentholder, if any, pursuant to this Section 3.08, either
directly from the Distribution Account without deposit in the Reserve Account or
from the Reserve Account, shall be deemed released from the Trust Property, and
the Issuer or its designee, or Class F Instrumentholder, if any, shall not in
any event thereafter be required to refund any such paid amounts.
(c) With respect to the Reserve Account Property, the Issuer
and the Trustee agree that any Reserve Account Property that is held in deposit
accounts shall be held solely in the name of the Trustee, on behalf of the
Noteholders. Each such deposit account shall be subject to the exclusive custody
and control of the Trustee, and the Trustee shall have sole signature authority
with respect thereto.
(d) Upon termination of this Indenture, any amounts on deposit
in the Reserve Account, after payment of amounts due to the Class A Noteholders,
the Class B Noteholders, the Class C Noteholder, the Class D Noteholder, the
Class E Noteholder upon Transferor's written request to the Trustee, shall be
paid to the Transferor (as sole beneficial owner of the Issuer), or Class F
Instrumentholder, if any.
SECTION 3.09 REPORTS; NOTICES OF CERTAIN PAYMENTS.
(a) Following each payment to the Noteholders, the Trustee
shall mail to the Issuer, Cede & Co. and the Rating Agencies, and make available
to each Noteholder, the Monthly Servicer
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Report furnished to the Trustee by the Servicer on the Determination Date prior
to such Payment Date (or if such report has not been received, a written
statement to such effect).
(b) The Trustee shall deliver to the Servicer, and within two
Business Days after the request of the Issuer, deliver to the Issuer a written
statement setting forth the amounts on deposit in the Collection Account and the
Reserve Account, and identifying the investments included therein.
SECTION 3.10. TRUSTEE MAY RELY ON CERTAIN INFORMATION FROM
CONTRIBUTOR AND SERVICER.
Pursuant to the Contribution and Servicing Agreement, the
Contributor and the Servicer are required to furnish to the Trustee from time to
time certain information and make various calculations which are relevant to the
performance of the Trustee's duties in this Article III and in Article IV of
this Indenture. The Trustee shall be entitled to rely conclusively in good faith
on any such information and calculations in the performance of its duties
hereunder, (i) unless and until a Responsible Officer of the Trustee has actual
knowledge that such information or calculations is or are incorrect, or (ii)
unless there is a manifest error in any such information; PROVIDED that the
Trustee shall verify the mathematical accuracy of the Class A-1 Monthly
Principal, the Class A-2 Monthly Principal, the Class A-3 Monthly Principal, the
Class B Monthly Principal, the Class C Monthly Principal, the Class D Monthly
Principal, the Class E Monthly Principal, the Class A-1 Monthly Interest, the
Class A-2 Monthly Interest, the Class A-3 Monthly Interest, the Class B Monthly
Interest, the Class C Monthly Interest, the Class D Monthly Interest and the
Class E Monthly Interest to be paid on each Payment Date.
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ARTICLE IV
CONTRACTS AND EQUIPMENT
SECTION 4.01 REPRESENTATIONS AND WARRANTIES OF THE ISSUER.
The Issuer hereby restates and incorporates herein each of the
representations and warranties, IN MUTATIS MUTANDIS, set forth in Section 2.03
and Section 2.04 of the Contribution and Servicing Agreement. The Trustee shall
rely on such representations and warranties in accepting the Contracts and the
other Trust Property in trust and authenticating the Notes. Such representations
and warranties shall speak as of the Closing Date.
SECTION 4.02 PURCHASE UPON BREACH; CONTRIBUTION AND SERVICING
AGREEMENT.
The Issuer shall inform the Trustee promptly, in writing, upon
the discovery of a breach of any of the Contributor's representations and
warranties set forth in Section 2 of the Contribution and Servicing Agreement.
With respect to any breach of the Contributor's representations and warranties
set forth in Section 2 of the Contribution and Servicing Agreement which
materially and adversely affects the interest of the Noteholders in such
Contract or Contracts, the Issuer shall cause the Contributor to either (a)
replace such Contract and the related Equipment with a Substitute Contract in
accordance with the provisions of Section 5.03 of the Contribution and Servicing
Agreement (and for the Transferor to receive from the Contributor and transfer
to the Issuer such Substitute Contract) or (b) purchase from the Transferor
(which Transferor shall purchase from the Issuer and resell to the Contributor)
the Contract and the security interest in the related Equipment that are
affected by such breach, unless, in each such instance such breach has been
cured, or waived in all respects by Noteholders evidencing more than 50% of the
Voting Rights, within 90 days following the Issuer's discovery or receipt of
notice of such breach. In the event of a repurchase of a Contract, the Issuer
and the Transferor (as sole beneficial owner of the Issuer) shall cause the
Contributor to remit to the Trustee (upon written notice to the Trustee thereof)
the Repurchase Amount of such Contract (or, if such Contract is then a Defaulted
Contract, an amount equal to the Repurchase Amount as of the date such Contract
first became a Defaulted Contract, together with interest thereon at the
Discount Rate from the date such Contract first became a Defaulted Contract to
the end of the month in which the repurchase is to be made). The Trustee shall,
to the extent received, deposit such Repurchase Amounts and any cash received in
connection with a substitution in the Collection Account on or prior to 11:00
a.m. New York City time on the second Business Day after receipt thereof. The
sole remedy of the Trustee or the Noteholders against the Contributor with
respect to a breach of a representation or a warranty set forth in Section 2 of
the Contribution and Servicing Agreement, and against the Issuer or the
Transferor with respect to a breach under this agreement or the Pooling and
Trust Agreement by reason of such breach by the Contributor, shall be to require
the Contributor to purchase or substitute Contracts pursuant to the Contribution
and Servicing Agreement, PROVIDED that the limitation contained in this sentence
shall not otherwise limit the rights of any such Person under Section 5.02 of
the Contribution and Servicing Agreement. In the event that the Contributor
fails to purchase or substitute for any Contract that it is required to
substitute or repurchase pursuant to the Contribution and Servicing Agreement,
the Trustee, upon the written direction of the Noteholders, shall enforce the
Issuer's and the Transferor's rights against the Contributor under and in
accordance with the terms of the Contribution and Servicing Agreement and
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the Pooling and Trust Agreement, as assigned to the Trustee, to require the
purchase or replacement of the Contract.
SECTION 4.03 RELEASE OF CONTRACTS AND EQUIPMENT FOLLOWING
SUBSTITUTION OR PURCHASE.
In the event that (i) the Contributor shall have substituted a
Substitute Contract and a security interest in the Equipment subject thereto for
a Predecessor Contract and a security interest in the Equipment subject thereto
in accordance with Section 7 of the Contribution and Servicing Agreement, or
(ii) the Contributor shall have purchased a Contract and a security interest in
the related Equipment in accordance with Section 5.03 of the Contribution and
Servicing Agreement, the Predecessor Contract or the repurchased Contract, as
applicable, and the security interest in the Equipment subject thereto, shall be
released from the lien of this Indenture when the Trustee shall have (i) in the
case of the purchase of a Contract, deposited in the Collection Account all
amounts received pursuant to Section 5.03 of the Contribution and Servicing
Agreement, (ii) in the case of a Substitute Contract, received a fully executed
original of the Substitute Contract Transfer Form and the Contract File with
respect to such Substitute Contract plus any cash amount delivered as provided
in Section 7.01(d) of the Contribution and Servicing Agreement, (iii) received
written certification from an Authorized Officer of the Servicer that there are
no unreimbursed Servicer Advances with respect to such Contract and (iv)
delivered to the Contributor acknowledgment of its receipt of the related
Contract Files. If there are such unreimbursed amounts, any proceeds received
with respect to such Predecessor Contract or repurchased Contract, as
applicable, and the security interest in the related Equipment shall be applied
hereunder only to the extent necessary to repay such Servicer Advances (and
clause (iii) of the foregoing sentence shall be deemed satisfied) and to
reimburse the Collection Account for any other amounts drawn thereon and the
balance of such proceeds, if any, shall be paid to, or as directed by, the
Contributor.
In connection with the substitution of a Contract, if the
Discounted Contract Balance of such Substitute Contract is less than the
Discounted Contract Balance of the Predecessor Contract, the Contributor shall,
on the date of substitution, deposit an amount equal to such difference into the
Collection Account.
SECTION 4.04 RELEASE OF CONTRACTS AND EQUIPMENT UPON FINAL
CONTRACT PAYMENT.
(a) In the event that the Trustee shall have received written
certification from an Authorized Officer of the Servicer that the Trustee has
received from amounts paid by the Obligor or from the proceeds of the Equipment
subject to any Contract (i) the final Contract Payment due and payable under any
Contract (including, if applicable, any Purchase Option Payment paid by the
Obligor) or (ii) a Prepayment Amount in respect of any Contract and, following
such final Contract Payment or Prepayment Amount, no further payments on, or in
respect of, such Contract are or will be due and payable, such Contract and the
Equipment subject thereto shall be released from the lien of this Indenture
except if a Restricting Event or an Amortization Event shall have occurred and
then be continuing.
(b) If a Restricting Event or Amortization Event shall have
occurred and then be continuing, then each Contract and the security interest in
all Equipment (except for security interests relating to Equipment subject to a
conditional sales agreement or an equipment note) which would
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otherwise be released from the lien of this Indenture pursuant to this Section
4.04 shall instead remain subject to such lien and all of the provisions of this
Indenture, including, without limitation, Article VI hereof.
SECTION 4.05 EXECUTION OF DOCUMENTS.
The Trustee shall promptly execute and deliver such documents
(which shall be furnished to the Trustee by the Issuer) and take such other
actions as the Issuer, by Issuer Request, may reasonably request to fully
effectuate the release from this Indenture of any Contract and the security
interest relating to Equipment required to be so released pursuant to Sections
4.03 and 4.04 hereof.
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ARTICLE V
SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER
SECTION 5.01 SERVICER EVENTS OF DEFAULT.
If a Servicer Event of Default shall have occurred and be
continuing under Section 10.01 of the Contribution and Servicing Agreement, the
Trustee shall, upon the written request of Noteholders evidencing not less than
66-2/3% of the Voting Rights give written notice to the Servicer of the
termination of all of the rights and obligations of the Servicer (but none of
the Contributor's obligations thereunder, which shall survive any such
termination) under the Contribution and Servicing Agreement and the Trustee
shall act as successor Servicer in accordance with Section 10 of the
Contribution and Servicing Agreement.
SECTION 5.02 SUBSTITUTE SERVICER.
Notwithstanding the provisions of Section 5.01, the Trustee
may, if it shall be unwilling or unable to act as the Successor Servicer in
accordance with Section 5.01, appoint a Successor Servicer in accordance with
the provisions of Section 10.03 of the Contribution and Servicing Agreement.
SECTION 5.03 NOTIFICATION TO NOTEHOLDERS AND RATING AGENCIES.
Upon any termination of the Servicer or appointment of a
Successor Servicer, and upon any resignation, discharge or removal of the Owner
Trustee or appointment of a successor Owner Trustee, the Trustee shall give
prompt notice of such termination, resignation, discharge, removal or
appointment, together with the conditions of default, if applicable, to the
Rating Agencies and each Noteholder in the manner provided herein.
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ARTICLE VI
EVENTS OF DEFAULT; REMEDIES
SECTION 6.01 EVENTS OF DEFAULT.
"INDENTURE EVENT OF DEFAULT," wherever used herein, means any
one of the following (whatever the reason for such Indenture 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 (A) any interest payment
on any outstanding Class A Note, Class B Note, Class C Note, Class D
Note or Class E Note when it becomes due and payable, or (B) the then
outstanding principal balance of the Class A-1 Notes on the Class A-1
Stated Maturity Date, of the Class A-2 Note on the Class A-2 Stated
Maturity Date, of the Class A-3 Note on the Class A-3 Stated Maturity
Date, of the Class B Notes on the Class B Stated Maturity Date, of the
Class C Notes on the Class C Stated Maturity Date, of the Class D Notes
on the Class D Stated Maturity Date or of the Class E Notes on the
Class E Stated Maturity Date or (C) any payment of principal of or
interest on any outstanding Note when it becomes due and payable to the
extent that sufficient Available Funds were on deposit in the
Collection Account and to the extent that sufficient Available Reserve
Account Funds are on deposit in the Reserve Account with respect to
such Payment Date;
(ii) default in the performance, or breach, of any
covenant set forth in Section 8.04, 8.07(c) or 8.08;
(iii) default in the performance, or breach, of any
covenant of the Issuer in the Notes or this Indenture (other than a
covenant described in (ii) above), or of any party to the Contribution
and Servicing Agreement or the other Transaction Documents and
continuance of such default or breach for a period of 30 days after the
earliest of (A) any officer of the Transferor or Corporate Trust
Officer of the Owner Trustee first acquiring knowledge thereof, (B) the
Trustee's giving written notice thereof to the Issuer or (C) the holder
of any Note giving written notice thereof to the Issuer;
(iv) if any representation or warranty of the Issuer,
its Owner Trustee, the Transferor or the Contributor made in this
Indenture, the Pooling and Trust Agreement or the Contribution and
Servicing Agreement, respectively, or any other writing provided to the
Noteholders in connection with the foregoing documents shall prove to
be incorrect in any material respect as of the time when the same shall
have been made; PROVIDED, HOWEVER, that the breach of any
representation or warranty made by the Contributor in Section 2.03 or
2.04 of the Contribution and Servicing Agreement with respect to any of
the Contracts or the security interest in the Equipment subject thereto
shall not constitute an Indenture Event of Default if the Contributor
substitutes one or more Substitute Contracts and the security interest
in the Equipment subject thereto for such Contract and a security
interest in the related Equipment in accordance with Section 7.01 of
the Contribution and Servicing Agreement or repurchases
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a Contract and the security interest in the related Equipment in
accordance with Section 5.03 of the Contribution and Servicing
Agreement;
(v) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Issuer
in an involuntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization, or other similar law or
(B) a decree or order adjudging the Issuer a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of or in respect of the Issuer
under any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator, or other similar
official of the Issuer or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 90 consecutive
days; or
(vi) the commencement by the Issuer of a voluntary case
or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent
by it to the entry of a decree or order for relief in respect of the
Issuer in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization, or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable
federal or state law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator, or similar
official of the Issuer or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
Issuer's failure to pay its debts generally as they become due, or the
taking of company action by the Issuer in furtherance of any such
action.
SECTION 6.02 ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT.
(a) If an Indenture Event of Default occurs and is continuing,
of which a Responsible Officer of the Trustee has received written notice
(PROVIDED that such written notice need not have been received by the Trustee in
connection with a payment default as described in Section 6.01(i)), then and in
every such case the Trustee with the consent of Noteholders evidencing not less
than 66-2/3% of the Voting Rights may declare the unpaid principal amount of all
the Notes to be due and payable immediately, by a notice in writing to the
Issuer, and upon any such declaration such principal amount shall become
immediately due and payable together with all accrued and unpaid interest
thereon, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Issuer.
(b) At any time after such a declaration of acceleration has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, Noteholders
evidencing not less than 66-2/3% of the Voting Rights, by written notice to the
Issuer and the Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Issuer has paid or deposited with the Trustee a
sum sufficient to pay:
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(A) all sums paid or advanced, together with
interest thereon, by the Trustee hereunder and the reasonable
compensation, expenses, disbursements, and advances, if any,
of the Trustee, its agents and counsel;
(B) all principal of any Notes which have
become due otherwise than by such declaration of acceleration,
and interest thereon from the date when the same first became
due at the applicable Note Rate; and
(C) all interest which has become due with
respect to the Notes;
(ii) all Indenture Events of Default, other than the
non-payment of the aggregate principal amount of the Notes which has
become due solely by such declaration of acceleration, have been cured
or waived as provided in Section 6.13; and
(iii) the rescission would not conflict with any judgment
or decree of a court of competent jurisdiction.
No such rescission shall affect any subsequent Indenture Event of Default or
impair any right consequent thereon.
SECTION 6.03 OTHER REMEDIES.
(a) If an Indenture Event of Default occurs and is continuing
of which a Responsible Officer of the Trustee has received written notice
(PROVIDED that such written notice need not have been received by the Trustee in
the case of a payment default as described in Section 6.01(i)), the Trustee
shall give notice to each Noteholder as set forth in Section 7.02. The Trustee
shall then take such action, if any, as may be directed by Noteholders
evidencing not less than 66-2/3% of the Voting Rights.
(b) Following any acceleration of the Notes, the Trustee shall
have all of the rights, powers and remedies with respect to the Trust Property
as are available to secured parties under the Uniform Commercial Code or other
applicable law or as are otherwise available to it under applicable law to
protect and enforce the rights and remedies of the Trustee and the Noteholders
hereunder and under the other Transaction Documents; PROVIDED that, so long as
the Offered Notes are outstanding, the Trustee, in acting during the pendency of
an Indenture Event of Default shall act solely on behalf of the holders of the
Offered Notes and shall not take into account any Class F Instruments that may
have been issued in so acting. Such rights, powers and remedies may be exercised
by the Trustee in its own name as trustee of an express trust.
SECTION 6.04 TRUSTEE MAY FILE PROOFS OF CLAIM.
(a) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition,
or other judicial proceeding relative to the Issuer, the Transferor, the
Contributor, the Servicer or any other obligor upon the Notes or the other
obligations secured hereby or relating to the property of the Issuer, the
Transferor, the Contributor, the Servicer or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Notes shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of
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whether the Trustee shall have made any demand on the Issuer, the Transferor,
the Contributor or the Servicer for the payment of overdue principal or overdue
interest or any such other obligation) shall be entitled and empowered, by
intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Notes and any
other obligation secured hereby and to file such other papers or
documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Noteholders allowed in such judicial proceeding,
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
(iii) unless prohibited by applicable law and
regulations, to vote on behalf of the Noteholders in any election of a
trustee, a standby trustee or Person performing similar functions in
any such proceedings; 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 Noteholders allowed in any proceedings relative
to the Issuer, its creditors and its property;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator, or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Noteholders
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.06.
(b) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any holder thereof or to authorize 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.
SECTION 6.05 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
NOTES.
All rights of action and claims under this Indenture or the
Notes may be prosecuted and enforced by the Trustee without the possession of
any of the Notes or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the holders of the Notes in respect of which such judgment
has been recovered.
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SECTION 6.06 APPLICATION OF MONEY COLLECTED.
Any money, securities or property collected by the Trustee
pursuant to this Article, and any moneys, securities or property that may then
be held or thereafter received by the Trustee, shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of the entire amount due on account of principal or interest, upon
presentation of the Notes and surrender thereof:
FIRST, to the payment of all costs and expenses of collection
incurred by the Trustee (including the reasonable fees and
expenses of any counsel to the Trustee) and all other amounts
due the Trustee under Section 7.06 (the parties hereto agree
that when the Trustee renders services following an Indenture
Event of Default under Section 6.01 (v) or (vi), compensation
for such services and expenses in connection therewith are
intended to constitute administrative expenses under
applicable bankruptcy law);
SECOND, to the payment of all unreimbursed Servicer Advances
due to the Servicer;
THIRD, only in the event that DVI is no longer the Servicer,
and the Servicer has, in its good faith and reasonable
business judgment, deemed the Servicing Fee to be commercially
unreasonable, then, to the Servicer, the amount agreed upon
between the then Servicer and the Trustee, each in their good
faith and commercially reasonable judgment, as necessary to
make the Servicing Fee commercially reasonable and to cover
the reasonable costs in transferring the servicing
obligations;
FOURTH, to the payment of all accrued and unpaid interest on
the outstanding Class A Note Balance to the date of payment
thereof, ratably to each Class A Noteholder, without
preference or priority of any kind;
FIFTH, to the payment of all accrued and unpaid interest on
the outstanding Class B Note Balance to the date of payment
thereof, ratably to each Class B Noteholder without preference
or priority of any kind;
SIXTH, to the payment of all accrued and unpaid interest on
the outstanding Class C Note Balance to the date of payment
thereof, ratably to each Class C Noteholder without
preference or priority of any kind;
SEVENTH, to the payment of all accrued and unpaid interest on
the outstanding Class D Note Balance to the date of payment
thereof, ratably to each Class D Noteholder without
preference or priority of any kind;
EIGHTH, to the payment of all accrued and unpaid interest on
the outstanding Class E Note Balance to the date of payment
thereof, ratably to each Class E Noteholder without
preference or priority of any kind;
NINTH, to the payment of the outstanding Class A-1 Note
Balance, and any other amounts due to the Class A-1
Noteholders, ratably, without preference or priority of any
kind,
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until the Class A-1 Note Balance has been reduced to zero,
then (provided that a Subordination Deficiency Event has not
occurred and is continuing, in which case the outstanding
Class A-2 Note Balance and Class A-3 Note Balance shall be
paid PRO RATA in accordance with their respective outstanding
Note Balances) to the payment of the outstanding Class A-2
Note Balance, and any other amounts due to the Class A-2
Noteholders, ratably, without preference or priority of any
kind, until the Class A-2 Note Balance has been reduced to
zero, then (provided that a Subordination Deficiency Event has
not occurred and is continuing, in which case the outstanding
Class A-2 Note Balance and Class A-3 Note Balance shall be
paid PRO RATA in accordance with their respective outstanding
Note Balances) to the payment of the outstanding Class A-3
Note Balance, and any other amounts due to the Class A-3
Noteholders, ratably, without preference or priority of any
kind, until the Class A-3 Note Balance has been reduced to
zero;
TENTH, to the payment of the outstanding Class B Note Balance,
and any other amounts due to the Class B Noteholders ratably,
without preference or priority of any kind;
ELEVENTH, to the payment of the outstanding Class C Note
Balance, and any other amounts due to the Class C Noteholders
ratably, without preference or priority of any kind;
TWELFTH, to the payment of the outstanding Class D Note
Balance, and any other amounts due to the Class D Noteholders
ratably, without preference or priority of any kind;
THIRTEENTH, to the payment of the outstanding Class E Note
Balance, and any other amounts due to the Class E Noteholders
ratably, without preference or priority of any kind;
FOURTEENTH, to the payment of all accrued and unpaid interest
on outstanding Class F Instruments, if any, to the date of
payment thereof, ratably to each Holder of the Class F
Instruments without preference or priority of any kind;
FIFTEENTH, to the payment of the outstanding principal balance
of the Class F Instruments, if any, and any other amounts due
to the Holders of any Class F Instruments ratably, without
preference or priority of any kind; and
SIXTEENTH, in the event that DVI is the Servicer, to the
payment of all unreimbursed Servicing Fees due to the
Servicer; and
SEVENTEENTH, to the payment of the remainder, if any, to, or
at the order of, the Issuer.
SECTION 6.07 LIMITATION ON SUITS.
The holder of any Note shall not have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture or the
Notes, or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
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(i) such Noteholder has previously given written notice
to the Trustee of a continuing Indenture Event of Default;
(ii) the Noteholders evidencing not less than 25% of
the Voting Rights shall have made written request to the Trustee to
institute proceedings in respect of such Indenture Event of Default in
its own name as Trustee hereunder;
(iii) such Noteholder or Noteholders have offered to
the Trustee adequate indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(iv) the Trustee for 30 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(v) so long as any of the Notes remain outstanding, no
direction inconsistent with such written request has been given to the
Trustee during such 30-day period by Noteholders evidencing not less
than 66-2/3% of the Voting Rights;
it being understood and intended that no one or more Noteholder 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
Noteholder, or to obtain or to seek to obtain priority or preference over any
other Noteholder or to enforce any right under this Indenture, except in the
manner herein provided. It is further understood and intended that so long as
any portion of the Notes remains outstanding, the Servicer shall not have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture (other than for the enforcement of Sections 3.04(b) and 4.04) or for
the appointment of a receiver or trustee, or for any other remedy hereunder.
SECTION 6.08 UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE
PAYMENT.
Notwithstanding any other provision in this Indenture, other
than the provisions hereof establishing priorities of payment or limiting the
right to recover amounts due on the Notes to recoveries from the Trust Property,
the holder of any Note shall have the absolute and unconditional right to
receive payment of the principal of and interest on such Note as such principal
and interest becomes due on the Payment Dates for such payments, including the
Stated Maturity Date for the applicable Class, and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Noteholder.
SECTION 6.09 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, subject to any
determination in such proceeding, the Issuer, the Trustee and the Noteholders
shall 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 6.10. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost, or stolen Notes in the last paragraph
of Section 2.05, 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 6.11 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any holder of any
Note to exercise any right or remedy accruing upon any Indenture Event of
Default shall impair any such right or remedy or constitute a waiver of any such
Indenture Event of Default or an acquiescence therein. Every right and remedy
given by this Article 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 6.12 CONTROL BY NOTEHOLDERS.
Except as may otherwise be provided in this Indenture, until
such time as the conditions specified in Section 11.01 have been satisfied in
full, Noteholders evidencing not less than 66-2/3% of the Voting Rights shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee. Notwithstanding the foregoing:
(i) no such direction shall be in conflict with any
rule of law or with this Indenture;
(ii) the Trustee shall not be required to follow any
such direction which the Trustee believes may be unduly prejudicial to
the rights of another Noteholder not joining in such direction or which
the Trustee believes might result in any personal liability on the part
of the Trustee for which the Trustee is not indemnified to its
reasonable satisfaction; and
(iii) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with any such direction;
PROVIDED that the Trustee shall give notice of any
such action to each Noteholder.
SECTION 6.13 WAIVER OF DEFAULTS AND EVENTS OF DEFAULT.
(a) Subject to the provisions of Sections 6.08 and 9.01,
Noteholders evidencing more than 50% of the Voting Rights, may, by one or more
instruments in writing, waive an existing Default or Indenture Event of Default
hereunder and its consequences, except a continuing Indenture Event of Default:
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(i) in respect of the payment of the principal of or
interest on any outstanding Note (which may only be waived by the
holder of such Note), or
(ii) in respect of a covenant or provision hereof which
under Article IX cannot be modified or amended without the consent of
the holder of each outstanding Note affected (which only may be waived
by the holders of all outstanding Notes affected).
(b) A copy of each waiver pursuant to Section 6.13(a) shall be
furnished by the Issuer to the Trustee. Upon any such waiver, such Indenture
Event of Default shall cease to exist and shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Indenture Event of Default or impair any right consequent
thereon.
SECTION 6.14 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, which 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 advantage 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 6.15 SALE OF TRUST PROPERTY.
(a) The power to effect any sale of any portion of the Trust
Property pursuant to Section 6.03 shall not be exhausted by any one or more
sales as to any portion of the Trust Property remaining unsold, but shall
continue unimpaired until the entire Trust Property shall have been sold or all
amounts payable on the Notes shall have been paid. The Trustee may from time to
time, upon directions in accordance with Section 6.12, postpone any public sale
by public announcement made at the time and place of such sale.
(b) To the extent permitted by applicable law, the Trustee
shall not in any private sale sell the Trust Property, or any portion thereof,
unless either (i) until such time as the conditions specified in Section
11.01(a) have been satisfied in full, Noteholders evidencing not less than
66-2/3% of the Voting Rights consent to or direct the Trustee to make such sale;
or (ii) the proceeds of such sale would be not less than the sum of all amounts
due to the Trustee hereunder and the entire unpaid principal amount of all Class
A Notes, Class B Notes, Class C Notes, Class D Notes and Class E Notes then
outstanding and interest due or to become due thereon in accordance with Section
6.06 on the Payment Date next succeeding the date of such sale.
(c) In connection with a sale of all or any portion of the
Trust Property:
(i) any one or more Noteholders or the Trustee may bid
for and purchase the property offered for sale, and upon compliance
with the terms of sale may hold, retain, and possess and dispose of
such property, without further accountability, and any Noteholder may,
in paying the purchase money therefor, deliver in lieu of cash any
outstanding Notes or claims
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for interest thereon for credit in the amount that shall, upon
distribution of the net proceeds of such sale, be payable thereon, and
such Notes, in case the amounts so payable thereon shall be less than
the amount due thereon, shall be returned to the Noteholders after
being appropriately stamped to show such partial payment;
(ii) the Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Trust Property in connection with a sale thereof;
(iii) the Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Issuer to transfer and convey its
interest in any portion of the Trust Property in connection with a sale
thereof, and to take all action necessary to effect such sale; and
(iv) no purchaser or transferee at such a sale shall be
bound to ascertain the Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the
application of any moneys.
(d) The method, manner, time, place and terms of any sale of
all or any portion of the Trust Property shall be commercially reasonable.
(e) The provisions of this Section 6.15 shall not be construed
to restrict the ability of the Trustee to exercise any rights and powers against
the Issuer or the Trust Property that are vested in the Trustee by this
Indenture, including, without limitation, the power of the Trustee to proceed
against the collateral subject to the lien of this Indenture and to institute
judicial proceedings for the collection of any deficiency remaining thereafter.
SECTION 6.16 UNDERTAKING FOR COSTS.
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 or
omitted by it as Trustee, a court may in its discretion require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.16 does not apply to a suit by the Trustee, a suit by a
Noteholder pursuant to Sections 6.07 and 6.08, or a suit by any Noteholder or
group of Noteholders of more than 10% in principal amount of all Class A Notes,
Class B Notes, Class C Notes, Class D Notes and Class E Notes then outstanding.
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ARTICLE VII
THE TRUSTEE
SECTION 7.01 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Indenture Event of
Default:
(i) the Trustee undertakes to perform only those duties
that are specifically set forth in this Indenture and no others and no
covenants or duties shall be implied herein in connection with 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,
statements, opinions, reports or documents furnished to the Trustee and
conforming to the requirements of this Indenture. The Trustee, however,
shall examine the same to determine whether or not they conform to the
requirements of this Indenture.
(b) If an Indenture Event of Default has occurred and is
continuing, the Trustee shall exercise its rights and powers vested in it by
this Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct
of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, EXCEPT that:
(i) this subsection shall not be construed to limit the
effect of subsection (a) of this Section 7.01;
(ii) the Trustee shall not be liable for any error in
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the directions received by it pursuant to Section 6.12 or 6.13;
and
(iv) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any personal
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
indemnity reasonably satisfactory to it against such risk or liability
is not assured to it.
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(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject
to the provisions of this Section.
SECTION 7.02 NOTICE OF DEFAULTS OR EVENTS OF DEFAULT.
Within five Business Days after a Responsible Officer receives
written notice or is otherwise notified of the occurrence of any Default or
Indenture Event of Default hereunder or Servicer Event of Default under the
Contribution and Servicing Agreement, the Trustee shall transmit by certified
mail return receipt requested, hand delivery or overnight courier, to all
Noteholders, as their names and addresses appear in the Note Register, the
Issuer, the Servicer, the Rating Agencies and the Contributor notice of such
Default, Indenture Event of Default or Servicer Event of Default hereunder known
to the Trustee, unless such Default, Indenture Event of Default or Servicer
Event of Default shall have been cured or waived.
SECTION 7.03 CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 7.01:
(i) the Trustee may rely conclusively and shall be
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, note, debenture, other evidence of
indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) any request or direction of the Issuer mentioned
herein shall be sufficiently evidenced by an Issuer Request or Issuer
Order and any action of the Issuer may be sufficiently evidenced by an
Issuer Order;
(iii) whenever in the administration of this Indenture
the Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon an
Officer's Certificate;
(iv) the Trustee may consult with counsel as to legal
matters and the advice or opinion of any such counsel selected by the
Trustee with due care shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(v) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at
the request or direction of any of the Noteholders pursuant to this
Indenture, unless such Noteholders shall have offered to the Trustee
security or indemnity reasonably satisfactory to it against the costs,
expenses and liabilities which might be incurred by it in compliance
with such request or direction;
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(vi) prior to the occurrence of an Indenture Event of
Default and after the curing or waiving of all Indenture Events of
Default, 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, direction, consent,
order, note, debenture, other evidence of indebtedness, or other paper
or document, other than to examine such documents to determine whether
they conform as to form to the requirements of this Indenture, unless
requested in writing to do so by the Noteholders evidencing more than
50% of the Voting Rights; PROVIDED 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, the Trustee
may require indemnity reasonably satisfactory to it against such
expenses or liabilities as a condition to proceeding; the reasonable
expenses of every such examination shall be paid by the Issuer or, if
paid by the Trustee or any predecessor trustee, shall be promptly
repaid by the Issuer upon demand; and
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent, custodian, nominee or attorney appointed with due care by it
hereunder.
SECTION 7.04 TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or
adequacy of this Indenture (except as against itself), the Pooling and Trust
Agreement, the Contribution and Servicing Agreement or the Notes and it shall
not be responsible for any statement in the Notes other than its certificate of
authentication or in any document used in the sale of the Notes. The Trustee
shall have no responsibility for, or duty, or liability in connection with
performance by the Servicer, and shall have no obligation to monitor the
performance of the Servicer. The Trustee shall not be accountable for the use or
application by the Issuer of the Notes or the proceeds thereof.
SECTION 7.05 MONEY HELD IN TRUST.
Money and investments held by the Trustee or other paying
agent shall be held in trust in one or more Eligible Accounts as required
hereunder. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with Issuer.
SECTION 7.06 COMPENSATION, REIMBURSEMENT, ETC.
(a) Pursuant to the Contribution and Servicing Agreement, the
Servicer has agreed:
(i) to pay to the Trustee from time to time such
compensation for all services rendered by it hereunder as the Servicer
and the Trustee have agreed in writing prior to the Closing Date (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), such payment to be
made independent of the other payment obligations of the Servicer
hereunder;
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(ii) except as otherwise expressly provided herein,
to reimburse the Trustee upon its request for all reasonable expenses,
disbursements, and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement, or advance
as may be attributable to its negligence or bad faith;
(iii) to pay the Trustee its annual administrative
fee on the Closing Date;
(iv) to pay the reasonable fees and expenses of
Trustee's counsel on the Closing Date; and
(v) to pay the reasonable annual administrative fee
of each Lock-Box Bank.
(b) The Trustee hereby acknowledges and agrees that if the
Servicer fails to pay the amounts set forth in Section 7.06(a) of this
Indenture, the Trustee will continue to perform its obligations under this
Indenture, regardless of the Servicer's failure to pay such amounts, until the
appointment of a successor Trustee reasonably satisfactory to the Noteholders in
accordance with Section 7.08 of this Indenture; PROVIDED, HOWEVER, that in such
event, the Trustee shall withhold amounts otherwise payable to it pursuant to
Section 7.06(a) hereof from amounts payable to the Servicer pursuant to Section
3.04(b)(i).
SECTION 7.07 ELIGIBILITY; DISQUALIFICATION.
The Trustee hereunder (a) shall at all times be a national
banking association organized and doing business under the laws of the United
States of America or any state thereof authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$100,000,000 or shall be a member of a bank holding system, the aggregate
combined capital and surplus of which is at least $100,000,000, PROVIDED that
unless the Trustee is U.S. Bank Trust National Association, the Trustee, or the
bank holding company system of which the Trustee is a member must have a
long-term unsecured debt rating of at least "A" from the Rating Agencies;
PROVIDED, FURTHER, that if the Trustee is U.S. Bank Trust National Association,
the Trustee, or the bank holding company system of which the Trustee is a
member, shall have a long-term unsecured debt rating of at least "Baa3" from
Moody's, BBB- from Duff & Phelps or "BBB" from Fitch or a short-term unsecured
rating of Prime-3 from Moody's or F1 from Fitch, and (b) shall be subject to
supervision or examination by Federal or state authority and, in the case of any
successor Trustee subject to regulations regarding fiduciary funds on deposit
substantially similar to 12 CFR ss. 9.10(b). If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section 7.07, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 7.07, the Trustee
shall resign immediately in the manner and with the effect specified in Section
7.08.
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SECTION 7.08 RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by a successor Trustee reasonably
satisfactory to Noteholders evidencing more than 50% of the Voting Rights under
Section 7.09.
(b) Subject to Section 7.08(a) the Trustee may resign at any
time by giving written notice thereof to the Issuer and by mailing notice of
resignation by first-class mail, postage prepaid, to the Rating Agencies and the
Noteholders at their addresses appearing on the Note Register.
(c) The Trustee may be removed at any time by written notice
from Noteholders evidencing more than 50% of the Voting Rights delivered to the
Trustee and the Issuer. The Issuer, with the consent of Noteholders evidencing
more than 50% of the Voting Rights, may remove the Trustee if:
(i) the Trustee fails to comply with Section 7.07;
(ii) the Trustee is adjudged bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of
the Trustee or its property; or
(iv) the Trustee becomes incapable of acting.
(d) If the Trustee shall resign, be removed, or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Issuer, with the consent of Noteholders evidencing more than 50%
of the Voting Rights by an act of the Issuer, shall promptly appoint a successor
Trustee.
(e) If no successor Trustee shall have been so appointed by
the Issuer as hereinabove provided and accepted appointment in the manner
hereinafter provided within 30 days after any such resignation or removal,
existence of incapability, or occurrence of such vacancy, the Trustee or any
Noteholder may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
(f) The Issuer shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to all
Noteholders, as their names and addresses appear in the Note Register and to the
Rating Agencies. Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office.
(g) A Trustee who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated therein.
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SECTION 7.09 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the Issuer
or the successor Trustee, such retiring Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Issuer shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
(b) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article and no reduction in the then current ratings, if
any, on the Notes has occurred as a result of such appointment.
SECTION 7.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS.
Any Person into which the Trustee may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, PROVIDED such Person
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Notes shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion,
or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Notes so authenticated with the same effect as if such successor
Trustee had itself authenticated such Notes.
SECTION 7.11 CO-TRUSTEES AND SEPARATE TRUSTEES.
(a) At any time or times, for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Trust Property may at the
time be located, the Issuer and the Trustee shall have power to appoint, and,
upon the written request of the Trustee or the Noteholders evidencing more than
50% of the Voting Rights, the Issuer shall for such purpose join with the
Trustee in the execution, delivery, and performance of all instruments and
agreements necessary or proper to appoint one or more Persons approved by the
Trustee either to act as co-trustee, jointly with the Trustee, of all or any
part of such Trust Property, or to act as separate trustee of any such property,
in either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section 7.11. If the Issuer does not join in such
appointment within 15 days after the receipt by it of a request so to do, or in
case an Indenture Event of Default has occurred and is continuing, the Trustee
alone shall have power to make such appointment.
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(b) Should any written instrument from the Issuer be required
by any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right, or power, any
and all such instruments shall, on request, be executed, acknowledged
and delivered by the Issuer.
(c) Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the following
terms:
(i) The Notes shall be authenticated and delivered and
all rights, powers, duties, and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Trustee hereunder, shall
be exercised solely by the Trustee.
(ii) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Trustee in respect of any property
covered by such appointment shall be conferred or imposed upon and
exercised or performed by the Trustee or by the Trustee and such
co-trustee or separate trustee jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee, except to
the extent that, under any law of any jurisdiction in which any
particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers,
duties and obligations shall be exercised and performed by such
co-trustee or separate trustee.
(iii) The Trustee at any time, by an instrument in
writing executed by it, with the concurrence of the Issuer evidenced by
an Issuer Order, may accept the resignation of or remove any co-trustee
or separate trustee appointed under this Section 7.11, and, in case an
Indenture Event of Default has occurred and is continuing, the Trustee
shall have power to accept the resignation of, or remove, any such
co-trustee or separate trustee without the concurrence of the Issuer.
Upon the written request of the Trustee, the Issuer shall join with the
Trustee in the execution, delivery and performance of all instruments
and agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so resigned
or removed may be appointed in the manner provided in this Section
7.11.
(iv) No co-trustee or separate trustee hereunder shall
be personally liable by reason of any act or omission of the Trustee or
any other such trustee hereunder and the Trustee shall not be
personally liable by reason of any act or omission of any co-trustee or
other such separate trustee hereunder selected and supervised by the
Trustee with due care or appointed in accordance with directions to the
Trustee pursuant to Section 6.12.
(v) Any Act of Noteholders delivered to the Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
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SECTION 7.12 TRUSTEE TO HOLD CONTRACTS.
On or prior to the Closing Date, the Contributor, on behalf of
the Issuer, shall deliver to the Trustee (or its designee) the sole original,
manually executed counterpart of each Contract (or, if the original Contract is
in the form of a schedule or supplement to a master lease, all original
counterparts of such schedule or supplement previously in the possession of the
Contributor or the Issuer together with a true and correct copy of such master
lease) that constitutes "chattel paper" or an "instrument", as such terms are
defined in the UCC. The Trustee (or its designee) shall hold such documents
until such time as such Contract is released from the lien of this Indenture
pursuant to the provisions hereof.
SECTION 7.13 FINANCING STATEMENTS.
The Trustee shall execute such UCC financing statements and
continuation statements as shall have been prepared by the Servicer and as shall
be necessary and shall furnish the Servicer with such limited powers of attorney
or other documents necessary or appropriate to enable the Servicer to fulfill
its obligations under Section 4 of the Contribution and Servicing Agreement and
to carry out its servicing and administration duties under the Contribution and
Servicing Agreement.
SECTION 7.14 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 10.02 of the Contribution and Servicing
Agreement, the Trustee (subject to subsection (b) hereof) shall be the successor
in all respects to the Servicer in its capacity as servicer under the
Contribution and Servicing Agreement of the Contracts and, to such extent, shall
be subject to all the responsibilities, duties and liabilities (other than the
duty to advance funds and indemnify) relating thereto placed on the Servicer by
the terms and provisions thereof (but not the obligations of the Contributor
contained therein which shall survive any such termination as provided in
Section 10.02 thereof) and shall be entitled to receive from the Issuer the
Servicing Fee and other servicing compensation provided for in Section 4.04 of
the Contribution and Servicing Agreement; PROVIDED that the Trustee shall in no
way be responsible or liable for any action or actions of the Servicer before
the time the Servicer receives such a notice of termination.
(b) The Trustee may, if it is unwilling or unable to act as
the successor Servicer, give notice of such fact to each Noteholder and (i)
appoint a successor Servicer with a net worth of at least $15,000,000 and
reasonably acceptable to Noteholders evidencing more than 50% of the Voting
Rights and whose regular business includes the servicing of a similar type of
contracts and the financing of medical diagnostic imaging equipment, as the
successor Servicer under the Contribution and Servicing Agreement to assume all
of the rights and obligations of the Servicer thereunder, including, without
limitation, the Servicer's right thereunder to receive the Servicing Fee (but
not the obligations of the Contributor contained therein) or, (ii) if no such
institution is so appointed, petition a court of competent jurisdiction to
appoint an institution meeting such criteria as the Servicer thereunder. Pending
appointment of a successor Servicer under the Contribution and Servicing
Agreement, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee shall cause such
successor Servicer to enter into a servicing agreement substantially in the form
of the Contribution and Servicing Agreement except that such agreement shall not
include
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any of the Contributor's representations, warranties or obligations and the
Trustee may make arrangements for the compensation of such successor Servicer
out of payments on Contracts and the related Contracts as it and such successor
Servicer shall agree; PROVIDED, HOWEVER, that no such compensation shall be in
excess of that provided in Section 4.04 of the Contribution and Servicing
Agreement.
SECTION 7.15 REPORTS BY TRUSTEE TO HOLDERS.
If required by the TIA, within 60 days after each Payment Date
beginning with January 11, 1999, the Trustee shall mail to each Noteholder a
brief report dated as of such Payment Date that
complies with TIA Section 313(a).
SECTION 7.16 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER.
The Trustee is subject to and shall comply with TIA Section
311(a), excluding any creditor relationship listed in TIA Section 311(b).
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ARTICLE VIII
COVENANTS
SECTION 8.01 PAYMENT OF PRINCIPAL AND INTEREST.
The Issuer will duly and punctually pay the principal of and
interest on the Notes in accordance with the terms of the Notes and this
Indenture. An installment of interest shall be considered paid on the date it is
due if the Trustee holds on that date money designated for and sufficient to pay
the installment.
SECTION 8.02 MAINTENANCE OF OFFICE OR AGENCY; CHIEF EXECUTIVE
OFFICE.
(a) The Owner Trustee of the Issuer will maintain in the State
of Delaware an office or agency where notices and demands to or upon the Issuer
in respect of the Notes and this Indenture may be served.
(b) The corporate trust office of the Owner Trustee of the
Issuer, and the office at which the Issuer maintains its records with respect to
the Contracts, the Equipment, and the transactions contemplated hereby, is
located in Wilmington, Delaware. The Issuer will not change the location of such
office without giving the Trustee and each Noteholder at least 60 days' prior
written notice thereof (or, in the case of resignation or removal of the Owner
Trustee, such lesser time period as provided in the Pooling and Trust
Agreement).
SECTION 8.03 MONEY FOR PAYMENTS TO NOTEHOLDERS TO BE HELD IN
TRUST.
(a) All payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
pursuant to Section 3.04(b) or Section 6.06 shall be made on behalf of the
Issuer by the Trustee, and no amounts so withdrawn from the Collection Account
for payments of Notes shall be paid over to the Issuer under any circumstances
except as provided in this Section 8.03.
(b) In making payments hereunder, the Trustee will:
(i) allocate all sums received for payment to the
Noteholders on each Payment Date in accordance with the terms of this
Indenture;
(ii) hold all sums held by it for the payment of amounts
due with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided; and
(iii) comply with all requirements of the Internal
Revenue Code of 1986, as amended (or any successor statutes), and all
regulations thereunder, with respect to the withholding from any
payments made by it on any Notes of any applicable withholding taxes
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imposed thereon and with respect to any applicable reporting
requirements in connection therewith, in each case, consistent with the
treatment of the Notes as indebtedness.
(c) Except as required by applicable law, any money held by
the Trustee 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 to the Noteholder shall be discharged from such trust and, subject to
applicable escheat laws, paid to the Issuer upon request; and such Noteholder
shall thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof, and all liability of the Trustee with respect to such trust
money shall thereupon cease.
SECTION 8.04 ISSUER EXISTENCE; ETC.
(a) The Issuer will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence as a
Delaware business trust and the rights, licenses and franchises of the Issuer,
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 the Indenture, the Notes, or any of the
Contracts.
(b) The Issuer shall at all times observe and comply in all
material respects with (i) its certificate of trust and the Pooling and Trust
Agreement as in effect on the date hereof, (ii) all laws, regulations and court
orders applicable to it, (iii) all requirements of law in the declaration and
payment of any distributions on its Units, and (iv) all requisite and
appropriate formalities (including, without limitation, obtaining the consent of
the Transferor as its sole beneficial owner to authorize Issuer action as
required, and as otherwise required by law) in the management of its business
and affairs and the conduct of the transactions contemplated hereby, by the
Pooling and Trust Agreement and by the Contribution and Servicing Agreement. The
Pooling and Trust Agreement limits the Issuer's activities to the purchases of
assets, issuance of securities, and activities incidental thereto. No Affiliate
of the Issuer pays the expenses of the Issuer except as contemplated in the
Transaction Documents, and no Affiliate of the Issuer guarantees any obligation
of the Issuer. Other than the purchase, contribution, substitution or sale of
assets, the Issuer has no intercorporate transactions with DVI.
(c) The Issuer will, at all times: (i) maintain (A) trust and
financial books and records separate from those of any other Person and (B)
minutes of the meetings and other proceedings of its Owner Trustee and sole
beneficial owner; (ii) continuously maintain the resolutions, agreements and
other instruments underlying the transactions contemplated hereby, by the
Pooling and Trust Agreement and by the Contribution and Servicing Agreement as
official records of the Issuer; (iii) act solely in its trust name and through
its duly authorized Owner Trustee to maintain an arm's-length relationship with
the Contributor and its Affiliates; (iv) pay all of its operating expenses and
liabilities from its own funds; (v) maintain an office and telephone number
separate from that of the Contributor and the Transferor, (vi) maintain its
assets separately from the assets of the Contributor and (vii) characterize the
Contributor and the Transferor as separate entities in any report, tax return,
financial statement, other accounting or business transaction.
(d) The Issuer shall conduct its business solely in its own
name through the duly authorized corporate trust officers of the Owner Trustee
so as to not mislead others as to the identity of the trust with which those
others are concerned, and particularly will avoid the appearance of
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conducting business on behalf of the Contributor or any of its Affiliates or
that the assets of the Issuer are available to pay the creditors of the
Contributor or any of its Affiliates. Without limiting the generality of the
foregoing, all oral and written communications, including, without limitation,
letters, invoices, purchase orders, contracts, statements and loan applications,
will be made solely in the name of the Issuer or the Issuer's Owner Trustee.
(e) The Issuer will be operated so as not to be substantively
consolidated for bankruptcy purposes with the Contributor.
(f) Reserved.
(g) The Issuer will not amend the Pooling and Trust Agreement
without the prior consent of Noteholders evidencing more than 50% of the Voting
Rights.
(h) The Issuer shall also comply with the other applicable
provisions of TIA Section 314.
SECTION 8.05 PROTECTION OF TRUST PROPERTY; FURTHER ASSURANCES.
The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such UCC financing statements,
continuation statements, instruments of further assurance, and other
instruments, and will take such other action as may be necessary or advisable
to:
(i) Grant more effectively all or any portion of the
Trust Property;
(ii) maintain or preserve the lien of this Indenture or
carry out more effectively the purposes hereof;
(iii) publish notice of, or protect the validity of, any
Grant or assignment made or to be made by this Indenture and perfect
the security interest contemplated hereby in favor of the Trustee in
the Contracts and any security interest in the related Equipment;
(iv) enforce or cause the Servicer to enforce any of the
Contracts; or
(v) preserve and defend title to any Contract
(including the right to receive all payments due or to become due
thereunder subsequent to the applicable Cut-off Date), the security
interest of the Trustee in the Equipment, or other property included in
the Trust Property and preserve and defend the rights of the Trustee
and the Noteholders in such Contract (including the right to receive
all payments due or to become due thereunder subsequent to the
applicable Cut-off Date), Equipment and other property against the
claims of all persons and parties.
The Issuer, upon the Issuer's failure to do so, hereby designates the Trustee
its agent and attorney-in-fact to execute any UCC financing statement,
continuation statement or other document or instrument required pursuant to this
Section 8.05; PROVIDED, HOWEVER, that such designation shall not be deemed to
create a duty in the Trustee to monitor the compliance of the Issuer with the
foregoing covenants,
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and PROVIDED FURTHER that the duty of the Trustee to execute any instrument
required pursuant to this Section 8.05 shall arise only if a Responsible Officer
of the Trustee has actual knowledge of any failure
of the Issuer to comply with the provisions of this Section 8.05.
SECTION 8.06 COMPLIANCE CERTIFICATES.
The Issuer will deliver to the Trustee and the Rating
Agencies, within 90 days after the end of each fiscal year, an Officer's
Certificate of the Transferor, as sole owner of the beneficial interests of the
Issuer, stating, in addition to the statements required by Section 1.18, as to
each signer thereof, that
(i) a review of the activities of the Issuer during
such year and of performance under this Indenture has been made under
such officers' supervision and
(ii) to the best of such officers' knowledge, based on
such review, (a) the Issuer has fulfilled all of its obligations under
this Indenture throughout such year and (b) the Servicer has fulfilled
all of the Servicer's obligations under the Contribution and Servicing
Agreement.
(iii) whether the officer knows of any Defaults by the
Issuer under this Indenture throughout such year or, if there has been
a Default in the fulfillment of any such obligation, specifying each
such Default known to him and the nature and status thereof and
the nature of the action taken with respect thereto.
SECTION 8.07 PERFORMANCE OF OBLIGATIONS; CONTRIBUTION AND
SERVICING AGREEMENT.
(a) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, any Supplement, the
Notes, the Pooling and Trust Agreement, the Note Purchase Agreement, the
Underwriting Agreements and any other applicable Transaction Documents.
(b) The Issuer will clearly mark its books and records to
reflect each assignment and transfer of a Contract and the security interest in
the Equipment subject thereto from the Transferor.
(c) If the Owner Trustee or the Transferor, as sole owner of
the beneficial interests of the Issuer, shall have actual knowledge of the
occurrence of a default under either the Contribution and Servicing Agreement or
the Pooling and Trust Agreement, the Issuer shall promptly notify the Trustee
and the Noteholders thereof, and shall specify in such notice the action, if
any, the Issuer is taking in respect of such default. Unless consented to by
Noteholders evidencing more than 50% of the Voting Rights, the Issuer may not
waive any default under or amend the Contribution and Servicing Agreement.
(d) The Issuer shall, and shall cause the Contributor to,
update any information required to be provided pursuant to Rule 144A(d) (4) of
the Securities Act to subsequent purchasers of either the Class D Notes or the
Class E Notes to prevent such information from becoming materially
false and materially misleading in a manner adverse to any Noteholder.
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SECTION 8.08 NEGATIVE COVENANTS.
The Issuer will not:
(i) sell, transfer, exchange or otherwise dispose of
any portion of the Trust Property except as expressly permitted by this
Indenture or any Supplement; PROVIDED THAT nothing contained herein
shall prohibit the transfer by the Issuer of amounts payable to the
Issuer pursuant to Section 3.04(b);
(ii) claim any credit on, or make any deduction from,
the principal of, or interest on, any of the Notes by reason of the
payment of any taxes levied or assessed upon any portion of the Trust
Property;
(iii) seek dissolution or liquidation in whole or in
part or reorganization of its business or affairs;
(iv) (A) permit the validity or effectiveness of this
Indenture or any Grant hereby to be impaired, or permit the lien of
this Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations under this Indenture, except as may be expressly permitted
hereby, (B) permit any lien, charge, security interest, mortgage or
other encumbrance to be created on or to extend to or otherwise arise
upon or burden the Trust Property or any part thereof or any interest
therein or the proceeds thereof other than the lien of this Indenture
and the rights of Obligors, or (C) permit the lien of this Indenture
not to constitute a valid first priority perfected security interest in
the Contracts and a valid security interest in the Equipment;
(v) engage in any business or activity in violation of
the provisions contained in the Pooling and Trust Agreement;
(vi) at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or
extension law or other law that would prohibit or forgive the Issuer
from paying all or any portion of the principal of or interest on the
Notes as contemplated herein or in the Notes, wherever enacted, now or
at any time hereafter in force, or that may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully
do so) the Issuer hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such
law had been enacted;
(vii) merge or consolidate with any other Person unless
(i) the entity surviving such merger or consolidation is a Person
organized under the laws of the United States or any jurisdiction
thereof, (ii) the surviving entity, if not the Issuer, shall execute
and deliver to the Servicer and the Trustee, in form and substance
satisfactory to each of them, (x) an instrument expressly assuming all
of the obligations of the Issuer hereunder, and (y) an opinion of
counsel to the effect that such Person is a Person of the type
described in the preceding clause (i), has
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effectively assumed the obligations of the Issuer hereunder, that all
conditions precedent provided for in this Indenture relating to such
transaction have been complied with, that in the opinion of such
counsel, all UCC financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary
fully to preserve and protect the interest of the Trustee in the Trust
Property, and reciting the details of such filings, or stating that no
such action shall be necessary to preserve and protect such interest,
(iii) the Issuer shall deliver to the Trustee a letter from each Rating
Agency to the effect that such transaction will not, in and of itself,
result in a downgrading of the rating for the Notes and (iv)
immediately after giving effect to such transaction, no event of
default under any Transaction Document, and no event which, after
notice or lapse of time, or both, would become an event of default,
shall have occurred and be continuing. The Issuer and any surviving
entity, if not the Issuer, will keep all of its material assets within
the United States at all times. The Issuer will not make any material
change in its business;
(viii) take any action or permit any action to be taken by
others which would release any Person from any of such Person's
covenants or obligations under any Contract or any other instrument
included in the Trust Property other than any such release occasioned
by the early termination of a Contract after receipt of the Prepayment
Amount, or which would result in the amendment, hypothecation,
subordination, termination, or discharge of, or impair the validity or
effectiveness of, any Contract or such other instrument, except as
expressly provided in this Indenture or the Contribution and Servicing
Agreement; or
(ix) issue any other securities (other than the Notes
and the Class F Instruments) unless it shall have received from the
Rating Agencies a written confirmation that the issuance of such
securities will not result in a Ratings Effect with respect to any
class
of Notes.
SECTION 8.09 INFORMATION AS TO THE ISSUER. The Issuer shall
file with the Trustee and the Rating Agencies:
(a) within 15 days after filing 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 by rules
and regulations prescribe) which the Transferor (as settlor of the Issuer) is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act.
(b) immediately upon becoming aware of the existence of any
condition or event which constitutes a Default or an Indenture Event of Default,
a written notice describing its nature and period of existence and what action
the Issuer is taking or proposes to take with respect thereto;
(c) promptly upon the Issuer's becoming aware of:
(i) any proposed or pending investigation of it by any
governmental authority or agency, or
(ii) any pending or proposed court or administrative
proceeding
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which involves or may involve the possibility, individually or in the aggregate,
of materially and adversely affecting the properties, business, profits or
condition (financial or otherwise) of the Issuer, a written notice specifying
the nature of such investigation or proceeding and what action the Issuer is
taking or proposes to take with respect thereto and evaluating its merits; and
(d) with reasonable promptness, any other data and information
which may be reasonably requested from time to time.
SECTION 8.10. PAYMENT OF TAXES AND OTHER CLAIMS.
The Issuer will pay or discharge or cause to be paid or
discharged, before any penalty accrues from the failure to so pay or discharge,
(1) all taxes, assessments and governmental charges levied or imposed upon the
Issuer or upon the income, profits or property (including any property that is
part of the Trust Property) of the Issuer and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Issuer; PROVIDED, HOWEVER, that the Issuer shall not be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim the amount, applicability or validity of which is being
contested in good faith by appropriate proceedings and for which adequate
provision has been made or where the failure to effect such payment or discharge
is not adverse in any material respect to the Noteholders.
SECTION 8.11 INDEMNIFICATION.
The Issuer agrees to indemnify and hold harmless the Trustee
(which shall include its directors, officers, employees and agents) and each
Noteholder (each an "INDEMNIFIED PARTY") against any and all liabilities,
losses, damages, penalties, costs and expenses (including the fees and expenses
of counsel and the costs of defense and legal fees and expenses) which may be
incurred or suffered by such Indemnified Party without negligence, bad faith or
willful misconduct on its part as a result of claims, actions, suits or
judgments asserted or imposed against it and arising out of the transactions
contemplated hereby, by the Pooling and Trust Agreement or by the Contribution
and Servicing Agreement, including, without limitation, any claims resulting
from any use, operation, maintenance, repair, storage or transportation of any
item of Equipment, whether or not in the Issuer's possession or under its
control, and any tort claims and any fines or penalties arising from any
violation of the laws or regulations of the United States or any state or local
government or governmental authority; PROVIDED that, except to the extent
otherwise provided in Section 6.06, all amounts payable pursuant to this Section
8.11 shall be fully subordinated to amounts payable under the Class A Notes, the
Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes to the
extent that any amounts otherwise due and payable under the terms of this
Indenture have not been fully paid. In every circumstance where the Issuer has
agreed to indemnify or hold harmless the Noteholders for legal fees, counsel
fees and related costs and expenses, it is understood and agreed, and the
Noteholders by their acceptance of their respective Notes agree, that such
indemnification and holding harmless is limited to the reasonable fees, related
costs and expenses of the Noteholders Counsel only. The provisions of this
Section 8.11 shall survive the termination of this Indenture.
62
<PAGE>
SECTION 8.12 CONTRACT FILES TO TRUSTEE.
On or prior to the Closing Date or each Substitute Date, as
applicable, the Contributor, on behalf of the Issuer, shall deliver to the
Trustee the original counterpart of each Contract that constitutes "chattel
paper" or an "instrument", as such terms are defined in the UCC.
SECTION 8.13 PAYMENT ADVICES. Each payment by the Issuer or
the Servicer to the Trustee pursuant to any of the provisions of the Transaction
Documents shall be accompanied by written advice containing sufficient
information to identify the Contract and/or Equipment to which such payment
relates, the Section of the Transaction Documents pursuant to which such payment
is made, and the proper application pursuant to the provisions of the applicable
Transaction Document of the amounts being paid.
63
<PAGE>
ARTICLE IX
AMENDMENTS AND SUPPLEMENTAL INDENTURES
SECTION 9.01 AMENDMENTS AND SUPPLEMENTAL INDENTURES.
This Indenture or the Notes may be amended from time to time
by the parties hereto, without the consent of any of the Noteholders, (i) to
cure any ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein or to make any other provisions
with respect to matters or questions arising under this Indenture or the Notes
which shall not be materially inconsistent with the provisions of this Indenture
or the Notes, PROVIDED THAT such action shall not adversely affect in any
respect the interests of any Noteholder or (ii) to make any change to comply
with the TIA or any amendment thereto, or to comply with any requirement of the
Commission in connection with the qualification of the Indenture under the TIA.
This Indenture or the Notes may also be amended from time to
time by the parties hereto with the consent of the Holders of Notes evidencing
more than 66-2/3% of the Voting Rights (and with prior written notice to the
Rating Agency) for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or the Notes or of
modifying in any manner the rights of the Holders of Notes; PROVIDED, HOWEVER,
that no amendment to this Indenture or any supplemental indenture may (i) cause
a reduction in the then current ratings, if any, of the Notes, (ii) increase or
reduce in any manner the amount of, or accelerate or delay the timing of
collections of payments on the related Contracts or distributions that are
required to be made for the benefit of such Noteholders, (iii) reduce the
aforesaid percentage of the Notes of such series which is required to consent to
any such amendment or waiver, or (iv) release any of the Trust Property from the
lien hereof (except as otherwise permitted herein) or modify Section 2.06, 3.04,
6.06, 6.08, 6.13 or 9.01, without the consent of each affected Noteholder. The
Issuer shall furnish to the Rating Agencies copies of all amendments to and
supplements to this Indenture.
It shall not be necessary for the consent of the Noteholders
under this Section 9.01 to approve the particular form of any proposed amendment
or supplement, but it shall be sufficient if
such consent approves the substance thereof.
SECTION 9.02 EXECUTION OF AMENDMENTS AND SUPPLEMENTAL
INDENTURES.
In executing any amendment to this Indenture, the Notes or any
supplemental indenture pursuant to Section 9.01 of this Indenture, the Trustee
shall be entitled to receive, and (subject to Section 7.01) shall be fully
protected in relying upon (i) an Officer's Certificate stating that all
conditions precedent for entering into such amendment or supplemental indenture
as set forth in the Indenture have been met and (ii) an Opinion of Counsel
stating that the execution of such amendment to this Indenture, the Note, or any
supplemental indenture is authorized or permitted by this Indenture. The Trustee
may, but shall not be obligated to, enter into any supplemental indenture which
affects the Trustee's own rights, duties, protections, or immunities under this
Indenture or otherwise.
64
<PAGE>
SECTION 9.03 EFFECT OF AMENDMENTS AND SUPPLEMENTAL INDENTURES.
Upon the execution of any amendment to this Indenture, the
Notes or any supplemental indenture under this Article, this Indenture, the
Notes or any supplemental indenture shall be modified in accordance therewith,
and such amendment or supplemental indenture shall form a part of this
Indenture, the Notes or any supplemental indenture for all purposes, and every
Noteholder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 9.04 REFERENCE IN NOTES TO AMENDMENTS AND SUPPLEMENTAL
INDENTURES.
Notes authenticated and delivered after the execution of any
amendment to this Indenture or any supplemental indenture pursuant to this
Article may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such amendment or
supplemental indenture. If the Issuer shall so determine, new Notes so modified
as to conform, in the opinion of the Trustee and the Issuer, to any such
amendment or supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for outstanding
Notes.
SECTION 9.05 COMPLIANCE WITH TRUST INDENTURE ACT.
The Issuer hereby covenants and agrees that every amendment or
supplement to this Indenture or the Notes shall comply with the TIA as then in
effect.
SECTION 9.06 REVOCATION AND EFFECT OF CONSENTS.
Subject to this Indenture, each amendment, waiver or
instrument evidencing other action shall become effective in accordance with its
terms. Until an amendment, waiver or other action becomes effective, a consent
to it by a Noteholder is a continuing consent by the Noteholder even if notation
of the consent is not made on any Note.
The Issuer may, but shall not be obligated to, fix a record
date for the purpose of determining the Noteholders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then those Persons
who were Noteholders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to consent to such amendment, supplement
or waiver or to revoke any consent previously given, whether or not such Persons
continue to be Noteholders after such record date. No such consent shall be
valid or effective for more than 90 days after such record date.
65
<PAGE>
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01 OPTIONAL REDEMPTION; ELECTION TO REDEEM.
(a) The Notes may be redeemed in part by the Issuer at the
Partial Redemption Price on any Payment Date on which the outstanding Pool B
Aggregate Discounted Contract Balance is less than 20% of the outstanding Pool B
Aggregate Discounted Contract Balance as of the Closing Date. The Notes may be
redeemed by the Issuer, in whole but not in part, at the Redemption Price on any
Payment Date on which the Pool A Aggregate Discounted Contract Balance is less
than 10% of the Pool A Aggregate Discounted Contract Balance as of the Closing
Date and the Pool B Aggregate Discounted Contract Balance is less than 20% of
the Pool B Aggregate Discounted Contract Balance as of the Closing Date. The
Issuer, by an Authorized Officer of the Transferor, shall set the Redemption
Date and the Redemption Record Date and give notice thereof to the Trustee.
Notice of redemption or partial redemption having been given as provided in the
Indenture, the Notes shall, on the applicable Redemption Date, become due and
payable at the Redemption Price or Partial Redemption Price, as applicable. The
respective Noteholders shall be paid the Redemption Price or Partial Redemption
Price, as applicable, by the Trustee to the extent of Available Funds on deposit
in the Collection Account, and upon presentation and surrender of the Notes on
behalf of the Issuer; PROVIDED, HOWEVER, that installments of principal and
interest which are due on or prior to the Redemption Date shall be payable to
the respective Noteholders registered as such on the relevant Record Dates or
Redemption Record Dates, as applicable, according to their terms.
(b) The Issuer, by order of an Authorized Officer of the
Transferor, shall set the Redemption Date and the Redemption Record Date and
give notice thereof to the Trustee pursuant to Section 10.02.
SECTION 10.02 NOTICE TO TRUSTEE.
In the case of any redemption or partial redemption pursuant
to Section 10.01, the Issuer shall, at least 20 days prior to the Redemption,
notify the Trustee and the Rating Agencies of such Redemption Date and the
principal amount of Notes to be redeemed in part. The notice shall be
accompanied by an Officer's Certificate stating that the redemption or partial
redemption complies with the provisions of this Indenture.
SECTION 10.03 NOTICE OF REDEMPTION OR PARTIAL REDEMPTION BY
THE ISSUER.
Notice of redemption or partial redemption pursuant to Section
10.01 shall be given by first class mail, postage prepaid, mailed at least 15
days but not more than 60 days prior to the applicable Redemption Date, to each
holder of a Note, at its address in the Note Register.
66
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All notices of redemption or partial redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price or Partial Redemption
Price, as applicable;
(3) that on the Redemption Date, the Redemption
Price or Partial Redemption Price, as
applicable, will become due and payable upon
each such Note, and that interest on the
redeemed portion of such Note shall cease to
accrue if payment is made on such date;
(4) the private placement number or CUSIP
number, if any, of the Notes;
(5) Corporate Trust Office where Notes are to be
surrendered for payment of the Redemption
Price; and
(6) the Redemption Record Date.
Notice of redemption or partial redemption, as applicable, of
Notes shall be given by the Issuer, by order of an Authorized Officer of the
Transferor, or, at the request of such Authorized Officer of the Transferor, by
the Trustee in the name and at the expense of the Issuer. Failure to give notice
of redemption or partial redemption, as applicable, or any defect therein, to
any holder of a Note shall not impair or affect the validity of the redemption
or partial redemption, as applicable, of any other Note. If a private placement
number or CUSIP number is listed in such notice or printed on the Note, the
notice may state that no representation is made as to the correctness or
accuracy of such private placement number or CUSIP number.
SECTION 10.04 DEPOSIT OF THE REDEMPTION PRICE OR PARTIAL
REDEMPTION PRICE.
On or before the Business Day immediately preceding any
Redemption Date, the Issuer shall deposit with the Trustee an amount of monies
sufficient to pay the Redemption Price or Partial Redemption Price, as
applicable, of all Notes outstanding on such Redemption Date (less any portion
of such payment to be made from monies in the Collection Account).
SECTION 10.05 NOTES PAYABLE ON REDEMPTION DATE.
(a) Notice of redemption in full having been given as provided
in Section 10.03, the Notes shall, on the applicable Redemption Date, become due
and payable at the Redemption Price and on such Redemption Date (unless the
Issuer shall default in the payment of the Redemption Price) such Notes shall
cease to bear interest. The Noteholders shall be paid the Redemption Price by
the Trustee on behalf of the Issuer; PROVIDED, HOWEVER, that installments of
principal and interest which are due on or prior to the Redemption Date shall be
payable to the Noteholders registered as such on the relevant Record Dates
according to their terms and the provisions of Section 2.07. If the holders of
any Note called for redemption in full shall not be so paid upon surrender, the
principal and interest shall, until paid, bear interest from the Redemption Date
at the related Note Rate.
67
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(b) Notice of partial redemption having been given as provided
in Section 10.03, that portion of the Notes shall, on the applicable Redemption
Date, become due and payable at the Partial Redemption Price and on such
Redemption Date (unless the Issuer shall default in the payment of the
Redemption Price) such Notes shall continue to bear interest only on the
principal balances remaining outstanding. The Noteholders shall be paid the
Partial Redemption Price by the Trustee on behalf of the Issuer; PROVIDED,
HOWEVER, that installments of principal and interest which are due on or prior
to the Redemption Date shall be payable to the Noteholders registered as such on
the relevant Record Dates according to their terms and the provisions of Section
2.07. If the holders of any Note called for partial redemption shall not be so
paid, the principal and interest shall, until paid, bear interest from the
Redemption Date at the related Note Rate.
68
<PAGE>
ARTICLE XI
SATISFACTION AND DISCHARGE
SECTION 11.01 SATISFACTION AND DISCHARGE OF INDENTURE.
(a) This Indenture shall cease to be of further effect (except
as to any surviving rights herein expressly provided for), and the Trustee, on
demand of and at the expense of the Issuer, shall execute proper instruments and
certifications acknowledging satisfaction and discharge of this Indenture, when:
(i) either:
(A) all Notes theretofore authenticated and
delivered (other than (x) Notes which have been destroyed,
lost, or stolen and which have been replaced or paid as
provided in Section 2.05 and (y) 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 8.03(c))
have been irrevocably paid and delivered to the Trustee for
cancellation; or
(B) the final installments of principal on
all such Notes not theretofore
delivered to the Trustee for cancellation:
(1) have become due and
payable, or
(2) will become due and payable
at their Stated Maturity Date within one year,
and the Issuer has deposited or caused to be deposited with
the Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on
such Notes not theretofore delivered to the Trustee for
cancellation, for principal and interest to the date of such
deposit (in the case of Notes which have become due and
payable) or to the Stated Maturity Date thereof;
(ii) the Issuer has paid or caused to be paid all other
sums payable hereunder by the Issuer for the benefit of the
Noteholders; and
(iii) the Issuer has delivered to the Trustee an
Officer's Certificate of the Transferor stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
At such time, the Trustee shall deliver to the Issuer or, upon Issuer Order, its
assignee, all cash, securities and other property held by it as part of the
Trust Property other than funds deposited with the Trustee pursuant to Section
11.01(a)(i)(B) for the payment and discharge of the Notes and a certificate from
a Responsible Officer certifying the satisfaction and discharge of this
Indenture.
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(b) Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Issuer under Sections 7.06 and 8.11, and, if
money shall have been deposited with the Trustee pursuant to Section
11.01(a)(i)(B), the obligations of the Trustee under Section 11.02 and Section
8.03(c) shall survive.
SECTION 11.02 APPLICATION OF TRUST MONEY.
Subject to the provisions of Section 8.03(c), all money
deposited with the Trustee pursuant to Sections 11.01 and 8.03 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment to the Persons entitled thereto of the principal and
interest for whose payment such money has been deposited with the Trustee.
SECTION 11.03 REINSTATEMENT.
If the Trustee is unable to apply any money in accordance with
Section 11.01 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuer's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 11.01 until such time as the Trustee is permitted
to apply all such money in accordance with Section 11.01.
SECTION 11.04 LIMITATION OF LIABILITY OF OWNER TRUSTEE.
It is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by Wilmington Trust Company,
not individually or personally but solely as Owner Trustee of DVI Business Trust
1998-2, in the exercise of the powers and authority conferred and vested in it,
(b) each of the representations, undertakings and agreements herein made on the
part of the Issuer is made and intended not as personal representations,
undertakings and agreements by Wilmington Trust Company but is made and intended
for the purpose for binding only the Issuer, (c) nothing herein contained shall
be construed as creating any liability on Wilmington Trust Company, individually
or personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any being expressly waived by the parties hereto
and by any Person claiming by, through or under the parties hereto and (d) under
no circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Issuer under this Agreement or any other related documents.
70
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.
DVI BUSINESS TRUST 1998-2
By: Wilmington Trust Company, not in its
individual capacity but as Owner Trustee
By: /s/ Debra Eberly
-------------------------------------
Name: Debra Eberly
Title: Administrative Account Manager
U.S. BANK TRUST NATIONAL
ASSOCIATION,
as Trustee
By: /s/ Eve D. Kaplan
-------------------------------------
Name: Eve D. Kaplan
Title: Vice President
<PAGE>
SCHEDULE 1
CONTRACT SCHEDULE
<PAGE>
EXHIBIT A-1
TO INDENTURE
------------
[FORM OF CLASS A-1 NOTES]
NO BENEFICIAL OWNERS OF THIS NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT
OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED NOTES HAVE BEEN DELIVERED
PURSUANT TO THE TERMS OF THE INDENTURE.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, OR
DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE REFERRED TO BELOW.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
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.
BY ACCEPTANCE OF THIS NOTE, THE HOLDER AND ANY BENEFICIAL OWNER AGREES
TO TREAT THIS NOTE AS INDEBTEDNESS FOR FEDERAL INCOME TAX PURPOSES.
BY ITS ACCEPTANCE HEREOF, THE HOLDER AND ANY BENEFICIAL OWNER IS DEEMED
TO HAVE REPRESENTED TO THE ISSUER, THE TRUSTEE, THE SERVICER AND ANY SUCCESSOR
SERVICER THAT EITHER (1) IT IS NOT ACQUIRING THIS NOTE WITH THE ASSETS OF A
PLAN; OR (2) THE ACQUISITION AND HOLDING OF THIS NOTE WILL NOT GIVE RISE TO A
NONEXEMPT PROHIBITED TRANSACTION UNDER SECTION 406(a) OF ERISA OR SECTION 4975
OF THE CODE.
No. 1 Principal Amount $35,882,000
Due: December 13, 1999 CUSIP No. 23334W AA 6
5.242% ASSET-BACKED NOTE, SERIES 1998-2, CLASS A-1
DVI BUSINESS TRUST 1998-2, a Delaware business trust (the
"ISSUER"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of Thirty-Five Million, Eight Hundred
Eighty-Two Thousand and 00/100 Dollars ($35,882,000) in monthly installments
equal to the sum of (i) the Class A-1 Monthly Principal, (ii) the Class A-1
Overdue Principal and (iii) any other principal that may be due hereon pursuant
to the Indenture during an Amortization Event together with (i) the Class A-1
Monthly Interest and (ii) the Class A-1 Overdue Interest due thereon on the 11th
day of each month (or if such date is not a Business Day, the next succeeding
Business Day, commencing
A-1-1
<PAGE>
January 11, 1999 (each, a "PAYMENT DATE"), and not later than December 13, 1999,
all remaining principal and interest (computed on the basis of a 360-day year of
actual number of days elapsed) are due and payable in their entirety as set
forth in the Indenture.
Payments of principal and interest on this Note shall be made
on each Payment Date in such coin or currency of the United States of America as
at such time is legal tender for payment of public and private debts to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the Record Date, or Redemption Record Date, as
applicable, for such Payment Date, which shall be the last Business Day of the
month preceding the month in which the Payment Date occurs (or in the case of
the initial Payment Date, the Closing Date), by wire transfer of immediately
available funds to the account and number specified in the Note Register on such
Record Date for such Person or, if no such account or number is so specified,
then by check mailed to such Person's address as it appears in the Note Register
on such Record Date. The holder hereof shall surrender this Note at the
principal Corporate Trust Office of the Trustee for the final installment of
principal of this Note.
This Note is one of a duly authorized issue of Class A-1 Notes
of the Issuer designated as its 5.242% Asset-Backed Notes, Series 1998-2, Class
A-1 with aggregate principal amount of $35,882,000 and to be issued under an
Indenture dated as of December 1, 1998 (herein called the "INDENTURE"), between
the Issuer and U.S. Bank Trust National Association, as trustee (herein called
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, limitations of rights, duties,
and immunities thereunder of the Issuer, the Trustee, and the holders of the
Notes and of the terms upon which the Notes are, and are to be, authenticated
and delivered. The Trust Property secures the Notes equally and ratably without
prejudice, priority, or distinction between any Note of the same tranche and any
other Note of the same tranche by reason of difference in time of issuance or
otherwise, and also secures the payment of certain other amounts and certain
other obligations as set forth in the Indenture. This Note is issued under and
is subject to the terms, provisions and conditions of the Indenture, to which
Indenture the Holder of this Note by virtue of the acceptance hereof assents and
by which such Holder is bound.
Each Class A-1 Noteholder by acceptance of its Class A-1 Note
(and any Person which is a beneficial owner of any interest in a Class A-1 Note,
by virtue of such Persons' acquisition of a beneficial interest therein) agrees
to treat the Class A-1 Notes (or beneficial interest therein) for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness. Each Class A-1 Noteholder agrees that it
will cause any Person acquiring an interest in a Class A-1 Note through it to
acknowledge the Class A-1 Notes' characterization as indebtedness and to treat
the Class A-1 Notes as indebtedness for such tax purposes.
If an Indenture Event of Default or Amortization Event shall
occur and be continuing, the Notes may be declared due and payable in the manner
and with the effect provided in the Indenture.
As provided in the Indenture and subject to the limitations
set forth therein and above, the transfer of this Note is registrable in 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 Issuer and the Trustee
A-1-2
<PAGE>
duly executed by, the holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Notes, of authorized denominations and for the
same original aggregate principal amount, will be issued to the designated
transferee or transferees.
The Notes may be redeemed in part by the Issuer at the partial
redemption price set forth in the Indenture on any Payment Date on which the
outstanding Pool B Aggregate Discounted Contract Balance is less than 20% of the
Pool B Aggregate Discounted Contract Balance on the Closing Date in the manner
provided in the Indenture. The Notes may be redeemed by the Issuer, in whole but
not in part, at the redemption price set forth in the Indenture on any Payment
Date on which the Pool A Aggregate Discounted Contract Balance is less than 10%
of the Pool A Aggregate Discounted Contract Balance as of the Closing Date and
the Pool B Aggregate Discounted Contract Balance is less than 20% of the Pool B
Aggregate Discounted Contract Balance as of the Closing Date in the manner
provided in the Indenture.
The Notes are issuable only in registered form without coupons
in denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note 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.
This Note and the Indenture may be amended or supplemented as
set forth in the Indenture.
By accepting this Note, the holder hereof irrevocably appoints
the Trustee under the Indenture as the special attorney-in-fact for the holder
vested with full power on behalf of the holder to effect and enforce the rights
of such holder and the provisions of the Indenture for the benefit of the
holder. The preceding provision in no way shall limit the right of the holder
hereof to demand payment hereunder or bring an action to enforce payment hereof.
All capitalized terms used in this Note which are defined in
the Indenture and not otherwise defined herein shall have the meanings assigned
to them in the Indenture.
As provided in the Indenture, this Note and the Indenture
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to the conflict of laws principles thereof.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purpose.
This Class A-1 Note does not purport to summarize the
Indenture and reference is made to the Indenture for information with respect to
interests, rights, benefits, obligations, proceeds and
A-1-3
<PAGE>
duties evidenced hereby and the rights, duties and immunities of the Trustee.
Copies of the Indenture and all amendments thereto will be provided to any
Noteholder, at its expense, upon a written request to the Trustee, U.S. Bank
Trust National Association, 180 Fifth Street, St. Paul, Minnesota 55101,
Attention: Structured Finance.
A-1-4
<PAGE>
IN WITNESS WHEREOF, DVI BUSINESS TRUST 1998-2 has caused this
instrument to be duly executed.
DVI BUSINESS TRUST 1998-2
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By:______________________________________________
Name:
Title:
Dated:________________
This is one of the Notes
referred to in the within
mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By:________________________________________
Authorized Signatory
A-1-5
<PAGE>
EXHIBIT A-2
TO INDENTURE
------------
[FORM OF CLASS A-2 NOTES]
NO BENEFICIAL OWNERS OF THIS NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT
OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED NOTES HAVE BEEN DELIVERED
PURSUANT TO THE TERMS OF THE INDENTURE.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, OR
DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE REFERRED TO BELOW.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
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.
BY ACCEPTANCE OF THIS NOTE, THE HOLDER AND ANY BENEFICIAL OWNER AGREES
TO TREAT THIS NOTE AS INDEBTEDNESS FOR FEDERAL INCOME TAX PURPOSES.
BY ITS ACCEPTANCE HEREOF, THE HOLDER AND ANY BENEFICIAL OWNER IS DEEMED
TO HAVE REPRESENTED TO THE ISSUER, THE TRUSTEE, THE SERVICER AND ANY SUCCESSOR
SERVICER THAT EITHER (1) IT IS NOT ACQUIRING THIS NOTE WITH THE ASSETS OF A
PLAN; OR (2) THE ACQUISITION AND HOLDING OF THIS NOTE WILL NOT GIVE RISE TO A
NONEXEMPT PROHIBITED TRANSACTION UNDER SECTION 406(a) OF ERISA OR SECTION 4975
OF THE CODE.
No. 1 Principal Amount $117,000,000
Due: October 11, 2006 CUSIP No. 23334W AB 4
5.64% ASSET-BACKED NOTE, SERIES 1998-2, CLASS A-2
DVI BUSINESS TRUST 1998-2, a Delaware business trust (the
"ISSUER"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of One Hundred Seventeen Million and
00/100 Dollars ($117,000,000) in monthly installments equal to the sum of (i)
the Class A-2 Monthly Principal, (ii) the Class A-2 Overdue Principal and (iii)
any other principal that may be due hereon pursuant to the Indenture during an
Amortization Event together with (i) the Class A-2 Monthly Interest and (ii) the
Class A-2 Overdue Interest due thereon on the 11th day of each
A-2-1
<PAGE>
month (or if such date is not a Business Day, the next succeeding Business Day,
commencing January 11, 1999 (each, a "PAYMENT DATE"), and not later than October
11, 2006, all remaining principal and interest (computed on the basis of a
360-day year of twelve 30-day months) are due and payable in their entirety as
set forth in the Indenture.
Payments of principal and interest on this Note shall be made
on each Payment Date in such coin or currency of the United States of America as
at such time is legal tender for payment of public and private debts to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the Record Date, or Redemption Record Date, as
applicable, for such Payment Date, which shall be the last Business Day of the
month preceding the month in which the Payment Date occurs (or in the case of
the initial Payment Date, the Closing Date), by wire transfer of immediately
available funds to the account and number specified in the Note Register on such
Record Date for such Person or, if no such account or number is so specified,
then by check mailed to such Person's address as it appears in the Note Register
on such Record Date. The holder hereof shall surrender this Note at the
principal Corporate Trust Office of the Trustee for the final installment of
principal of this Note.
This Note is one of a duly authorized issue of Class A-2 Notes
of the Issuer designated as its 5.64% Asset-Backed Notes, Series 1998-2, Class
A-2 with aggregate principal amount of $117,000,000 and to be issued under an
Indenture dated as of December 1, 1998 (herein called the "INDENTURE"), between
the Issuer and U.S. Bank Trust National Association, as trustee (herein called
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, limitations of rights, duties,
and immunities thereunder of the Issuer, the Trustee, and the holders of the
Notes and of the terms upon which the Notes are, and are to be, authenticated
and delivered. The Trust Property secures the Notes equally and ratably without
prejudice, priority, or distinction between any Note of the same tranche and any
other Note of the same tranche by reason of difference in time of issuance or
otherwise, and also secures the payment of certain other amounts and certain
other obligations as set forth in the Indenture. This Note is issued under and
is subject to the terms, provisions and conditions of the Indenture, to which
Indenture the Holder of this Note by virtue of the acceptance hereof assents and
by which such Holder is bound.
Each Class A-2 Noteholder by acceptance of its Class A-2 Note
(and any Person which is a beneficial owner of any interest in a Class A-2 Note,
by virtue of such Persons' acquisition of a beneficial interest therein) agrees
to treat the Class A-2 Notes (or beneficial interest therein) for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness. Each Class A-2 Noteholder agrees that it
will cause any Person acquiring an interest in a Class A-2 Note through it to
acknowledge the Class A-2 Notes' characterization as indebtedness and to treat
the Class A-2 Notes as indebtedness for such tax purposes.
If an Indenture Event of Default or Amortization Event shall
occur and be continuing, the Notes may be declared due and payable in the manner
and with the effect provided in the Indenture.
As provided in the Indenture and subject to the limitations
set forth therein and above, the transfer of this Note is registrable in 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
A-2-2
<PAGE>
by, or accompanied by a written instrument of transfer in form satisfactory to
the Issuer and the Trustee duly executed by, the holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same original aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes may be redeemed in part by the Issuer at the partial
redemption price set forth in the Indenture on any Payment Date on which the
outstanding Pool B Aggregate Discounted Contract Balance is less than 20% of the
Pool B Aggregate Discounted Contract Balance on the Closing Date in the manner
provided in the Indenture. The Notes may be redeemed by the Issuer, in whole but
not in part, at the redemption price set forth in the Indenture on any Payment
Date on which the Pool A Aggregate Discounted Contract Balance is less than 10%
of the Pool A Aggregate Discounted Contract Balance as of the Closing Date and
the Pool B Aggregate Discounted Contract Balance is less than 20% of the Pool B
Aggregate Discounted Contract Balance as of the Closing Date in the manner
provided in the Indenture.
The Notes are issuable only in registered form without coupons
in denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note 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.
This Note and the Indenture may be amended or supplemented as
set forth in the Indenture.
By accepting this Note, the holder hereof irrevocably appoints
the Trustee under the Indenture as the special attorney-in-fact for the holder
vested with full power on behalf of the holder to effect and enforce the rights
of such holder and the provisions of the Indenture for the benefit of the
holder. The preceding provision in no way shall limit the right of the holder
hereof to demand payment hereunder or bring an action to enforce payment hereof.
All capitalized terms used in this Note which are defined in
the Indenture and not otherwise defined herein shall have the meanings assigned
to them in the Indenture.
As provided in the Indenture, this Note and the Indenture
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to the conflict of laws
principles thereof.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purpose.
A-2-3
<PAGE>
This Class A-2 Note does not purport to summarize the
Indenture and reference is made to the Indenture for information with respect to
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Indenture
and all amendments thereto will be provided to any Noteholder, at its expense,
upon a written request to the Trustee, U.S. Bank Trust National Association, 180
Fifth Street, St. Paul, Minnesota 55101, Attention: Structured Finance.
A-2-4
<PAGE>
IN WITNESS WHEREOF, DVI BUSINESS TRUST 1998-2 has caused this
instrument to be duly executed.
DVI BUSINESS TRUST 1998-2
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By:______________________________________________
Name:
Title:
Dated:________________
This is one of the Notes
referred to in the within
mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By:________________________________________
Authorized Signatory
A-2-5
<PAGE>
EXHIBIT A-3
TO INDENTURE
[FORM OF CLASS A-3 NOTES]
NO BENEFICIAL OWNERS OF THIS NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT
OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED NOTES HAVE BEEN DELIVERED
PURSUANT TO THE TERMS OF THE INDENTURE.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, OR
DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE REFERRED TO BELOW.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
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.
BY ACCEPTANCE OF THIS NOTE, THE HOLDER AND ANY BENEFICIAL OWNER AGREES
TO TREAT THIS NOTE AS INDEBTEDNESS FOR FEDERAL INCOME TAX PURPOSES.
BY ITS ACCEPTANCE HEREOF, THE HOLDER AND ANY BENEFICIAL OWNER IS DEEMED
TO HAVE REPRESENTED TO THE ISSUER, THE TRUSTEE, THE SERVICER AND ANY SUCCESSOR
SERVICER THAT EITHER (1) IT IS NOT ACQUIRING THIS NOTE WITH THE ASSETS OF A
PLAN; OR (2) THE ACQUISITION AND HOLDING OF THIS NOTE WILL NOT GIVE RISE TO A
NONEXEMPT PROHIBITED TRANSACTION UNDER SECTION 406(a) OF ERISA OR SECTION 4975
OF THE CODE.
No. 1 Principal Amount $38,090,000
Due: October 11, 2006 CUSIP No. 23334W AC 2
5.76% ASSET-BACKED NOTE, SERIES 1998-2, CLASS A-3
DVI BUSINESS TRUST 1998-2, a Delaware business trust (the
"ISSUER"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of Thirty-Eight Million, Ninety Thousand
and 00/100 Dollars ($38,090,000) in monthly installments equal to the sum of (i)
the Class A-3 Monthly Principal, (ii) the Class A-3 Overdue Principal and (iii)
any other principal that
A-3-1
<PAGE>
may be due hereon pursuant to the Indenture during an Amortization Event
together with (i) the Class A-3 Monthly Interest and (ii) the Class A-3 Overdue
Interest due thereon on the 11th day of each month or if such date is not a
Business Day, the next succeeding Business Day, commencing January 11, 1999
(each, a "PAYMENT DATE"), and not later than October 11, 2006, all remaining
principal and interest (computed on the basis of a 360-day year of twelve 30-day
months) are due and payable in their entirety as set forth in the Indenture.
Payments of principal and interest on this Note shall be made
on each Payment Date in such coin or currency of the United States of America as
at such time is legal tender for payment of public and private debts to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the Record Date, or Redemption Record Date, as
applicable, for such Payment Date, which shall be the last Business Day of the
month preceding the month in which the Payment Date occurs (or in the case of
the initial Payment Date, the Closing Date), by wire transfer of immediately
available funds to the account and number specified in the Note Register on such
Record Date for such Person or, if no such account or number is so specified,
then by check mailed to such Person's address as it appears in the Note Register
on such Record Date. The holder hereof shall surrender this Note at the
principal Corporate Trust Office of the Trustee for the final installment of
principal of this Note.
This Note is one of a duly authorized issue of Class A-3 Notes
of the Issuer designated as its 5.76% Asset-Backed Notes, Series 1998-2, Class
A-3 with aggregate principal amount of $38,090,000 and to be issued under an
Indenture dated as of December 1, 1998 (herein called the "INDENTURE"), between
the Issuer and U.S. Bank Trust National Association, as trustee (herein called
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, limitations of rights, duties,
and immunities thereunder of the Issuer, the Trustee, and the holders of the
Notes and of the terms upon which the Notes are, and are to be, authenticated
and delivered. The Trust Property secures the Notes equally and ratably without
prejudice, priority, or distinction between any Note of the same tranche and any
other Note of the same tranche by reason of difference in time of issuance or
otherwise, and also secures the payment of certain other amounts and certain
other obligations as set forth in the Indenture. This Note is issued under and
is subject to the terms, provisions and conditions of the Indenture, to which
Indenture the Holder of this Note by virtue of the acceptance hereof assents and
by which such Holder is bound.
Each Class A-3 Noteholder by acceptance of its Class A-3 Note
(and any Person which is a beneficial owner of any interest in a Class A-3 Note,
by virtue of such Persons' acquisition of a beneficial interest therein) agrees
to treat the Class A-3 Notes (or beneficial interest therein) for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness. Each Class A-3 Noteholder agrees that it
will cause any Person acquiring an interest in a Class A-3 Note through it to
acknowledge the Class A-3 Notes' characterization as indebtedness and to treat
the Class A-3 Notes as indebtedness for such tax purposes.
If an Indenture Event of Default or Amortization Event shall
occur and be continuing, the Notes may be declared due and payable in the manner
and with the effect provided in the Indenture.
A-3-2
<PAGE>
As provided in the Indenture and subject to the limitations
set forth therein and above, the transfer of this Note is registrable in 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 Issuer and the Trustee duly executed by, the holder hereof
or his attorney duly authorized in writing, and thereupon one or more new Notes,
of authorized denominations and for the same original aggregate principal
amount, will be issued to the designated transferee or transferees.
The Notes may be redeemed in part by the Issuer at the partial
redemption price set forth in the Indenture on any Payment Date on which the
outstanding Pool B Aggregate Discounted Contract Balance is less than 20% of the
Pool B Aggregate Discounted Contract Balance on the Closing Date in the manner
provided in the Indenture. The Notes may be redeemed by the Issuer, in whole but
not in part, at the redemption price set forth in the Indenture on any Payment
Date on which the Pool A Aggregate Discounted Contract Balance is less than 10%
of the Pool A Aggregate Discounted Contract Balance as of the Closing Date and
the Pool B Aggregate Discounted Contract Balance is less than 20% of the Pool B
Aggregate Discounted Contract Balance as of the Closing Date in the manner
provided in the Indenture.
The Notes are issuable only in registered form without coupons
in denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note 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.
This Note and the Indenture may be amended or supplemented as
set forth in the Indenture.
By accepting this Note, the holder hereof irrevocably appoints
the Trustee under the Indenture as the special attorney-in-fact for the holder
vested with full power on behalf of the holder to effect and enforce the rights
of such holder and the provisions of the Indenture for the benefit of the
holder. The preceding provision in no way shall limit the right of the holder
hereof to demand payment hereunder or bring an action to enforce payment hereof.
All capitalized terms used in this Note which are defined in
the Indenture and not otherwise defined herein shall have the meanings assigned
to them in the Indenture.
As provided in the Indenture, this Note and the Indenture
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to the conflict of laws principles thereof.
A-3-3
<PAGE>
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purpose.
This Class A-3 Note does not purport to summarize the
Indenture and reference is made to the Indenture for information with respect to
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Indenture
and all amendments thereto will be provided to any Noteholder, at its expense,
upon a written request to the Trustee, U.S. Bank Trust National Association, 180
Fifth Street, St. Paul, Minnesota 55101, Attention: Structured Finance.
A-3-4
<PAGE>
IN WITNESS WHEREOF, DVI BUSINESS TRUST 1998-2 has caused this
instrument to be duly executed.
DVI BUSINESS TRUST 1998-2
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By:______________________________________________
Name:
Title:
Dated:________________
This is one of the Notes
referred to in the within
mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By:________________________________________
Authorized Signatory
A-3-5
<PAGE>
EXHIBIT B
TO INDENTURE
------------
[FORM OF CLASS B NOTES]
NO BENEFICIAL OWNERS OF THIS NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT
OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED NOTES HAVE BEEN DELIVERED
PURSUANT TO THE TERMS OF THE INDENTURE.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, OR
DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE REFERRED TO BELOW.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
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.
BY ACCEPTANCE OF THIS NOTE, THE HOLDER AND ANY BENEFICIAL OWNER AGREES
TO TREAT THIS NOTE AS INDEBTEDNESS FOR FEDERAL INCOME TAX PURPOSES.
BY ITS ACCEPTANCE HEREOF, THE HOLDER AND ANY BENEFICIAL OWNER IS DEEMED
TO HAVE REPRESENTED TO THE ISSUER, THE TRUSTEE, THE SERVICER AND ANY SUCCESSOR
SERVICER EITHER (1) IT IS NOT ACQUIRING THIS NOTE WITH THE ASSETS OF A PLAN; OR
(2) THE ACQUISITION AND HOLDING OF THIS NOTE WILL NOT GIVE RISE TO A NONEXEMPT
PROHIBITED TRANSACTION UNDER SECTION 406(a) OF ERISA OR SECTION 4975 OF THE
CODE.
No. 1 Principal Amount $4,365,000
Due: October 11, 2006 CUSIP No. 23334W AD 0
5.93% ASSET-BACKED NOTE, SERIES 1998-2, CLASS B
DVI BUSINESS TRUST 1998-2, a Delaware business trust (the
"ISSUER"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of Four Million Three Hundred Sixty-Five
Thousand and 00/100 Dollars ($4,365,000) in monthly installments
B-1
<PAGE>
equal to the sum of (i) the Class B Monthly Principal, (ii) the Class B Overdue
Principal and (iii) any other principal that may be due hereon pursuant to the
Indenture during an Amortization Event together with (i) the Class B Monthly
Interest and (ii) the Class B Overdue Interest due thereon on the 11th day of
each month (or if such date is not a Business Day, the next succeeding Business
Day, commencing January 11, 1999 (each, a "PAYMENT DATE"), and not later than
October 11, 2006, all remaining principal and interest (computed on the basis of
a 360-day year of twelve 30-day months) are due and payable in their entirety as
set forth in the Indenture.
Payments of principal and interest on this Note shall be made
on each Payment Date in such coin or currency of the United States of America as
at such time is legal tender for payment of public and private debts to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the Record Date, or Redemption Record Date, as
applicable, for such Payment Date, which shall be the last Business Day of the
month preceding the month in which the Payment Date occurs (or in the case of
the initial Payment Date, the Closing Date), by wire transfer of immediately
available funds to the account and number specified in the Note Register on such
Record Date for such Person or, if no such account or number is so specified,
then by check mailed to such Person's address as it appears in the Note Register
on such Record Date. The holder hereof shall surrender this Note at the
principal Corporate Trust Office of the Trustee for the final installment of
principal of this Note.
This Note is one of a duly authorized issue of Class B Notes
of the Issuer designated as its 5.93% Asset-Backed Notes, Series 1998-2, Class B
with aggregate principal amount of $4,365,000 and to be issued under an
Indenture dated as of December 1, 1998 (herein called the "INDENTURE"), between
the Issuer and U.S. Bank Trust National Association, as trustee (herein called
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, limitations of rights, duties,
and immunities thereunder of the Issuer, the Trustee, and the holders of the
Notes and of the terms upon which the Notes are, and are to be, authenticated
and delivered. The Trust Property secures the Notes equally and ratably without
prejudice, priority, or distinction between any Note of the same class and any
other Note of the same class by reason of difference in time of issuance or
otherwise, and also secures the payment of certain other amounts and certain
other obligations as set forth in the Indenture. This Note is issued under and
is subject to the terms, provisions and conditions of the Indenture, to which
Indenture the Holder of this Note by virtue of the acceptance hereof assents and
by which such Holder is bound.
Each Class B Noteholder by acceptance of its Class B Note (and
any Person which is a beneficial owner of any interest in a Class B Note, by
virtue of such Persons' acquisition of a beneficial interest therein) agrees to
treat the Class B Notes (or beneficial interest therein) for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness. Each Class B Noteholder agrees that it
will cause any Person acquiring an interest in a Class B Note through it to
acknowledge the Class B Notes' characterization as indebtedness and to agree to
comply with the Indenture as to treatment of the Class B Notes as indebtedness
for such tax purpose.
If an Indenture Event of Default or Amortization Event shall
occur and be continuing, the Notes may be declared due and payable in the manner
and with the effect provided in the Indenture.
B-2
<PAGE>
As provided in the Indenture and subject to the limitations
set forth therein and above, the transfer of this Note is registrable in 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 Issuer and the Trustee duly executed by, the holder hereof
or his attorney duly authorized in writing, and thereupon one or more new Notes,
of authorized denominations and for the same original aggregate principal
amount, will be issued to the designated transferee or transferees.
The Notes may be redeemed in part by the Issuer at the partial
redemption price set forth in the Indenture on any Payment Date on which the
outstanding Pool B Aggregate Discounted Contract Balance is less than 20% of the
Pool B Aggregate Discounted Contract Balance on the Closing Date in the manner
provided in the Indenture. The Notes may be redeemed by the Issuer, in whole but
not in part, at the redemption price set forth in the Indenture on any Payment
Date on which the Pool A Aggregate Discounted Contract Balance is less than 10%
of the Pool A Aggregate Discounted Contract Balance as of the Closing Date and
the Pool B Aggregate Discounted Contract Balance is less than 20% of the Pool B
Aggregate Discounted Contract Balance as of the Closing Date in the manner
provided in the Indenture.
The Notes are issuable only in registered form without coupons
in denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note 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.
This Note and the Indenture may be amended or supplemented as
set forth in the Indenture.
By accepting this Note, the holder hereof irrevocably appoints
the Trustee under the Indenture as the special attorney-in-fact for the holder
vested with full power on behalf of the holder to effect and enforce the rights
of such holder and the provisions of the Indenture for the benefit of the
holder. The preceding provision in no way shall limit the right of the holder
hereof to demand payment hereunder or bring an action to enforce payment hereof.
All capitalized terms used in this Note which are defined in
the Indenture and not otherwise defined herein shall have the meanings assigned
to them in the Indenture.
As provided in the Indenture, this Note and the Indenture
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to the conflict of laws principles thereof.
B-3
<PAGE>
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purpose.
This Class B Note does not purport to summarize the Indenture
and reference is made to the Indenture for information with respect to
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Indenture
and all amendments thereto will be provided to any Noteholder, at its expense,
upon a written request to the Trustee, U.S. Bank Trust National Association, 180
Fifth Street, St. Paul, Minnesota 55101, Attention: Structured Finance.
B-4
<PAGE>
IN WITNESS WHEREOF, DVI BUSINESS TRUST 1998-2 has caused this
instrument to be duly executed.
DVI BUSINESS TRUST 1998-2
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By:______________________________________________
Name:
Title:
Dated:________________
This is one of the Notes
referred to in the within
mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By:________________________________________
Authorized Signatory
B-5
<PAGE>
EXHIBIT C
TO INDENTURE
------------
[FORM OF CLASS C NOTES]
NO BENEFICIAL OWNERS OF THIS NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT
OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED NOTES HAVE BEEN DELIVERED
PURSUANT TO THE TERMS OF THE INDENTURE.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, OR
DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE REFERRED TO BELOW.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
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.
BY ACCEPTANCE OF THIS NOTE, THE HOLDER AND ANY BENEFICIAL OWNER AGREES
TO TREAT THIS NOTE AS INDEBTEDNESS FOR FEDERAL INCOME TAX PURPOSES.
BY ITS ACCEPTANCE HEREOF, THE HOLDER AND ANY BENEFICIAL OWNER IS DEEMED
TO HAVE REPRESENTED TO THE ISSUER, THE TRUSTEE, THE SERVICER AND ANY SUCCESSOR
SERVICER THAT EITHER (1) IT IS NOT ACQUIRING THIS NOTE WITH THE ASSETS OF A
PLAN; OR (2) THE ACQUISITION AND HOLDING OF THIS NOTE WILL NOT GIVE RISE TO A
NONEXEMPT PROHIBITED TRANSACTION UNDER SECTION 406(a) OF ERISA OR SECTION 4975
OF THE CODE.
No. 1 Principal Amount $4,910,955
Due October 11, 2006 CUSIP No. 23334W AE 8
6.37% ASSET-BACKED NOTE, SERIES 1998-2, CLASS C
DVI BUSINESS TRUST 1998-2, a Delaware business trust (the
"ISSUER"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of Four Million, Nine Hundred Ten
Thousand, Nine Hundred Fifty-Five and 00/100 Dollars ($4,910,955) in monthly
C-1
<PAGE>
installments equal to the sum of (i) the Class C Monthly Principal, (ii) the
Class C Overdue Principal and (iii) any other principal that may be due hereon
pursuant to the Indenture during an Amortization Event together with (i) the
Class C Monthly Interest and (ii) the Class C Overdue Interest due thereon on
the 11th day of each month (or if such date is not a Business Day, the next
succeeding Business Day, commencing January 11, 1999 (each, a "PAYMENT DATE"),
and not later than October 11, 2006, all remaining principal and interest
(computed on the basis of a 360-day year of twelve 30-day months) are due and
payable in their entirety as set forth in the Indenture.
Payments of principal and interest on this Note shall be made
on each Payment Date in such coin or currency of the United States of America as
at such time is legal tender for payment of public and private debts to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the Record Date, or Redemption Record Date, as
applicable, for such Payment Date, which shall be the last Business Day of the
month preceding the month in which the Payment Date occurs (or in the case of
the initial Payment Date, the Closing Date), by wire transfer of immediately
available funds to the account and number specified in the Note Register on such
Record Date for such Person or, if no such account or number is so specified,
then by check mailed to such Person's address as it appears in the Note Register
on such Record Date. The holder hereof shall surrender this Note at the
principal Corporate Trust Office of the Trustee for the final installment of
principal of this Note.
This Note is one of a duly authorized issue of Class C Notes
of the Issuer designated as its 6.37% Asset-Backed Notes, Series 1998-2, Class C
with aggregate principal amount of $4,910,955 and to be issued under an
Indenture dated as of December 1, 1998 (herein called the "INDENTURE"), between
the Issuer and U.S. Bank Trust National Association, as trustee (herein called
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, limitations of rights, duties,
and immunities thereunder of the Issuer, the Trustee, and the holders of the
Notes and of the terms upon which the Notes are, and are to be, authenticated
and delivered. The Trust Property secures the Notes equally and ratably without
prejudice, priority, or distinction between any Note of the same class and any
other Note of the same class by reason of difference in time of issuance or
otherwise, and also secures the payment of certain other amounts and certain
other obligations as set forth in the Indenture. This Note is issued under and
is subject to the terms, provisions and conditions of the Indenture, to which
Indenture the Holder of this Note by virtue of the acceptance hereof assents and
by which such Holder is bound.
Each Class C Noteholder by acceptance of its Class C Note (and
any Person which is a beneficial owner of any interest in a Class C Note, by
virtue of such Persons' acquisition of a beneficial interest therein) agrees to
treat the Class C Notes (or beneficial interest therein) for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness. Each Class C Noteholder agrees that it
will cause any Person acquiring an interest in a Class C Note through it to
acknowledge the Class C Notes' characterization as indebtedness and to agree to
comply with the Indenture as to treatment of the Class C Notes as indebtedness
for such tax purpose.
If an Indenture Event of Default or Amortization Event shall
occur and be continuing, the Notes may be declared due and payable in the manner
and with the effect provided in the Indenture.
C-2
<PAGE>
As provided in the Indenture and subject to the limitations
set forth therein and above, the transfer of this Note is registrable in 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 Issuer and the Trustee duly executed by, the holder hereof
or his attorney duly authorized in writing, and thereupon one or more new Notes,
of authorized denominations and for the same original aggregate principal
amount, will be issued to the designated transferee or transferees.
The Notes may be redeemed in part by the Issuer at the partial
redemption price set forth in the Indenture on any Payment Date on which the
outstanding Pool B Aggregate Discounted Contract Balance is less than 20% of the
Pool B Aggregate Discounted Contract Balance on the Closing Date in the manner
provided in the Indenture. The Notes may be redeemed by the Issuer, in whole but
not in part, at the redemption price set forth in the Indenture on any Payment
Date on which the Pool A Aggregate Discounted Contract Balance is less than 10%
of the Pool A Aggregate Discounted Contract Balance as of the Closing Date and
the Pool B Aggregate Discounted Contract Balance is less than 20% of the Pool B
Aggregate Discounted Contract Balance as of the Closing Date in the manner
provided in the Indenture.
The Notes are issuable only in registered form without coupons
in denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note 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.
This Note and the Indenture may be amended or supplemented as
set forth in the Indenture.
By accepting this Note, the holder hereof irrevocably appoints
the Trustee under the Indenture as the special attorney-in-fact for the holder
vested with full power on behalf of the holder to effect and enforce the rights
of such holder and the provisions of the Indenture for the benefit of the
holder. The preceding provision in no way shall limit the right of the holder
hereof to demand payment hereunder or bring an action to enforce payment hereof.
All capitalized terms used in this Note which are defined in
the Indenture and not otherwise defined herein shall have the meanings assigned
to them in the Indenture.
As provided in the Indenture, this Note and the Indenture
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to the conflict of laws principles thereof.
C-3
<PAGE>
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purpose.
This Class C Note does not purport to summarize the Indenture
and reference is made to the Indenture for information with respect to
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Indenture
and all amendments thereto will be provided to any Noteholder, at its expense,
upon a written request to the Trustee, U.S. Bank Trust National Association, 180
Fifth Street, St. Paul, Minnesota 55101, Attention: Structured Finance.
C-4
<PAGE>
IN WITNESS WHEREOF, DVI BUSINESS TRUST 1998-2 has caused this
instrument to be duly executed.
DVI BUSINESS TRUST 1998-2
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By:______________________________________________
Name:
Title:
Dated:________________
This is one of the Notes
referred to in the within
mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By:________________________________________
Authorized Signatory
C-5
<PAGE>
EXHIBIT D
TO INDENTURE
------------
[FORM OF CLASS D NOTES]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
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.
BY ACCEPTANCE OF THIS NOTE, THE HOLDER AND ANY BENEFICIAL OWNER AGREES
TO TREAT THIS NOTE AS INDEBTEDNESS FOR FEDERAL INCOME TAX PURPOSES.
THIS NOTE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAW OF ANY STATE. ANY RESALE,
TRANSFER OR OTHER DISPOSITION OF THIS NOTE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH
REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION
2.04 OF THE INDENTURE REFERRED TO HEREIN.
BY ITS ACCEPTANCE HEREOF, THE HOLDER AND ANY BENEFICIAL OWNER IS DEEMED
TO HAVE REPRESENTED TO THE ISSUER, THE TRUSTEE, THE SERVICER AND ANY SUCCESSOR
SERVICER THAT EITHER (1) IT IS NOT ACQUIRING THIS NOTE WITH THE ASSETS OF A
PLAN; OR (2) THE ACQUISITION AND HOLDING OF THIS NOTE WILL NOT GIVE RISE TO A
NONEXEMPT PROHIBITED TRANSACTION UNDER SECTION 406(a) OF ERISA OR SECTION 4975
OF THE CODE.
THIS CLASS D NOTE MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED
UNLESS (i) SUCH TRANSFEREE IS A "UNITED STATES PERSON" AS DEFINED IN SECTION
7701(a)(30) OF THE CODE; (ii) (A) SUCH TRANSFEREE IS NOT A GRANTOR TRUST,
PARTNERSHIP OR S CORPORATION FOR UNITED STATES FEDERAL INCOME TAX PURPOSES OR
(B) SUCH TRANSFEREE IS A GRANTOR TRUST, PARTNERSHIP OR S CORPORATION FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES, BUT AFTER GIVING EFFECT TO SUCH TRANSFER OF
CLASS D NOTES TO SUCH TRANSFEREE, SUBSTANTIALLY ALL OF THE VALUE OF THE INTEREST
OF AN OWNER OF THE TRANSFEREE IN THE TRANSFEREE WILL NOT BE ATTRIBUTABLE TO THE
PASS-THROUGH ENTITY'S OWNERSHIP INTEREST IN SECURITIES ISSUED BY THE ISSUER
OTHER THAN THE CLASS A, CLASS B AND CLASS C NOTES AND (ii) FOR THE PURPOSES OF
SECTION 7704 OF THE CODE AND THE TREASURY REGULATIONS PROMULGATED THEREUNDER,
D-1
<PAGE>
AFTER SUCH TRANSFER THE ISSUER WOULD NOT BE TREATED AS HAVING MORE THAN 100
PARTNERS.
No. 1 Principal Amount $4,910,955
Due: October 11, 2006 CUSIP No. 23334W AF 5
7.39% ASSET-BACKED NOTE, SERIES 1998-2, CLASS D
DVI BUSINESS TRUST 1998-2, a Delaware business trust (the
"ISSUER"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of Four Million, Nine Hundred Ten Thousand
Nine Hundred Fifty-Five and 00/100 Dollars ($4,910,955) in monthly installments
equal to the sum of (i) the Class D Monthly Principal, (ii) the Class D Overdue
Principal and (iii) any other principal that may be due hereon pursuant to the
Indenture during an Amortization Event together with (i) the Class D Monthly
Interest and (ii) the Class D Overdue Interest due thereon on the 10th day of
each month (or if such date is not a Business Day, the next succeeding Business
Day, commencing January 11, 1999 (each, a "PAYMENT DATE"), and not later than
October 11, 2006, all remaining principal and interest (computed on the basis of
a 360-day year of twelve 30-day months) are due and payable in their entirety as
set forth in the Indenture.
THE RIGHTS TO RECEIVE PAYMENTS WITH RESPECT TO THIS CLASS D
NOTE ARE SUBORDINATE TO THE PRIOR PAYMENT IN FULL ON EACH PAYMENT DATE OF
CERTAIN AMOUNTS DUE AND PAYABLE ON THE CLASS A NOTES, THE CLASS B NOTES AND THE
CLASS C NOTES AS PROVIDED IN THE INDENTURE.
Payments of principal and interest on this Note shall be made
on each Payment Date in such coin or currency of the United States of America as
at such time is legal tender for payment of public and private debts to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the Record Date or Redemption Date, as applicable,
for such Payment Date, which shall be the last Business Day of the month
preceding the month in which the Payment Date occurs (or in the case of the
initial Payment Date, the Closing Date), by wire transfer of immediately
available funds to the account and number specified in the Note Register on such
Record Date for such Person or, if no such account or number is so specified,
then by check mailed to such Person's address as it appears in the Note Register
on such Record Date. The holder hereof shall surrender this Note at the
principal Corporate Trust Office of the Trustee for the final installment of
principal of this Note.
This Note is one of a duly authorized issue of Class D Notes
of the Issuer designated as its 7.39% Asset-Backed Notes, Series 1998-2, Class D
with aggregate principal amount of $4,910,955 and to be issued under an
Indenture dated as of December 1, 1998 (herein called the "INDENTURE"), between
the Issuer and U.S. Bank Trust National Association, as trustee (herein called
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, limitations of rights, duties,
and immunities thereunder of the Issuer, the Trustee, and the holders of the
Notes and
D-2
<PAGE>
of the terms upon which the Notes are, and are to be, authenticated and
delivered. The Trust Property secures the Notes equally and ratably without
prejudice, priority, or distinction between any Note of the same class and any
other Note of the same class by reason of difference in time of issuance or
otherwise, and also secures the payment of certain other amounts and certain
other obligations as set forth in the Indenture. This Note is issued under and
is subject to the terms, provisions and conditions of the Indenture, to which
Indenture the Holder of this Note by virtue of the acceptance hereof assents and
by which such Holder is bound.
The Issuer, the Trustee and each Class D Noteholder by
acceptance of its Class D Note (and any Person that is a beneficial owner of any
interest in a Class D Note, by virtue of such Person's acquisition of a
beneficial interest therein) agrees to treat the Class D Notes for purposes of
federal, state and local income or franchise taxes (and any other tax imposed on
or measured by income) as indebtedness. Each Class D Noteholder agrees that it
will cause any Person acquiring an interest in a Class D Note through it to
acknowledge the Class D Notes' characterization as indebtedness and to agree to
comply with this Indenture as to treatment of the Class D Notes as indebtedness
for such tax purposes.
If an Indenture Event of Default or Amortization Event shall
occur and be continuing, the Notes may be declared due and payable in the manner
and with the effect provided in the Indenture.
As provided in the Indenture and subject to the limitations
set forth therein and above, the transfer of this Note is registrable in 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 Issuer and the Trustee duly executed by, the holder hereof
or his attorney duly authorized in writing, and thereupon one or more new Notes,
of authorized denominations and for the same original aggregate principal
amount, will be issued to the designated transferee or transferees.
The Notes may be redeemed in part by the Issuer at the partial
redemption price set forth in the Indenture on any Payment Date on which the
outstanding Pool B Aggregate Discounted Contract Balance is less than 20% of the
Pool B Aggregate Discounted Contract Balance on the Closing Date in the manner
provided in the Indenture. The Notes may be redeemed by the Issuer, in whole but
not in part, at the redemption price set forth in the Indenture on any Payment
Date on which the Pool A Aggregate Discounted Contract Balance is less than 10%
of the Pool A Aggregate Discounted Contract Balance as of the Closing Date and
the Pool B Aggregate Discounted Contract Balance is less than 20% of the Pool B
Aggregate Discounted Contract Balance as of the Closing Date in the manner
provided in the Indenture.
The Notes are issuable only in registered form without coupons
in denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note is registered
D-3
<PAGE>
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.
This Note and the Indenture may be amended or supplemented as
set forth in the Indenture.
By accepting this Note, the holder hereof irrevocably appoints
the Trustee under the Indenture as the special attorney-in-fact for the holder
vested with full power on behalf of the holder to effect and enforce the rights
of such holder and the provisions of the Indenture for the benefit of the
holder. The preceding provision in no way shall limit the right of the holder
hereof to demand payment hereunder or bring an action to enforce payment hereof.
All capitalized terms used in this Note which are defined in
the Indenture and not otherwise defined herein shall have the meanings assigned
to them in the Indenture.
As provided in the Indenture, this Note and the Indenture
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to the conflict of laws principles thereof.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purpose.
This Class D Note does not purport to summarize the Indenture
and reference is made to the Indenture for information with respect to
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Indenture
and all amendments thereto will be provided to any Noteholder, at its expense,
upon a written request to the Trustee, U.S. Bank Trust National Association, 180
Fifth Street, St. Paul, Minnesota 55101, Attention: Structured Finance.
D-4
<PAGE>
IN WITNESS WHEREOF, DVI BUSINESS TRUST 1998-2 has caused this
instrument to be duly executed.
DVI BUSINESS TRUST 1998-2
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By:______________________________________________
Name:
Title:
Dated:________________
This is one of the Notes
referred to in the within
mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By:________________________________________
Authorized Signatory
D-5
<PAGE>
EXHIBIT E
TO INDENTURE
------------
[FORM OF CLASS E NOTES]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
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.
BY ACCEPTANCE OF THIS NOTE, THE HOLDER AND ANY BENEFICIAL OWNER AGREES
TO TREAT THIS NOTE AS INDEBTEDNESS FOR FEDERAL INCOME TAX PURPOSES.
THIS NOTE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAW OF ANY STATE. ANY RESALE,
TRANSFER OR OTHER DISPOSITION OF THIS NOTE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH
REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION
2.04 OF THE INDENTURE REFERRED TO HEREIN.
BY ITS ACCEPTANCE HEREOF, THE HOLDER AND ANY BENEFICIAL OWNER IS DEEMED
TO HAVE REPRESENTED TO THE ISSUER, THE TRUSTEE, THE SERVICER AND ANY SUCCESSOR
SERVICER THAT EITHER (1) IT IS NOT ACQUIRING THIS NOTE WITH THE ASSETS OF A
PLAN; OR (2) THE ACQUISITION AND HOLDING OF THIS NOTE WILL NOT GIVE RISE TO A
NONEXEMPT PROHIBITED TRANSACTION UNDER SECTION 406(a) OF ERISA OR SECTION 4975
OF THE CODE.
THIS CLASS E NOTE MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED
UNLESS (i) SUCH TRANSFEREE IS A "UNITED STATES PERSON" AS DEFINED IN SECTION
7701(a)(30) OF THE CODE; (ii) (A) SUCH TRANSFEREE IS NOT A GRANTOR TRUST,
PARTNERSHIP OR S CORPORATION FOR UNITED STATES FEDERAL INCOME TAX PURPOSES OR
(B) SUCH TRANSFEREE IS A GRANTOR TRUST, PARTNERSHIP OR S CORPORATION FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES, BUT AFTER GIVING EFFECT TO SUCH TRANSFER OF
CLASS E NOTES TO SUCH TRANSFEREE, SUBSTANTIALLY ALL OF THE VALUE OF THE INTEREST
OF AN OWNER OF THE TRANSFEREE IN THE TRANSFEREE WILL NOT BE ATTRIBUTABLE TO THE
PASS-THROUGH ENTITY'S OWNERSHIP INTEREST IN SECURITIES ISSUED BY THE ISSUER
OTHER THAN THE CLASS A, CLASS B AND CLASS C NOTES AND (ii) FOR THE PURPOSES OF
SECTION 7704 OF THE CODE AND THE TREASURY REGULATIONS PROMULGATED THEREUNDER,
E-1
<PAGE>
AFTER SUCH TRANSFER THE ISSUER WOULD NOT BE TREATED AS HAVING MORE THAN 100
PARTNERS.
No. 1 Principal Amount $4,910,955
Due: October 11, 2006 CUSIP No. 23334W AG 3
9.42% ASSET-BACKED NOTE, SERIES 1998-2, CLASS E
DVI BUSINESS TRUST 1998-2, a Delaware business trust (the
"ISSUER"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of Four Million, Nine Hundred Ten
Thousand, Nine Hundred Fifty-Five and 00/100 Dollars ($4,910,955) in monthly
installments equal to the sum of (i) the Class E Monthly Principal, (ii) the
Class E Overdue Principal and (iii) any other principal that may be due hereon
pursuant to the Indenture during an Amortization Event together with (i) the
Class E Monthly Interest and (ii) the Class E Overdue Interest due thereon on
the 11th day of each month (or if such date is not a Business Day, the next
succeeding Business Day, commencing January 11, 1999 (each, a "PAYMENT DATE"),
and not later than October 11, 2006, all remaining principal and interest
(computed on the basis of a 360-day year of twelve 30-day months) are due and
payable in their entirety as set forth in the Indenture.
THE RIGHTS TO RECEIVE PAYMENTS WITH RESPECT TO THIS CLASS E
NOTE ARE SUBORDINATE TO THE PRIOR PAYMENT IN FULL ON EACH PAYMENT DATE OF
CERTAIN AMOUNTS DUE AND PAYABLE ON THE CLASS A NOTES, THE CLASS B NOTES, THE
CLASS C NOTES AND THE CLASS D NOTES AS PROVIDED IN THE INDENTURE.
Payments of principal and interest on this Note shall be made
on each Payment Date in such coin or currency of the United States of America as
at such time is legal tender for payment of public and private debts to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the Record Date or Redemption Date, as applicable,
for such Payment Date, which shall be the last Business Day of the month
preceding the month in which the Payment Date occurs (or in the case of the
initial Payment Date, the Closing Date), by wire transfer of immediately
available funds to the account and number specified in the Note Register on such
Record Date for such Person or, if no such account or number is so specified,
then by check mailed to such Person's address as it appears in the Note Register
on such Record Date. The holder hereof shall surrender this Note at the
principal Corporate Trust Office of the Trustee for the final installment of
principal of this Note.
This Note is one of a duly authorized issue of Class E Notes
of the Issuer designated as its ;9.42% Asset-Backed Notes, Series 1998-2, Class
E with aggregate principal amount of $4,910,955 and to be issued under an
Indenture dated as of December 1, 1998 (herein called the "INDENTURE"), between
the Issuer and U.S. Bank Trust National Association, as trustee (herein called
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, limitations of rights, duties,
and immunities thereunder of the Issuer, the Trustee, and the holders of the
Notes and of the terms upon which the Notes are, and are to be, authenticated
and delivered. The Trust Property secures the Notes equally and ratably without
prejudice, priority, or distinction between any Note of
E-2
<PAGE>
the same class and any other Note of the same class by reason of difference in
time of issuance or otherwise, and also secures the payment of certain other
amounts and certain other obligations as set forth in the Indenture. This Note
is issued under and is subject to the terms, provisions and conditions of the
Indenture, to which Indenture the Holder of this Note by virtue of the
acceptance hereof assents and by which such Holder is bound.
The Issuer, the Trustee and each Class E Noteholder by
acceptance of its Class E Note (and any Person that is a beneficial owner of any
interest in a Class E Note, by virtue of such Person's acquisition of a
beneficial interest therein) agrees to treat the Class E Notes for purposes of
federal, state and local income or franchise taxes (and any other tax imposed on
or measured by income) as indebtedness. Each Class E Noteholder agrees that it
will cause any Person acquiring an interest in a Class E Note through it to
acknowledge the Class E Notes' characterization as indebtedness and to agree to
comply with this Indenture as to treatment of the Class E Notes as indebtedness
for such tax purposes.
If an Indenture Event of Default or Amortization Event shall
occur and be continuing, the Notes may be declared due and payable in the manner
and with the effect provided in the Indenture.
As provided in the Indenture and subject to the limitations
set forth therein and above, the transfer of this Note is registrable in 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 Issuer and the Trustee duly executed by, the holder hereof
or his attorney duly authorized in writing, and thereupon one or more new Notes,
of authorized denominations and for the same original aggregate principal
amount, will be issued to the designated transferee or transferees.
The Notes may be redeemed in part by the Issuer at the partial
redemption price set forth in the Indenture on any Payment Date on which the
outstanding Pool B Aggregate Discounted Contract Balance is less than 20% of the
Pool B Aggregate Discounted Contract Balance on the Closing Date in the manner
provided in the Indenture. The Notes may be redeemed by the Issuer, in whole but
not in part, at the redemption price set forth in the Indenture on any Payment
Date on which the Pool A Aggregate Discounted Contract Balance is less than 10%
of the Pool A Aggregate Discounted Contract Balance as of the Closing Date and
the Pool B Aggregate Discounted Contract Balance is less than 20% of the Pool B
Aggregate Discounted Contract Balance as of the Closing Date in the manner
provided in the Indenture.
The Notes are issuable only in registered form without coupons
in denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note 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.
E-3
<PAGE>
This Note and the Indenture may be amended or supplemented as
set forth in the Indenture.
By accepting this Note, the holder hereof irrevocably appoints
the Trustee under the Indenture as the special attorney-in-fact for the holder
vested with full power on behalf of the holder to effect and enforce the rights
of such holder and the provisions of the Indenture for the benefit of the
holder. The preceding provision in no way shall limit the right of the holder
hereof to demand payment hereunder or bring an action to enforce payment hereof.
All capitalized terms used in this Note which are defined in
the Indenture and not otherwise defined herein shall have the meanings assigned
to them in the Indenture.
As provided in the Indenture, this Note and the Indenture
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to the conflict of laws principles thereof.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purpose.
This Class E Note does not purport to summarize the Indenture
and reference is made to the Indenture for information with respect to
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Indenture
and all amendments thereto will be provided to any Noteholder, at its expense,
upon a written request to the Trustee, U.S. Bank Trust National Association, 180
Fifth Street, St. Paul, Minnesota 55101, Attention: Structured Finance.
E-4
<PAGE>
IN WITNESS WHEREOF, DVI BUSINESS TRUST 1998-2 has caused this
instrument to be duly executed.
DVI BUSINESS TRUST 1998-2
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By:______________________________________________
Name:
Title:
Dated:________________
This is one of the Notes
referred to in the within
mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By:________________________________________
Authorized Signatory
E-5
<PAGE>
EXHIBIT F
TO INDENTURE
------------
[FORM OF CLASS F INSTRUMENT TO BE PROVIDED WITH ANY
SUPPLEMENT PURSUANT TO WHICH CLASS F INSTRUMENTS ARE ISSUED]
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<PAGE>
EXHIBIT G
TO INDENTURE
------------
INVESTMENT LETTER
_______________, 199__
DVI Business Trust 1998-2
c/o Wilmington Trust Company
1100 North Market Square
Wilmington, Delaware 19890
DVI Financial Services Inc.
500 Hyde Park
Doylestown, Pennsylvania 18901
U.S. Bank Trust National Association
180 Fifth Street
St. Paul, Minnesota 55101
Re: $ % Asset-Backed Notes, Series 1998-2, Class
CUSIP Number
--------------------------------------------------------
Ladies and Gentlemen:
___________________________ (the "SELLER") intends to transfer
$_____________ in aggregate principal amount of the captioned Notes to
_____________________ (the "PURCHASER").
1. In connection with such transfer, and in accordance with
Section 2.04 of the Indenture, dated as of December 1, 1998 (the "INDENTURE";
all capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Indenture), between DVI Business Trust 1998-2 (the
"ISSUER") and U.S. Bank Trust National Association, not in its individual
capacity but solely as Trustee (the "TRUSTEE"), pursuant to which the Notes were
issued, the Seller hereby certifies to you the following facts: Neither the
Seller nor anyone acting on its behalf has offered, transferred, pledged, sold
or otherwise disposed of the Notes, any interest in the Notes or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Notes, any interest in the Notes or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action which would constitute a distribution of the Notes under the
Securities Act of 1933, as amended (the "1933 ACT"), or under state securities
laws, or which would render the disposition of the Notes a violation of Section
5 of the 1933 Act or applicable state securities laws or require registration
pursuant thereto.
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<PAGE>
2. The Purchaser warrants and represents to, and covenants
with, the Trustee pursuant to Section 2.04 of the Indenture that:
(a) The Purchaser agrees to be bound, as Noteholder, by all of
the terms, covenants and conditions of the Indenture and the Notes, and
from and after the date hereof, the Purchaser assumes for the benefit
of each of the Trustee and the Seller all of the Seller's obligations
as Noteholder thereunder;
(b) The Purchaser understands that the Notes have not been and
may never be registered under the 1933 Act or the securities laws of
any state;
(c) The Purchaser is acquiring the Notes for investment for
its own account or the account of another qualified institutional buyer
(within the meaning of Rule 144A under the 1933 Act) only and not for
any other person or with a view to the distribution thereof in
violation of applicable securities laws;
(d) The Purchaser considers itself a substantial,
sophisticated institutional investor having such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of investment in the Notes;
(e) The Purchaser has been furnished with all information
regarding the Notes that it has requested from the Seller or the
Trustee and has been afforded the opportunity to ask all questions it
reasonably desires to ask of the Seller (and all such questions have
been answered to the Purchaser's satisfaction); and
(f) Neither the Purchaser nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Notes,
any interest in the Notes or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of the Notes, any interest in the Notes or any other
similar security from, or otherwise approached or negotiated with
respect to the Notes, any interest in the Notes or any other similar
security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action which would constitute a distribution of the
Notes under the 1933 Act or applicable state securities laws or which
would render the disposition of the Notes a violation of Section 5 of
the 1933 Act or applicable state securities laws or require
registration pursuant thereto, nor will it act, nor has it authorized
or will it authorize any person to act, in such manner with respect to
the Notes.
(g) The Purchaser will strictly comply with the Indenture as
to treatment of the Class ___ Notes as indebtedness of the Transferor
for purposes of federal, state and local income or franchise taxes and
any other tax imposed on or measured by income.
3. The Purchaser represents and warrants to the Issuer, the
Trustee, the Servicer and any successor Servicer that either (1) it is not
acquiring this Note with the assets of a Plan; or (2) the acquisition and
holding of this Note will not give rise to a nonexempt prohibited transaction
under Section 406(a) of ERISA or section 4975 of the code.
G-2
<PAGE>
4. The Purchaser understands and agrees with the Seller that
the Seller is transferring the Notes pursuant to the exemption from registration
under the 1933 Act provided by Rule 144A thereunder ("RULE 144A") and the
Purchaser hereby represents and warrants to the Seller and the Trustee that the
Purchaser is a "qualified institutional buyer" as defined in Rule 144A.
The Purchaser acknowledges that it is familiar with Rule 144A
and understand that you are and will continue to rely on the statements made
herein.
5. This Certification may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Investment
Letter to be executed by their duly authorized officers as of the date first
above written.
__________________________ _________________________________
Seller Purchaser
By:_______________________ By:______________________________
Its: _____________________ Its:_____________________________
Taxpayer Identification Taxpayer Identification
No._______________________ No._________________________
G-3
<PAGE>
EXHIBIT H
H-1
<PAGE>
EXHIBIT I
TAX CERTIFICATE
[With respect to Class D Notes and the Class E Notes]
The undersigned hereby certifies and represents as follows to the
parties listed in the Indenture to which this certification relates with respect
to the Class [D Notes and the Class E] Notes described therein:
This Tax Certificate ("certificate") is delivered in
connection with the acquisition of, transfer to or possession by the
undersigned, whether as beneficial owner (the "Beneficial Owner"), or nominee on
behalf of the Beneficial Owner of the above-described Class [D Notes and Class
E] Notes.
Each Holder must complete Part I, Part II (if the holder is a
nominee), Part III, Part IV and in all cases sign and otherwise complete this
certificate. Each Holder shall submit with this certificate an IRS Form W-9 (or
any such successor form) to such Holder.
Part I
1. _______________ (Name of Beneficial Owner) is not a
foreign corporation, foreign partnership, foreign
trust or foreign estate (as those terms are defined
in the Code and Treasury Regulations);
2. The Beneficial Owner's office address and place of
incorporation (if applicable) is _______________; and
3. The Beneficial Owner's U.S. employer identification
number is _______________.
Part II - Nominees
If the undersigned is the nominee for the Beneficial Owner,
the undersigned certifies that this certificate has been made in reliance upon
information contained in:
____ an IRS Form W-9
____ a form such as this or substantially similar
provided to the undersigned by an appropriate person and (i) the undersigned
agrees to notify the Trustee at least thirty (30) days prior to the date that
the form relied upon becomes obsolete, and (ii) in connection with a change in
Beneficial Owners, the undersigned agrees to submit a new Tax Certificate to the
Trustee promptly after such change.
I-1
<PAGE>
Part III - Declaration
The undersigned, as the Beneficial Owner or a nominee thereof,
agrees to notify the Trustee within sixty (60) days of the date that the
Beneficial Owner becomes a foreign person. The undersigned understands that this
certificate may be disclosed to the Internal Revenue Service by the Trustee and
any false statement contained therein could be punishable by fines, imprisonment
or both.
Part IV - Representation
The undersigned hereby represents, warrants and agrees that
it:
(1) (a) is purchasing the Class [D or Class E] Note for its
own account and is the sole beneficial owner of such Note;
(b) either (i) is not, for federal income tax
purposes, a partnership, trust, estate or "S Corporation" (as defined in the
Code) (each a "Pass-through Entity") or (ii) is for federal income tax purposes,
a Pass-through Entity, but after giving effect to our purchase of such Note less
than 50 percent of the aggregate value of our assets would consist of Class [D
or Class E] Notes; and
(c) such Note has not been transferred through an
"established securities market" within the meaning of Section 7704(b) of the
Code;
(2) if we are a Pass-through Entity, we covenant that the
portion of our assets consisting of Class [D and Class E] Notes will remain
below 50 percent at all times; and
(3) if it resells or transfers any of the Class [D or Class E]
Notes, it will obtain from each subsequent purchaser or transferee a letter
containing the same representations and agreements as set forth herein.
The undersigned understands and agrees that no initial or subsequent
sale or other transfer of a Class [D or Class E] Note may be made unless such
sale or transfer (i) is accompanied by delivery of a tax statement in the form
of this letter, (ii) is made to a "United States Person" as defined in Section
7701(a)(30) of the code, as certified in such tax statement, and (iii) will not
cause the Issuer to be treated as a publicly traded partnership for United
States federal income tax purposes. Any attempted transfer, assignment,
conveyance, participation or subdivision in contravention of the preceding
restrictions, as reasonably determined by the Trustee, shall be void AB INITIO
and the purported transferor, seller or subdivider of such Class [D or Class E]
Note shall continue to be treated as the Holder of such Note for all purposes of
the Indenture.
IN WITNESS WHEREOF, the undersigned has caused this
certificate to be executed by its duly authorized officer as of the date first
above written.
_____________________________
Purchaser
By:__________________________
Its:_________________________
I-2
