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 (Date of earliest event reported): May 22, 1996
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CATERPILLAR FINANCIAL FUNDING CORPORATION
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(Exact name of registrant as specified in governing instruments)
Nevada 333-2988 88-0342613
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
organization)
Greenview Plaza, 2950 East Flamingo Road, Suite E-4, Las Vegas, NV 89121
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 735-2514
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Not Applicable
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(Former name or former address if changed since last report)
Exhibit Index located at Page 2
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Items 1 through 6 and Item 8 are not included because they are not
applicable.
Item 7. Financial Statements and Exhibits.
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(a) Financial Statements - Not Applicable
(b) Pro Form Financial Information - Not Applicable
(c) Exhibits (executed copies) - The following execution copies
of Exhibits to the Form S-3 Registration Statement of the
Registrant are hereby filed:
Sequentially
Exhibit Numbered
Number Exhibit Page
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1.1(A) Certificate Underwriting Agreement
dated May 15, 1996 among Caterpillar
Financial Funding Corporation,
Caterpillar Financial Services
Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
1.2(A) Note Underwriting Agreement dated
May 15, 1996 among Caterpillar
Financial Funding Corporation,
Caterpillar Financial Services
Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Goldman,
Sachs & Co. and UBS Securities LLC.
4.1(A) Indenture dated as of May 1, 1996
between Caterpillar Financial Asset
Trust 1996-A and The First National
Bank of Chicago, as Indenture Trustee.
4.2(A) Amended and Restated Trust Agreement
dated as of May 1, 1996 between
Caterpillar Financial Funding
Corporation and Chemical Bank
Delaware, as Owner Trustee.
4.3(A) Sale and Servicing Agreement dated as
of May 1, 1996 among Caterpillar
Financial Asset Trust 1996-A,
Caterpillar Financial Funding
Corporation, as Seller and Caterpillar
Financial Services Corporation, as
Servicer.
2
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Sequentially
Exhibit Numbered
Number Exhibit Page
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10.1(A) Purchase Agreement dated as of May 1,
1996 between Caterpillar Financial
Funding Corporation, as Purchaser
and Caterpillar Financial Services
Corporation, as Seller.
10.2(A) Administration Agreement dated as of
May 1, 1996 among Caterpillar
Financial Asset Trust 1996-A,
Caterpillar Financial Services
Corporation, as Administrator and
Servicer, Caterpillar Financial
Funding Corporation, and The First
National Bank of Chicago, as Indenture
Trustee.
10.3(A) Custodial Agreement dated as of May 1,
1996, among Caterpillar Financial
Services Corporation, Caterpillar
Financial Funding Corporation,
Caterpillar Financial Asset Trust
1996-A and the First National Bank of
Chicago, as Indenture Trustee.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CATERPILLAR FINANCIAL FUNDING CORPORATION
(Registrant)
June 6, 1996 By:/s/ Scott E. Harris
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Scott E. Harris
Treasurer
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Exhibit 1.1(A)
CATERPILLAR FINANCIAL ASSET TRUST 1996-A
6.55% ASSET BACKED CERTIFICATES
CATERPILLAR FINANCIAL FUNDING CORPORATION
CERTIFICATE UNDERWRITING AGREEMENT
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May 15, 1996
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
250 Vesey Street, 15th Floor
New York, New York 10281
Ladies and Gentlemen:
1. Introductory. Caterpillar Financial Funding Corporation, a
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Nevada corporation (the "Seller"), proposes to cause Caterpillar Financial
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Asset Trust 1996-A (the "Trust") to issue and sell $14,727,000 aggregate
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principal amount of 6.55% Asset Backed Certificates (the "Certificates")
each representing a fractional undivided interest in the Trust, to Merrill
Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter"). The assets
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of the Trust will include, among other things, a pool of fixed rate retail
installment sale contracts (the "Receivables") secured by new and used
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machinery manufactured primarily by Caterpillar Inc. ("Caterpillar"),
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including rights to receive certain payments with respect to such Receiv-
ables, and security interests in the machinery financed by the Receivables
(the "Financed Equipment"), and the proceeds thereof. The Receivables will
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be sold to the Trust by the Seller. The Receivables will be serviced for
the Trust by Caterpillar Financial Services Corporation, a Delaware
corporation (the "Servicer" or "CFSC"). The Certificates will be issued
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pursuant to the Indenture to be dated as of May 1, 1996 (as amended and
supplemented from time to time, the "Indenture"), between the Trust and The
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First National Bank of Chicago, a national banking association (the "Inden-
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ture Trustee").
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Simultaneously with the issuance and sale of the Certificates as
contemplated herein, the Trust will issue $85,000,000 aggregate principal
amount of Class A-1 5.418% Money Market Asset Backed Notes (the "Class A-1
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Notes"), $139,000,000 aggregate principal amount of Class A-2 5.90% Asset
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Backed Notes (the "Class A-2 Notes"), and $133,021,000 aggregate principal
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amount of Class A-3 6.30% Asset Backed Notes (the "Class A-3 Notes", and
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together with the Class A-1 Notes and the Class A-2
<PAGE>
Notes, the "Notes"), which will be sold pursuant to an underwriting agree-
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ment (the "Note Underwriting Agreement"; together with this Underwriting
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Agreement, the "Underwriting Agreements") among the Seller, CFSC and the
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several underwriters named in Schedule I to the Note Underwriting Agree-
ment. The Certificates and the Notes are sometimes referred to collec-
tively herein as the "Securities".
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Capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to them in the Sale and Servicing Agreement to
be dated as of May 1, 1996 (as amended and supplemented from time to time,
the "Sale and Servicing Agreement"), among the Trust, the Seller and the
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Servicer or, if not defined therein, in the Indenture or the Trust
Agreement to be dated as of May 1, 1996 (as amended and supplemented from
time to time, the "Trust Agreement"), between the Seller and Chemical Bank
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Delaware, a Delaware banking corporation as owner trustee under the Trust
Agreement (the "Owner Trustee").
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2. Representations and Warranties of the Seller. The Seller
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represents and warrants to and agrees with the Underwriter that:
(a) The Seller meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "Act"), and has filed with the
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Securities and Exchange Commission (the "Commission") a registration
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statement (Registration No. 333-2988) on such Form, including a prospectus
and a form of prospectus supplement, for registration under the Act of the
offering and sale of the Securities. The Seller may have filed one or more
amendments thereto, each of which amendments has previously been furnished
to the Underwriter. The Seller will also file with the Commission a
prospectus supplement in accordance with Rule 424(b) under the Act. The
Seller has included in the Registration Statement, as amended at the
Effective Date (as hereinafter defined), all information required by the
Act and the rules thereunder to be included in the Prospectus with respect
to the Securities and the offering thereof. As filed, the registration
statement as amended, the form of prospectus supplement, and any prospec-
tuses or prospectus supplements filed pursuant to Rule 424(b) under the Act
relating to the Securities shall, except to the extent that the Underwriter
shall agree in writing to a modification, be in all substantive respects in
the form furnished to the Underwriter prior to the Execution Time (as
hereinafter defined) or, to the extent not completed at the Execution Time,
shall contain only such specific additional information and other changes
(beyond that contained in the latest preliminary prospectus supplement
which has previously been furnished to the Underwriter) as the Seller has
advised the Underwriter, prior to the Execution Time, will be included or
made therein.
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For purposes of this Agreement, "Effective Time" means the date
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and time as of which such registration statement, or the most recent post-
effective amendment thereto, if any, was declared effective by the Commis-
sion, and "Effective Date" means the date of the Effective Time.
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"Execution Time" shall mean the date and time that this Agreement is
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executed and delivered by the parties hereto. Such registration statement,
as amended at the Effective Time and including the exhibits thereto and any
material incorporated by reference therein (including any Computational
Materials, ABS Term Sheets, Structural Term Sheets and Collateral Term
Sheets (as defined in Section 4(b) of this Agreement) filed on Form 8-K),
is hereinafter referred to as the "Registration Statement" and any prospec-
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tus supplement (the "Prospectus Supplement") relating to the Securities, as
---------------------
filed with the Commission pursuant to and in accordance with Rule 424(b)
under the Act is, together with the prospectus filed as part of the
Registration Statement (such prospectus, in the form it appears in the
Registration Statement or in the form most recently revised and filed with
the Commission pursuant to Rule 424(b) being hereinafter referred to as the
"Basic Prospectus"), hereinafter referred to as the "Prospectus". "Prelim-
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inary Prospectus" means any preliminary prospectus to the Prospectus which
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describes the Securities and the offering thereof and which is used prior
to the filing of the Prospectus. "Rule 424" refers to such rule under the
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Act. Any reference herein to the Registration Statement, the Prospectus or
any Prospectus Supplement shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the Effective Date of the Registration
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Statement or the issue date of the Prospectus or any Prospectus Supplement,
as the case may be; and any reference herein to the terms "amend",
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"amendment" or "supplement" with respect to the Registration Statement, the
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Prospectus or any Prospectus Supplement shall be deemed to refer to and
include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement, or the issue date of the
Prospectus or any Prospectus Supplement, as the case may be, deemed to be
incorporated therein by reference.
(b) On the Effective Date and on the date of this Agreement, the
Registration Statement did or will, and, when the Prospectus was first
filed and on the Closing Date (as defined below), the Prospectus and any
Prospectus Supplement did or will comply in all material respects with the
applicable requirements of the Act, the Exchange Act and the Trust Inden-
ture Act of 1939, as amended (the "Trust Indenture Act"), and the respec-
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tive rules and regulations of the Commission thereunder (the "Rules and
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Regulations") and of the Employee Retirement Income Security Act of 1974,
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as amended ("ERISA"). On the Effective Date, the Registration Statement
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did not and will not contain any untrue statement of a material fact or
omit to state any material fact
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<PAGE>
required to be stated therein or necessary in order to make the statements
therein not misleading; and, on the Effective Date, the Prospectus, if not
filed pursuant to Rule 424(b), did not or will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus,
together with any Prospectus Supplement, did not or will not include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
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however, that the Seller makes no representation or warranty as to the
- -------
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with information furnished in
writing to the Seller by the Underwriter specifically for use in connection
with preparation of the Registration Statement or the Prospectus. As of
the Closing Date, the Seller's representations and warranties in the Sale
and Servicing Agreement and the Trust Agreement will be true and correct.
(c) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) there has not been
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, business,
management, financial condition, stockholders' equity, results of
operations, regulatory status or business prospects of the Seller or CFSC,
and (ii) neither the Seller nor CFSC has entered into any transaction or
agreement (whether or not in the ordinary course of business) material to
it that, in either case, would reasonably be expected to materially
adversely affect the interests of the holders of the Securities, other than
as set forth or contemplated in the Prospectus.
(d) The computer tape of the Receivables created as of May 1,
1996, and made available to the Underwriter by the Servicer, was complete
and accurate as of the date thereof and includes a description of the
Receivables that are described in Schedule A to the Sale and Servicing
Agreement.
(e) Each of the Seller and CFSC is duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and is qualified to transact business in and
is in good standing under the laws of each state in which its activities
require such qualification, and has full power, authority and legal right
to own its properties and conduct its business as such properties are
presently owned and such business is presently conducted.
(f) This Agreement has been duly authorized, executed and
delivered by each of the Seller and CFSC.
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<PAGE>
(g) On the date of this Agreement and on the Closing Date, the
representations and warranties of CFSC and the Seller in the Purchase
Agreement and the Sale and Servicing Agreement with respect to the
Receivables will be true and correct.
(h) CFSC's assignment and delivery of the Receivables to the
Seller as of the Closing Date will vest in the Seller all of CFSC's right,
title and interest therein, subject to no prior lien, mortgage, security
interest, pledge, adverse claim, charge or other encumbrance.
(i) The Seller's assignment and delivery of the Receivables to
the Trust as of the Closing Date will vest in the Trust all of the Seller's
right, title and interest therein, subject to no prior lien, mortgage,
security interest, pledge, adverse claim, charge or other encumbrance.
(j) The Trust's assignment of the Receivables to the Indenture
Trustee pursuant to the Indenture will vest in the Indenture Trustee, for
the benefit of the Noteholders, a first priority perfected security
interest therein, subject to no prior lien, mortgage, security interest,
pledge, adverse claim, charge or other encumbrance.
3. Purchase, Sale, and Delivery of the Certificates. On the
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basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Seller agrees
to cause the Trust to sell to the Underwriter, and the Underwriter agrees
to purchase from the Trust, at a purchase price of 99.55625% of the
principal amount thereof, $14,727,000 in principal amount of the Certifi-
cates. Delivery of and payment for the Certificates shall be made at the
office of Orrick, Herrington & Sutcliffe, 666 Fifth Avenue, New York, New
York 10103, on May 22, 1996 (the "Closing Date"). Delivery of the Certifi-
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cates shall be made against payment of the purchase price in immediately
available funds drawn to the order of the Seller. The Certificates to be
so delivered will be represented by one or more Certificates in fully
registered, certificated form.
4. Offering by Underwriter. (a) It is understood that the
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Underwriter proposes to offer the Certificates for sale to the public
(which may include selected dealers), as set forth in the Prospectus.
(b) The Underwriter may prepare and provide to prospective inves-
tors certain Computational Materials, ABS Term Sheets, Structural Term
Sheets and Collateral Term Sheets in connection with its offering of the
Certificates, subject to the following conditions:
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(i) The Underwriter shall have complied with the require-
ments of the no-action letter, dated May 20, 1994, issued by the Commission
to Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incor-
porated and Kidder Structured Asset corporation, as made applicable to
other issuers and underwriters by the Commission in the response to the
request of the Public Securities Association, dated May 24, 1994 (colle-
ctively, the "Kidder/PSA Letter"), the requirements of the no-action
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letter, dated February 17, 1995, issued by the Commission to the Public
Securities Association (the "PSA Letter") and the requirements of the no-
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action letter, dated April 5, 1996, issued by the Commission to Greenwood
Trust Company (the "Greenwood Letter" and together with the Kidder/PSA
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Letter and the PSA Letter, the "No-Action Letters").
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(ii) For purposes hereof, "Computational Materials" shall
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have the meaning given such term in the No-Action Letters, but shall
include only those Computational Materials that have been prepared or
delivered to prospective investors by or at the direction of the
Underwriter. For purposes hereof, "ABS Term Sheets", "Structural Term
--------------- ---------------
Sheets" and "Collateral Term Sheets" shall have the meanings given such
- ------ ----------------------
terms in the PSA Letter but shall include only those ABS Term Sheets,
Structural Term Sheets or Collateral Term Sheets that have been prepared or
delivered to prospective investors by or at the direction of the
Underwriter.
(iii) All Computational Materials, ABS Term Sheets,
Structural Term Sheets and Collateral Term Sheets provided to prospective
investors that are required to be filed pursuant to the No-Action Letters
shall bear a legend substantially in the form attached hereto as Exhibit A.
The Seller shall have the right to require specific legends or notations to
appear on any Computational Materials, ABS Term Sheets, Structural Term
Sheets and Collateral Term Sheets, the right to require changes regarding
the use of terminology and the right to determine the types of information
appearing therein. Notwithstanding the foregoing, this subsection (iii)
will be satisfied if all Computational Materials, ABS Term Sheets, Struc-
tural Term Sheets and Collateral Term Sheets referred to herein bear a
legend in a form previously approved in writing by the Seller.
(iv) The Underwriter shall have provided the Seller with
representative forms of all Computational Materials, ABS Term Sheets,
Structural Term Sheets and Collateral Term Sheets prior to their first use,
to the extent such forms have not previously been approved by the Seller
for use by the Underwriter. The Underwriter shall have provided to the
Seller, for filing on Form 8-K as provided in Section 5(n), copies (in such
format as required by the Seller) of all Computational Materials, ABS Term
Sheets, Structural Term Sheets and Collateral Term Sheets that are required
to be filed with the Commission pursuant
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<PAGE>
to the No-Action Letters. The Underwriter may provide copies of the
foregoing in a consolidated or aggregated form including all information
required to be filed. All Computational Materials, ABS Term Sheets,
Structural Term Sheets and Collateral Term Sheets described in this
subsection (iv) shall have been provided to the Seller not later than 10:00
a.m. (New York City time) not less than one business day before filing
thereof is required to be made with the Commission pursuant to the No-
Action Letters. The Underwriter shall not have provided to any investor or
prospective investor in the Certificates any Computational Materials, ABS
Term Sheets, Structural Term Sheets and Collateral Term Sheets on or after
the day on which Computational Materials, ABS Term Sheets, Structural Term
Sheets and Collateral Term Sheets are required to be provided to the Seller
pursuant to this subsection (iv) (other than copies of Computational
Materials, ABS Term Sheets, Structural Term Sheets and Collateral Term
Sheets previously submitted to the Seller in accordance with this subsec-
tion (iv) for filing pursuant to Section 5(n)), unless such Computational
Materials, ABS Term Sheets, Structural Term Sheets and Collateral Term
Sheets are preceded or accompanied by the delivery of a Prospectus to such
investor or prospective investor.
(v) All information included in the Computational
Materials, ABS Term Sheets, Structural Term Sheets and Collateral Term
Sheets shall have been generated based on substantially the same
methodology and assumptions that are used to generate the information in
the Prospectus as set forth therein; provided that the Computational
Materials, ABS Term Sheets, Structural Term Sheets and Collateral Term
Sheets may have included information based on alternative methodologies or
assumptions if specified therein. If any Computational Materials, ABS Term
Sheets, Structural Term Sheets and Collateral Term Sheets that are required
to be filed were based on assumptions with respect to the Receivables that
differ from the final Receivables information in any material respect or on
Note structuring terms that were revised in any material respect prior to
the printing of the Prospectus, the Underwriter shall have prepared revised
Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets, as the case may be, based on the final Receivables
information and structuring assumptions, shall have circulated such revised
Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets to all recipients of the preliminary versions
thereof that indicated orally to the Underwriter they would purchase all or
any portion of the Certificates, and shall have included such revised
Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets (marked, "as revised") in the materials delivered to
the Seller pursuant to subsection (iv) above.
(vi) The Seller shall not be obligated to file any Com-
putational Materials, ABS Term Sheets, Structural Term Sheets
7
<PAGE>
and Collateral Term Sheets that have been determined to contain any
material error or omission, provided that, at the request of the
Underwriter, the Seller will file Computational Materials, ABS Term Sheets,
Structural Term Sheets and Collateral Term Sheets that contain a material
error or omission if clearly marked "superseded by materials dated _______"
and accompanied by corrected ABS Term Sheets that are marked, "supersedes
material previously dated _______, as corrected." If, within the period
during which the Prospectus relating to the Certificates is required to be
delivered under the Act, any Computational Materials, ABS Term Sheets,
Structural Term Sheets and Collateral Term Sheets are determined, in the
reasonable judgment of the Seller or the Underwriter, to contain a material
error or omission, the Underwriter shall prepare a corrected version of
such Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets, shall circulate such corrected Computational
Materials, ABS Term Sheets, Structural Term Sheets and Collateral Term
Sheets, as the case may be, to all recipients of the prior versions thereof
that either indicated orally to the Underwriter they would purchase all or
any portion of the Certificates, or actually purchased all or any portion
thereof, and shall deliver copies of such corrected Computational Materi-
als, ABS Term Sheets, Structural Term Sheets and Collateral Term Sheets
(marked, "as corrected") to the Seller for filing with the Commission in a
subsequent Form 8-K submission (subject to the Seller's obtaining an
accountant's comfort letter in respect of such corrected Computational
Materials, ABS Term Sheets, Structural Term Sheets and Collateral Term
Sheets, which shall be at the expense of the Seller).
(vii) The Underwriter shall be deemed to have represented
as of the Closing Date, that, except for Computational Materials, ABS Term
Sheets, Structural Term Sheets and Collateral Term Sheets provided to the
Seller pursuant to subsection (iv) above, the Underwriter did not provide
any prospective investors with any information in written or electronic
form in connection with the offering of the Certificates that is required
to be filed with the Commission in accordance with the No-Action Letters.
(viii) In the event of any delay in the delivery by the
Underwriter to the Seller of all Computational Materials, ABS Term Sheets,
Structural Term Sheets and Collateral Term Sheets required to be delivered
in accordance with subsection (iv) above, or in the delivery of the accoun-
tant's comfort letter in respect thereof pursuant to Section 5(n), the
Seller shall have the right to delay the release of the Prospectus to
investors or to the Underwriter, to delay the Closing Date and to take
other appropriate actions in each case as necessary in order to allow the
Seller to comply with its agreement set forth in Section 5(n) to file the
Computational Materials, ABS Term
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Sheets, Structural Term Sheets and Collateral Term Sheets by the time
specified therein.
5. Covenants of the Seller. The Seller covenants and agrees
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with the Underwriter that:
(a) Immediately following the execution of this Agreement, the
Seller will prepare a Prospectus Supplement setting forth the amount of
Securities covered thereby and the terms thereof not otherwise specified in
the Basic Prospectus, the price at which such Securities are to be pur-
chased by the Underwriter, the initial public offering price, the selling
concessions and allowances, and such other information as the Seller deems
appropriate and shall furnish a copy to the Underwriter in accordance with
Section 5(b) of this Agreement. The Seller will transmit the Prospectus
including such Prospectus Supplement to the Commission pursuant to Rule
424(b) by a means reasonably calculated to result in filing that complies
with all applicable provisions of Rule 424(b). The Seller will advise the
Underwriter promptly of any such filing pursuant to Rule 424(b).
(b) Prior to the termination of the offering of the Cer-
tificates, the Seller will not file any amendment of the Registration
Statement or supplement to the Prospectus unless the Seller has furnished
the Underwriter with a copy for its review prior to filing and will not
file any such proposed amendment or supplement to which the Underwriter
reasonably objects. Subject to the foregoing sentence, if filing of the
Prospectus is otherwise required under Rule 424(b), the Seller will file
the Prospectus, properly completed, and any supplement thereto, with the
Commission pursuant to and in accordance with the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Underwriter of such timely filing.
(c) The Seller will advise the Underwriter promptly of any
proposal to amend or supplement the Registration Statement as filed, or the
Prospectus, and will not effect such amendment or supplement without the
Underwriter's consent, which consent will not unreasonably be withheld; the
Seller will also advise the Underwriter promptly of any request by the
Commission for any amendment of or supplement to the Registration Statement
or the Prospectus or for any additional information; and the Seller will
also advise the Underwriter promptly of any amendment or supplement to the
Registration Statement or the Prospectus and of the issuance by the
Commission of any stop order suspending the effectiveness of the Registra-
tion Statement or the institution or threat of any proceeding for that
purpose, and the Seller will use its best efforts to prevent the issuance
of any such stop order and to obtain as soon as possible the lifting of any
issued stop order.
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(d) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Registration Statement or supplement the Prospectus to
comply with the Act or the Exchange Act or the respective Rules and
Regulations thereunder, the Seller promptly will notify the Underwriter and
will prepare and file, or cause to be prepared and filed, with the Commis-
sion, subject to the first sentence of paragraph (b) of this Section 5, an
amendment or supplement that will correct such statement or omission, or
effect such compliance. Any such filing shall not operate as a waiver or
limitation on any right of the Underwriter hereunder.
(e) As soon as practicable, but not later than fourteen months
after the original effective date of the Registration Statement, the Seller
will cause the Trust to make generally available to Certificateholders an
earnings statement of the Trust covering a period of at least twelve months
beginning after the Effective Date of the Registration Statement that will
satisfy the provisions of Section 11(a) of the Act.
(f) The Seller will furnish to the Underwriter copies of the
Registration Statement (one of which will be signed and will include all
exhibits), each related preliminary prospectus or prospectus supplement,
the Prospectus and all amendments and supplements to such documents, in
each case as soon as available and in such quantities as the Underwriter
requests.
(g) The Seller will assist the Underwriter in arranging for the
qualification of the Certificates for sale and determination of their
eligibility for investment under the laws of such jurisdictions in the
United States, or as necessary to qualify for the Euroclear System or Cedel
Bank, societe anonyme, as the Underwriter designates and will continue to
assist the Underwriter in maintaining such qualifications in effect so long
as required for the distribution; provided, however, that neither the
Seller nor CFSC shall be required to qualify to do business in any juris-
diction where it is now not qualified or to take any action which would
subject it to general or unlimited service of process in any jurisdiction
in which it is now not subject to service of process.
(h) For a period from the date of this Agreement until the
retirement of the Certificates, or until such time as the Underwriter shall
cease to maintain a secondary market in the Certificates, whichever occurs
first, the Seller will deliver to the Underwriter the annual statements of
compliance and the annual independent certified public accountants' reports
fur-
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nished to the Owner Trustee or the Indenture Trustee pursuant to the Sale
and Servicing Agreement, as soon as such statements and reports are fur-
nished to the Owner Trustee or the Indenture Trustee.
(i) So long as any of the Certificates are outstanding, the
Seller will furnish to the Underwriter (i) as soon as practicable after the
end of the fiscal year all documents required to be distributed to Cer-
tificateholders or filed with the Commission pursuant to the Exchange Act
or any order of the Commission thereunder and (ii) from time to time, any
other information concerning the Seller filed with any government or
regulatory authority which is otherwise publicly available, as the
Underwriter may reasonably request.
(j) On or before the Closing Date, the Seller shall cause the
computer records of the Seller and the Servicer relating to the Receivables
to be marked to show the Trust's absolute ownership of the Receivables, and
from and after the Closing Date neither the Seller nor the Servicer shall
take any action inconsistent with the Trust's ownership of such Receiv-
ables, other than as permitted by the Sale and Servicing Agreement.
(k) To the extent, if any, that the rating provided with respect
to the Certificates by the rating agency or agencies that initially rate
the Certificates is conditional upon the furnishing of documents or the
taking of any other actions by the Seller, the Seller shall furnish such
documents and take any such other actions.
(l) For the period beginning on the date of this Agreement and
ending seven days after the Closing Date, unless waived by the Underwriter,
none of the Seller, CFSC or any trust originated, directly or indirectly,
by the Seller or CFSC will offer to sell or sell certificates (other than
the Certificates) collateralized by, or notes (other than the Notes)
evidencing an ownership interest in, receivables generated pursuant to
fixed rate retail installment sale contracts secured by equipment similar
to the Financed Equipment.
(m) The Seller and CFSC each will deliver to the Underwriter,
all opinions, certificates and other documents or information delivered to
the Owner Trustee and the Indenture Trustee at the time such opinions,
certificates and other documents or information are delivered to the Owner
Trustee or the Indenture Trustee pursuant to the Sale and Servicing
Agreement and the Purchase Agreement with respect to perfection and priori-
ty of CFSC's interest in the Receivables.
(n) The Seller will file with the Commission a report on Form 8-
K setting forth all Computational Materials, ABS Term Sheets, Structural
Term Sheets and Collateral Term Sheets provid-
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ed to the Seller by the Underwriter and identified by it as such within the
time period allotted for such filing pursuant to the No-Action Letters.
The Seller shall file any corrected ABS Term Sheets, Structural Term Sheets
or Collateral Term Sheets described in Subsection 4(b)(vi) as soon as
practicable following receipt thereof.
6. Payment of Expenses. The Seller will pay all expenses
-------------------
incident to the performance of its obligations under this Agreement,
including (i) the printing and filing of the Registration Statement as
originally filed and of each amendment thereto, (ii) the preparation,
issuance and delivery of the Certificates to the Underwriter, (iii) the
fees and disbursements of the Seller's counsel and accountants, (iv) the
qualification of the Certificates under securities laws in accordance with
the provisions of Section 5(g), including filing fees and the fees and
disbursements of counsel in connection therewith and in connection with the
preparation of any blue sky or legal investment survey, (v) the printing
and delivery to the Underwriter of copies of the Registration Statement as
originally filed and of each amendment thereto, of the Preliminary Prospec-
tus and of each amendment or supplement thereto, (vi) the printing and
delivery to the Underwriter of copies of any blue sky or legal investment
survey prepared in connection with the Certificates, (vii) any fees charged
by rating agencies for the rating of the Certificates, (viii) the fees and
expenses, if any, incurred with respect to any filing with the National
Association of Securities Dealers, Inc. and (ix) the fees and expenses of
Orrick, Herrington & Sutcliffe in its role as counsel to the Trust incurred
as a result of providing the opinions required by Section 7(f) hereof.
7. Conditions of the Obligations of the Underwriter. The
------------------------------------------------
obligations of the Underwriter to purchase and pay for the Certificates
will be subject to the accuracy of the representations and warranties on
the part of the Seller herein, to the accuracy of the statements of
officers of the Seller made pursuant to the provisions hereof, to the
performance by the Seller of its obligations hereunder and to the following
additional conditions precedent:
(a) The Registration Statement shall have become effective prior
to the Execution Time, and prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or,
to the knowledge of the Seller or the Underwriter, shall be contemplated by
the Commission or by any authority administering any state securities or
blue sky law.
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(b) The Prospectus and any supplements thereto shall have been
filed (if required) with the Commission in accordance with the Rules and
Regulations and Section 5(a) hereof.
(c) On or prior to the date of this Agreement and on or prior to
the Closing Date, the Underwriter shall have received a letter or letters,
dated as of the date of this Agreement and as of the Closing Date, respec-
tively, of Price Waterhouse, independent public accountants, substantially
in the form of the drafts to which the Underwriter has previously agreed
and otherwise in form and substance satisfactory to the Underwriter and its
counsel.
(d) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development involving
a prospective change, in or affecting particularly the business or proper-
ties of the Trust, the Seller or the Servicer which, in the judgment of the
Underwriter, materially impairs the investment quality of the Certificates
or makes it impractical or inadvisable to market the Certificates; (ii) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such
exchange; (iii) any suspension of trading of any securities of Caterpillar
or CFSC on any exchange or in the over-the-counter market; (iv) any banking
moratorium declared by Federal, Delaware or New York authorities; or (v)
any outbreak or escalation of major hostilities in which the United States
is involved, any declaration of war by Congress, or any other substantial
national or international calamity or emergency if, in the judgment of the
Underwriter, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Certificates.
(e) The Underwriter shall have received opinions of Nancy L.
Snowden, General Counsel of CFSC, Orrick, Herrington & Sutcliffe and Tuke,
Yopp & Sweeney, counsel to CFSC, the Seller and the Trust and such other
counsel acceptable to the Underwriter, the Owner Trustee and the Indenture
Trustee, dated the Closing Date and satisfactory in form and substance to
the Underwriter and its counsel, substantially to the effect that:
(i) CFSC has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware
with full corporate power and authority to own its properties and
conduct its business, as presently owned and conducted by it, and to
enter into and perform its obligations under the Underwriting
Agreements, the Administration Agreement, the Purchase Agreement, the
Sale and Servicing Agreement and the Custodial Agreement and had at
all times, and now has, the power, authority and legal right to ac-
quire, own and sell the Receivables.
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(ii) The Seller has been duly incorporated and is validly exist-
ing as a corporation in good standing under the laws of the State of
Nevada with full corporate power and authority to own its properties
and conduct its business, as presently owned and conducted by it, and
to enter into and perform its obligations under the Underwriting
Agreements, the Purchase Agreement, the Trust Agreement, the Sale and
Servicing Agreement and the Custodial Agreement and had at all times,
and now has, the power, authority and legal right to acquire, own and
sell the Receivables.
(iii) CFSC is duly qualified to do business and is in good
standing, and has obtained all necessary licenses and approvals in
each jurisdiction in which failure to qualify or to obtain such
license or approval would render any Receivable unenforceable by the
Seller, the Owner Trustee or the Indenture Trustee, except as may be
required under state securities or Blue Sky laws of various jurisdic-
tions.
(iv) The Seller is duly qualified to do business and is in good
standing, and has obtained all necessary licenses and approvals in
each jurisdiction in which failure to qualify or to obtain such
license or approval would have a material adverse effect on the
Receivables as a whole, except as may be required under state
securities or Blue Sky laws of various jurisdictions.
(v) The direction by the Seller to the Owner Trustee to authen-
ticate the Certificates has been duly authorized by the Seller and,
when the Certificates have been duly executed, authenticated and
delivered by the Owner Trustee in accordance with the Trust Agreement
and delivered and paid for pursuant to this Underwriting Agreement,
will be legally issued, fully paid and nonassessable obligations of
the Trust.
(vi) The direction by CFSC to the Indenture Trustee to authen-
ticate the Notes has been duly authorized by CFSC, and, when the Notes
have been duly executed and delivered by the Owner Trustee, authen-
ticated by the Indenture Trustee in accordance with the Indenture and
delivered and paid for pursuant to the Note Underwriting Agreement,
the Notes will be duly issued and entitled to the benefits and
security afforded by the Indenture, except (x) the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights and (y) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
14
<PAGE>
(vii) Each of the Purchase Agreement, the Trust Agreement, the
Sale and Servicing Agreement and the Custodial Agreement has been duly
authorized, executed and delivered by the Seller, and is a legal,
valid and binding obligation of the Seller enforceable against the
Seller in accordance with its terms, except (x) the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights and (y) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(viii) The Underwriting Agreements have been duly
authorized, executed and delivered by each of the Seller and CFSC.
(ix) Each of the Administration Agreement, the Purchase
Agreement, the Sale and Servicing Agreement and the Custodial
Agreement has been duly authorized, executed and delivered by CFSC and
is a legal, valid and binding obligation of CFSC enforceable against
CFSC in accordance with its terms, except (x) the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights and (y) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(x) Neither the transfer of the Receivables from CFSC to the
Seller, nor the transfer of the Receivables from the Seller to the
Trust, nor the assignment of the Trust Estate to the Trust, nor the
assignment by the Seller of its right, title and interest in the
Purchase Agreement to the Trust, nor the grant of the security
interest in the Collateral to the Indenture Trustee pursuant to the
Indenture, nor the execution and delivery of the Underwriting
Agreements, the Purchase Agreement, the Trust Agreement, the Sale and
Servicing Agreement or the Custodial Agreement by the Seller, nor the
execution of the Underwriting Agreements, the Administration
Agreement, the Purchase Agreement, the Sale and Servicing Agreement or
the Custodial Agreement by CFSC, nor the consummation of any transac-
tions contemplated in the Underwriting Agreements, the Purchase Agree-
ment, the Trust Agreement, the Indenture, the Administration
Agreement, the Sale and Servicing Agreement or the Custodial Agreement
(such agreements, excluding the Underwriting Agreements, being,
collectively, the "Basic Documents"), nor the fulfillment of the terms
---------------
thereof by CFSC, the Seller or the Trust, as the case may be, will (x)
conflict with, or result
15
<PAGE>
in a breach, violation or acceleration of, or constitute a default
under, any term or provision of the certificate of incorporation or
by-laws of CFSC or the Seller or, to the best of such counsel's knowl-
edge after due inquiry, of any indenture or other agreement or
instrument to which CFSC or the Seller is a party or by which either
of them is bound, or (y) result in a violation of or contravene the
terms of any statute, order or regulation applicable to CFSC or the
Seller of any court, regulatory body, administrative agency or
governmental body having jurisdiction over either of them.
(xi) There are no actions, proceedings or investigations pending
or, to the best of such counsel's knowledge, threatened before any
court, administrative agency, or other tribunal (1) asserting the
invalidity of the Trust or any of the Basic Documents, (2) seeking to
prevent the consummation of any of the transactions contemplated by
any of the Basic Documents or the execution and delivery thereof, (3)
that could reasonably be expected to materially and adversely affect
the performance (A) by CFSC of its obligations under, or the validity
or enforceability of, the Underwriting Agreements, the Administration
Agreement, the Purchase Agreement, the Sale and Servicing Agreement or
the Custodial Agreement (B) by the Seller of its obligations under, or
the validity or enforceability of, the Underwriting Agreements, the
Purchase Agreement, the Trust Agreement, the Sale and Servicing Agree-
ment or the Custodial Agreement or (C) by the Servicer of its obliga-
tions under, or the validity or enforceability of, the Sale and
Servicing Agreement.
(xii) To the best knowledge of such counsel, no default exists
and no event has occurred which, with notice, lapse of time or both,
would constitute a default in the due performance and observance of
any term, covenant or condition of any agreement to which CFSC or the
Seller is a party or by which either of them is bound, which default
is or would have a material adverse effect on the financial condition,
earnings, business or properties of CFSC and its subsidiaries, taken
as a whole.
(xiii) The Assignment dated as of the Closing Date from CFSC to
the Seller has been duly authorized, executed and delivered by CFSC.
(xiv) Should CFSC become the debtor in a case under the
Bankruptcy Code, if the matter were properly briefed and presented to
a court, the court should hold that (1) the transfer of the
Receivables by CFSC to the Seller in the manner set forth in the
Purchase Agreement would constitute an absolute sale of the
Receivables, rather than a borrowing by CFSC secured by the
Receivables, and thus (2) the
16
<PAGE>
Seller's rights to the Receivables would not be impaired by the
operation of Section 362(a) of the Bankruptcy Code.
(xv) Should CFSC become the debtor in a case under the -
Bankruptcy Code, and the Seller would not otherwise properly be a
debtor in a case under the Bankruptcy Code, and if the matter were
properly briefed and presented to a court exercising bankruptcy
jurisdiction, the court, exercising reasonable judgment after full
consideration of all relevant factors, should not order, over the
objection of the Certificateholders or the Noteholders, the substan-
tive consolidation of the assets and liabilities of the Seller with
those of CFSC based on any legal theories currently subscribed to by
federal courts exercising bankruptcy jurisdiction.
(xvi) Such counsel is familiar with the Servicer's standard
operating procedures relating to the Servicer's acquisition of a
perfected first priority security interest in the equipment financed
by the Servicer pursuant to equipment installment sale contracts in
the ordinary course of the Servicer's business. Assuming that the
Servicer's standard procedures have been followed with respect to the
perfection of security interests in the Financed Equipment (and such
counsel has no reason to believe that such procedures have not been
followed), the Servicer has acquired or will acquire a perfected first
priority security interest in the Financed Equipment.
(xvii) The Purchase Agreement grants to the Seller a valid
security interest in CFSC's rights in the Receivables and the proceeds
thereof. The Sale and Servicing Agreement grants to the Trust a valid
security interest in the Seller's rights in the Receivables and the
proceeds thereof. The Indenture grants to the Indenture Trustee a
valid
security interest in the Trust's rights in the Receivables and the
proceeds thereof.
(xviii) The Receivables are chattel paper as defined in the UCC.
(xix) Immediately prior to the sale of the Receivables and the
proceeds thereof to the Seller, CFSC had a first priority perfected
security interest in the Receivables and the proceeds thereof.
Immediately prior to the transfer of the Receivables and the proceeds
thereof to the Trust, the Seller had a first priority perfected
security interest in the Receivables and the proceeds thereof.
Immediately prior to the transfer of the Receivables and the proceeds
thereof to the Indenture Trustee, the Trust had a first priority
perfected security interest in the Receivables and the proceeds there-
of. The Indenture Trustee has a first priority perfected security
interest in the Receivables and the
17
<PAGE>
proceeds thereof. The opinion covered by this paragraph (xix) shall
be subject to customary UCC exceptions and qualifications.
(xx) The Sale and Servicing Agreement, the Trust Agreement, the
Indenture, the Administration Agreement and the Purchase Agreement
conform in all material respects with the description thereof con-
tained in the Prospectus and any supplement thereto.
(xxi) The statements in the Prospectus under the headings "Risk
Factors--Perfection of Interests in Receivables and in Financed
Equipment" and "Certain Legal Aspects of the Receivables--Security
Interest in Equipment" to the extent they constitute matters of law or
legal conclusions with respect thereto, are correct in all material
respects.
(xxii) The statements contained in the Prospectus and any
supplement thereto under the headings "Description of the Notes",
"Description of the Certificates" and "Description of the Transfer and
Servicing Agreements", insofar as such statements constitute a summary
of the Notes, the Certificates, the Indenture, the Administration
Agreement, the Sale and Servicing Agreement and the Trust Agreement,
are a fair and accurate summary of the matters referred to therein.
(xxiii) No consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required for
the consummation of the transactions contemplated in the Basic
Documents, except such filings with respect to the transfer of the
Receivables to the Seller pursuant to the Purchase Agreement, the
transfer of the Receivables to the Trust pursuant to the Sale and Ser-
vicing Agreement, and such as may be required under state securities
or Blue Sky laws of various jurisdictions.
(xxiv) All actions required to be taken and all filings required
to be made under the Act prior to the sale of the Certificates have
been duly taken or made.
(xxv) The Trust Agreement is not required to be qualified under
the Trust Indenture Act and the Trust is not required to be registered
under the Investment Company Act of 1940, as amended (the "Investment
----------
Company Act").
-----------
(xxvi) The Indenture has been duly qualified under the Trust
Indenture Act.
(xxvii) The Seller is not, and will not as a result of the offer
and sale of the Certificates as contemplated in the Prospectus and
this Underwriting Agreement or of the
18
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Notes as contemplated in the Prospectus and the Note Underwriting
Agreement become, an "investment company" as defined in the Investment
Company Act or a company "controlled by" an "investment company"
within the meaning of the Investment Company Act.
(xxviii) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened which are
required to be disclosed in the Registration Statement, other than
those disclosed therein.
(xxix) The Registration Statement has become effective under the
Act, any required filing of any Preliminary Prospectus and the
Prospectus and any supplements thereto pursuant to Rule 424(b) has
been or will be made in the manner and within the time period required
by Rule 424(b), and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or are pending or contemplated under the Act, and the Registration
Statement and the Prospectus, and each amendment or supplement
thereto, as of their respective effective or issue dates, complied as
to form in all material respects with the requirements of the Act, the
Exchange Act, the Trust Indenture Act and the Rules and Regulations.
(xxx) Nothing has come to such counsel's attention that would
lead such counsel to believe that the Registration Statement or the
Prospectus or any amendment or supplement thereto as of the respective
dates thereof (other than the financial statements and other financial
and statistical information contained therein, as to which such
counsel need not express any view) contains an untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements therein not misleading.
(xxxi) The Trust has been duly formed and is validly existing as
a statutory business trust and is in good standing under the laws of
the State of Delaware, with full power and authority to execute,
deliver and perform its obligations under the Sale and Servicing
Agreement, the Indenture, the Administration Agreement, the Certifi-
cates and the Notes.
(xxxii) The Indenture, the Sale and Servicing Agreement and the
Administration Agreement have been duly authorized and, when duly
executed and delivered by the Owner Trustee on behalf of the Trust,
will constitute the legal, valid and binding obligations of the Trust,
enforceable against the Trust in accordance with their terms, except
(x) the enforceability thereof may be subject to bankruptcy, insol-
vency, reorganization, moratorium or other similar laws
19
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now or hereafter in effect relating to creditors' rights and (y) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(xxxiii) The Servicer has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with full corporate power and authority to own its proper-
ties and conduct its business, as presently conducted by it, and to
enter into and perform its obligations under the Sale and Servicing
Agreement, and had at all relevant times, and now has, the power,
authority and legal right to acquire, own, sell and service the
Receivables.
(xxxiv) The Servicer is duly qualified to do business and is in
good standing, and has obtained all necessary licenses and approvals
in each jurisdiction in which failure to qualify or to obtain such
license or approval would render any Receivable unenforceable by the
Seller, the Owner Trustee or the Indenture Trustee.
(xxxv) The Sale and Servicing Agreement has been duly autho-
rized, executed and delivered by the Servicer, and is the legal, valid
and binding obligation of the Servicer enforceable against the Ser-
vicer in accordance with its terms, except (x) the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights and (y) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(xxxvi) Neither the execution and delivery of the Sale and
Servicing Agreement by the Servicer, nor the consummation of any
transactions contemplated in the Underwriting Agreements or the Basic
Documents, nor the fulfillment of the terms thereof by the Servicer
will conflict with, or result in a breach, violation or acceleration
of, or constitute a default under, any term or provision of the
certificate of incorporation or by-laws of the Servicer or of any
indenture or other agreement or instrument to which the Servicer is a
party or by which it is bound, or result in a violation of or
contravene the terms of any statute, order or regulation applicable to
the Servicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it.
(xxxvii) To the best knowledge of such counsel, no default
exists and no event has occurred which, with notice,
20
<PAGE>
lapse of time or both, would constitute a default in the due perfor-
mance and observance of any term, covenant or condition of any agree-
ment to which the Servicer is a party or by which it is bound, which
default is or would have a material adverse effect on the financial
condition, earnings, business or properties of the Servicer and its
subsidiaries, taken as a whole.
Such counsel shall also opine as to such other matters as the
Underwriter may reasonably request. The opinions set forth in clauses
(xiv), (xv) and (xix) of this Section 7(e) shall be given by Orrick,
Herrington & Sutcliffe or such other outside counsel to CFSC, the Seller
and the Trust as may be acceptable to the Underwriter.
(f) The Underwriter shall have received an opinion addressed to
it of Orrick, Herrington & Sutcliffe in its capacity as Special Tax Counsel
for the Trust, substantially to the effect that the statements in the
Prospectus under the headings "Summary of Terms--Tax Status" (to the extent
relating to Federal income tax consequences) and "Certain Federal Income
Tax Considerations" accurately describe the material Federal income tax
consequences to holders of the Securities, and the statements in the
Prospectus under the heading "ERISA Considerations", to the extent that
they constitute statements of matters of law or legal conclusions with
respect thereto, have been prepared or reviewed by such counsel and
accurately describe the material consequences to holders of the Securities
under ERISA. Orrick, Herrington & Sutcliffe, in its capacity as Special
Counsel to the Trust, shall have delivered an opinion with respect to the
characterization of the transfer of the Receivables.
(g) The Underwriter shall have received an opinion addressed to
it of Tuke, Yopp & Sweeney in its capacity as Special Tennessee Tax Counsel
for the Trust, substantially to the effect that the statements in the
Prospectus under the heading "Summary of Terms--Tax Status" (to the extent
relating to Tennessee income tax consequences) and in the Prospectus under
the heading "Certain State Income Tax Considerations" accurately describe
the material income tax consequences in the State of Tennessee to holders
of the Securities.
(h) The Underwriter shall have received an opinion addressed to
it of Skadden, Arps, Slate, Meagher & Flom, in its capacity as Special
Counsel to the Underwriter, dated the Closing Date, with respect to the
validity of the Securities and such other related matters as the
Underwriter shall require and the Seller shall have furnished or caused to
be furnished to such counsel such documents as they may reasonably request
for the purpose of enabling them to pass upon such matters.
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(i) The Underwriter shall have received an opinion addressed to
it, the Seller and the Servicer of The Law Department of the Indenture
Trustee, and such other counsel acceptable to the Underwriter and its coun-
sel, dated the Closing Date and satisfactory in form and substance to the
Underwriter and its counsel, substantially to the effect that:
(i) The Indenture Trustee is a national banking associa-
tion duly organized and validly existing under the Federal law of the
United States of America.
(ii) The Indenture Trustee has the full corporate trust
power to accept the office of trustee under the Indenture and to enter
into and perform its obligations under the Indenture, the Sale and
Servicing Agreement, the Custodial Agreement and the Administration
Agreement.
(iii) The execution and delivery of the Indenture, the
Custodial Agreement and the Administration Agreement and the accep-
tance of the Sale and Servicing Agreement and the performance by the
Indenture Trustee of its obligations under the Indenture, the Sale and
Servicing Agreement and the Administration Agreement have been duly
authorized by all necessary corporate action of the Indenture Trustee
and each has been duly executed and delivered by the Indenture Trus-
tee.
(iv) The Indenture, the Sale and Servicing Agreement, the
Custodial Agreement and the Administration Agreement constitute valid
and binding obligations of the Indenture Trustee enforceable against
the Indenture Trustee in accordance with their terms under the laws of
the State of New York and the Federal law of the United States of
America.
(v) The execution and delivery by the Indenture Trustee
of the Indenture, the Custodial Agreement and the Administration
Agreement and the acceptance of the Sale and Servicing Agreement do
not require any consent, approval or authorization of, or any
registration or filing with, any New York or United States Federal
governmental authority, other than the filing of Form T-1 under the
Trust Indenture Act.
(vi) Each of the Certificates has been duly authenticated
by the Indenture Trustee.
(vii) Neither the consummation by the Indenture Trustee of
the transactions contemplated in the Sale and Servicing Agreement, the
Indenture, the Custodial Agreement or the Administration Agreement,
nor the fulfillment of the terms thereof by the Indenture Trustee,
will conflict with,
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<PAGE>
result in a breach or violation of, or constitute a default under any
law or the charter, by-laws or other organizational documents of the
Indenture Trustee or the terms of any indenture or other agreement or
instrument known to such counsel and to which the Indenture Trustee is
a party or is bound or any judgment, order or decree known to such
counsel to be applicable to the Indenture Trustee of any court,
regulatory body, administrative agency, governmental body or ar-
bitrator having jurisdiction over the Indenture Trustee.
(viii) To the best of such counsel's knowledge and belief,
there is no action, suit or proceeding pending or threatened against
the Indenture Trustee (as trustee under the Indenture or in its
individual capacity) before or by any governmental authority that if
adversely decided, would materially adversely affect the ability of
the Indenture Trustee to perform its obligations under the Indenture,
the Sale and Servicing Agreement or the Administration Agreement.
(ix) The execution, delivery and performance by the Inden-
ture Trustee of the Sale and Servicing Agreement, the Indenture, the
Custodial Agreement and the Administration Agreement will not subject
any of the property or assets of the Trust or any portion thereof, to
any liens that are unrelated to the transactions contemplated in such
Agreements.
(j) The Underwriter shall have received an opinion addressed to
it, the Seller and the Servicer of Pryor, Cashman, Sherman & Flynn, counsel
to the Owner Trustee, and such other counsel acceptable to the Underwriter
and its counsel, dated the Closing Date and satisfactory in form and sub-
stance to the Underwriter and its counsel, when taken together, substan-
tially to the effect that:
(i) The Owner Trustee has been duly incorporated and is
validly existing as a banking corporation in good standing under the
laws of the State of Delaware.
(ii) The Owner Trustee has full corporate trust power and
authority to enter into and perform its obligations under the Trust
Agreement and, on behalf of the Trust, under the Indenture, the Sale
and Servicing Agreement and the Administration Agreement.
(iii) The execution and delivery of the Trust Agreement
and, on behalf of the Trust, of the Indenture, the Custodial
Agreement, the Sale and Servicing Agreement, the Administration Agree-
ment, the Certificates and the Notes and the performance by the Owner
Trustee of its obligations under the Trust Agreement, the Indenture,
the Sale and
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<PAGE>
Servicing Agreement and the Administration Agreement have been duly
authorized by all necessary corporate action of the Owner Trustee and
each has been duly executed and delivered by the Owner Trustee.
(iv) The Trust Agreement, the Sale and Servicing Agree-
ment, the Indenture, the Custodial Agreement and the Administration
Agreement constitute valid and binding obligations of the Owner Trust-
ee enforceable against the Owner Trustee in accordance with their
terms under the laws of the State of New York and the State of
Delaware and the Federal law of the United States of America.
(v) The execution and delivery by the Owner Trustee of
the Trust Agreement and, on behalf of the Trust, of the Indenture, the
Sale and Servicing Agreement, the Custodial Agreement and the Ad-
ministration Agreement do not require any consent, approval or
authorization of, or any registration or filing with, any Delaware or
United States Federal governmental authority having jurisdiction over
the trust power of the Owner Trustee, other than those consents, ap-
provals or authorizations as have been obtained and the filing of the
Certificate of Trust with the Secretary of State of the State of
Delaware.
(vi) The Owner Trustee has duly executed, authenticated
and delivered the Certificates, and has duly executed and delivered
the Notes, issued on the Closing Date on behalf of the Trust.
(vii) The execution and delivery by the Owner Trustee of
the Trust Agreement and, on behalf of the Trust, the Sale and Servic-
ing Agreement, the Indenture, the Custodial Agreement and the Ad-
ministration Agreement, and the performance by the Owner Trustee of
its obligations thereunder, do not conflict with, result in a breach
or violation of or constitute a default under, the Articles of As-
sociation or By-laws of the Owner Trustee.
(k) The Underwriter shall have received certificates dated the
Closing Date of any two of the Chairman of the Board, the President, the
Executive Vice President, any Vice President, the Treasurer, any Assistant
Treasurer, the principal financial officer or the principal accounting
officer of each of the Seller and the Servicer in which such officers shall
state that, to the best of their knowledge after reasonable investigation,
(i) the representations and warranties of the Seller or the Servicer, as
the case may be, contained in the Trust Agreement, Purchase Agreement and
the Sale and Servicing Agreement, as applicable, are true and correct, that
the Seller or the Servicer, as the case may be, has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied under such
24
<PAGE>
agreements at or prior to the Closing Date, that no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission and (ii) no material adverse change in or affecting particu-
larly the business or properties of the Trust, the Seller, or the Servicer
has occurred.
(l) The Underwriter shall have received evidence satisfactory to
it that, on or before the Closing Date, the Custodian, on behalf of the
Seller, the Trust and the Indenture Trustee has taken possession of the
applicable Receivables reflecting the transfer of the interest of CFSC in
such Receivables and the proceeds thereof to the Seller, and the transfer
of the interest of the Seller in such Receivables and the proceeds thereof
to the Trust and the grant of the security interest by the Trust in such
Receivables and the proceeds thereof to the Indenture Trustee.
(m) The Certificates shall have been rated at least "A" by
Standard & Poor's Ratings Services, a division of The McGraw-Hill Com-
panies, Inc., and at least "A3" by Moody's Investors Service, Inc.
(n) The issuance of the Notes and the Certificates shall not
have resulted in a reduction or withdrawal by any Rating Agency of the
current rating of any outstanding securities issued by the Seller or any of
its affiliates or by any trust established by the Seller or any of its
affiliates.
(o) On the Closing Date, $85,000,000 aggregate principal amount
of Class A-1 5.418% Asset Backed Notes, $139,000,000 aggregate principal
amount of Class A-2 5.90% Asset Backed Notes and $133,021,000 aggregate
principal amount of Class A-3 6.30% Asset Backed Notes shall have been
issued and sold.
The Seller will provide or cause to be provided to the
Underwriter such conformed copies of such opinions, certificates, letters
and documents as it reasonably requests.
8. Indemnification and Contribution. (a) The Seller and CFSC
--------------------------------
will jointly and severally, indemnify and hold harmless the Underwriter and
each person, if any, who controls the Underwriter within the meaning of
Section 15 of the Act as follows: against any losses, claims, damages,
liabilities or expenses, joint or several, to which the Underwriter or any
such person may become subject, under the Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact re-
25
<PAGE>
quired to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; and against any and all loss, liability, claim,
damage and expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Seller or CFSC; and will reimburse the Under-
writer for any legal or other expenses reasonably incurred by it in connec-
tion with investigating or defending any such action or claim; provided,
--------
however, that the Seller and CFSC shall not be liable in any such case to
- -------
the extent that any such loss, claim, damage, liability or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the Regis-
tration Statement, the Prospectus as amended or supplemented and any other
prospectus relating to the Securities or any such amendment or supplement
in reliance upon and in conformity with written information furnished to
the Seller by the Underwriter expressly for use in the Prospectus as
amended or supplemented relating to such Securities; and provided, further,
that the Seller and CFSC shall not be liable to the Underwriter under the
indemnity agreement in this subsection (a) with respect to any Preliminary
Prospectus or Prospectus Supplement to the extent that any such loss,
claim, damage, liability or expense results from the fact that the
Underwriter sold Securities to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
Prospectus or Prospectus Supplement (excluding documents incorporated by
reference) or of the Prospectus as then amended or supplemented (excluding
documents incorporated by reference) if the Seller has previously furnished
copies thereof to the Underwriter.
(b) The Underwriter agrees to indemnify and hold harmless the
Seller and CFSC against any losses, claims, damages, liabilities or
expenses to which the Seller and CFSC may become subject, under the Act or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Prospectus as amended or supplemented and any
other prospectus relating to the Securities, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the
26
<PAGE>
statements therein not misleading, in each case to the extent, but only to
the extent that such untrue statement or alleged untrue statement or omis-
sion or alleged omission was made in any Preliminary Prospectus, the
Prospectus as amended or supplemented and any other prospectus relating to
the Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Seller or CFSC by the
Underwriter expressly for use therein; and will reimburse the Seller and
CFSC for any legal or other expenses reasonably incurred by the Seller and
CFSC in connection with investigating or defending any such action or
claim.
In addition, the Underwriter agrees to indemnify and hold harm-
less the Seller and CFSC against any losses, claims, damages, liabilities
or expenses to which the Seller and CFSC may become subject, under the Act
or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained
in the Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets distributed by the Underwriter and filed in a Form
8-K pursuant to Section 5(n); provided, however, that the Underwriter shall
not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of, or is based upon, an untrue
statement contained in any Computational Materials, ABS Term Sheets,
Structural Term Sheets and Collateral Term Sheets in reliance upon and in
conformity with (x) information furnished to the Underwriter by the Seller
or (y) information contained in the Registration Statement or any
Preliminary Prospectus, the Prospectus as amended or supplemented and any
other prospectus relating to the Securities, or any amendment or supplement
thereto other than written information furnished to the Seller or CFSC by
the Underwriter expressly for use therein, and will reimburse the Seller
and CFSC for any legal or other expenses reasonably incurred by the Seller
and CFSC in connection with investigating or defending any such action or
claim.
(c) Promptly after receipt by an indemnified party under subsec-
tion (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indem-
nifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any indem-
nified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein
and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to
27
<PAGE>
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by
such indemnified party, in connection with the defense thereof other than
reasonable costs of investigation.
(d) If the indemnification provided for in this Section 8 is un-
available to or insufficient to hold harmless an indemnified party under
subsection (a) above in respect of any losses, claims, damages, liabilities
or expenses (or actions,in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Seller and
CFSC on the one hand and the Underwriter on the other from the offering of
the Securities to which such loss, claim, damage, liability or expense (or
action in respect thereof) relates. If, however, the indemnification
provided for in this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party under subsection (b) above in respect of any
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) referred to therein or if the allocation provided by the im-
mediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Seller and CFSC
on the one hand and the Underwriter on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by
the Seller and CFSC on the one hand and the Underwriter on the other shall
be deemed to be in the same proportion as the total net proceeds from the
sale of Securities (before deducting expenses) received by the Seller and
CFSC bear to the total commissions or discounts received by the Underwriter
in respect thereof. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading relates to information supplied by the Seller and
CFSC on the one hand or by the Underwriter on the other and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Seller and CFSC and the
Underwriter agree that it would not be just and equitable if contribution
pursuant to
28
<PAGE>
this subsection (d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable consider-
ations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Securities purchased by or through the Underwriter were sold
exceeds the amount of any damages which the Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresen-
tation (within the meaning of Section 11(f) of the Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Seller and CFSC under this Section 8
shall be in addition to any liability which the Seller and CFSC may
otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls the Underwriter within the meaning of the
Act; and the Underwriter's obligations under this Section 8 shall be in
addition to any liability which the Underwriter may otherwise have and
shall extend, upon the same terms and conditions, to each officer and
director of the Seller and CFSC and to each person, if any, who controls
the Seller or CFSC within the meaning of the Act.
9. No Bankruptcy Petition. The Underwriter and CFSC each cove-
----------------------
nants and agrees that, prior to the date which is one year and one day
after the payment in full of all securities issued by the Seller or by a
trust for which the Seller was the depositor which securities were rated by
any nationally recognized statistical rating organization, it will not
institute against, or join any other person in instituting against, the
Seller any bankruptcy, reorganization, arrangement, insolvency or li-
quidation proceedings or other proceedings under any Federal or state
bankruptcy or similar law.
10. Survival of Representations and Obligations. The respective
-------------------------------------------
indemnities, agreements, representations, warranties and other statements
of the Seller or CFSC or any of their officers and the Underwriter set
forth in or made pursuant to this Agreement or contained in certificates of
officers of the Seller submitted pursuant hereto shall remain operative and
in full force and effect, regardless of (i) any termination of this
Agreement, (ii) any investigation or statement as to the results thereof
made by or on behalf of the Underwriter or of the Seller or any of their
respective representatives, officers or directors
29
<PAGE>
or any controlling person, and (iii) delivery of and payment for the
Certificates. If for any reason the purchase of the Certificates by the
Underwriter is not consummated, the Seller shall remain responsible for the
expenses to be paid or reimbursed by the Seller pursuant to Section 6 and
the respective obligations of the Seller and the Underwriter pursuant to
Section 8 shall remain in effect. If for any reason the purchase of the
Certificates by the Underwriter is not consummated (other than because of a
failure to satisfy the conditions set forth in items (ii), (iv) or (v) of
Section 7(d)), the Seller will reimburse the Underwriter, upon demand, for
all reasonable out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by it in connection with the offering of the
Certificates. Nothing contained in this Section 10 shall limit the
recourse of the Seller against the Underwriter.
11. Notices. All communications hereunder will be in writing
-------
and, if sent to the Underwriter, will be mailed, delivered or telegraphed
and confirmed to it at World Financial Center, North Tower, 250 Vesey
Street, New York, New York 10281, Attention: Robert Flanigan; if sent to
the Seller, will be mailed, delivered or telegraphed, and confirmed to it
at Caterpillar Financial Funding Corporation, Greenview Plaza, 2950 East
Flamingo Road, Suite E-4, Las Vegas, Nevada 89121, Attention: Secretary; if
sent to CFSC, will be mailed, delivered or telegraphed, and confirmed to it
at Caterpillar Financial Services Corporation 3322 West End Avenue,
Nashville, Tennessee 37203-0983, Attention: Secretary; provided, however,
-------- -------
that any notice to the Underwriter pursuant to Section 8 will be mailed,
delivered or telegraphed and confirmed to the Underwriter. Any such notice
will take effect at the time of receipt.
12. Successors. This Agreement will inure to the benefit of and
----------
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8,
and no other person will have any right or obligations hereunder. No
purchaser of Certificates from the Underwriter shall be deemed to be a
successor of the Underwriter merely because of such purchase.
13. Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement will be governed by, and
--------------
construed in accordance with, the laws of the State of New York.
30
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement among the Seller, CFSC and the
Underwriter in accordance with its terms.
Very truly yours,
CATERPILLAR FINANCIAL FUNDING
CORPORATION
By: /s/ Scott E. Harris
---------------------------------------
-
Name: Scott E. Harris
Title: President
CATERPILLAR FINANCIAL SERVICES
CORPORATION
By: /s/ Frank C. Carder
---------------------------------------
-
Name: Frank C. Carder
Title: Treasurer
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first written above.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Robert W. Flanigan
---------------------------
Name: Robert W. Flanigan
Title: Vice President
<PAGE>
EXHIBIT A
THIS TERM SHEET CONTAINS STRUCTURAL AND COLLATERAL INFORMATION WITH
RESPECT TO THE NOTES AND THE CERTIFICATES; HOWEVER, THIS TERM SHEET DOES
NOT CONTAIN COMPLETE INFORMATION WITH RESPECT TO THE OFFERING OF THE NOTES
AND THE CERTIFICATES. THE INFORMATION HEREIN IS PRELIMINARY AND WILL BE
SUPERSEDED BY THE INFORMATION CONTAINED IN THE PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS. ADDITIONAL INFORMATION WILL BE CONTAINED IN THE PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS. PURCHASERS ARE URGED TO READ BOTH THE
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
THIS TERM SHEET SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE. SALES OF THE NOTES AND THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THE PROSPECTUS SUP-
PLEMENT AND THE PROSPECTUS.
32
Exhibit 1.2(A)
CATERPILLAR FINANCIAL ASSET TRUST 1996-A
CLASS A-1 5.418% MONEY MARKET ASSET BACKED NOTES
CLASS A-2 5.90% ASSET BACKED NOTES
CLASS A-3 6.30% ASSET BACKED NOTES
CATERPILLAR FINANCIAL FUNDING CORPORATION
NOTE UNDERWRITING AGREEMENT
---------------------------
May 15, 1996
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As Representative of the
Several Underwriters
250 Vesey Street, 15th Floor
New York, New York 10281
Ladies and Gentlemen:
1. Introductory. Caterpillar Financial Funding Corporation, a
------------
Nevada corporation (the "Seller"), proposes to cause Caterpillar Financial
------
Asset Trust 1996-A (the "Trust") to issue and sell $85,000,000 aggregate
-----
principal amount of Class A-1 5.418% Money Market Asset Backed Notes (the
"Class A-1 Notes"), $139,000,000 aggregate principal amount of Class A-2
---------------
5.90% Asset Backed Notes (the "Class A-2 Notes") and $133,021,000 aggregate
---------------
principal amount of Class A-3 6.30% Asset Backed Notes (the "Class A-3
---------
Notes", and together with the Class A-2 Notes and the Class A-3 Notes, the
- -----
"Notes") to the several underwriters named in Schedule I hereto (the
-----
"Underwriters"), for whom you are acting as representative (the
------------
"Representative"). The assets of the Trust will include, among other
--------------
things, a pool of fixed rate retail installment sale contracts (the
"Receivables") secured by new and used machinery manufactured primarily by
-----------
Caterpillar Inc. ("Caterpillar"), including rights to receive certain
-----------
payments with respect to such Receivables, and security interests in the
machinery financed by the Receivables (the "Financed Equipment"), and the
------------------
proceeds thereof. The Receivables will be sold to the Trust by the Seller.
The Receivables will be serviced for the Trust by Caterpillar Financial
Services Corporation, a Delaware corporation (the "Servicer" or "CFSC").
-------- ----
The Notes will be issued pursuant to the Indenture to be dated as of May 1,
1996 (as amended and supplemented from time to time, the "Indenture"),
---------
between the Trust and The First National Bank of Chicago, a national
banking association (the "Indenture Trustee").
-----------------
<PAGE>
Simultaneously with the issuance and sale of the Notes as
contemplated herein, the Trust will issue $14,876,157 aggregate principal
amount of 6.55% Asset Backed Certificates (the "Certificates"), each
------------
representing a fractional undivided interest in the Trust, which will be
sold pursuant to an underwriting agreement (the "Certificate Underwriting
------------------------
Agreement"; together with this Underwriting Agreement, the "Underwriting
- --------- ------------
Agreements") among the Seller, CFSC and the underwriters named in Schedule
- ----------
I thereto. The Notes and the Certificates are sometimes referred to
collectively herein as the "Securities".
----------
Capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to them in the Sale and Servicing Agreement to
be dated as of May 1, 1996 (as amended and supplemented from time to time,
the "Sale and Servicing Agreement"), among the Trust, the Seller and the
------------------ ---------
Servicer or, if not defined therein, in the Indenture or the Trust
Agreement to be dated as of May 1, 1996 (as amended and supplemented from
time to time, the "Trust Agreement"), between the Seller and Chemical Bank
---------------
Delaware, a Delaware banking corporation as owner trustee under the Trust
Agreement (the "Owner Trustee").
-------------
2. Representations and Warranties of the Seller. The Seller
--------------------------------------------
represents and warrants to and agrees with each Underwriter that:
(a) The Seller meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "Act"), and has filed with the
---
Securities and Exchange Commission (the "Commission") a registration
----------
statement (Registration No. 333-2988) on such Form, including a prospectus
and a form of prospectus supplement, for registration under the Act of the
offering and sale of the Securities. The Seller may have filed one or more
amendments thereto, each of which amendments has previously been furnished
to the Representative. The Seller will also file with the Commission a
prospectus supplement in accordance with Rule 424(b) under the Act. The
Seller has included in the Registration Statement, as amended at the
Effective Date (as hereinafter defined), all information required by the
Act and the rules thereunder to be included in the Prospectus with respect
to the Securities and the offering thereof. As filed, the registration
statement as amended, the form of prospectus supplement, and any
prospectuses or prospectus supplements filed pursuant to Rule 424(b) under
the Act relating to the Securities shall, except to the extent that the
Representative shall agree in writing to a modification, be in all
substantive respects in the form furnished to the Representative prior to
the Execution Time (as hereinafter defined) or, to the extent not completed
at the Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the latest
preliminary prospectus supplement which has previously been furnished to
the
-2-
<PAGE>
Representative) as the Seller has advised the Representative, prior to the
Execution Time, will be included or made therein.
For purposes of this Agreement, "Effective Time" means the date
--------------
and time as of which such registration statement, or the most recent post-
effective amendment thereto, if any, was declared effective by the
Commission, and "Effective Date" means the date of the Effective Time.
--------------
"Execution Time" shall mean the date and time that this Agreement is
--------------
executed and delivered by the parties hereto. Such registration statement,
as amended at the Effective Time, and including the exhibits thereto and
any material incorporated by reference therein (including any Computational
Materials, ABS Term Sheets, Structural Term Sheets and Collateral Term
Sheets (as defined in Section 4(b) of this Agreement) filed on Form 8-K),
is hereinafter referred to as the "Registration Statement," and any
----------------------
prospectus supplement (the "Prospectus Supplement") relating to the
---------------------
Securities, as filed with the Commission pursuant to and in accordance with
Rule 424(b) under the Act is, together with the prospectus filed as part of
the Registration Statement (such prospectus, in the form it appears in the
Registration Statement or in the form most recently revised and filed with
the Commission pursuant to Rule 424(b) being hereinafter referred to as the
"Basic Prospectus"), hereinafter referred to as the "Prospectus".
---------------- ----------
"Preliminary Prospectus" means any preliminary prospectus to the Prospectus
----------------------
which describes the Securities and the offering thereof and which is used
prior to the filing of the Prospectus. "Rule 424" refers to such rule
--------
under the Act. Any reference herein to the Registration Statement, the
Prospectus or any Prospectus Supplement shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12
of Form S-3 which were filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on or before the Effective Date of the
------------
Registration Statement or the issue date of the Prospectus or any
Prospectus Supplement, as the case may be; and any reference herein to the
terms "amend", "amendment" or "supplement" with respect to the Registration
----- --------- ----------
Statement, the Prospectus or any Prospectus Supplement shall be deemed to
refer to and include the filing of any document under the Exchange Act
after the Effective Date of the Registration Statement, or the issue date
of the Prospectus or any Prospectus Supplement, as the case may be, deemed
to be incorporated therein by reference.
(b) On the Effective Date and on the date of this Agreement, the
Registration Statement did or will, and, when the Prospectus was first
filed and on the Closing Date (as defined below), the Prospectus and any
Prospectus Supplement did or will comply in all material respects with the
applicable requirements of the Act, the Exchange Act and the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
-------------------
respective rules and regulations of the Commission thereunder (the "Rules
-----
and Regulations") and of the Employee Retirement Income Security Act
- ---------------
-3-
<PAGE>
of 1974, as amended ("ERISA"). On the Effective Date, the Registration
-----
Statement did not and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and, on
the Effective Date, the Prospectus, if not filed pursuant to Rule 424(b),
did not or will not, and on the date of any filing pursuant to Rule 424(b)
and on the Closing Date, the Prospectus, together with any Prospectus
Supplement, did not or will not include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Seller makes no
-------- -------
representation or warranty as to the information contained in or omitted
from the Registration Statement or the Prospectus in reliance upon and in
conformity with information furnished in writing to the Seller by any
Underwriter through the Representative specifically for use in connection
with preparation of the Registration Statement or the Prospectus. As of
the Closing Date, the Seller's representations and warranties in the Sale
and Servicing Agreement and the Trust Agreement will be true and correct.
(c) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) there has not been
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, business,
management, financial condition, stockholders' equity, results of
operations, regulatory status or business prospects of the Seller or CFSC,
and (ii) neither the Seller nor CFSC has entered into any transaction or
agreement (whether or not in the ordinary course of business) material to
it that, in either case, would reasonably be expected to materially
adversely affect the interests of the holders of the Securities, other than
as set forth or contemplated in the Prospectus.
(d) The computer tape of the Receivables created as of May 1,
1996, and made available to the Representative by the Servicer, was
complete and accurate as of the date thereof and includes a description of
the Receivables that are described in Schedule A to the Sale and Servicing
Agreement.
(e) Each of the Seller and CFSC is duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and is qualified to transact business in and
is in good standing under the laws of each state in which its activities
require such qualification, and has full power, authority and legal right
to own its properties and conduct its business as such properties are
presently owned and such business is presently conducted.
(f) This Agreement has been duly authorized, executed
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<PAGE>
and delivered by each of the Seller and CFSC.
(g) On the date of this Agreement and on the Closing Date, the
representations and warranties of CFSC and the Seller in the Purchase
Agreement and the Sale and Servicing Agreement with respect to the
Receivables will be true and correct.
(h) CFSC's assignment and delivery of the Receivables to the
Seller as of the Closing Date will vest in the Seller all of CFSC's right,
title and interest therein, subject to no prior lien, mortgage, security
interest, pledge, adverse claim, charge or other encumbrance.
(i) The Seller's assignment and delivery of the Receivables to
the Trust as of the Closing Date will vest in the Trust all of the Seller's
right, title and interest therein, subject to no prior lien, mortgage,
security interest, pledge, adverse claim, charge or other encumbrance.
(j) The Trust's assignment of the Receivables to the Indenture
Trustee pursuant to the Indenture will vest in the Indenture Trustee, for
the benefit of the Noteholders, a first priority perfected security
interest therein, subject to no prior lien, mortgage, security interest,
pledge, adverse claim, charge or other encumbrance.
3. Purchase, Sale, and Delivery of the Notes. On the basis of
-----------------------------------------
the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Seller agrees to
cause the Trust to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Trust, (a) at a purchase
price of 99.85% of the principal amount thereof, the respective principal
amount of the Class A-1 Notes set forth opposite the name of such
Underwriter in Schedule I hereto, (b) at a purchase price of 99.76875% of
the principal amount thereof, the respective principal amount of the Class
A-2 Notes set forth opposite the name of such Underwriter in Schedule I
hereto and (c) at a purchase price of 99.671875% of the principal amount
thereof, the respective principal amount of the Class A-3 Notes set forth
opposite the name of such Underwriter in Schedule I hereto. Delivery of
and payment for the Notes shall be made at the office of Orrick, Herrington
& Sutcliffe, 666 Fifth Avenue, New York, New York 10103 on May 22, 1996
(the "Closing Date"). Delivery of the Notes shall be made against payment
------------
of the purchase price in immediately available funds drawn to the order of
the Seller. The Notes to be so delivered will be initially represented by
one or more Notes registered in the name of Cede & Co., the nominee of The
Depository Trust Company ("DTC"). The interests of beneficial owners of
---
the Notes will be represented by book entries on the records of DTC and
participating members thereof. Definitive Notes will be available only
under limited
-5-
<PAGE>
circumstances set forth in the Indenture.
4. Offering by Underwriters. (a) It is understood that the
------------------------
Underwriters propose to offer the Notes for sale to the public (which may
include selected dealers) as set forth in the Prospectus.
(b) Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MLPF&S") may prepare and provide to prospective investors certain
Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets in connection with its offering of the Notes,
subject to the following conditions:
(i) MLPF&S shall have complied with the requirements of the
no-action letter, dated May 20, 1994, issued by the Commission to Kidder,
Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated and
Kidder Structured Asset corporation, as made applicable to other issuers
and underwriters by the Commission in the response to the request of the
Public Securities Association, dated May 24, 1994 (collectively, the
"Kidder/PSA Letter"), the requirements of the no-action letter, dated
-----------------
February 17, 1995, issued by the Commission to the Public Securities
Association (the "PSA Letter") and the requirements of the no-action
----------
letter, dated April 5, 1996, issued by the Commission to Greenwood Trust
Company (the "Greenwood Letter" and together with the Kidder/PSA Letter and
----------------
the PSA Letter, the "No-Action Letters").
-----------------
(ii) For purposes hereof, "Computational Materials" shall
-----------------------
have the meaning given such term in the No-Action Letters, but shall
include only those Computational Materials that have been prepared or
delivered to prospective investors by or at the direction of MLPF&S. For
purposes hereof, "ABS Term Sheets", "Structural Term Sheets" and
--------------- ----------------------
"Collateral Term Sheets" shall have the meanings given such terms in the
----------------------
PSA Letter but shall include only those ABS Term Sheets, Structural Term
Sheets or Collateral Term Sheets that have been prepared or delivered to
prospective investors by or at the direction of MLPF&S.
(iii) All Computational Materials, ABS Term Sheets,
Structural Term Sheets and Collateral Term Sheets provided to prospective
investors that are required to be filed pursuant to the No-Action Letters
shall bear a legend substantially in the form attached hereto as Exhibit A.
The Seller shall have the right to require specific legends or notations to
appear on any Computational Materials, ABS Term Sheets, Structural Term
Sheets and Collateral Term Sheets, the right to require changes regarding
the use of terminology and the right to determine the types of information
appearing therein. Notwithstanding the foregoing, this subsection (iii)
will be satisfied if all Computational Materials, ABS Term Sheets,
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<PAGE>
Structural Term Sheets and Collateral Term Sheets referred to herein bear a
legend in a form previously approved in writing by the Seller.
(iv) MLPF&S shall have provided the Seller with
representative forms of all Computational Materials, ABS Term Sheets,
Structural Term Sheets and Collateral Term Sheets prior to their first use,
to the extent such forms have not previously been approved by the Seller
for use by MLPF&S. MLPF&S shall have provided to the Seller, for filing on
Form 8-K as provided in Section 5(n), copies (in such format as required by
the Seller) of all Computational Materials, ABS Term Sheets, Structural
Term Sheets and Collateral Term Sheets that are required to be filed with
the Commission pursuant to the No-Action Letters. MLPF&S may provide
copies of the foregoing in a consolidated or aggregated form including all
information required to be filed. All Computational Materials, ABS Term
Sheets, Structural Term Sheets and Collateral Term Sheets described in this
subsection (iv) shall have been provided to the Seller not later than 10:00
a.m. (New York City time) not less than one business day before filing
thereof is required to be made with the Commission pursuant to the No-
Action Letters. MLPF&S shall have not provided to any investor or prospec-
tive investor in the Notes any Computational Materials, ABS Term Sheets,
Structural Term Sheets and Collateral Term Sheets on or after the day on
which Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets are required to be provided to the Seller pursuant
to this subsection (iv) (other than copies of Computational Materials, ABS
Term Sheets, Structural Term Sheets and Collateral Term Sheets previously
submitted to the Seller in accordance with this subsection (iv) for filing
pursuant to Section 5(n)), unless such Computational Materials, ABS Term
Sheets, Structural Term Sheets and Collateral Term Sheets are preceded or
accompanied by the delivery of a Prospectus to such investor or prospective
investor.
(v) All information included in the Computational
Materials, ABS Term Sheets, Structural Term Sheets and Collateral Term
Sheets shall have been generated based on substantially the same
methodology and assumptions that are used to generate the information in
the Prospectus as set forth therein; provided that the Computational
Materials, ABS Term Sheets, Structural Term Sheets and Collateral Term
Sheets may have included information based on alternative methodologies or
assumptions if specified therein. If any Computational Materials, ABS Term
Sheets, Structural Term Sheets and Collateral Term Sheets that are required
to be filed were based on assumptions with respect to the Receivables that
differ from the final Receivables information in any material respect or on
Note structuring terms that were revised in any material respect prior to
the printing of the Prospectus, MLPF&S shall have prepared revised
Computational Materials, ABS Term Sheets, Structural Term Sheets
-7-
<PAGE>
and Collateral Term Sheets, as the case may be, based on the final
Receivables information and structuring assumptions, shall have circulated
such revised Computational Materials, ABS Term Sheets, Structural Term
Sheets and Collateral Term Sheets to all recipients of the preliminary
versions thereof that indicated orally to MLPF&S they would purchase all or
any portion of the Notes, and shall have included such revised
Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets (marked, "as revised") in the materials delivered to
the Seller pursuant to subsection (iv) above.
(vi) The Seller shall not be obligated to file any
Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets that have been determined to contain any material
error or omission, provided that, at the request of MLPF&S, the Seller will
file Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets that contain a material error or omission if clearly
marked "superseded by materials dated _______" and accompanied by corrected
ABS Term Sheets that are marked, "supersedes material previously dated
_______, as corrected." If, within the period during which the Prospectus
relating to the Notes is required to be delivered under the Act, any
Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets are determined, in the reasonable judgment of the
Seller or MLPF&S, to contain a material error or omission, MLPF&S shall
prepare a corrected version of such Computational Materials, ABS Term
Sheets, Structural Term Sheets and Collateral Term Sheets, shall circulate
such corrected Computational Materials, ABS Term Sheets, Structural Term
Sheets and Collateral Term Sheets, as the case may be, to all recipients of
the prior versions thereof that either indicated orally to MLPF&S they
would purchase all or any portion of the Notes, or actually purchased all
or any portion thereof, and shall deliver copies of such corrected
Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets (marked, "as corrected") to the Seller for filing
with the Commission in a subsequent Form 8-K submission (subject to the
Seller's obtaining an accountant's comfort letter in respect of such cor-
rected Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets, which shall be at the expense of the Seller).
(vii) MLPF&S shall be deemed to have represented as of the
Closing Date, that, except for Computational Materials, ABS Term Sheets,
Structural Term Sheets and Collateral Term Sheets provided to the Seller
pursuant to subsection (iv) above, MLPF&S did not provide any prospective
investors with any information in written or electronic form in connection
with the offering of the Notes that is required to be filed with the Com-
mission in accordance with the No-Action Letters.
(viii) In the event of any delay in the delivery
-8-
<PAGE>
by MLPF&S to the Seller of all Computational Materials, ABS Term Sheets,
Structural Term Sheets and Collateral Term Sheets required to be delivered
in accordance with subsection (iv) above, or in the delivery of the accoun-
tant's comfort letter in respect thereof pursuant to Section 5(n), the
Seller shall have the right to delay the release of the Prospectus to
investors or to the Underwriters, to delay the Closing Date and to take
other appropriate actions in each case as necessary in order to allow the
Seller to comply with its agreement set forth in Section 5(n) to file the
Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets by the time specified therein.
5. Covenants of the Seller. The Seller covenants and agrees
-----------------------
with each of the Underwriters that:
(a) Immediately following the execution of this Agreement, the
Seller will prepare a Prospectus Supplement setting forth the amount of
Securities covered thereby and the terms thereof not otherwise specified in
the Basic Prospectus, the price at which such Securities are to be
purchased by the Underwriters, the initial public offering price, the
selling concessions and allowances, and such other information as the
Seller deems appropriate and shall furnish a copy to the Representative in
accordance with Section 5(b) of this Agreement. The Seller will transmit
the Prospectus including such Prospectus Supplement to the Commission
pursuant to Rule 424(b) by a means reasonably calculated to result in
filing that complies with all applicable provisions of Rule 424(b). The
Seller will advise the Representative promptly of any such filing pursuant
to Rule 424(b).
(b) Prior to the termination of the offering of the Notes, the
Seller will not file any amendment of the Registration Statement or
supplement to the Prospectus unless the Seller has furnished the
Representative with a copy for its review prior to filing and will not file
any such proposed amendment or supplement to which the Representative
reasonably objects. Subject to the foregoing sentence, if filing of the
Prospectus is otherwise required under Rule 424(b), the Seller will file
the Prospectus, properly completed, and any supplement thereto, with the
Commission pursuant to and in accordance with the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Representative of such timely filing.
(c) The Seller will advise the Representative promptly of any
proposal to amend or supplement the Registration Statement as filed or the
Prospectus, and will not effect such amendment or supplement without the
Representative's consent, which consent will not unreasonably be withheld;
the Seller will also advise the Representative promptly of any request by
the Commission for
-9-
<PAGE>
any amendment of or supplement to the Registration Statement or the
Prospectus or for any additional information; and the Seller will also
advise the Representative promptly of any amendment or supplement to the
Registration Statement or the Prospectus and of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threat of any proceeding for
that purpose, and the Seller will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible the
lifting of any issued stop order.
(d) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Registration Statement or supplement the Prospectus to
comply with the Act or the Exchange Act or the respective Rules and
Regulations thereunder, the Seller promptly will notify the Representative
and will prepare and file, or cause to be prepared and filed, with the
Commission, subject to the first sentence of paragraph (b) of this Section
5, an amendment or supplement that will correct such statement or omission,
or effect such compliance. Any such filing shall not operate as a waiver
or limitation on any right of any Underwriter hereunder.
(e) As soon as practicable, but not later than fourteen months
after the original effective date of the Registration Statement, the Seller
will cause the Trust to make generally available to Noteholders an earnings
statement of the Trust covering a period of at least twelve months
beginning after the Effective Date of the Registration Statement that will
satisfy the provisions of Section 11(a) of the Act.
(f) The Seller will furnish to the Underwriters copies of the
Registration Statement (one of which will be signed and will include all
exhibits), each related preliminary prospectus or prospectus supplement,
the Prospectus and all amendments and supplements to such documents, in
each case as soon as available and in such quantities as the Underwriters
request.
(g) The Seller will assist the Representative in arranging for
the qualification of the Notes for sale and determination of their
eligibility for investment under the laws of such jurisdictions in the
United States, or as necessary to qualify for the Euroclear System or Cedel
Bank, societe anonyme, as the Representative designates and will continue
to assist the Representative in maintaining such qualifications in effect
so long as required for the distribution; provided, however, that neither
the Seller nor CFSC shall be required to qualify to do
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<PAGE>
business in any jurisdiction where it is now not qualified or to take any
action which would subject it to general or unlimited service of process in
any jurisdiction in which it is now not subject to service of process.
(h) For a period from the date of this Agreement until the
retirement of the Notes, or until such time as the Underwriters shall cease
to maintain a secondary market in the Notes, whichever occurs first, the
Seller will deliver to the Representative the annual statements of
compliance and the annual independent certified public accountants' reports
furnished to the Owner Trustee or the Indenture Trustee pursuant to the
Sale and Servicing Agreement, as soon as such statements and reports are
furnished to the Owner Trustee or the Indenture Trustee.
(i) So long as any of the Notes are outstanding, the Seller will
furnish to the Representative (i) as soon as practicable after the end of
the fiscal year all documents required to be distributed to Noteholders or
filed with the Commission pursuant to the Exchange Act or any order of the
Commission thereunder and (ii) from time to time, any other information
concerning the Seller filed with any government or regulatory authority
which is otherwise publicly available, as the Representative may reasonably
request.
(j) On or before the Closing Date, the Seller shall cause the
computer records of the Seller and the Servicer relating to the Receivables
to be marked to show the Trust's absolute ownership of the Receivables, and
from and after the Closing Date neither the Seller nor the Servicer shall
take any action inconsistent with the Trust's ownership of such
Receivables, other than as permitted by the Sale and Servicing Agreement.
(k) To the extent, if any, that the rating provided with respect
to the Notes by the rating agency or agencies that initially rate the Notes
is conditional upon the furnishing of documents or the taking of any other
actions by the Seller, the Seller shall furnish such documents and take any
such other actions.
(l) For the period beginning on the date of this Agreement and
ending seven days after the Closing Date, unless waived by the
Underwriters, none of the Seller, CFSC or any trust originated, directly or
indirectly, by the Seller or CFSC will offer to sell or sell notes (other
than the Notes) collateralized by, or certificates (other than the
Certificates) evidencing an ownership interest in, receivables generated
pursuant to fixed rate retail installment sale contracts secured by
equipment similar to the Financed Equipment.
(m) The Seller and CFSC each will deliver to the
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<PAGE>
Representative, all opinions, certificates and other documents or
information delivered to the Owner Trustee and the Indenture Trustee at the
time such opinions, certificates and other documents or information are
delivered to the Owner Trustee or the Indenture Trustee pursuant to the
Sale and Servicing Agreement and the Purchase Agreement with respect to
perfection and priority of CFSC's interest in the Receivables.
(n) The Seller will file with the Commission a report on Form 8-
K setting forth all Computational Materials, ABS Term Sheets, Structural
Term Sheets and Collateral Term Sheets provided to the Seller by MLPF&S and
identified by it as such within the time period allotted for such filing
pursuant to the No-Action Letters. The Seller shall file any corrected ABS
Term Sheets, Structural Term Sheets or Collateral Term Sheets described in
Subsection 4(b)(vi) as soon as practicable following receipt thereof.
6. Payment of Expenses. The Seller will pay all expenses
-------------------
incident to the performance of its obligations under this Agreement,
including (i) the printing and filing of the Registration Statement as
originally filed and of each amendment thereto, (ii) the preparation,
issuance and delivery of the Notes to the Underwriters, (iii) the fees and
disbursements of the Seller's counsel and accountants, (iv) the
qualification of the Notes under securities laws in accordance with the
provisions of Section 5(g), including filing fees and the fees and
disbursements of counsel in connection therewith and in connection with the
preparation of any blue sky or legal investment survey, (v) the printing
and delivery to the Underwriters of copies of the Registration Statement as
originally filed and of each amendment thereto, of the Preliminary
Prospectus and of each amendment or supplement thereto, (vi) the printing
and delivery to the Underwriters of copies of any blue sky or legal
investment survey prepared in connection with the Notes, (vii) any fees
charged by rating agencies for the rating of the Notes, (viii) the fees and
expenses, if any, incurred with respect to any filing with the National
Association of Securities Dealers, Inc. and (ix) the fees and expenses of
Orrick, Herrington & Sutcliffe in its role as counsel to the Trust incurred
as a result of providing the opinions required by Section 7(f) hereof.
7. Conditions of the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the Underwriters to purchase and pay for the Notes will be
subject to the accuracy of the representations and warranties on the part
of the Seller herein, to the accuracy of the statements of officers of the
Seller made pursuant to the provisions hereof, to the performance by the
Seller of its obligations hereunder and to the following additional
conditions precedent:
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<PAGE>
(a) The Registration Statement shall have become effective prior
to the Execution Time, and prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or,
to the knowledge of the Seller or the Representative, shall be contemplated
by the Commission or by any authority administering any state securities or
blue sky law.
(b) The Prospectus and any supplements thereto shall have been
filed (if required) with the Commission in accordance with the Rules and
Regulations and Section 5(a) hereof.
(c) On or prior to the date of this Agreement and on or prior to
the Closing Date, the Representative shall have received a letter or
letters, dated as of the date of this Agreement and as of the Closing Date,
respectively, of Price Waterhouse, independent public accountants,
substantially in the form of the drafts to which the Representative has
previously agreed and otherwise in form and substance satisfactory to the
Representative and its counsel.
(d) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development involving
a prospective change, in or affecting particularly the business or
properties of the Trust, the Seller or the Servicer which, in the judgment
of the Underwriters, materially impairs the investment quality of the Notes
or makes it impractical or inadvisable to market the Notes; (ii) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such
exchange; (iii) any suspension of trading of any securities of Caterpillar
or CFSC on any exchange or in the over-the-counter market; (iv) any banking
moratorium declared by Federal, Delaware or New York authorities; or (v)
any outbreak or escalation of major hostilities in which the United States
is involved, any declaration of war by Congress, or any other substantial
national or international calamity or emergency if, in the judgment of the
Underwriters, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Notes.
(e) The Representative shall have received opinions of Nancy L.
Snowden, General Counsel of CFSC, Orrick, Herrington & Sutcliffe and Tuke,
Yopp & Sweeney, counsel to CFSC, the Seller and the Trust and such other
counsel acceptable to the Underwriters addressed to the Representative, the
Owner Trustee and the Indenture Trustee, dated the Closing Date and
satisfactory in form and substance to the Representative and its counsel,
substantially to the effect that:
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<PAGE>
(i) CFSC has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware
with full corporate power and authority to own its properties and
conduct its business, as presently owned and conducted by it, and to
enter into and perform its obligations under the Underwriting
Agreements, the Administration Agreement, the Purchase Agreement, the
Sale and Servicing Agreement and the Custodial Agreement and had at
all times, and now has, the power, authority and legal right to
acquire, own and sell the Receivables.
(ii) The Seller has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Nevada with full corporate power and authority to own its
properties and conduct its business, as presently owned and conducted
by it, and to enter into and perform its obligations under the
Underwriting Agreements, the Purchase Agreement, the Trust Agreement,
the Sale and Servicing Agreement and the Custodial Agreement and had
at all times, and now has, the power, authority and legal right to
acquire, own and sell the Receivables.
(iii) CFSC is duly qualified to do business and is in good
standing, and has obtained all necessary licenses and approvals in
each jurisdiction in which failure to qualify or to obtain such
license or approval would render any Receivable unenforceable by the
Seller, the Owner Trustee or the Indenture Trustee, except as may be
required under state securities or Blue Sky laws of various
jurisdictions.
(iv) The Seller is duly qualified to do business and is in good
standing, and has obtained all necessary licenses and approvals in
each jurisdiction in which failure to qualify or to obtain such
license or approval would have a material adverse effect on the
Receivables as a whole, except as may be required under state
securities or Blue Sky laws of various jurisdictions.
(v) The direction by the Seller to the Owner Trustee to
authenticate the Certificates has been duly authorized by the Seller
and, when the Certificates have been duly executed, authenticated and
delivered by the Owner Trustee in accordance with the Trust Agreement
and delivered and paid for pursuant to the Certificate Underwriting
Agreement, will be legally issued, fully paid and nonassessable
obligations of the Trust.
(vi) The direction by CFSC to the Indenture Trustee to
authenticate the Notes has been duly authorized by CFSC, and, when the
Notes have been duly executed and delivered by the Owner Trustee,
authenticated by the Indenture Trustee in accordance with the
Indenture and delivered and paid for
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<PAGE>
pursuant to the Note Underwriting Agreement, the Notes will be duly
issued and entitled to the benefits and security afforded by the
Indenture, except (x) the enforceability thereof may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and (y)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(vii) Each of the Purchase Agreement, the Trust Agreement, the
Sale and Servicing Agreement and the Custodial Agreement has been duly
authorized, executed and delivered by the Seller, and is a legal,
valid and binding obligation of the Seller enforceable against the
Seller in accordance with its terms, except (x) the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights and (y) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(viii) The Underwriting Agreements have been duly authorized,
executed and delivered by each of the Seller and CFSC.
(ix) Each of the Administration Agreement, the Purchase
Agreement, the Sale and Servicing Agreement and the Custodial
Agreement has been duly authorized, executed and delivered by CFSC and
is a legal, valid and binding obligation of CFSC enforceable against
CFSC in accordance with its terms, except (x) the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights and (y) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(x) Neither the transfer of the Receivables from CFSC to the
Seller, nor the transfer of the Receivables from the Seller to the
Trust, nor the assignment of the Trust Estate to the Trust, nor the
assignment by the Seller of its right, title and interest in the
Purchase Agreement to the Trust, nor the grant of the security
interest in the Collateral to the Indenture Trustee pursuant to the
Indenture, nor the execution and delivery of the Underwriting
Agreements, the Purchase Agreement, the Trust Agreement, the Sale and
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<PAGE>
Servicing Agreement or the Custodial Agreement by the Seller, nor the
execution of the Underwriting Agreements, the Administration
Agreement, the Purchase Agreement, the Sale and Servicing Agreement or
the Custodial Agreement by CFSC, nor the consummation of any
transactions contemplated in the Underwriting Agreements, the Purchase
Agreement, the Trust Agreement, the Indenture, the Administration
Agreement, the Sale and Servicing Agreement or the Custodial Agreement
(such agreements, excluding the Underwriting Agreements, being,
collectively, the "Basic Documents"), nor the fulfillment of the terms
----- ---------
thereof by CFSC, the Seller or the Trust, as the case may be, will (x)
conflict with, or result in a breach, violation or acceleration of, or
constitute a default under, any term or provision of the certificate
of incorporation or by-laws of CFSC or the Seller or, to the best of
such counsel's knowledge after due inquiry, of any indenture or other
agreement or instrument to which CFSC or the Seller is a party or by
which either of them is bound, or (y) result in a violation of or
contravene the terms of any statute, order or regulation applicable to
CFSC or the Seller of any court, regulatory body, administrative
agency or governmental body having jurisdiction over either of them.
(xi) There are no actions, proceedings or investigations pending
or, to the best of such counsel's knowledge, threatened before any
court, administrative agency, or other tribunal (1) asserting the
invalidity of the Trust or any of the Basic Documents, (2) seeking to
prevent the consummation of any of the transactions contemplated by
any of the Basic Documents or the execution and delivery thereof, (3)
that could reasonably be expected to materially and adversely affect
the performance (A) by CFSC of its obligations under, or the validity
or enforceability of, the Underwriting Agreements, the Administration
Agreement, the Purchase Agreement, the Sale and Servicing Agreement or
the Custodial Agreement, (B) by the Seller of its obligations under,
or the validity or enforceability of, the Underwriting Agreements, the
Purchase Agreement, the Trust Agreement, the Sale and Servicing
Agreement or the Custodial Agreement, or (C) by the Servicer of its
obligations under, or the validity or enforceability of, the Sale and
Servicing Agreement.
(xii) To the best knowledge of such counsel, no default exists
and no event has occurred which, with notice, lapse of time or both,
would constitute a default in the due performance and observance of
any term, covenant or condition of any agreement to which CFSC or the
Seller is a party or by which either of them is bound, which default
is or would have a material adverse effect on the financial condition,
earnings, business or properties of CFSC and its
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subsidiaries, taken as a whole.
(xiii) The Assignment dated as of the Closing Date from CFSC to
the Seller has been duly authorized, executed and delivered by CFSC.
(xiv) Should CFSC become the debtor in a case under the
Bankruptcy Code, if the matter were properly briefed and presented to
a court, the court should hold that (1) the transfer of the
Receivables by CFSC to the Seller in the manner set forth in the
Purchase Agreement would constitute an absolute sale of the
Receivables, rather than a borrowing by CFSC secured by the
Receivables, and thus (2) the Seller's rights to the Receivables would
not be impaired by the operation of Section 362(a) of the Bankruptcy
Code.
(xv) Should CFSC become the debtor in a case under the
Bankruptcy Code, and the Seller would not otherwise properly be a
debtor in a case under the Bankruptcy Code, and if the matter were
properly briefed and presented to a court exercising bankruptcy
jurisdiction, the court, exercising reasonable judgment after full
consideration of all relevant factors, should not order, over the
objection of the Certificateholders or the Noteholders, the
substantive consolidation of the assets and liabilities of the Seller
with those of CFSC based on any legal theories currently
subscribed to by federal courts exercising bankruptcy jurisdiction.
(xvi) Such counsel is familiar with the Servicer's standard
operating procedures relating to the Servicer's acquisition of a
perfected first priority security interest in the equipment financed
by the Servicer pursuant to equipment installment sale contracts in
the ordinary course of the Servicer's business. Assuming that the
Servicer's standard procedures have been followed with respect to the
perfection of security interests in the Financed Equipment (and such
counsel has no reason to believe that such procedures have not been
followed), the Servicer has acquired or will acquire a perfected first
priority security interest in the Financed Equipment.
(xvii) The Purchase Agreement grants to the Seller a valid
security interest in CFSC's rights in the Receivables and the proceeds
thereof. The Sale and Servicing Agreement grants to the Trust a valid
security interest in the Seller's rights in the Receivables and the
proceeds thereof. The Indenture grants to the Indenture Trustee a
valid security interest in the Trust's rights in the Receivables and
the proceeds thereof.
(xviii) The Receivables are chattel paper as defined
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in the UCC.
(xix) Immediately prior to the sale of the Receivables and the
proceeds thereof to the Seller, CFSC had a first priority perfected
security interest in the Receivables and the proceeds thereof.
Immediately prior to the transfer of the Receivables and the proceeds
thereof to the Trust, the Seller had a first priority perfected
security interest in the Receivables and the proceeds thereof.
Immediately prior to the transfer of the Receivables and the proceeds
thereof to the Indenture Trustee, the Trust had a first priority
perfected security interest in the Receivables and the proceeds there-
of. The Indenture Trustee has a first priority perfected security
interest in the Receivables and the proceeds thereof. The opinion
covered by this paragraph (xix) shall be subject to customary UCC
exceptions and qualifications.
(xx) The Sale and Servicing Agreement, the Trust Agreement, the
Indenture, the Administration Agreement and the Purchase Agreement
conform in all material respects with the description thereof
contained in the Prospectus and any supplement thereto.
(xxi) The statements in the Prospectus under the headings "Risk
Factors -- Perfection of Interests in Receivables and in Financed
Equipment" and "Certain Legal Aspects of the Receivables -- Security
Interest in Equipment" to the extent they constitute matters of law or
legal conclusions with respect thereto, are correct in all material
respects.
(xxii) The statements contained in the Prospectus and any
supplement thereto under the headings "Description of the Notes",
"Description of the Certificates" and "Description of the Transfer and
Servicing Agreements", insofar as such statements constitute a summary
of the Notes, the Certificates, the Indenture, the Administration
Agreement, the Sale and Servicing Agreement and the Trust Agreement,
are a fair and accurate summary of the matters referred to therein.
(xxiii) No consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required for
the consummation of the transactions contemplated in the Basic
Documents, except such filings with respect to the transfer of the
Receivables to the Seller pursuant to the Purchase Agreement, the
transfer of the Receivables to the Trust pursuant to the Sale and
Servicing Agreement, and such as may be required under state
securities or Blue Sky laws of various jurisdictions.
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(xxiv) All actions required to be taken and all filings required
to be made under the Act prior to the sale of the Notes have been duly
taken or made.
(xxv) The Trust Agreement is not required to be qualified under
the Trust Indenture Act and the Trust is not required to be registered
under the Investment Company Act
of 1940, as amended (the "Investment Company Act").
----------------------
(xxvi) The Indenture has been duly qualified under the Trust
Indenture Act.
(xxvii) The Seller is not, and will not as a result of the offer
and sale of the Certificates as contemplated in the Prospectus and the
Certificate Underwriting Agreement or of the Notes as contemplated in
the Prospectus and the Note Underwriting Agreement become, an
"investment company" as defined in the Investment Company Act or a
company
"controlled by" an "investment company" within the meaning of the
Investment Company Act.
(xxviii) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened which are
required to be disclosed in the Registration Statement, other than
those disclosed therein.
(xxix) The Registration Statement has become effective under the
Act, any required filing of any Preliminary Prospectus and the
Prospectus and any supplements thereto pursuant to Rule 424(b) has
been or will be made in the manner and within the time period required
by Rule 424(b), and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or are pending or contemplated under the Act, and the Registration
Statement and the Prospectus, and each amendment or supplement
thereto, as of their respective effective or issue dates, complied as
to form in all material respects with the requirements of the Act, the
Exchange Act, the Trust Indenture Act and the Rules and Regulations.
(xxx) Nothing has come to such counsel's attention that would
lead such counsel to believe that the Registration Statement or the
Prospectus or any amendment or supplement thereto as of the respective
dates thereof (other than the financial statements and other financial
and statistical information contained therein, as to which such
counsel need not express any view) contains an untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements therein not misleading.
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<PAGE>
(xxxi) The Trust has been duly formed and is validly existing as
a statutory business trust and is in good standing under the laws of
the State of Delaware, with full power and authority to execute,
deliver and perform its obligations under the Sale and Servicing
Agreement, the Indenture, the Administration Agreement, the Notes and
the Certificates.
(xxxii) The Indenture, the Sale and Servicing Agreement and the
Administration Agreement have been duly authorized and, when duly
executed and delivered by the Owner Trustee on behalf of the Trust,
will constitute the legal, valid and binding obligations of the Trust,
enforceable against the Trust in accordance with their terms, except
(x) the enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and (y) the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(xxxiii) The Servicer has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with full corporate power and authority to own its
properties and conduct its business, as presently conducted by it, and
to enter into and perform its obligations under the Sale and Servicing
Agreement, and had at all relevant times, and now has, the power,
authority and legal right to acquire, own, sell and service the
Receivables.
(xxxiv) The Servicer is duly qualified to do business and is in
good standing, and has obtained all necessary licenses and approvals
in each jurisdiction in which failure to qualify or to obtain such
license or approval would render any Receivable unenforceable by the
Seller, the Owner Trustee or the Indenture Trustee.
(xxxv) The Sale and Servicing Agreement has been duly
authorized, executed and delivered by the Servicer, and is the legal,
valid and binding obligation of the Servicer enforceable against the
Servicer in accordance with its terms, except (x) the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights and (y) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(xxxvi) Neither the execution and delivery of the Sale
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<PAGE>
and Servicing Agreement by the Servicer, nor the consummation of any
transactions contemplated in the Underwriting Agreements or the Basic
Documents, nor the fulfillment of the terms thereof by the Servicer
will conflict with, or result in a breach, violation or acceleration
of, or constitute a default under, any term or provision of the
certificate of incorporation or by-laws of the Servicer or of any
indenture or other agreement or instrument to which the Servicer is a
party or by which it is bound, or result in a violation of or
contravene the terms of any statute, order or regulation applicable to
the Servicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it.
(xxxvii) To the best knowledge of such counsel, no default
exists and no event has occurred which, with notice, lapse of time or
both, would constitute a default in the due performance and observance
of any term, covenant or condition of any agreement to which the
Servicer is a party or by which it is bound, which default is or would
have a material adverse effect on the financial condition, earnings,
business or properties of the Servicer and its subsidiaries, taken as
a whole.
Such counsel shall also opine as to such other matters as the
Underwriters may reasonably request. The opinions set forth in clauses
(xiv), (xv) and (xix) of this Section 7(e) shall be given by Orrick,
Herrington & Sutcliffe or such other outside counsel to CFSC, the Seller
and the Trust as may be acceptable to the Underwriters.
(f) The Representative shall have received an opinion addressed
to it of Orrick, Herrington & Sutcliffe in its capacity as Special Tax
Counsel for the Trust, substantially to the effect that the statements in
the Prospectus under the headings "Summary of Terms--Tax Status" (to the
extent relating to Federal income tax consequences) and "Certain Federal
Income Tax Considerations" accurately describe the material Federal income
tax consequences to holders of the Securities, and the statements in the
Prospectus under the heading "ERISA Considerations", to the extent that
they constitute statements of matters of law or legal conclusions with
respect thereto, have been prepared or reviewed by such counsel and
accurately describe the material consequences to holders of the Securities
under ERISA. Orrick, Herrington & Sutcliffe, in its capacity as Special
Counsel to the Trust, shall have delivered an opinion with respect to the
characterization of the transfer of the Receivables.
(g) The Representative shall have received an opinion addressed
to it of Tuke, Yopp & Sweeney in its capacity as Special Tennessee Tax
Counsel for the Trust, substantially to the effect that the statements in
the Prospectus under the heading
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<PAGE>
"Summary of Terms--Tax Status" (to the extent relating to Tennessee income
tax consequences) and in the Prospectus under the heading "Certain State
Income Tax Considerations" accurately describe the material income tax
consequences in the State of Tennessee to holders of the Securities.
(h) The Representative shall have received an opinion addressed
to it of Skadden, Arps, Slate, Meagher & Flom in its capacity as Special
Counsel to the Underwriters, dated the Closing Date, with respect to the
validity of the Securities and such other related matters as the
Representative shall require and the Seller shall have furnished or caused
to be furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
(i) The Representative shall have received an opinion addressed
to it, the Seller and the Servicer of The Law Department of the Indenture
Trustee, and such other counsel acceptable to the Representative and its
counsel, dated the Closing Date and satisfactory in form and substance to
the Representative and its counsel, substantially to the effect that:
(i) The Indenture Trustee is a national banking association
duly organized and validly existing under the Federal law of the
United States of America.
(ii) The Indenture Trustee has the full corporate trust power to
accept the office of trustee under the Indenture and to enter into and
perform its obligations under the Indenture, the Sale and Servicing
Agreement, the Custodial Agreement and the Administration Agreement.
(iii) The execution and delivery of the Indenture, the Custodial
Agreement and the Administration Agreement and the acceptance of the
Sale and Servicing Agreement and the performance by the Indenture
Trustee of its obligations under the Indenture, the Sale and Servicing
Agreement and the Administration Agreement have been duly authorized
by all necessary corporate action of the Indenture Trustee and each
has been duly executed and delivered by the Indenture Trustee.
(iv) The Indenture, the Sale and Servicing Agreement, the
Custodial Agreement and the Administration Agreement constitute valid
and binding obligations of the Indenture Trustee enforceable against
the Indenture Trustee in accordance with their terms under the laws of
the State of New York and the Federal law of the United States of
America.
(v) The execution and delivery by the Indenture Trustee of the
Indenture, the Custodial Agreement and the
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<PAGE>
Administration Agreement and the acceptance of the Sale and Servicing
Agreement do not require any consent, approval or authorization of, or
any registration or filing with, any New York or United States Federal
governmental authority, other than the filing of Form T-1 under the
Trust Indenture Act.
(vi) Each of the Notes has been duly authenticated by the
Indenture Trustee.
(vii) Neither the consummation by the Indenture Trustee of the
transactions contemplated in the Sale and Servicing Agreement, the
Indenture, the Custodial Agreement or the Administration Agreement,
nor the fulfillment of the terms thereof by the Indenture Trustee,
will conflict with, result in a breach or violation of, or constitute
a default under any law or the charter, by-laws or other
organizational documents of the Indenture Trustee or the terms of any
indenture or other agreement or instrument known to such counsel and
to which the Indenture Trustee is a party or is bound or any judgment,
order or decree known to such counsel to be applicable to the
Indenture Trustee of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Indenture Trustee.
(viii) To the best of such counsel's knowledge and belief, there
is no action, suit or proceeding pending or threatened against the
Indenture Trustee (as trustee under the Indenture or in its individual
capacity) before or by any governmental authority that if adversely
decided, would materially adversely affect the ability of the
Indenture Trustee to perform its obligations under the Indenture, the
Sale and Servicing Agreement or the Administration Agreement.
(ix) The execution, delivery and performance by the Indenture
Trustee of the Sale and Servicing Agreement, the Indenture, the
Custodial Agreement and the Administration Agreement will not subject
any of the property or assets of the Trust or any portion thereof, to
any liens that are unrelated to the transactions contemplated in such
Agreements.
(j) The Representative shall have received an opinion addressed
to it, the Seller and the Servicer of Pryor, Cashman, Sherman & Flynn,
counsel to the Owner Trustee, and such other counsel acceptable to the
Representative and its counsel, dated the Closing Date and satisfactory in
form and substance to the Representative and its counsel, when taken
together, substantially to the effect that:
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<PAGE>
(i) The Owner Trustee has been duly incorporated and is validly
existing as a banking corporation in good standing under the laws of
the State of Delaware.
(ii) The Owner Trustee has full corporate trust power and
authority to enter into and perform its obligations under the Trust
Agreement and, on behalf of the Trust, under the Indenture, the Sale
and Servicing Agreement and the Administration Agreement.
(iii) The execution and delivery of the Trust Agreement and, on
behalf of the Trust, of the Indenture, the Custodial Agreement, the
Sale and Servicing Agreement, the Administration Agreement, the
Certificates and the Notes and the performance by the Owner Trustee of
its obligations under the Trust Agreement, the Indenture, the Sale and
Servicing Agreement and the Administration Agreement have been duly
authorized by all necessary corporate action of the Owner Trustee and
each has been duly executed and delivered by the Owner Trustee.
(iv) The Trust Agreement, the Sale and Servicing Agreement, the
Indenture, the Custodial Agreement and the Administration Agreement
constitute valid and binding obligations of the Owner Trustee
enforceable against the Owner Trustee in accordance with their terms
under the laws of the State of New York and the State of Delaware and
the Federal law of the United States of America.
(v) The execution and delivery by the Owner Trustee of the
Trust Agreement and, on behalf of the Trust, of the Indenture, the
Sale and Servicing Agreement, the Custodial Agreement and the
Administration Agreement do not require any consent, approval or
authorization of, or any registration or filing with, any Delaware or
United States Federal governmental authority having jurisdiction over
the trust power of the Owner Trustee, other than those consents,
approvals or authorizations as have been obtained and the filing of
the Certificate of Trust with the Secretary of State of the State of
Delaware.
(vi) The Owner Trustee has duly executed, authenticated and
delivered the Certificates, and has duly executed and delivered the
Notes, issued on the Closing Date on behalf of the Trust.
(vii) The execution and delivery by the Owner Trustee of the
Trust Agreement and, on behalf of the Trust, the Sale and Servicing
Agreement, the Indenture, the Custodial Agreement and the
Administration Agreement and the performance by the Owner Trustee of
its obligations thereunder, do not conflict with, result in a breach
or
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<PAGE>
violation of or constitute a default under, the Articles of
Association or By-laws of the Owner Trustee.
(k) The Representative shall have received certificates dated
the Closing Date of any two of the Chairman of the Board, the President,
the Executive Vice President, any Vice President, the Treasurer, any
Assistant Treasurer, the principal financial officer or the principal
accounting officer of each of the Seller and the Servicer in which such
officers shall state that, to the best of their knowledge after reasonable
investigation, (i) the representations and warranties of the Seller or the
Servicer, as the case may be, contained in the Trust Agreement, Purchase
Agreement and the Sale and Servicing Agreement, as applicable, are true and
correct, that the Seller or the Servicer, as the case may be, has complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied under such agreements at or prior to the Closing
Date, that no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission and (ii) no material
adverse change in or affecting particularly the business or properties of
the Trust, the Seller, or the Servicer has occurred.
(l) The Representative shall have received evidence satisfactory
to it that, on or before the Closing Date, the Custodian, on behalf of the
Seller, the Trust and the Indenture Trustee has taken possession of the
applicable Receivables reflecting the transfer of the interest of CFSC in
such Receivables and the proceeds thereof to the Seller, and the transfer
of the interest of the Seller in such Receivables and the proceeds thereof
to the Trust and the grant of the security interest by the Trust in such
Receivables and the proceeds thereof to the Indenture Trustee.
(m) The Class A-1 Notes shall have been rated "A-1+" by Standard
& Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.
and "P-1" by Moody's Investors Service, Inc., the Class A-2 Notes shall
have been rated "AAA" by Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. and "Aaa" by Moody's Investors Service,
Inc. and the Class A-3 Notes shall have been rated "AAA" by Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. and
"Aaa" by Moody's Investors Service, Inc.
(n) The issuance of the Notes and the Certificates shall not
have resulted in a reduction or withdrawal by any Rating Agency of the
current rating of any outstanding securities issued by the Seller or any of
its affiliates or by any trust established by the Seller or any of its
affiliates.
(o) On the Closing Date, $14,876,157 aggregate
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<PAGE>
principal amount of the Certificates shall have been issued and sold.
The Seller will provide or cause to be provided to the
Representative such conformed copies of such opinions, certificates,
letters and documents as it reasonably requests.
8. Indemnification and Contribution. (a) The Seller and CFSC
--------------------------------
will jointly and severally, indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act as follows: against any losses, claims, damages,
liabilities or expenses, joint or several, to which any such Underwriter or
person may become subject, under the Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and against any and all loss,
liability, claim, damage and expense whatsoever to the extent of the
aggregate amount paid in settlement of any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Seller or CFSC; and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such
action or claim; provided, however, that the Seller and CFSC shall not be
-------- -------
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement, the Prospectus as
amended or supplemented and any other prospectus relating to the Securities
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Seller by the Representative on behalf
of the Underwriters expressly for use in the Prospectus as amended or
supplemented relating to such Securities; and provided, further, that the
Seller and CFSC shall not be liable to any Underwriter under the indemnity
agreement in this subsection (a) with respect to any Preliminary Prospectus
or Prospectus Supplement to the extent that any such loss, claim, damage,
liability or expense
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<PAGE>
results from the fact that such Underwriter sold Securities to a person to
whom there was not sent or given, at or prior to the written confirmation
of such sale, a copy of the Prospectus or Prospectus Supplement (excluding
documents incorporated by reference) or of the Prospectus as then amended
or supplemented (excluding documents incorporated by reference) if the
Seller has previously furnished copies thereof to such Underwriter.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Seller and CFSC against any losses, claims, damages,
liabilities or expenses to which the Seller and CFSC may become subject,
under the Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Prospectus as amended
or supplemented and any other prospectus relating to the Securities, or any
such amendment or supplement in reliance upon and in conformity with
written information furnished to the Seller or CFSC by such Underwriter
expressly for use therein, and will reimburse the Seller and CFSC for any
legal or other expenses reasonably incurred by the Seller and CFSC in
connection with investigating or defending any such action or claim.
In addition, MLPF&S agrees to indemnify and hold harmless the
Seller and CFSC against any losses, claims, damages, liabilities or
expenses to which the Seller and CFSC may become subject, under the Act or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in the
Computational Materials, ABS Term Sheets, Structural Term Sheets and
Collateral Term Sheets distributed by MLPF&S and filed in a Form 8-K
pursuant to Section 5(n); provided, however, that MLPF&S shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of, or is based upon, an untrue statement
contained in any Computational Materials, ABS Term Sheets, Structural Term
Sheets and Collateral Term Sheets in reliance upon and in conformity with
(x) information furnished to MLPF&S by the Seller or (y) information
contained in the Registration Statement or any Preliminary Prospectus, the
Prospectus as amended or supplemented and any other prospectus relating to
the Securities, or any amendment or supplement thereto other than written
information furnished to
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<PAGE>
the Seller or CFSC by MLPF&S expressly for use therein, and will reimburse
the Seller and CFSC for any legal or other expenses reasonably incurred by
the Seller and CFSC in connection with investigating or defending any such
action or claim.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) above in respect of any losses, claims, damages, liabilities
or expenses (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Seller and
CFSC on the one hand and the Underwriters on the other from the offering of
the Securities to which such loss, claim, damage, liability or expense (or
action in respect thereof) relates. If, however, the indemnification
provided for in this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party under subsection (b) above in respect of any
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) referred to therein or if the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of
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the Seller and CFSC on the one hand and the contributing Underwriter on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Seller and CFSC on the one hand and the
contributing Underwriter on the other shall be deemed to be in the same
proportion as the total net proceeds from the sale of Securities (before
deducting expenses) received by the Seller and CFSC bear to the total
commissions or discounts received by the contributing Underwriter in
respect thereof. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading relates to information supplied by the Seller and
CFSC on the one hand or by the contributing Underwriter on the other and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Seller
and CFSC and the contributing Underwriter agree that it would not be just
and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
above in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses
(or actions in respect thereof) referred to above in this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this subsection
(d), no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Securities purchased by or
through such Underwriter were sold exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Seller and CFSC under this Section 8
shall be in addition to any liability which the Seller and CFSC may
otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls any Underwriter within the meaning of the
Act; and each Underwriter's obligations under this Section 8 shall be in
addition to any liability which such Underwriter may otherwise have and
shall extend, upon the same terms and conditions, to each officer and
director of the Seller and CFSC and to each person, if any, who controls
the Seller or CFSC within the meaning of the Act.
-29-
<PAGE>
9. Defaults of Underwriters. If any Underwriter or
------------------------
Underwriters default in their obligations to purchase the Notes hereunder
on the Closing Date and the aggregate principal amount of the Notes that
such defaulting Underwriter or Underwriters agreed but failed to purchase
does not exceed 10% of the total principal amount of the Notes, the
Representative may make arrangements satisfactory to the Representative and
the Seller for the purchase of such Notes by other persons, including any
of the Underwriters, but if no such arrangements are made by the Closing
Date, the nondefaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Notes
that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If an Underwriter or Underwriters so default and the aggregate
principal amount of the Notes with respect to such default or defaults
exceeds 10% of the total principal amount of the Notes and arrangements
satisfactory to the Representative and the Seller for the purchase of such
Notes by other persons are not made within 24 hours after such default,
this Agreement will terminate without liability on the part of any
nondefaulting Underwriter or the Seller, except as provided in Section 11.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
10. No Bankruptcy Petition. Each Underwriter and CFSC
----------------------
covenants and agrees that, prior to the date which is one year and one day
after the payment in full of all securities issued by the Seller or by a
trust for which the Seller was the depositor which securities were rated by
any nationally recognized statistical rating organization, it will not
institute against, or join any other person in instituting against, the
Seller any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other proceedings under any Federal or state
bankruptcy or similar law.
11. Survival of Representations and Obligations. The respective
-------------------------------------------
indemnities, agreements, representations, warranties and other statements
of the Seller or CFSC or any of their officers and each of the Underwriters
set forth in or made pursuant to this Agreement or contained in
certificates of officers of the Seller submitted pursuant hereto shall
remain operative and in full force and effect, regardless of (i) any
termination of this Agreement, (ii) any investigation or statement as to
the results thereof made by or on behalf of any Underwriter or of the
Seller or any of their respective representatives, officers or directors or
any controlling person, and (iii) delivery of and payment for the Notes.
If for any reason the purchase of the Notes by the Underwriters is not
consummated, the Seller shall remain responsible for the expenses to be
paid or reimbursed by the Seller pursuant to Section 6 and the respective
obligations of the Seller and the Underwriters
-30-
<PAGE>
pursuant to Section 8 shall remain in effect. If for any reason the
purchase of the Notes by the Underwriters is not consummated (other than
because of a failure to satisfy the conditions set forth in items (ii),
(iv) or (v) of Section 7(d)), the Seller will reimburse any Underwriter,
upon demand, for all reasonable out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by it in connection with the
offering of the Notes. Nothing contained in this Section 11 shall limit
the recourse of the Seller against the Underwriters.
12. Notices. All communications hereunder will be in writing
-------
and if sent to the Underwriters, will be mailed, delivered or telegraphed
and confirmed to the Representative at World Financial Center, North Tower,
250 Vesey Street, New York, New York 10281, Attention: Robert Flanigan; if
sent to the Seller, will be mailed, delivered or telegraphed, and confirmed
to it at Caterpillar Financial Funding Corporation, Greenview Plaza, 2950
East Flamingo Road, Suite E-4, Las Vegas, Nevada 89121, Attention:
Secretary; if sent to CFSC, will be mailed, delivered or telegraphed, and
confirmed to it at Caterpillar Financial Services Corporation, 3322 West
End Avenue, Nashville, Tennessee 37203-0983, Attention: Secretary;
provided, however, that any notice to an Underwriter pursuant to Section 8
- -------- -------
will be mailed, delivered or telegraphed and confirmed to such Underwriter.
Any such notice will take effect at the time of receipt.
13. Computational Materials. Each Underwriter (other than
-----------------------
MLPF&S) represents and warrants to the Seller that it has not and will not
use any information that constitutes Computational Materials, as defined in
the Kidder/PSA Letter, or ABS Term Sheets, Structural Term Sheets or
Collateral Term Sheets, as defined in the PSA Letter, in connection with
the offering of the Securities.
14. Successors. This Agreement will inure to the benefit of and
----------
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8,
and no other person will have any right or obligations hereunder. No
purchaser of Notes from any Underwriter shall be deemed to be a successor
of such Underwriter merely because of such purchase.
15. Representation. The Representative will act for the several
--------------
Underwriters in connection with the transactions contemplated by this
Agreement, and any action under this Agreement taken by the Representative
will be binding upon all of the Underwriters.
-31-
<PAGE>
16. Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same Agreement.
17. Applicable Law. This Agreement will be governed by, and
--------------
construed in accordance with, the laws of the State of New York.
-32-
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement among the Seller, CFSC and the
several Underwriters in accordance with its terms.
Very truly yours,
CATERPILLAR FINANCIAL FUNDING
CORPORATION
By:/s/ Scott E. Harris
_____________________
Name: Scott E. Harris
Title: President
CATERPILLAR FINANCIAL
SERVICES CORPORATION
By:/s/ Frank C. Carder
______________________
Name: Frank C. Carder
Title: Treasurer
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first written above.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
on behalf of itself and as
Representative of the several
Underwriters
By: /s/ Robert W. Flanigan
________________________
Name: Robert W. Flanigan
Title: Vice President
-33-
<PAGE>
SCHEDULE I
Principal Principal Principal
Amount of Amount of Amount of
Underwriter Class A-1 Notes Class A-2 Notes Class A-3
----------- --------------- --------------- ---------
Notes
-----
Merrill Lynch, Pierce . . .$29,000,000 $47,000,000 $45,021,000
Fenner & Smith
Incorporated
Goldman, Sachs & Co. . . .$28,000,000 $46,000,000 $44,000,000
UBS Securities LLC . . . . $28,000,000 $46,000,000 $44,000,000
---------- ---------- ----------
Total $85,000,000 $139,000,000 $133,021,000
------------
============ ============ ===========
-34-
<PAGE>
EXHIBIT A
THIS TERM SHEET CONTAINS STRUCTURAL AND COLLATERAL INFORMATION WITH
RESPECT TO THE NOTES AND THE CERTIFICATES; HOWEVER, THIS TERM SHEET DOES
NOT CONTAIN COMPLETE INFORMATION WITH RESPECT TO THE OFFERING OF THE NOTES
AND THE CERTIFICATES. THE INFORMATION HEREIN IS PRELIMINARY AND WILL BE
SUPERSEDED BY THE INFORMATION CONTAINED IN THE PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS. ADDITIONAL INFORMATION WILL BE CONTAINED IN THE PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS. PURCHASERS ARE URGED TO READ BOTH THE
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
THIS TERM SHEET SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE. SALES OF THE NOTES AND THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THE PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS.
-35-
Exhibit 4.1(A)
[EXECUTION COPY]
CATERPILLAR FINANCIAL ASSET TRUST 1996-A
Class A-1 5.418% Money Market Asset Backed Notes and
Class A-2 5.90% Asset Backed Notes
Class A-3 6.30% Asset Backed Notes
INDENTURE
Dated as of May 1, 1996
THE FIRST NATIONAL BANK OF CHICAGO
Indenture Trustee
<PAGE>
______________________________
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE
ACT OF 1939 AND INDENTURE PROVISIONS*
Trust Indenture
Act Section Indenture Section
--------------- -----------------
310(a)(1) . . . . . . . . . . . . 6.11
(a)(2) . . . . . . . . . . . . . 6.11
(a)(3) . . . . . . . . . . . . . 6.10
(a)(4) . . . . . . . . . . . . .
Not Applicable
(b) . . . . . . . . . . . . . . 6.08(a)(1)
(c) . . . . . . . . . . . . . .
Not Applicable
311(a) . . . . . . . . . . . . . 6.12
(b) . . . . . . . . . . . . . . 6.12
312(a) . . . . . . . . . . . . . 7.01(a)
(b) . . . . . . . . . . . . . . 7.02(b)
(c) . . . . . . . . . . . . . . 7.02(c)
313(a) . . . . . . . . . . . . . 7.04
(b) . . . . . . . . . . . . . . 7.04
(c) . . . . . . . . . . . . . . 7.04
(d) . . . . . . . . . . . . . . 7.04
314(a) . . . . . . . . . . . . .
3.09, 7.03(a)
(b) . . . . . . . . . . . . . . 3.06
(c)(1) . . . . . . . . . . . . .
2.09, 8.04(b)
(c)(2) . . . . . . . . . . . . .
2.09, 8.04(b), 11.01(a)
(c)(3) . . . . . . . . . . . . .
2.09, 8.04(b), 11.01(a)
(d)(1) . . . . . . . . . . . . .
2.09, 8.04(b), 11.01(a)
(d)(2) . . . . . . . . . . . . . Not Applicable
(d)(3) . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . 11.01(a)
315(a) . . . . . . . . . . . . . 6.01(b)
(b) . . . . . . . . . . . . . . 6.05
(c) . . . . . . . . . . . . . . 6.01(b)
(d) . . . . . . . . . . . . . . 6.01(b)
(d)(1) . . . . . . . . . . . . . 6.01(b)
(d)(2) . . . . . . . . . . . . . 6.01(c)
(d)(3) . . . . . . . . . . . . . 6.01(c)
(e) . . . . . . . . . . . . . . 5.13
316(a)(1)(A) . . . . . . . . . . 5.11
316(a)(1)(B) . . . . . . . . . . 5.12
316(a)(2) . . . . . . . . . . . . Not Applicable
316(b) . . . . . . . . . . . . . 5.07
317(a)(1) . . . . . . . . . . . . 5.03
317(a)(2) . . . . . . . . . . . . 5.03
317(b) . . . . . . . . . . . . . 5.03
318(a) . . . . . . . . . . . . . 11.07
- --------------------
*This reconciliation and tie shall not, for any purpose, be deemed to be
part of the within indenture.
i
<PAGE>
TABLE OF CONTENTS
Page
GRANTING CLAUSE
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. (a) Definitions . . . . . . . . . . . . 2
(b) Other Definitional Provisions 9
SECTION 1.02. Incorporation by Reference of
Trust Indenture Act . . . . . . . . . . . . . . . . . 9
SECTION 1.03. [Reserved] . . . . . . . . . . . . . . . 10
SECTION 1.04. Calculations of Interest . . . . . . . . 10
ARTICLE II
THE NOTES
SECTION 2.01. Form . . . . . . . . . . . . . . . . . . 10
SECTION 2.02. Execution, Authentication and
Delivery . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.03. Temporary Notes . . . . . . . . . . . . . 11
SECTION 2.04. Registration; Registration of
Transfer and Exchange . . . . . . . . . . . . . . . . 11
SECTION 2.05. Mutilated, Destroyed, Lost or
Stolen Notes . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.06. Persons Deemed Owner . . . . . . . . . . 13
SECTION 2.07. Payment of Principal and
Interest; Defaulted Interest . . . . . . . . . . . . . 13
SECTION 2.08. Cancellation . . . . . . . . . . . . . . 14
SECTION 2.09. Release of Collateral . . . . . . . . . . 15
SECTION 2.10. Book-Entry Notes . . . . . . . . . . . . 15
SECTION 2.11. Notices to Clearing Agency . . . . . . . 16
SECTION 2.12. Definitive Notes . . . . . . . . . . . . 16
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal and
Interest . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.02. Maintenance of Office or Agency . . . . . 16
SECTION 3.03. Money for Payments To Be Held
in Trust . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.04. Existence . . . . . . . . . . . . . . . . 18
SECTION 3.05. Protection of Trust Estate . . . . . . . 18
SECTION 3.06. Opinions as to Trust Estate . . . . . . . 19
SECTION 3.07. Performance of Obligations;
Servicing of Receivables . . . . . . . . . . . . . . . 20
SECTION 3.08. Negative Covenants . . . . . . . . . . . 22
ii
<PAGE>
Page
SECTION 3.09. Statements as to Compliance . . . . . . . 22
SECTION 3.10. Issuer May Consolidate, etc.,
Only on Certain Terms . . . . . . . . . . . . . . . . 23
SECTION 3.11. Successor or Transferee . . . . . . . . . 24
SECTION 3.12. No Other Business . . . . . . . . . . . . 25
SECTION 3.13. No Borrowing . . . . . . . . . . . . . . 25
SECTION 3.14. Servicer's Obligations . . . . . . . . . 25
SECTION 3.15. Guarantees, Loans, Advances and
Other Liabilities . . . . . . . . . . . . . . . . . . 25
SECTION 3.16. Capital Expenditures . . . . . . . . . . 25
SECTION 3.17. Removal of Administrator . . . . . . . . 25
SECTION 3.18. Restricted Payments . . . . . . . . . . . 25
SECTION 3.19. Notice of Events of Default . . . . . . . 25
SECTION 3.20. Further Instruments and Acts . . . . . . 26
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of
Indenture . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.02. Application of Trust Money . . . . . . . 27
SECTION 4.03. Repayment of Moneys Held by
Paying Agent . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE V
REMEDIES
SECTION 5.01. Events of Default . . . . . . . . . . . . 28
SECTION 5.02. Acceleration of Maturity;
Rescission and Annulment . . . . . . . . . . . . . . . 29
SECTION 5.03. Collection of Indebtedness and
Suits for Enforcement by Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.04. Remedies; Priorities . . . . . . . . . . 32
SECTION 5.05. Optional Preservation of the
Receivables . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.06. Limitation of Suits . . . . . . . . . . . 34
SECTION 5.07. Unconditional Rights of
Noteholders to Receive Principal and
Interest . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.08. Restoration of Rights and
Remedies . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.09. Rights and Remedies Cumulative . . . . . 35
SECTION 5.10. Delay or Omission Not a Waiver . . . . . 35
SECTION 5.11. Control by Noteholders . . . . . . . . . 35
SECTION 5.12. Waiver of Past Defaults . . . . . . . . . 36
SECTION 5.13. Undertaking for Costs . . . . . . . . . . 36
SECTION 5.14. Waiver of Stay or Extension
Laws . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.15. Action on Notes . . . . . . . . . . . . . 37
SECTION 5.16. Performance and Enforcement of
Certain Obligations . . . . . . . . . . . . . . . . . 37
iii
<PAGE>
Page
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee . . . . . . . 38
SECTION 6.02. Rights of Indenture Trustee . . . . . . . 39
SECTION 6.03. Individual Rights of Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.04. Indenture Trustee's Disclaimer . . . . . 40
SECTION 6.05. Notice of Defaults . . . . . . . . . . . 40
SECTION 6.06. Reports by Indenture Trustee to
Holders . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.07. Compensation and Indemnity . . . . . . . 40
SECTION 6.08. Replacement of Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.09. Successor Indenture Trustee by
Merger . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.10. Appointment of Co-Trustee or
Separate Indenture Trustee . . . . . . . . . . . . . . 42
SECTION 6.11. Eligibility; Disqualification . . . . . . 43
SECTION 6.12. Preferential Collection of
Claims Against Issuer . . . . . . . . . . . . . . . . 44
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer To Furnish Indenture
Trustee Names and Addresses of
Noteholders . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.02. Preservation of Information;
Communications to Noteholders . . . . . . . . . . . . 44
SECTION 7.03. Reports by Issuer . . . . . . . . . . . . 44
SECTION 7.04. Reports by Indenture Trustee . . . . . . 45
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money . . . . . . . . . . . 45
SECTION 8.02. Trust Accounts . . . . . . . . . . . . . 46
SECTION 8.03. General Provisions Regarding
Accounts . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.04. Release of Trust Estate . . . . . . . . . 47
SECTION 8.05. Opinion of Counsel . . . . . . . . . . . 48
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without
Consent of Noteholders . . . . . . . . . . . . . . . . 48
SECTION 9.02. Supplemental Indentures with
Consent of Noteholders . . . . . . . . . . . . . . . . 49
iv
<PAGE>
Page
SECTION 9.03. Execution of Supplemental
Indentures . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.04. Effect of Supplemental
Indenture . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.05. Conformity With Trust Indenture
Act . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.06. Reference in Notes to
Supplemental Indentures . . . . . . . . . . . . . . . 51
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. Redemption . . . . . . . . . . . . . . . 52
SECTION 10.02. Form of Redemption Notice . . . . . . . 52
SECTION 10.03. Notes Payable on Redemption
Date . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and
Opinions etc. . . . . . . . . . . . . . . . . . . . . 53
SECTION 11.02. Form of Documents Delivered to
Indenture Trustee . . . . . . . . . . . . . . . . . . 55
SECTION 11.03. Acts of Noteholders . . . . . . . . . . 56
SECTION 11.04. Notices, etc. to Indenture
Trustee, Issuer and Rating Agencies . . . . . . . . . 56
SECTION 11.05. Notices to Noteholders; Waiver . . . . . 57
SECTION 11.06. Alternate Payment and Notice
Provisions. . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.07. Conflict with Trust Indenture
Act . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.08. Effect of Headings and Table
of Contents . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.09. Successors and Assigns . . . . . . . . . 58
SECTION 11.10. Separability . . . . . . . . . . . . . . 58
SECTION 11.11. Benefits of Indenture . . . . . . . . . 58
SECTION 11.12. Legal Holidays . . . . . . . . . . . . . 58
SECTION 11.13. GOVERNING LAW . . . . . . . . . . . . . 58
SECTION 11.14. Counterparts . . . . . . . . . . . . . . 58
SECTION 11.15. Recording of Indenture . . . . . . . . . 59
SECTION 11.16. Trust Obligation . . . . . . . . . . . . 59
SECTION 11.17. No Petition . . . . . . . . . . . . . . 59
SECTION 11.18. Inspection . . . . . . . . . . . . . . . 59
EXHIBITS
EXHIBIT A - Schedule of Receivables . . . . . . . . . . A-1
EXHIBIT B - Form of Sale and Servicing Agreement . . . . B-1
EXHIBIT C - Form of Depository Agreement . . . . . . . . C-1
EXHIBIT D - Form of Note . . . . . . . . . . . . . . . . D-1
v
<PAGE>
This INDENTURE dated as of May 1, 1996, is hereby executed by and
between CATERPILLAR FINANCIAL ASSET TRUST 1996-A, a Delaware business trust
(the "Issuer" or the "Trust"), and THE FIRST NATIONAL BANK OF CHICAGO, as
trustee and not in its individual capacity (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Issuer's Class A-1
5.418% Money Market Asset Backed Notes, Class A-2 5.90% Asset Backed Notes
and Class A-3 6.30% Asset Backed Notes (collectively, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date,
as Indenture Trustee for the benefit of the Holders of the Notes, all of
the Issuer's right, title and interest, whether now owned or hereafter
acquired, in, to and under (a) the Receivables and all obligations of the
Obligors thereunder, including all moneys (including accrued interest) due
thereon on or after the Cut-off Date; (b) the security interests in the
Transaction Equipment granted by Obligors pursuant to the Receivables and
any other interest of the Issuer in the Transaction Equipment; (c) any
proceeds with respect to the Receivables from claims on any physical
damage, credit life and/or disability insurance policies covering Financed
Equipment or Obligors; (d) the Purchase Agreement, including the right
assigned to the Issuer to cause CFSC to repurchase Receivables from the
Seller under certain circumstances described therein; (e) all money on
deposit from time to time in the Trust Accounts, including the Reserve
Account Initial Deposit, and in all investments and all income from the
investment of funds therein (including any accrued discount realized on
liquidation of any investment purchased at a discount); (f) the Sale and
Servicing Agreement (including all rights of the Seller under the Purchase
Agreement assigned to the Issuer pursuant to the Sale and Servicing
Agreement); (g) the rights of the Seller in any proceeds from recourse to
Dealers on Receivables or any other amounts owing by Dealers on
Receivables; and (h) all present and future claims, demands, causes and
choses in action in respect of any or all of the foregoing and all payments
on or under and all proceeds of every kind and nature whatsoever in respect
of any or all of the foregoing, including all proceeds, products, rents,
receipts or profits of the conversion, voluntary or involuntary, into cash
or other property, all cash and non-cash proceeds, accounts, accounts
receivable, notes, drafts, contract rights, general intangibles, documents,
money, certificates of deposit, letters of credit, advances of credit,
goods, uncertificated securities, acceptances, chattel paper, checks,
deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind and other forms of obligations and
receivables, instruments and other property consisting of, arising from or
relating to all or any part of any of the foregoing or any proceeds thereof
(collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of,
the Notes, equally and ratably without prejudice, priority or distinction,
and to secure compliance with the provisions of this Indenture, all as
provided in this Indenture.
<PAGE>
The Indenture Trustee, as Indenture Trustee on behalf of the Holders
of the Notes, acknowledges such Grant, accepts the trusts under this
Indenture in accordance with the provisions of this Indenture and agrees to
perform its duties as required in this Indenture.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. (a) Definitions. Except as otherwise specified herein
-----------
or as the context may otherwise require, the following terms have the
respective meanings set forth below for all purposes of this Indenture.
"Act" has the meaning specified in Section 11.03(a).
--- ----------------
"Administration Agreement" means the Administration Agreement dated as
------------------------
of May 1, 1996, among the Administrator, the Issuer and the Trustee.
"Administrator" means CFSC or any successor Administrator under the
-------------
Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other
---------
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of
------------------
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized
Officers, containing the specimen signature of each such Person, delivered
by the Owner Trustee to the Indenture Trustee on the Closing Date (as such
list may be modified or supplemented from time to time thereafter) and, so
long as the Administration Agreement is in effect, any Vice President or
more senior officer of the Administrator who is authorized to act for the
Administrator in matters relating to the Issuer and to be acted upon by the
Administrator pursuant to the Administration Agreement and who is
identified on the list of Authorized Officers (containing the specimen
signatures of such officers) delivered by the Administrator to the
Indenture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter); provided, however, that for
-------- -------
purposes of Section 3.09 such officer of the Administrator must be any of
------------
the chief executive officer, chief financial officer or chief accounting
officer.
"Basic Documents" means the Certificate of Trust, the Trust Agreement,
---------------
the Purchase Agreement, the Sale and Servicing Agreement, the
Administration Agreement, the Depository
2
<PAGE>
Agreement, the Custodial Agreement, the Underwriting Agreements and other
documents and certificates delivered in connection therewith.
"Book-Entry Notes" means a beneficial interest in the Notes, ownership
----------------
and transfers of which shall be made through book entries by a Clearing
Agency as described in Section 2.10.
------------
"Business Day" means any day other than a Saturday, a Sunday or a day
------------
on which banking institutions or trust companies in The City of New York,
Chicago, Illinois and Nashville, Tennessee or in such other location as the
Corporate Trust Office may be located are authorized or obligated by law,
regulation or executive order to remain closed.
"Certificate" has the meaning assigned to it in the Trust Agreement.
-----------
"Certificate of Trust" means the certificate of trust of the Issuer
--------------------
substantially in the form of Exhibit B to the Trust Agreement.
---------
"CFSC" means Caterpillar Financial Services Corporation, a Delaware
----
corporation, and its successors.
"Class A-1 Note" means any Note, substantially in the form of Exhibit
-------------- -------
D, designated therein as a Class A-1 5.418% Money Market Asset Backed Note.
- -
"Class A-2 Note" means any Note, substantially in the form of Exhibit
-------------- -------
D, designated therein as a Class A-2 5.90% Asset Backed Note.
- -
"Class A-3 Note" means any Note, substantially in the form of Exhibit
-------------- -------
D, designated therein as a Class A-3 6.30% Asset Backed Note.
- -
"Class A-1 Note Interest Rate" means, for any Distribution Date,
----------------------------
5.418% per annum.
"Class A-2 Note Interest Rate" means, for any Distribution Date, 5.90%
----------------------------
per annum.
"Class A-3 Note Interest Rate" means, for any Distribution Date, 6.30%
----------------------------
per annum.
"Clearing Agency" means an organization registered as a "clearing
---------------
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" means May 22, 1996.
------------
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, and Treasury Regulations promulgated thereunder.
3
<PAGE>
"Collateral" has the meaning specified in the Granting Clause of this
----------
Indenture.
"Corporate Trust Office" means the principal office of the Indenture
----------------------
Trustee at which at any particular time its corporate trust business shall
be administered, which office at date of the execution of this Agreement is
located at One First National Plaza, Suite 0126, Chicago, Illinois 60670,
Attention: Corporate Trust Services Division, except that for purposes of
Section 3.02, such term shall mean the office or agency of the Indenture
- ------------
Trustee in the Borough of Manhattan, the City of New York, which office at
the date hereof is located at 14 Wall Street, Eighth Floor, New York, New
York 10005, or at such other address as the Indenture Trustee may designate
from time to time by notice to the Noteholders and the Seller, or the
principal corporate trust office of any successor Indenture Trustee (the
address of which the successor Indenture Trustee will notify the
Noteholders and the Seller); provided, that for the purposes of Section
--------
3.02, the address of any such office shall be in the Borough of Manhattan
of the City of New York.
"Default" means any occurrence that is, or with notice or the lapse of
-------
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
---------------- ------------
"Depository Agreement" means the agreement among the Issuer, the
--------------------
Indenture Trustee, the Administrator, and The Depository Trust Company, as
the initial Clearing Agency, dated as of the Closing Date, substantially in
the form of Exhibit C.
---------
"Distribution Date" means the 25th day of each calendar month, or, if
-----------------
any such date is not a Business Day, the next succeeding Business Day,
commencing June 25, 1996.
"Event of Default" has the meaning specified in Section 5.01.
---------------- ------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Executive Officer" means, with respect to any corporation, the Chief
-----------------
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or
the Treasurer of such corporation; and with respect to any partnership, any
general partner thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
-----
remise, release, convey, assign, transfer, create, and grant a lien upon
and a security interest in and right of set-off against, deposit, set over
and confirm pursuant to this Indenture. A Grant of the Collateral or of
any other agreement or instrument shall include all rights, powers and
options (but none of the obligations) of the Granting party thereunder,
including the immediate and continuing right to claim for, collect, receive
and give receipt for principal and interest payments in respect of the
Collateral and all other moneys payable thereunder, to give and receive
notices and other communications, to make waivers or other agreements, to
exercise all rights and options, to bring Proceedings in the name of the
Granting party or otherwise and generally to
4
<PAGE>
do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
------ ----------
registered on the Note Register.
"Indenture" means this Indenture as amended or supplemented from time
---------
to time.
"Indenture Trustee" means The First National Bank of Chicago, a
-----------------
national banking association, as Indenture Trustee under this Indenture, or
any successor Indenture Trustee under this Indenture.
"Independent" means, when used with respect to any specified Person,
-----------
that the Person (a) is in fact independent of the Issuer, any other obligor
upon the Notes, the Seller and any Affiliate of any of the foregoing
Persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the
Seller or any Affiliate of any of the foregoing Persons and (c) is not
connected with the Issuer, any such other obligor, the Seller or any
Affiliate of any of the foregoing Persons as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing
similar functions.
"Independent Certificate" means a certificate or opinion to be
-----------------------
delivered to the Indenture Trustee under the circumstances described in,
and otherwise complying with, the applicable requirements of Section 11.01,
-------------
made by an Independent appraiser or other expert appointed by an Issuer
Order and approved by the Indenture Trustee in the exercise of reasonable
care, and such opinion or certificate shall state that the signer has read
the definition of "Independent" in this Indenture and that the signer is
Independent within the meaning thereof.
"Issuer" means Caterpillar Financial Asset Trust 1996-A or any
------
successor thereto and, for purposes of any provision contained herein and
required by the TIA, each other obligor on the Notes.
"Issuer Order" and "Issuer Request" means a written order or request
------------ --------------
signed in the name of the Issuer by any one of its Authorized officers and
delivered to the Indenture Trustee.
"Net APR" means, with respect to a Receivable, its APR less the
-------
Servicing Fee Rate.
"Note Interest Rate" means the per annum interest rate borne by a
------------------
Note.
"Note Owner" means, with respect to a Book-Entry Note, the Person who
----------
is the owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such
Clearing Agency).
5
<PAGE>
"Note Register" and "Note Registrar" have the respective meanings
------------- --------------
specified in Section 2.04.
------------
"Notes" means, collectively, the Class A-1 Notes, the Class A-2 and
-----
the Class A-3 Notes.
"Officer's Certificate" means a certificate signed by any Authorized
---------------------
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered
-------------
to the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate
of any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
------------------
may, except as otherwise expressly provided in this Indenture, be employees
of or counsel to CFSC and who shall be satisfactory to the Indenture
Trustee, and which opinion or opinions shall be addressed to the Indenture
Trustee as Indenture Trustee, shall comply with any applicable requirements
of Section 11.01, and shall be in form and substance satisfactory to the
-------------
Indenture Trustee.
"Outstanding" means, as of the date of determination, all Notes
-----------
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of
-------- -------
such redemption has been duly given pursuant to this Indenture or
provision therefor, satisfactory to the Indenture Trustee, has been
made); and
(iii) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser;
provided that in determining whether the Holders of the requisite
- --------
Outstanding Amount of the Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any
Basic Document, Notes owned by the Issuer, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Notes that the Indenture Trustee knows to be so owned shall be so
disregarded. Notes so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of
the Indenture Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing Persons.
6
<PAGE>
"Outstanding Amount" means the aggregate principal amount of all
------------------
Notes, or a class of Notes, as applicable, Outstanding at the date of
determination.
"Owner Trustee" means Chemical Bank Delaware, not in its individual
-------------
capacity but solely as Owner Trustee under the Trust Agreement, or any
successor Owner Trustee under the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any Person that meets
------------
the eligibility standards for the Indenture Trustee specified in Section
-------
6.11 and is authorized by the Issuer to make the payments to and
- ----
distributions from the Collection Account and the Note Distribution
Account, including payment of principal of or interest on the Notes on
behalf of the Issuer.
"Person" means any individual, corporation, estate, partnership, joint
------
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
----------------
previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition,
any Note authenticated and delivered under Section 2.05 in lieu of a
------------
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the
same debt as the mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
----------
or administrative proceeding.
"Rating Agency" means Moody's and Standard & Poor's. If no such
-------------
organization or successor is any longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization or other
comparable Person designated by the Issuer, notice of which designation
shall be given to the Indenture Trustee, the Owner Trustee and the
Servicer.
"Rating Agency Condition" means, with respect to any action, that each
-----------------------
Rating Agency shall have been given 10 days prior notice thereof and that
each of the Rating Agencies shall have notified the Seller, the Servicer
and the Issuer in writing that such action will not result in a reduction
or withdrawal of the then current rating of any Class of the Notes.
"Receivable" means any Contract listed on the Schedule of Receivables.
----------
"Record Date" means, with respect to a Distribution Date or Redemption
-----------
Date, (i) if the Notes are held in book-entry form, the close of business
on the calendar day immediately preceding such Distribution Date or
Redemption Date or (ii) if the Notes are held in definitive form, the last
calendar day of the month preceding the month in which such Distribution
Date or Redemption Date occurs.
7
<PAGE>
"Redemption Date" means the Distribution Date specified by the
---------------
Servicer or the Issuer pursuant to Section 10.01(a) or (b), as applicable.
---------------- ---
"Redemption Price" means (a) in the case of a redemption of the Notes
----------------
pursuant to Section 10.01(a), an amount equal to the principal amount of
----------------
the Notes redeemed plus accrued and unpaid interest thereon at the related
Note Interest Rate to but excluding the Redemption Date, or (b) in the case
of a payment made to Noteholders pursuant to Section 10.01(b), the amount
----------------
on deposit in the Note Distribution Account, but not in excess of the
amount specified in clause (a) above.
"Registered Holder" means the Person in whose name a Note is
-----------------
registered in the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture Trustee,
-------------------
any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Trust Officer,
Secretary, Assistant Secretary, or any other officer of the Indenture
Trustee customarily performing functions similar to those performed by any
of the above designated officers and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
----------------------------
dated as of May 1, 1996, among the Issuer, the Seller and the Servicer.
"Schedule Of Receivables" means the listing of the Receivables set
-----------------------
forth in Exhibit A (which Exhibit may be in the form of microfiche).
---------
"State" means any one of the 50 states of the United States of America
-----
or the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.07(e).
------------------ ---------------
"Trust" means Caterpillar Financial Asset Trust 1996-A.
-----
"Trust Agreement" means the Trust Agreement, as amended and restated
---------------
as of May 1, 1996, between the Seller and the Owner Trustee.
"Trust Estate" means all money, instruments, rights and other property
------------
that are subject or intended to be subject to the lien and security
interest of this Indenture for the benefit of the Noteholders (including,
without limitation, all property and interests Granted to the Indenture
Trustee), including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
------------------- ---
as in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
---
Commercial Code, as in effect in the relevant jurisdiction, as amended from
time to time.
8
<PAGE>
(b) Other Definitional Provisions. (1) Capitalized terms used
-----------------------------
herein and not otherwise defined have the meanings assigned to them in the
Sale and Servicing Agreement or, if not defined therein, in the Trust
Agreement.
(2) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(3) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such
certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Agreement or in any such
certificate or other document shall control.
(4) The words "hereof," "herein," "hereunder," and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(5) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
SECTION 1.02. Incorporation by Reference of Trust Indenture
---------------------------------------------
Act. Whenever this Indenture refers to a provision of the TIA, the
- ---
provision is incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the
following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
9
<PAGE>
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission
rule have the meaning assigned to them by such definitions.
SECTION 1.03. [Reserved]
--------
SECTION 1.04. Calculations of Interest. All calculations of interest
------------------------
made hereunder shall be made on the basis of a year of 360 days of twelve
30-day months.
ARTICLE II
THE NOTES
SECTION 2.01. Form. The Class A-1, Class A-2 and Class A-3 Notes, in
----
each case together with the Indenture Trustee's certificate of
authentication, shall be in substantially the forms set forth in Exhibit D,
---------
with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Notes, as evidenced by their execution of the
Notes. Any portion of the text of any Note may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the officers executing such
Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit D are part of the terms of this Indenture.
---------
SECTION 2.02. Execution, Authentication and Delivery. The Notes
--------------------------------------
shall be executed on behalf of the Issuer by any of its Authorized
Officers. The signature of any such Authorized Officer on the Notes may be
manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
The Indenture Trustee shall, upon written order of the Seller,
authenticate and deliver Class A-1 Notes for original issue in an aggregate
principal amount of $85,000,000 Class A-2 Notes for an original issue in an
aggregate principal amount of $139,000,000, and Class A-3 Notes for an
original issue in an aggregate principal amount of $133,021,000. The
aggregate principal amount of Class A-1, Class A-2 and Class A-3 Notes
outstanding at any time may not exceed such amounts, respectively, except
as provided in Section 2.05.
------------
10
<PAGE>
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000
and in integral multiples thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
SECTION 2.03. Temporary Notes. Pending the preparation of definitive
---------------
Notes, the Issuer may execute, and upon receipt of an Issuer Order the
Indenture Trustee shall authenticate and deliver, temporary Notes which are
printed, lithographed, typewritten, mimeographed or otherwise produced, of
the tenor of the definitive Notes in lieu of which they are issued and with
such variations not inconsistent with the terms of this Indenture as the
officers executing such Notes may determine, as evidenced by their
execution of such Notes.
If temporary Notes are issued, the Issuer will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of
definitive Notes, the temporary Notes shall be exchangeable for definitive
Notes upon surrender of the temporary Notes at the office or agency of the
Issuer to be maintained as provided in Section 3.02, without charge to the
------------
Holder. Upon surrender for cancellation of any one or more temporary
Notes, the Issuer shall execute, and the Indenture Trustee shall
authenticate and deliver in exchange therefor, a like principal amount of
definitive Notes of authorized denominations. Until so exchanged, the
temporary Notes shall in all respects be entitled to the same benefits
under this Indenture as definitive Notes.
SECTION 2.04. Registration; Registration of Transfer and
------------------------------------------
Exchange. The Issuer shall cause to be kept a register (the "Note
- --------
Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of Notes and the
registration of transfers of Notes. The Indenture Trustee shall be the
initial "Note Registrar" for the purpose of registering Notes and transfers
of Notes as herein provided. Upon any resignation of any Note Registrar,
the Issuer shall promptly appoint a successor or, if it elects not to make
such an appointment, assume the duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the
location, and any change in the location, of the Note Register, and the
Indenture Trustee shall have the right to inspect the Note Register at all
reasonable times and to obtain copies thereof, and the Indenture Trustee
shall have the right to rely upon a certificate executed on behalf of the
Note Registrar by an Executive Officer thereof as to the names and
addresses of the Holders of the Notes and the principal amounts and number
of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, if
------------
the requirements of Section 8-401(1) of the UCC are met the Issuer shall
execute, and the Indenture Trustee shall authenticate and the
11
<PAGE>
Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferee or transferees, one or more new Notes of the same
Class in any authorized denominations, of a like aggregate principal
amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same class in any authorized denominations, of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, if
the requirements of Section 8-401(1) of the UCC are met, the Issuer shall
execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, the Notes which the Noteholder
making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Holder thereof or such Holder's attorney duly authorized
in writing, with such signature guaranteed by a commercial bank or trust
company located, or having a correspondent located, in The City of New York
or the city in which the Corporate Trust Office is located, or by a member
firm of a national securities exchange, and such other documents as the
Indenture Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 2.03 or 9.06 not involving
------------ ----
any transfer.
The preceding provisions of this section notwithstanding, the Issuer
shall not be required to make, and the Note Registrar need not register,
transfers or exchanges of Notes selected for redemption or of any Note for
a period of 15 days preceding the due date for any payment with respect to
the Note.
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
------------------------------------------
mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (ii) there is delivered to the Indenture Trustee
such security or indemnity as may be required by it to hold the Issuer and
the Indenture Trustee harmless, then, in the absence of notice to the
Issuer, the Note Registrar or the Indenture Trustee that such Note has been
acquired by a bona fide purchaser, and provided that the requirements of
Section 8-405 of the UCC are met, the Issuer shall execute and upon its
request the Indenture Trustee shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
replacement Note of the same class; provided, however, that if any such
-------- -------
destroyed, lost or stolen Note, but not a mutilated Note, shall have become
or within seven days shall be due and payable, or shall have been called
for redemption,
12
<PAGE>
instead of issuing a replacement Note, the Issuer may pay such destroyed,
lost or stolen Note when so due or payable or upon the Redemption Date
without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note pursuant to the proviso to
the preceding sentence, a bona fide purchaser of the original Note in lieu
of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall be entitled to
recover such replacement Note (or such payment) from the Person to whom it
was delivered or any Person taking such replacement Note from such Person
to whom such replacement Note was delivered or any assignee of such Person,
except a bona fide-purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage,
cost or expense incurred by the Issuer or the Indenture Trustee in
connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including
the fees and expenses of the Indenture Trustee) connected therewith.
Except as set forth in the first paragraph of this Section 2.05, every
replacement Note issued pursuant to this Section in replacement of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Notes duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.06. Persons Deemed Owner. Prior to due presentment for
--------------------
registration of transfer of any Note, the Issuer, the Indenture Trustee and
any agent of the Issuer or the Indenture Trustee may treat the Person in
whose name any Note is registered (as of the day of determination) as the
owner of such Note for the purpose of receiving payments of principal of
and interest, if any, on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and neither the Issuer, the Indenture
Trustee nor any agent of the Issuer or the Indenture Trustee shall be
affected by notice to the contrary.
SECTION 2.07. Payment of Principal and Interest; Defaulted
--------------------------------------------
Interest. (a) The Notes shall accrue interest as provided in the form of
- --------
the Note set forth in Exhibit D and such interest shall be payable on each
---------
Distribution Date as specified therein, subject to Section 3.01. Any
------------
installment of interest or principal, if any, or any other amount, payable
on any Note which is punctually paid or duly provided for by the Issuer on
the applicable Distribution Date shall be paid to the Person in whose name
such Note (or one or more Predecessor Notes) is registered on the Record
Date, by check mailed first-class, postage prepaid to such Person's address
as it appears on the Note Register on such Record Date, (i) except that,
unless Definitive Notes have been issued pursuant to Section 2.12, with
------------
respect to Notes registered on the Record Date in the
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name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payment will be made by wire transfer in immediately available
funds to the account designated by such nominee and (ii) except for (A) the
final installment of principal payable with respect to such Note on a
Distribution Date and (B) the Redemption Price for any Note called for
redemption pursuant to Section 10.01(a), in each case which shall be
----------------
payable as provided below. The funds represented by any such checks
returned undelivered shall be held in accordance with Section 3.03.
------------
(b) The principal of each Note shall be payable in installments on
each Distribution Date as provided in the form of Note set forth in Exhibit
-------
D. Notwithstanding the foregoing, the entire unpaid principal amount of
- -
the Notes shall be due and payable, if not previously paid, on the date on
which an Event of Default shall have occurred and be continuing, if the
Indenture Trustee or the Holders of the Notes representing a majority of
the Outstanding Amount of the Notes have declared the Notes to be
immediately due and payable in the manner provided in Section 5.02. All
------------
principal payments on each class of Notes shall be made pro rata to the
Noteholders of such Class entitled thereto. Upon notice to the Indenture
Trustee by the Issuer, the Indenture Trustee shall notify the Person in
whose name a Note is registered at the close of business on the Record Date
preceding the Distribution Date on which the Issuer expects that the final
installment of principal of and interest on such Note will be paid. Such
notice shall be mailed no later than five Business Days prior to such final
Distribution Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify
the place where such Note may be presented and surrendered for payment of
such installment. Notices in connection with redemptions of Notes shall be
mailed to Noteholders as provided in Section 10.02.
-------------
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable Note Interest Rate in any
lawful manner. The Issuer may pay such defaulted interest to the persons
who are Noteholders on a subsequent special record date, which date shall
be fixed or caused to be fixed by the Issuer and shall be at least five
Business Days prior to the payment date. The Issuer shall fix or cause to
be fixed any such payment date, and, at least 15 days before any such
special record date, the Issuer shall mail to each Noteholder a notice that
states the special record date, the payment date and the amount of
defaulted interest to be paid.
SECTION 2.08. Cancellation. All Notes surrendered for payment,
------------
registration of transfer, exchange or redemption shall, if surrendered to
any Person other than the Indenture Trustee, be delivered to the Indenture
Trustee and shall be promptly cancelled by the Indenture Trustee. The
Issuer may at any time deliver to the Indenture Trustee for cancellation
any Notes previously authenticated and delivered hereunder which the Issuer
may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly cancelled by the Indenture Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided
in this Section, except as expressly permitted by this Indenture. All
cancelled Notes may be held or disposed of by the Indenture Trustee in
accordance with its standard retention or disposal policy as in effect at
the time unless the Issuer shall direct by an Issuer Order that
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they be destroyed or returned to it; provided that such Issuer Order is
--------
timely and the Notes have not been previously disposed of by the Indenture
Trustee.
SECTION 2.09. Release of Collateral. Subject to Section 11.01, the
--------------------- -------------
Indenture Trustee shall release property from the lien of this Indenture
only upon receipt of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel and Independent Certificates in
accordance with TIA Sec.Sec. 314(c) and 314 (d)(1) or an Opinion of Counsel in
lieu of such Independent Certificates to the effect that the TIA does not
require any such Independent Certificates.
SECTION 2.10. Book-Entry Notes. The Notes, upon original issuance,
----------------
will be issued in the form of a typewritten Note or Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company, the
initial Clearing Agency, by, or on behalf of, the Issuer. Such Notes shall
initially be registered on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Note Owner will receive a
Definitive Note representing such Note Owner's interest in such Note,
except as provided in Section 2.12. Unless and until definitive, fully
------------
registered Notes (the "Definitive Notes") have been issued to Note Owners
pursuant to Section 2.12:
------------
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and
the giving of instructions or directions hereunder) as the sole holder
of the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants pursuant to the Depository Agreement.
Unless and until Definitive Notes are issued pursuant to Section 2.12,
------------
the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments of
principal of and interest on the Notes to such Clearing Agency
Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the
Clearing Agency shall be deemed to represent such percentage only to
the extent that it has received instructions to such effect from Note
Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in
the Notes and has delivered such instructions to the Indenture
Trustee.
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SECTION 2.11. Notices to Clearing Agency. Whenever a notice or other
--------------------------
communication to the Noteholders is required under this Indenture, unless
and until Definitive Notes shall have been issued to Note Owners pursuant
to Section 2.12, the Indenture Trustee shall give all such notices and
------------
communications specified herein to be given to Holders of the Notes to the
Clearing Agency, and shall have no obligation to the Note Owners.
SECTION 2.12. Definitive Notes. If (i) the Administrator advises the
----------------
Indenture Trustee in writing that the Clearing Agency is no longer willing
or able to properly discharge its responsibilities with respect to the
Notes, and the Administrator is unable to locate a qualified successor,
(ii) the Administrator at its option advises the Indenture Trustee in
writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default or a
Servicer Default, Note Owners representing beneficial interests aggregating
a majority of the Outstanding Amount of the Notes advise the Clearing
Agency in writing that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interests of the Note Owners, then
the Clearing Agency shall notify all Note Owners and the Indenture Trustee
of the occurrence of any such event and of the availability of Definitive
Notes to Note Owners requesting the same. Upon surrender to the Indenture
Trustee of the typewritten Note or Notes representing the Book-Entry Notes
by the Clearing Agency, accompanied by registration instructions, the
Issuer shall execute and the Indenture Trustee shall authenticate the
Definitive Notes in accordance with the instructions of the Clearing
Agency. None of the Issuer, the Note Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Notes, the Indenture Trustee
shall recognize the Holders of the Definitive Notes as Noteholders.
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal and Interest. The Issuer will
---------------------------------
duly and punctually pay the principal of and interest, if any, on the Notes
in accordance with the terms of the Notes and this Indenture. Without
limiting the foregoing, the Issuer will cause to be distributed all amounts
on deposit in the Note Distribution Account on a Distribution Date pursuant
to Section 8.02(c). Amounts properly withheld under the Code by any Person
---------------
from a payment to any Noteholder of interest and/or principal and/or
premium shall be considered as having been paid by the Issuer to such
Noteholder for all purposes of this Indenture.
SECTION 3.02. Maintenance of Office or Agency. The Issuer will
-------------------------------
maintain in the Borough of Manhattan, in the City of New York an office or
agency where Notes may be surrendered for registration of transfer or
exchange, and where notices and demands to or upon the Issuer in respect of
the Notes and this Indenture may be served. The Issuer hereby initially
appoints the Corporate Trust Office to serve as its agent for the foregoing
purposes. The Issuer will give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of any such
office or agency. If at any time the Issuer shall fail to maintain any
16
<PAGE>
such office or agency or shall fail to furnish the Indenture Trustee with
the address thereof, such surrenders, notices and demands may be made or
served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee as its agent to receive all such surrenders, notices and
demands.
SECTION 3.03. Money for Payments To Be Held in Trust. As provided in
--------------------------------------
Section 8.02(a) and (b), all payments of amounts due and payable with
- --------------- ---
respect to any Notes that are to be made from amounts withdrawn from the
Collection Account and the Note Distribution Account pursuant to Section
-------
8.02(c) shall be made on behalf of the Issuer by the Indenture Trustee or
- -------
by another Paying Agent, and no amounts so withdrawn from the Collection
Account and the Note Distribution Account for payments of Notes shall be
paid over to the Issuer except as provided in this Section.
On or before 12:00 noon (New York time) on each Distribution Date and
the Redemption Date, the Issuer shall deposit or cause to be deposited in
the Note Distribution Account an aggregate sum sufficient to pay the
amounts then becoming due under the Notes, such sum to be held in trust for
the benefit of the Persons entitled thereto and (unless the Paying Agent is
the Indenture Trustee) shall promptly notify the Indenture Trustee of its
action or failure so to act.
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in
which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to
the provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer of which it has actual knowledge (or any other obligor upon the
Notes) in the making of any payment required to be made with respect
to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be
met by a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed
17
<PAGE>
thereon and with respect to any applicable reporting requirements in
connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order
direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee
upon the same trusts as those upon which the sums were held by such Paying
Agent; and upon such payment by any Paying Agent to the Indenture Trustee,
such Paying Agent shall be released from all further liability with respect
to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment
of any amount due with respect to any Note and remaining unclaimed for two
years after such amount has become due and payable shall be discharged from
such trust, and the Indenture Trustee or such Paying Agent, as the case may
be, shall give prompt notice of such occurrence to the Issuer and shall
release such money to the Issuer on Issuer Request; and the Holder of such
Note shall thereafter, as an unsecured general creditor, look only to the
Issuer for payment thereof (but only to the extent of the amounts so paid
to the Issuer), and all liability of the Indenture Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; provided,
--------
however, that the Indenture Trustee or such Paying Agent, before being
- -------
required to make any such repayment, shall at the expense and direction of
the Issuer cause to be published once, in a newspaper published in the
English language, customarily published on each Business Day and of general
circulation in The City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Issuer. The Indenture
Trustee shall also adopt and employ, at the expense of the Issuer, any
other reasonable means of notification of such repayment (including, but
not limited to, mailing notice of such repayment to Holders whose Notes
have been called but have not been surrendered for redemption or whose
right to or interest in moneys due and payable but not claimed is
determinable from the records of the Indenture Trustee or of any Paying
Agent, at the last address of record for each such Holder).
SECTION 3.04. Existence. The Issuer will keep in full effect its
---------
existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is
or becomes, organized under the laws of any other State or of the United
States of America, in which case the Issuer will keep in full effect its
existence, rights and franchises under the laws of such other jurisdiction)
and will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Indenture, the Notes, the
Collateral and each other instrument or agreement included in the Trust
Estate.
SECTION 3.05. Protection of Trust Estate. The Issuer will from time
--------------------------
to time take all actions necessary, including without limitation preparing,
executing, delivering and filing all such supplements and amendments hereto
and all such financing statements, continuation
18
<PAGE>
statements, instruments of further assurance and other instruments, if
applicable, and will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture:
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and the rights
of the Indenture Trustee and the Noteholders in such Trust Estate
against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement
or other instrument required by the Indenture Trustee pursuant to this
Section.
SECTION 3.06. Opinions as to Trust Estate. (a) On the Closing Date,
---------------------------
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been
taken to perfect the lien and security interest of this Indenture,
including without limitation with respect to the recording and filing of
this Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continuation statements, as are so necessary and reciting
the details of such action, or stating that, in the opinion of such
counsel, no such action is necessary to maintain the perfection of such
lien and security interest.
(b) On or before April 30 in each calendar year, beginning in 1997,
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been
taken to perfect the lien and security interest of this Indenture,
including without limitation with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and with respect to the execution
and filing of any financing statements and continuation statements as is so
necessary and reciting the details of such action or stating that in the
opinion of such counsel no such action is necessary to maintain the
perfection of such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of
this Indenture, any indentures supplemental hereto and any other requisite
documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be
required to maintain the perfection of the lien and security interest of
this Indenture until April 30 in the following calendar year.
SECTION 3.07. Performance of Obligations; Servicing of
----------------------------------------
Receivables. (a) The Issuer will not take any action and will use its
- -----------
best efforts not to permit any action to be taken by others that would
release any Person from any of such Person's material covenants or
obligations
19
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under any instrument or agreement included in the Trust Estate or that
would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such
instrument or agreement, except as expressly provided in this Indenture,
the Sale and Servicing Agreement or such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such
duties by a Person identified to the Indenture Trustee in an Officer's
Certificate of the Issuer shall be deemed to be action taken by the Issuer.
Initially, the Issuer has contracted with the Servicer and the
Administrator to assist the Issuer in performing its duties under this
Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents
and in the instruments and agreements included in the Trust Estate,
including but not limited to filing or causing to be filed all UCC
financing statements and continuation statements required to be filed by
the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and
therein. Except as otherwise expressly provided therein, the Issuer shall
not waive, amend, modify, supplement or terminate any Basic Document or any
provision thereof without the consent of the Indenture Trustee or the
Holders of a majority of the Outstanding Amount of the Notes.
(d) If the Issuer shall have knowledge of the occurrence of a
Servicer Default under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee and the Rating Agencies thereof, and
shall specify in such notice the action, if any, the Issuer is taking with
respect of such default. If a Servicer Default shall arise from the
failure of the Servicer to perform any of its duties or obligations under
the Sale and Servicing Agreement with respect to the Receivables, the
Issuer shall take all reasonable steps available to it to remedy such
failure.
(e) As promptly as possible after the giving of notice of termination
to the Servicer of the Servicer's rights and powers pursuant to Section
8.01 of the Sale and Servicing Agreement, the Issuer shall appoint a
successor servicer (the "Successor Servicer"), and such Successor Servicer
shall accept its appointment by a written assumption in a form acceptable
to the Indenture Trustee. In the event that a Successor Servicer has not
been appointed and accepted its appointment at the time when the Servicer
ceases to act as Servicer, the Indenture Trustee without further action
shall automatically be appointed the Successor Servicer. The Indenture
Trustee may resign as the Servicer by giving written notice of such
resignation to the Issuer and in such event will be released from such
duties and obligations, such release not to be effective until the date a
new servicer enters into a servicing agreement with the Issuer as provided
below. Upon delivery of any such notice to the Issuer, the Issuer shall
obtain a new servicer as the Successor Servicer under the Sale and
Servicing Agreement. Any Successor Servicer other than the Indenture
Trustee shall (i) be an established financial institution having a net
worth of not less than $50,000,000 and whose regular business includes the
servicing of equipment receivables and (ii) enter into a servicing
agreement with the Issuer having substantially the same provisions as the
provisions of the Sale and Servicing Agreement applicable to the Servicer.
If
20
<PAGE>
within 30 days after the delivery of the notice referred to above, the
Issuer shall not have obtained such a new servicer, the Indenture Trustee
may appoint, or may petition a court of competent jurisdiction to appoint,
a Successor Servicer. In connection with any such appointment, the
Indenture Trustee may make such arrangements for the compensation of such
successor as it and such successor shall agree, subject to the limitations
set forth below and in the Sale and Servicing Agreement, and in accordance
with Section 8.02 of the Sale and Servicing Agreement, the Issuer shall
enter into an agreement with such successor for the servicing of the
Receivables (such agreement to be in form and substance satisfactory to the
Indenture Trustee). If the Indenture Trustee shall succeed to the
Servicer's duties as servicer of the Receivables as provided herein, it
shall do so in its individual capacity and not in its capacity as Indenture
Trustee and, accordingly, the provisions of Article VI hereof shall be
----------
inapplicable to the Indenture Trustee in its duties as the successor to the
Servicer and the servicing of the Receivables. In case the Indenture
Trustee shall become successor to the Servicer under the Sale and Servicing
Agreement, the Indenture Trustee shall be entitled to appoint as Servicer
any one of its Affiliates, provided that it shall be fully liable for the
actions and omissions of such Affiliate in such capacity as Successor
Servicer.
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Sale and Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee. As soon as a Successor Servicer is appointed, the
Issuer shall notify the Indenture Trustee of such appointment, specifying
in such notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees that it will not, without
the prior written consent of the Indenture Trustee or the Holders of a
majority in Outstanding Amount of the Notes, amend, modify, waiver,
supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the terms of
any Collateral (except to the extent otherwise permitted pursuant to the
terms of the Sale and Servicing Agreement) or the Basic Documents, or waive
timely performance or observance by the Servicer or the Seller under the
Sale and Servicing Agreement or by CFSC under the Purchase Agreement;
provided, however, that no such amendment shall (i) except to the extent
- -------- -------
otherwise provided in the Sale and Servicing Agreement, increase or reduce
in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that are required
to be made for the benefit of the Noteholders or (ii) reduce the aforesaid
percentage of the Notes which are required to consent to any such
amendment, without the consent of the holders of all the outstanding Notes.
If any such amendment, modification, supplement or waiver shall be so
consented to by the Indenture Trustee or such Holders, the Issuer agrees,
promptly following a request by the Indenture Trustee to do so, to execute
and deliver, in its own name and at its own expense, such agreements,
instruments, consents and other documents as the Indenture Trustee may
reasonably deem necessary or appropriate under the circumstances.
SECTION 3.08. Negative Covenants. So long as any Notes are
------------------
Outstanding, the Issuer shall not:
21
<PAGE>
(i) except as expressly permitted by this Indenture, the
Purchase Agreement or the Sale and Servicing Agreement, sell,
transfer, exchange or otherwise dispose of any of the properties or
assets of the Issuer, including those included in the Trust Estate,
unless directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable state law) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied or
assessed upon any part of the Trust Estate;
(iii) dissolve or liquidate in whole or in part; or
(iv) (A) permit the validity or effectiveness of this Indenture
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 with respect
to the Notes under this Indenture except as may be expressly permitted
hereby, (B) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture)
to be created on or extend to or otherwise arise upon or burden the
Trust Estate or any part thereof or any interest therein or the
proceeds thereof (other than tax liens, mechanics' liens and other
liens that arise by operation of law, in each case on a Financed
Equipment and arising solely as a result of an action or omission of
the related Obligor) or (C) permit the lien of this Indenture not to
constitute a valid first priority perfected security interest in the
Trust Estate (other than with respect to any such tax, mechanics' or
other lien).
SECTION 3.09. Statements as to Compliance. (a) The Issuer will
---------------------------
deliver to the Indenture Trustee, within 120 days after the end of each
fiscal year of the Issuer (commencing within 120 days after the end of the
fiscal year 1996), an Officer's Certificate stating, as to the Authorized
Officer signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during the 12-month
period ending at the end of such fiscal year (or in the case of the
fiscal year ending December 31, 1996, the period from the Closing Date
to December 31, 1996) and of performance under this Indenture has been
made under such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a
default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain
---------------------------------------------
Terms. (a) The Issuer shall not consolidate or merge with or into any
- -----
other Person, unless
22
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(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any State and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form satisfactory to the
Indenture Trustee, the due and punctual payment of the principal of
and interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture on the part of the Issuer to
be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
-----------
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of
which is hereby restricted shall (A) be a United States citizen or a
Person organized and existing under the laws of the United States of
America or any State, (B) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee,
in form satisfactory to the Indenture Trustee, the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all
as provided herein, (C) expressly agrees by means of such supplemental
indenture that all right, title and interest so conveyed or
transferred shall be subject and subordinate to the rights of Holders
of the Notes, (D) unless otherwise provided in such supplemental
indenture, expressly agrees to indemnify, defend and hold harmless the
Issuer against and from any loss, liability or expense arising under
or related to this Indenture and the Notes and (E) expressly agrees by
means of such supplemental indenture that such Person (or if a group
23
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of Persons, then one specified Person) shall make all filings with the
Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing:
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
-----------
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
SECTION 3.11. Successor or Transferee. (a) Upon any consolidation or
-----------------------
merger of the Issuer in accordance with Section 3.10(a), the Person formed
---------------
by or surviving such consolidation or merger (if other than the Issuer)
shall succeed to, and be substituted for, and may exercise every right and
power of, the Issuer under this Indenture with the same effect as if such
Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10(b), Caterpillar Financial Asset Trust
---------------
1996-A will be released from every covenant and agreement of this Indenture
to be observed or performed on the part of the Issuer with respect to the
Notes immediately upon the delivery to the Indenture Trustee of the
Officer's Certificate and Opinion of Counsel specified in Section
-------
3.10(b)(vi) stating that Caterpillar Financial Asset Trust 1996-A is to be
- -----------
so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in any
-----------------
business other than the purposes and powers set forth in Section 2.03 of
the Trust Agreement.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur,
------------
assume, guarantee or otherwise become liable, directly or indirectly, for
any indebtedness except for the Notes.
24
<PAGE>
SECTION 3.14. Servicer's Obligations. The Issuer shall cause the
----------------------
Servicer to comply with all of its obligations under the Basic Documents,
including without limitation those set forth in Sections 4.09, 4.10, 4.11
and 5.06 of the Sale and Servicing Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.
-------------------------------------------------
Except as contemplated by the Sale and Servicing Agreement or this
Indenture, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability
of so doing or otherwise), endorse or otherwise become contingently liable,
directly or indirectly, in connection with the obligations, stocks or
dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or
any other interest in, or make any capital contribution to, any other
Person.
SECTION 3.16. Capital Expenditures. The Issuer shall not make any
--------------------
expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty).
SECTION 3.17. Removal of Administrator. So long as any Notes are
------------------------
Outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agency Condition shall have been satisfied in connection
with such removal.
SECTION 3.18. Restricted Payments. The Issuer shall not, directly or
-------------------
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a
combination thereof, to the Owner Trustee or any owner of a beneficial
interest in the Issuer or otherwise with respect to any ownership or equity
interest or security in or of the Issuer or to the Servicer, (ii) redeem,
purchase, retire or otherwise acquire for value any such ownership or
equity interest or security or (iii) set aside or otherwise segregate any
amounts for any such purpose; provided, however, that the Issuer may make,
-------- -------
or cause to be made, (x) distributions to the Servicer, the Owner Trustee
and the Certificateholders as permitted by, and to the extent funds are
available for such purpose under, the Sale and Servicing Agreement and the
Trust Agreement and (y) payments to the Indenture Trustee pursuant to
Section 1(a)(ii) of the Administration Agreement. The Issuer will not,
directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the Basic
Documents.
SECTION 3.19. Notice of Events of Default. The Issuer agrees to give
---------------------------
the Indenture Trustee and the Rating Agencies prompt written notice of each
Event of Default hereunder and, immediately after obtaining knowledge of
any of the following occurrences, written notice of each default on the
part of the Servicer or the Seller of its obligations under the Sale and
Servicing Agreement and each default on the part of CFSC of its obligations
under the Purchase Agreement.
SECTION 3.20. Further Instruments and Acts. Upon request of the
----------------------------
Indenture Trustee, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
25
<PAGE>
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture. This
---------------------------------------
Indenture shall cease to be of further effect with respect to the Notes
except as to (i) rights of registration of transfer and exchange, (ii)
substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of
Noteholders to receive payments of principal thereof and interest thereon,
(iv) Sections 3.03, 3.04, 3.05, 3.08, 3.10, 3.12 and 3.13, (v) the rights,
------------- ---- ---- ---- ---- ---- ----
obligations and immunities of the Indenture Trustee hereunder (including
the rights of the Indenture Trustee under Section 6.07 and the obligations
------------
of the Indenture Trustee under Section 4.02) and (vi) the rights of
------------
Noteholders as beneficiaries hereof with respect to the property so
deposited with the Indenture Trustee payable to all or any of them, and the
Indenture Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.05 and (ii) Notes for
------------
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided in Section 3.03)
------------
have been delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation:
(i) have become due and payable;
(ii) will become due and payable at (A) the Class A-1 Final
Scheduled Distribution Date with respect to the Class A-1 Notes,
(B) the Class A-2 Final Scheduled Distribution Date with respect
to the Class A-2 Notes and (C) the Class A-3 Final Scheduled
Distribution Date with respect to the Class A-3 Notes; or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving
of notice of redemption by the Indenture Trustee in the name, and
at the expense, of the Issuer;
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Indenture Trustee cash or direct obligations of or obligations
guaranteed by the United States of America (which will mature prior to
the date such amounts are payable), in trust for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on such
Notes not theretofore delivered to the Indenture Trustee for
cancellation when due to (x) the Class A-1 Final Scheduled
Distribution Date, Class A-2 Final Scheduled Distribution Date or
Class A-3 Final
26
<PAGE>
Scheduled Distribution Date, as applicable, or Redemption Date (if
Notes shall have been called for redemption pursuant to Section
-------
10.01(a)), as the case may be;
--------
(B) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the
Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section
-------
11.01(a) and each stating that all conditions precedent herein provided for
- --------
relating to the satisfaction and discharge of this Indenture have been
complied with.
SECTION 4.02. Application of Trust Money. All moneys deposited with
--------------------------
the Indenture Trustee pursuant to Section 4.01 hereof shall be held in
------------
trust and applied by it, in accordance with the provisions of the Notes and
this Indenture, to the payment, either directly or through any Paying
Agent, as the Indenture Trustee may determine, to the Holders of the
particular Notes for the payment or redemption of which such moneys have
been deposited with the Indenture Trustee, of all sums due and to become
due thereon for principal and interest; provided such moneys need not be
--------
segregated from other funds except to the extent required herein or in the
Sale and Servicing Agreement or required by law.
SECTION 4.03. Repayment of Moneys Held by Paying Agent. In
----------------------------------------
connection with the satisfaction and discharge of this Indenture with
respect to the Notes, all moneys then held by any Paying Agent other than
the Indenture Trustee under the provisions of this Indenture with respect
to such Notes shall, upon demand of the Issuer, be paid to the Indenture
Trustee to be held and applied according to Section 3.03, and thereupon
------------
such Paying Agent shall be released from all further liability with respect
to such moneys.
ARTICLE V
REMEDIES
SECTION 5.01. Events of Default. "Event of Default", wherever used
-----------------
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(i) default in the payment of any interest on any Note when the
same becomes due and payable, and such default shall continue for a
period of five days; or
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable; or
27
<PAGE>
(iii) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant
or agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such representation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by the Indenture Trustee or to the
Issuer and the Indenture Trustee by the Holders of at least 25% of the
Outstanding Amount of the Notes, a written notice specifying such
default or incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(iv) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for the
Issuer or for any substantial part of the Trust Estate, or ordering
the winding-up or liquidation of the Issuer's affairs, and such decree
or order shall remain unstayed and in effect for a period of 90
consecutive days; or
(v) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by the Issuer to the
entry of an order for relief in an involuntary case under any such
law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the Trust Estate, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the
commencement of the termination of the Trust pursuant to Section 9.02
of the Trust Agreement, or the taking of action by the Issuer in
furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within five days
after the occurrence thereof, written notice in the form of an Officer's
Certificate of any event which with the giving of notice and the lapse of
time would become an Event of Default under clause (iii) or clause (v), its
status and what action the Issuer is taking or proposes to take with
respect thereto.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment. If
--------------------------------------------------
an Event of Default should occur and be continuing, then and in every such
case the Indenture Trustee or the Holders of Notes representing not less
than a majority of the Outstanding Amount of the Notes may declare all the
Notes to be immediately due and payable, by a notice in writing to the
Issuer (and to the Indenture Trustee if declared by Noteholders), and upon
any such
28
<PAGE>
declaration the unpaid principal amount of the Notes, together with accrued
and unpaid interest thereon through the date of acceleration, shall become
immediately due and payable.
At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has
been obtained by the Indenture Trustee as hereinafter in this Article V
---------
provided, the Holders of Notes representing not less than a majority of the
Outstanding Amount of the Notes, by written notice to the Issuer and the
Indenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay
(A) all payments of principal of and interest on all Notes
and all other amounts that would then be due hereunder or upon
such Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its
agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.12.
------------
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in
- -----------------
the payment of any interest on any Note when the same becomes due and
payable, and such default continues for a period of five days, or (ii)
default is made in the payment of the principal of or any installment of
the principal of any Note when the same becomes due and payable, the Issuer
will, upon demand of the Indenture Trustee, pay to it, for the benefit of
the Holders of the Notes, the whole amount then due and payable on such
Notes for principal and interest, with interest upon the overdue principal,
and, to the extent payment at such rate of interest shall be legally
enforceable, upon overdue installments of interest, at the applicable Note
Interest Rate borne by the Notes, and in addition thereto will pay such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, may institute a Proceeding for the collection of the sums so
due and unpaid, and may prosecute such Proceeding to judgment or final
decree, and may enforce the same against the Issuer or other obligor upon
29
<PAGE>
such Notes and collect in the manner provided by law out of the property of
the Issuer or other obligor upon such Notes, wherever situated, the moneys
adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 5.04, in its
------------
discretion, proceed to protect and enforce its rights and the rights of the
Noteholders, by such appropriate Proceedings as the Indenture Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other
proper remedy or legal or equitable right vested in the Indenture Trustee
by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United
States Code or any other applicable federal or state bankruptcy, insolvency
or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official
shall have been appointed for or taken possession of the Issuer or its
property or such other obligor or Person, or in case of any other
comparable judicial Proceedings relative to the Issuer or other obligor
upon the Notes, or to the creditors or property of the Issuer or such other
obligor, the Indenture Trustee, irrespective of whether the principal of
any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand pursuant to the provisions of this Section,
shall be entitled and empowered, by intervention in such Proceedings or
otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable
in order to have the claims of the Indenture Trustee (including any
claim for reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents, attorneys
and counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a result of negligence or bad
faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Holders of Notes allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
30
<PAGE>
and any trustee, receiver, liquidator, custodian or other similar official
in any such Proceeding is hereby authorized by each of such Noteholders to
make payments to the Indenture Trustee, and, in the event that the
Indenture Trustee shall consent to the making of payments directly to such
Noteholders, to pay to the Indenture Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor Indenture Trustee
except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt
on behalf of any Noteholder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder
thereof or to authorize the Indenture Trustee to vote in respect of the
claim of any Noteholder in any such proceeding except, as aforesaid, to
vote for the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture
Trustee without the possession of any of the Notes or the production
thereof in any trial or other Proceedings relative thereto, and any such
action or Proceedings instituted by the Indenture Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and
compensation of the Indenture Trustee, each predecessor Indenture Trustee
and their respective agents and attorneys, shall be for the ratable benefit
of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee
shall be held to represent all the Holders of the Notes, and it shall not
be necessary to make any Noteholder a party to any such Proceedings.
SECTION 5.04. Remedies; Priorities. (a) If an Event of Default shall
--------------------
have occurred and be continuing, the Indenture Trustee may do one or more
of the following (subject to Section 5.05):
------------
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys adjudged
due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights
and remedies of the Indenture Trustee and the Holders of the Notes;
and
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(iv) in the event that (i) all the Notes have been declared due
and payable pursuant to Section 5.02 or (ii) an Event of Default
described in Section 5.01(v) which results from the termination of the
Trust pursuant to Section 9.02 of the Trust Agreement has occurred,
sell the Trust Estate or any portion thereof or rights or interest
therein, at one or more public or private sales called and conducted
in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
- -------- -------
liquidate the Trust Estate following an Event of Default, other than an
Event of Default described in Section 5.01(i) or (ii) or an Event of
---------------
Default described in Section 5.01(v) which results from the termination of
the Trust pursuant to Section 9.02 of the Trust Agreement, unless (A) the
Holders of 100% of the Outstanding Amount of the Notes consent thereto, (B)
the proceeds of such sale or liquidation distributable to the Noteholders
are sufficient to discharge in full all amounts then due and unpaid upon
such Notes for principal and interest or (C) the Indenture Trustee
determines that the Trust Estate will not continue to provide sufficient
funds for the payment of principal of and interest on the Notes as they
would have become due if the Notes had not been declared due and payable,
and the Indenture Trustee obtains the consent of Holders of at least 66-
2/3% of the Outstanding Amount of the Notes. In determining such
sufficiency or insufficiency with respect to clause (B) and (C), the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose. Notwithstanding anything in this Section
5.04(a) to the contrary, in the event of the sale or liquidation of the
Trust Estate following an Event of Default which results from the
termination of the Trust pursuant to Section 9.02 of the Trust Agreement,
such sale or liquidation shall be accomplished pursuant to the terms and
conditions of Section 9.02 of the Trust Agreement and shall not be subject
to the terms and conditions set forth in the immediately preceding proviso.
(b) If the Indenture Trustee collects any money or property pursuant
to this Article V (i) following the acceleration of the maturities of the
---------
Notes pursuant to Section 5.02 (so long as such declaration shall not have
been rescinded or annulled) or (ii) following an Event of Default described
in Section 5.01(v) which results from the termination of the Trust pursuant
to Section 9.02 of the Trust Agreement, it shall pay out the money or
property (other than the Servicer's Yield, which may be retained by the
Servicer in accordance with Section 5.07 of the Sale and Servicing
Agreement) in the following order:
FIRST: to the Indenture Trustee for amounts due under Section
-------
6.07;
----
SECOND: to Noteholders for amounts due and unpaid on the Notes
for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for interest;
THIRD: to Holders of Class A-1 Notes for amounts due and unpaid
on the Class A-1 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-1 Notes for principal;
32
<PAGE>
FOURTH: to Holders of Class A-2 Notes for amounts due and unpaid
on the Class A-2 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-2 Notes for principal;
FIFTH: to Holders of Class A-3 Notes for amounts due and unpaid
on the Class A-3 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-3 Notes for principal; and
SIXTH: to the Issuer for distribution to the Certificateholders
pursuant to the Trust Agreement.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 15 days before
such record date, the Issuer shall mail to each Noteholder and the
Indenture Trustee a notice that states the record date, the payment date
and the amount to be paid.
SECTION 5.05. Optional Preservation of the Receivables. If the Notes
----------------------------------------
have been declared to be due and payable under Section 5.02 following an
------------
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Trust Estate. It is the desire of the parties
hereto and the Noteholders that there be at all times sufficient funds for
the payment of principal of and interest on the Notes, and the Indenture
Trustee shall take such desire into account when determining whether or not
to maintain possession of the Trust Estate. In determining whether to
maintain possession of the Trust Estate, the Indenture Trustee may, but
need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of
such proposed action and as to the sufficiency of the Trust Estate for such
purpose.
SECTION 5.06. Limitation of Suits. No Holder of any Note shall have
-------------------
any right to institute any Proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for
any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount
of the Notes have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its
own name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
33
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(v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of
any other Holders of Notes or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of
Notes, each representing less than a majority of the Outstanding Amount of
the Notes, the Indenture Trustee in its sole discretion may determine what
action, if any, shall be taken, notwithstanding any other provisions of
this Indenture.
SECTION 5.07. Unconditional Rights of Noteholders to Receive
----------------------------------------------
Principal and Interest. Notwithstanding any other provisions in this
- ----------------------
Indenture, the Holder of any Note shall have the right, which is absolute
and unconditional, to receive payment of the principal of and interest, if
any, on such Note on or after the respective due dates thereof expressed in
such Note or in this Indenture (or, in the case of redemption, on or after
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.
SECTION 5.08. Restoration of Rights and Remedies. If the Indenture
----------------------------------
Trustee or any Noteholder has instituted any Proceeding to enforce any
right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely
to the Indenture Trustee or to such Noteholder, then and in every such case
the Issuer, the Indenture Trustee and the Noteholders shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of
the Indenture Trustee and the Noteholders shall continue as though no such
Proceeding had been instituted.
SECTION 5.09. Rights and Remedies Cumulative. No right or remedy
------------------------------
herein conferred upon or reserved to the Indenture Trustee or to the
Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 5.10. Delay or Omission Not a Waiver. No delay or omission
------------------------------
of the Indenture Trustee or any Holder of any Note to exercise any right or
remedy accruing upon any Default or Event of Default shall impair any such
right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by
34
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this Article V or by law to the Indenture Trustee or to the Noteholders may
---------
be exercised from time to time, and as often as may be deemed expedient, by
the Indenture Trustee or by the Noteholders, as the case may be.
SECTION 5.11. Control by Noteholders. The Holders of a majority of
----------------------
the Outstanding Amount of the Notes shall have the right to direct the
time, method and place of conducting any Proceeding for any remedy
available to the Indenture Trustee with respect to the Notes or exercising
any trust or power conferred on the Indenture Trustee; provided that
--------
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) subject to the express terms of Section 5.04, any direction
------------
to the Indenture Trustee to sell or liquidate the Trust Estate shall
be by the Holders of Notes representing not less than 100% of the
Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.05 have been
------------
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee
by Holders of Notes representing less than 100% of the Outstanding
Amount of the Notes to sell or liquidate the Trust Estate shall be of
no force and effect; and
(iv) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction;
provided, however, that, subject to Section 6.01, the Indenture Trustee
- -------- ------- ------------
need not take any action that it determines might involve it in liability
or might materially adversely affect the rights of any Noteholders not
consenting to such action.
SECTION 5.12. Waiver of Past Defaults. Prior to the declaration of
-----------------------
the acceleration of the maturity of the Notes as provided in Section 5.02,
------------
the Holders of Notes of not less than a majority of the Outstanding Amount
of the Notes may waive any past Default or Event of Default and its
consequences except a Default (a) in payment of principal of or interest on
any of the Notes or (b) in respect of a covenant or provision hereof which
cannot be modified or amended without the consent of the Holder of each
Note. In the case of any such waiver, the Issuer, the Indenture Trustee
and the Holders of the Notes shall be restored to their former positions
and rights hereunder, respectively; provided that no such waiver shall
--------
extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have
occurred, for every purpose of this Indenture; provided that no such waiver
--------
shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereto.
35
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SECTION 5.13. Undertaking for Costs. All parties to this Indenture
---------------------
agree, and each Holder of any Note by such Holder's acceptance thereof
shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Indenture Trustee for any action
taken, suffered or omitted by it as Indenture Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; provided that the provisions of this
--------
Section shall not apply to (a) any suit instituted by the Indenture
Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any
Noteholder for the enforcement of the payment of principal of or interest
on any Note on or after the respective due dates expressed in such Note and
in this Indenture (or, in the case of redemption, on or after the
Redemption Date).
SECTION 5.14. 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, that may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Indenture Trustee, but will
suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 5.15. Action on Notes. The Indenture Trustee's right to seek
---------------
and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under
or with respect to this Indenture. Neither the lien of this Indenture nor
any rights or remedies of the Indenture Trustee or the Noteholders shall be
impaired by the recovery of any judgment by the Indenture Trustee against
the Issuer or by the levy of any execution under such judgment upon any
portion of the Trust Estate or upon any of the assets of the Issuer. Any
money or property collected by the Indenture Trustee shall be applied in
accordance with Section 5.04(b).
---------------
SECTION 5.16. Performance and Enforcement of Certain
--------------------------------------
Obligations. (a) Promptly following a request from the Indenture Trustee
- -----------
to do so and at the Seller's expense, the Issuer agrees to take all such
lawful action as the Indenture Trustee may request to compel or secure the
performance and observance by (x) the Seller and the Servicer, as
applicable, of each of their obligations to the Issuer under or in
connection with the Sale and Servicing Agreement or (y) CFSC of its
obligations under or in connection with the Purchase Agreement in
accordance with the terms thereof, and to exercise any and all rights,
remedies, powers and privileges lawfully available to the Issuer under or
in connection with the Sale and Servicing Agreement to the extent and in
the manner directed by the Indenture Trustee, including the transmission of
notices of default on the part of the Seller or the Servicer thereunder and
the institution of legal or administrative actions or proceedings to compel
or secure performance by the Seller or the Servicer of each of their
obligations under the Sale and Servicing Agreement.
36
<PAGE>
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and, at the direction (which direction shall be in
writing or by telephone (confirmed in writing promptly thereafter)) of the
Holders of at least 66-2/3% of the Outstanding Amount of the Notes shall,
exercise all rights, remedies, powers, privileges and claims of the Issuer
against the Seller or the Servicer under or in connection with the Sale and
Servicing Agreement, including the right or power to take any action to
compel or secure performance or observance by the Seller or the Servicer of
each of their obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under the Sale
and Servicing Agreement, and any right of the Issuer to take such action
shall be suspended.
(c) Promptly following a request from the Indenture Trustee to do so
and at the Seller's expense, the Issuer agrees to take all such lawful
action as the Indenture Trustee may request to compel or secure the
performance and observance by CFSC of each of its obligations to the Seller
under or in connection with the Purchase Agreement in accordance with the
terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the
Purchase Agreement to the extent and in the manner directed by the
Indenture Trustee, including the transmission of notices of default on the
part of the Seller thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by
CFSC of each of its obligations under the Purchase Agreement.
(d) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and, at the direction (which direction shall be in
writing or by telephone (confirmed in writing promptly thereafter)) of the
Holders of at least 66-2/3% of the Outstanding Amount of the Notes shall,
exercise all rights, remedies, powers, privileges and claims of the Seller
against CFSC under or in connection with the Purchase Agreement, including
the right or power to take any action to compel or secure performance or
observance by CFSC of each of its obligations to the Seller thereunder and
to give any consent, request, notice, direction, approval, extension or
waiver under the Purchase Agreement, and any right of the Seller to take
such action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee. (a) If an Event of
---------------------------
Default has occurred and is continuing, the Indenture Trustee shall
exercise the rights and powers vested in it by this Indenture and use the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
37
<PAGE>
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture
and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; provided, however, the Indenture
-------- -------
Trustee shall examine the certificates and opinions to determine
whether or not they conform on their face to the requirements of this
Indenture.
The Indenture Trustee shall not be required to determine, confirm or
recalculate the information contained in the Servicer's Certificate
delivered to it pursuant to the Sale and Servicing Agreement.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(i) this paragraph does not limit the effect of subsection
----------
6.01(b);
-------
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 5.11.
------------
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to subsections 6.01(a), (b) and (c);
------------------- --- ---
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing
with the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the
terms of this Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds to believe that repayments of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
38
<PAGE>
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of
the TIA.
SECTION 6.02. Rights of Indenture Trustee. (a) The Indenture
---------------------------
Trustee may rely on any document believed by it to be genuine and to have
been signed or presented by the proper person. The Indenture Trustee need
not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of,
or for the supervision of, any such agent, attorney, custodian or nominee
appointed with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within
its rights or powers; provided, however, that the Indenture Trustee's
-------- -------
conduct does not constitute wilful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of
such counsel.
SECTION 6.03. Individual Rights of Indenture Trustee. The Indenture
--------------------------------------
Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Issuer or its affiliates
with the same rights it would have if it were not Indenture Trustee. Any
Paying Agent, Note Registrar, co-registrar or co-paying agent may do the
same with like rights. However, the Indenture Trustee must comply with
Sections 6.11 and 6.12.
- ------------- ----
SECTION 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee
------------------------------
shall not be responsible for and makes no representation as to the validity
or adequacy of the Trust Estate, this Indenture or the Notes, it shall not
be accountable for the Issuer's use of the proceeds from the Notes, and it
shall not be responsible for any statement of the Issuer in the Indenture
or in any document issued in connection with the sale of the Notes or in
the Notes other than the Indenture Trustee's certificate of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and is
------------------
continuing and if it is known to a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall mail to
39
<PAGE>
each Noteholder notice of the Default within 90 days after it occurs.
Except in the case of a Default in payment of principal of or interest on
any Note (including payments pursuant to the mandatory redemption
provisions of such Note), the Indenture Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
SECTION 6.06. Reports by Indenture Trustee to Holders. The Indenture
---------------------------------------
Trustee shall deliver to each Noteholder such information as may be
required to enable such holder to prepare its federal and state income tax
returns, which shall include the information required to be distributed
pursuant to the second to last paragraph of Section 5.06 of the Sale and
------------
Servicing Agreement. The Indenture Trustee shall only be required to
provide to the Noteholders the information given to it by the Servicer.
The Indenture Trustee shall not be required to determine, confirm or
recompute any such information.
SECTION 6.07. Compensation and Indemnity. The Issuer shall cause the
--------------------------
Administrator to pay to the Indenture Trustee from time to time reasonable
compensation for its services. The Indenture Trustee's compensation shall
not be limited by any law on compensation of a trustee of an express trust.
The Issuer shall cause the Administrator to reimburse the Indenture Trustee
for all reasonable out-of-pocket expenses incurred or made by it, including
costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer shall cause the Administrator to
indemnify the Indenture Trustee against any and all loss, liability or
expense (including the fees of either in-house counsel or outside counsel,
but not both) incurred by it in connection with the administration of this
trust and the performance of its duties hereunder. The Indenture Trustee
shall notify the Issuer and the Administrator promptly of any claim for
which it may seek indemnity. Failure by the Indenture Trustee to so notify
the Issuer and the Administrator shall not relieve the Issuer or the
Administrator of its obligations hereunder. The Issuer shall cause the
Administrator to defend the claim and the Indenture Trustee may have
separate counsel and the Issuer shall or shall cause the Administrator to
pay the fees and expenses of such counsel. Neither the Issuer nor the
Administrator need reimburse any expense or indemnify against any loss,
liability or expense incurred by the Indenture Trustee through the
Indenture Trustee's own wilful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of a Default
specified in Section 5.01(iv) or (v) with respect to the Issuer, the
---------------- ---
expenses are intended to constitute expenses of administration under Title
11 of the United States Code or any other applicable federal or state
bankruptcy, insolvency or similar law.
Notwithstanding anything herein to the contrary, the Indenture
Trustee's right to enforce any of the Issuer's payment obligations pursuant
to this Section 6.07 shall be subject to the provisions of Section 11.17.
------------ -------------
40
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SECTION 6.08. Replacement of Indenture Trustee. No resignation or
--------------------------------
removal of the Indenture Trustee and no appointment of a successor
Indenture Trustee shall become effective until the acceptance of
appointment by the successor Indenture Trustee pursuant to this Section
-------
6.08. The Indenture Trustee may resign at any time by so notifying the
- ----
Issuer. The Holders of a majority in Outstanding Amount of the Notes may
remove the Indenture Trustee by so notifying the Indenture Trustee and may
appoint a successor Indenture Trustee. The Issuer shall remove the
Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
------------
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee, which
successor shall be, if CFSC is the Servicer, reasonably acceptable to the
Seller.
A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee and to the Issuer.
Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all
the rights, powers and duties of the Indenture Trustee under this
Indenture. The successor Indenture Trustee shall mail a notice of its
succession to Noteholders. The retiring Indenture Trustee shall promptly
transfer all property held by it as Indenture Trustee to the successor
Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of not less than a majority in
Outstanding Amount of the Notes may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
------------
Noteholder may petition any court of competent jurisdiction for the removal
of the Indenture Trustee and the appointment of a successor Indenture
Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's and the Administrator's obligations under
Section 6.07 shall continue for the benefit of the retiring Indenture
- ------------
Trustee.
SECTION 6.09. Successor Indenture Trustee by Merger. If the
-------------------------------------
Indenture Trustee consolidates with, merges or converts into, or transfers
all or substantially all its corporate trust
41
<PAGE>
business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation or banking association
without any further act shall be the successor Indenture Trustee. The
Indenture Trustee shall provide the Rating Agencies prior written notice of
any such transaction; provided that such corporation or banking association
--------
shall be otherwise qualified and eligible under Section 6.11.
------------
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Notes shall have been authenticated
but not delivered, any such successor to the Indenture Trustee may adopt
the certificate of authentication of any predecessor trustee, and deliver
such Notes so authenticated; and in case at that time any of the Notes
shall not have been authenticated, any successor to the Indenture Trustee
may authenticate such Notes either in the name of any predecessor hereunder
or in the name of the successor to the Indenture Trustee; and in all such
cases such certificates shall have the full force which it is anywhere in
the Notes or in this Indenture provided that the certificate of the
Indenture Trustee shall have.
SECTION 6.10. Appointment of Co-Trustee or Separate Indenture
-----------------------------------------------
Trustee. (a) Notwithstanding any other provisions of this Indenture, at
- -------
any time, for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Trust may at the time be located, the
Indenture Trustee shall have the power and may execute and deliver all
instruments to appoint one or more Persons reasonably acceptable to the
Issuer to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such
Person or Persons, in such capacity and for the benefit of the Noteholders,
such title to the Trust, or any part hereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and
trusts as the Indenture Trustee may consider necessary or desirable. No
co-trustee or separate trustee hereunder shall be required to meet the
terms of eligibility as a successor trustee under Section 6.11 and no
------------
notice to Noteholders of the appointment of any co-trustee or separate
trustee shall be required under Section 6.08 hereof.
------------
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or acts
are to be performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
42
<PAGE>
(iii) the Indenture Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them.
Every instrument appointing any separate trustee or co-trustee shall refer
to this Agreement and the conditions of this Article VI. Each separate
----------
trustee and co-trustee, upon its acceptance of the trusts conferred, shall
be vested with the estates or property specified in its instrument of
appointment, either jointly with the Indenture Trustee or separately, as
may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the
conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under
or in respect of this Agreement on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Indenture Trustee, to the
extent permitted by law, without the appointment of a new or successor
trustee.
SECTION 6.11. Eligibility; Disqualification. The Indenture Trustee
-----------------------------
shall at all times satisfy the requirements of TIA Sec. 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000
as set forth in its most recent published annual report of condition and
its long-term unsecured debt shall be rated at least Baa3 by Moody's and
BBB- by Standard & Poor's. The Indenture Trustee shall comply with TIA Sec.
310(b), including the optional provision permitted by the second sentence
of TIA Sec. 310(b)(9); provided, however, that there shall be excluded from
-------- -------
the operation of TIA Sec. 310(b)(1) any indenture or indentures under which
other securities of the issuer are outstanding if the requirements for such
exclusion set forth in TIA Sec. 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
------------------------------------------------
Indenture Trustee shall comply with TIA Sec. 311(a), excluding any creditor
relationship listed in TIA Sec. 311(b). A Indenture Trustee who has resigned
or been removed shall be subject to TIA Sec. 311(a) to the extent indicated.
SECTION 6.13. Appointment of Custodians. The Indenture Trustee may,
-------------------------
with the consent of the Servicer and notice to the Rating Agencies, appoint
The First National Bank of Chicago as Custodian to hold the Receivables
Files in accordance with the Custodial Agreement. Subject to this Article
VI, the Indenture Trustee agrees to comply with the terms of each Custodial
Agreement and to enforce the terms and provisions thereof against the
Custodian for the benefit of the Noteholders.
43
<PAGE>
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses
-------------------------------------------------------
of Noteholders. The Issuer will furnish or cause to be furnished to the
- --------------
Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in
such form as the Indenture Trustee may reasonably require, of the names and
addresses of the Holders of Notes as of such Record Date, (b) at such other
times as the Indenture Trustee may request in writing, within 30 days after
receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Indenture Trustee is the
-------- -------
Note Registrar, no such list shall be required to be furnished.
SECTION 7.02. Preservation of Information; Communications to
----------------------------------------------
Noteholders. (a) The Indenture Trustee shall preserve, in as current a
- -----------
form as is reasonably practicable, the names and addresses of the Holders
of Notes contained in the most recent list furnished to the Indenture
Trustee as provided in Section 7.01 and the names and addresses of Holders
------------
of Notes received by the Indenture Trustee in its capacity as Note
Registrar. The Indenture Trustee may destroy any list furnished to it as
provided in such Section 7.01 upon receipt of a new list so furnished.
------------
(b) Noteholders may communicate, pursuant to TIA Sec. 312(b), with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Sec. 312(c).
SECTION 7.03. Reports by Issuer. (a) The Issuer shall:
-----------------
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which the Issuer
may be required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA Sec. 313(c))
such summaries of any information, documents and reports required to
be filed by the Issuer pursuant to clauses (i) and (ii)
----------- ----
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of this Section 7.03(a) as may be required by rules and regulations
---------------
prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.04. Reports by Indenture Trustee. If required by
----------------------------
TIA Sec. 313(a), within 60 days after each March 31 beginning with March 31,
1997, the Indenture Trustee shall mail to each Noteholder as required by
TIA Sec. 313(c) a brief report dated as of such date that complies with TIA Sec.
313(a). The Indenture Trustee also shall comply with TIA Sec. 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each stock
exchange, if any, on which the Notes are listed. The Issuer shall notify
the Indenture Trustee if and when the Notes are listed on any stock
exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money. Except as otherwise expressly
-------------------
provided herein, the Indenture Trustee may demand payment or delivery of,
and shall receive and collect, directly and without intervention or
assistance of any fiscal agent or other intermediary, all money and other
property payable to or receivable by the Indenture Trustee pursuant to this
Indenture. The Indenture Trustee shall apply all such money received by it
as provided in this Indenture. Except as otherwise expressly provided in
this Indenture, if any default occurs in the making of any payment or
performance under any agreement or instrument that is part of the Trust
Estate, the Indenture Trustee may take such action as may be appropriate to
enforce such payment or performance, including the institution and
prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
---------
SECTION 8.02. Trust Accounts. (a) On or prior to the Closing Date,
--------------
the Issuer shall cause the Servicer to establish and maintain, in the name
of the Indenture Trustee, for the benefit of the Noteholders and the
Certificateholders the Trust Accounts as provided in Section 5.01 of the
Sale and Servicing Agreement.
(b) On or before the second Business Day preceding each Distribution
Date, the Total Distribution Amount with respect to the preceding
Collection Period will be deposited in the Collection Account as provided
in Section 5.02 of the Sale and Servicing Agreement. On or before the
Business Day preceding each Distribution Date, the Noteholders'
Distributable Amount with respect to the preceding Collection Period will
be transferred from the Collection Account and/or the Reserve Account, as
applicable, to the Note Distribution Account as provided in Sections 5.04
and 5.05 of the Sale and Servicing Agreement.
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(c) On each Distribution Date and Redemption Date, the Indenture
Trustee shall distribute all amounts on deposit in the Note Distribution
Account to Noteholders in respect of the Notes to the extent of amounts due
and unpaid on the Notes for principal and interest in the following amounts
and in the following order of priority (except as otherwise provided in
Section 5.04(b)):
- ---------------
(i) accrued and unpaid interest on the Notes; provided that if
--------
there are not sufficient funds in the Note Distribution Account to pay
the entire amount of accrued and unpaid interest then due on the
Notes, the amount in Note Distribution Account shall be applied to the
payment of such interest on each class of the Notes pro rata on the
basis of the total such interest due on the Notes;
(ii) to the Holders of the Class A-l Notes until the Outstanding
Amount of the Class A-l Notes is reduced to zero;
(iii) to the Holders of the Class A-2 Notes until the Outstanding
Amount of the Class A-2 Notes is reduced to zero; and
(iv) to the Holders of the Class A-3 Notes until the Outstanding
Amount of the Class A-3 Notes is reduced to zero.
SECTION 8.03. General Provisions Regarding Accounts. (a) So long as
-------------------------------------
no Default or Event of Default shall have occurred and be continuing, all
or a portion of the funds in the Trust Accounts shall be invested in
Eligible Investments and (except with respect to the Certificate
Distribution Account) reinvested by the Indenture Trustee upon Issuer
Order, subject to the provisions of Section 5.01(b) of the Sale and
Servicing Agreement (which Issuer Order may be upon direction of the
Servicer). All income or other gain from investments of moneys deposited
in the Trust Accounts shall be deposited by the Indenture Trustee in the
Collection Account, and any loss resulting from such investments shall be
charged to such account. The Issuer will not direct the Indenture Trustee
to make any investment of any funds or to sell any investment held in any
of the Trust Accounts unless the security interest granted and perfected in
such account will continue to be perfected in such investment or the
proceeds of such sale, and, in connection with any direction to the
Indenture Trustee to make any such investment or sale, if requested by the
Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an
Opinion of Counsel, acceptable to the Indenture Trustee, to such effect.
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in
---------------
any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included
therein except for losses attributable to the Indenture Trustee's failure
to make payments on such Eligible Investments issued by the Indenture
Trustee, in its commercial capacity as principal obligor and not as
trustee, in accordance with their terms.
(c) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Indenture Trustee by
12:00 noon New York Time (or such other time as may be agreed by the Issuer
and Indenture Trustee) on any Business Day; or (ii)
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a Default or Event of Default shall have occurred and be continuing with
respect to the Notes but the Notes shall not have been declared due and
payable pursuant to Section 5.02, or, if such Notes shall have been
------------
declared due and payable following an Event of Default, amounts collected
or receivable from the Trust Estate are being applied in accordance with
Section 5.05 as if there had not been such a declaration; then the
- ------------
Indenture Trustee shall, to the fullest extent practicable, invest and
reinvest funds in the Trust Accounts in Eligible Investments maturing prior
to the succeeding Distribution Date in accordance with Section 5.01(b) of
the Sale and Servicing Agreement.
SECTION 8.04. Release of Trust Estate. (a) Subject to the payment
-----------------------
of its fees and expenses pursuant to Section 6.07, the Indenture Trustee
------------
may, and when required by the provisions of this Indenture shall, execute
instruments to release property from the lien of this Indenture, or convey
the Indenture Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture
Trustee as provided in this Article VIII shall be bound to ascertain the
------------
Indenture Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07
------------
have been paid, release any remaining portion of the Trust Estate that
secured the Notes from the lien of this Indenture and release to the Issuer
or any other Person entitled thereto any funds then on deposit in the Trust
Accounts. The Indenture Trustee shall release property from the lien of
this Indenture pursuant to this Section 8.04(b) only upon receipt of an
---------------
Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and (if required by the TIA) Independent Certificates in accordance
with TIA Sec.Sec. 314(c) and 314(d)(1) meeting the applicable requirements of
Section 11.01.
- -------------
SECTION 8.05. Opinion of Counsel. The Indenture Trustee shall
------------------
receive at least seven days' notice when requested by the Issuer to take
any action pursuant to Section 8.04(a), accompanied by copies of any
---------------
instruments involved, and the Indenture Trustee shall also require, as a
condition to such action, an Opinion of Counsel, in form and substance
satisfactory to the Indenture Trustee, stating the legal effect of any such
action, outlining the steps required to complete the same, and concluding
that all conditions precedent to the taking of such action have been
complied with and such action will not materially and adversely impair the
security for the Notes or the rights of the Noteholders in contravention of
the provisions of this Indenture; provided, however, that such Opinion of
-------- -------
Counsel shall not be required to express an opinion as to the fair value of
the Trust Estate. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate
or other instrument delivered to the Indenture Trustee in connection with
any such action.
47
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders.
------------------------------------------------------
(a) Without the consent of the Holders of any Notes but with prior notice
to the Rating Agencies, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter
into one or more indentures supplemental hereto (which shall conform to the
provisions of the TIA as in force at the date of the execution thereof), in
form satisfactory to the Indenture Trustee, for any of the following
purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption
by any such successor of the covenants of the Issuer herein and in the
Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with
any other provision herein or in any supplemental indenture or to make
any other provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture; provided that
--------
such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of the Holders
of the Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add
to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by
more than one trustee, pursuant to the requirements of Article VI; or
----------
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
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<PAGE>
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Holders of the
Notes but with prior notice to the Rating Agencies, enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions
to, or changing in any manner or eliminating any of the provisions of, this
Indenture or of modifying in any manner the rights of the Holders of the
Notes under this Indenture; provided, however, that such action shall not,
-------- -------
as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Noteholder.
SECTION 9.02. Supplemental Indentures with Consent of
---------------------------------------
Noteholders. The Issuer and the Indenture Trustee, when authorized by an
- -----------
Issuer Order, also may, with prior notice to the Rating Agencies and with
the consent of the Holders of not less than a majority of the Outstanding
Amount of the Notes, by Act of such Holders delivered to the Issuer and the
Indenture Trustee, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to, or changing in any
manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that no such supplemental indenture shall,
-------- -------
without the consent of the Holder of each Outstanding Note affected
thereby:
(i) change the date of payment of any installment of principal of
or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change any place
of payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article V, to
---------
the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the Notes,
the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences
provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell
or liquidate the Trust Estate pursuant to Section 5.04;
------------
49
<PAGE>
(v) modify any provision of this Section 9.02 except to increase
------------
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified
or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(vi) modify any of the provisions of this Indenture in such manner
as to affect the calculation of the amount of any payment of interest
or principal due on any Note on any Distribution Date (including the
calculation of any of the individual components of such calculation)
or to affect the rights of the Holders of Notes to the benefit of any
provisions for the mandatory redemption of the Notes contained herein;
or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security
provided by the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The
Indenture Trustee shall not be liable for any such determination made in
good faith.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the
substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee
of any supplemental indenture pursuant to this Section, the Indenture
Trustee shall mail to the Holders of the Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture
Trustee to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Execution of Supplemental Indentures. In executing, or
------------------------------------
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts
----------
created by this Indenture, the Indenture Trustee shall be entitled to
receive, and subject to Sections 6.01 and 6.02, shall be fully protected in
------------- ----
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights,
duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indenture. Upon the execution
--------------------------------
of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby,
50
<PAGE>
and the respective rights, limitations of rights, obligations, duties,
liabilities and immunities under this Indenture of the Indenture Trustee,
the Issuer and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.05. Conformity With Trust Indenture Act. Every amendment
-----------------------------------
of this Indenture and every supplemental indenture executed pursuant to
this Article IX shall conform to the requirements of the TIA as then in
----------
effect so long as this Indenture shall then be qualified under the TIA.
SECTION 9.06. Reference in Notes to Supplemental Indentures. Notes
---------------------------------------------
authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
----------
Trustee shall, bear a notation in form approved by the Indenture Trustee as
to any matter provided for in such supplemental indenture. If the Issuer
or the Indenture Trustee shall so determine, new Notes so modified as to
conform, in the opinion of the Indenture Trustee and the Issuer, to any
such supplemental indenture may be prepared and executed by the Issuer and
authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Notes.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. Redemption. (a) The Class A-3 Notes are subject to
----------
redemption in whole, but not in part, at the direction of the Servicer
pursuant to Section 9.01(a) of the Sale and Servicing Agreement, on any
Distribution Date after the Class A-1 Notes and the Class A-2 Notes have
been paid in full on which the Servicer exercises the option to purchase
the Owner Trust Estate pursuant to said Section 9.01(a) of the Sale and
Servicing Agreement; provided, however, that such purchase is subject to
-------- -------
such payment resulting in the Issuer having available funds sufficient to
pay the Redemption Price for the Class A-3 Notes and to reduce the
Certificate Balance to zero (together with payment to the
Certificateholders of accrued and unpaid interest on the Certificates at
the Pass-Through Rate). The Servicer or the Issuer shall furnish the
Rating Agencies notice of such redemption. If the Class A-3 Notes are to
be redeemed pursuant to this Section 10.01(a), the Servicer or the Issuer
----------------
shall furnish notice of such election to the Indenture Trustee not later
than 15 days prior to the Redemption Date, and the Issuer shall deposit
with the Indenture Trustee in the Note Distribution Account the Redemption
Price of the Class A-3 Notes to be redeemed whereupon all such Class A-3
Notes shall be due and payable on the Redemption Date upon the furnishing
of a notice complying with Section 10.02 to each Holder of the Notes.
-------------
(b) In the event that the assets of the Trust are sold pursuant to
Section 9.02 of the Trust Agreement, all amounts on deposit in the Note
Distribution Account shall be paid to the
51
<PAGE>
Noteholders up to the Outstanding Amount of the Notes and all accrued and
unpaid interest thereon. If amounts are to be paid to Noteholders pursuant
to this Section 10.01(b), the Servicer or the Issuer shall, to the extent
----------------
practicable, furnish notice of such event to the Indenture Trustee not
later than 15 days prior to the Redemption Date whereupon all such amounts
shall be payable on the Redemption Date.
SECTION 10.02. Form of Redemption Notice. (a) Notice of redemption
-------------------------
under Section 10.01(a) shall be given by the Indenture Trustee by
----------------
first-class mail, postage prepaid, mailed not less than five days prior to
the applicable Redemption Date to each Holder of Notes, as of the close of
business on the Record Date preceding the applicable Redemption Date, at
such Holder's address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for payment
of the Redemption Price (which shall be the office or agency of the
Issuer to be maintained as provided in Section 3.02).
------------
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give
notice of redemption, or any defect therein, to any Holder of any Note
shall not impair or affect the validity of the redemption of any other
Note.
(b) Prior notice of redemption under Section 10.01(b) is not required
----------------
to be given to Noteholders.
SECTION 10.03. Notes Payable on Redemption Date. The Notes or
--------------------------------
portions thereof to be redeemed shall, following notice of redemption as
required by Section 10.02 (in the case of redemption pursuant to Section
------------- -------
10.01(a)), on the Redemption Date become due and payable at the Redemption
- --------
Price and (unless the Issuer shall default in the payment of the Redemption
Price) no interest shall accrue on the Redemption Price for any period
after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and Opinions etc. (a) Upon
-----------------------------------------
any application or request by the Issuer to the Indenture Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish
to the Indenture Trustee (i) an Officer's Certificate stating that
52
<PAGE>
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with, (ii) an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent,
if any, have been complied with and (iii) (if required by the TIA) an
Independent Certificate from a firm of certified public accountants meeting
the applicable requirements of this Section, except that, in the case of
any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Indenture, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as
to whether or not such covenant or condition has been complied with;
and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other
property or securities with the Indenture Trustee that is to be made
the basis for the release of any property or securities subject to the
lien of this Indenture, the Issuer shall, in addition to any
obligation imposed in Section 11.01(a) or elsewhere in this Indenture,
----------------
furnish to the Indenture Trustee an Officer's Certificate certifying
or stating the opinion of each person signing such certificate as to
the fair value (within 90 days of such deposit) to the Issuer of the
Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(i) above, the Issuer shall also deliver to the Indenture Trustee an
Independent Certificate as to the same matters, if the fair value to
the Issuer of the securities to be so deposited and of all other such
securities made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Issuer, as set
forth in the certificates delivered pursuant to clause (i) above and
this clause (ii), is 10% or more of the Outstanding Amount of the
Notes, but such a certificate need not be furnished with respect to
any securities so deposited if the fair value thereof to the Issuer as
set forth in the related Officer's Certificate is less than $25,000 or
less than one percent of the Outstanding Amount of the Notes.
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(iii) Other than with respect to the release of any Purchased
Receivables or Liquidated Receivables, whenever any property or
securities are to be released from the lien of this Indenture, the
Issuer shall also furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within 90 days of such release)
of the property or securities proposed to be released and stating that
in the opinion of such person the proposed release will not impair the
security under this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Indenture Trustee an
Independent Certificate as to the same matters if the fair value of
the property or securities and of all other property, other than
Purchased Receivables and Liquidated Receivables, or securities
released from the lien of this Indenture since the commencement of the
then current calendar year, as set forth in the certificates required
by clause (iii) above and this clause (iv), equals 10% or more of the
Outstanding Amount of the Notes, but such certificate need not be
furnished in the case of any release of property or securities if the
fair value thereof as set forth in the related Officer's Certificate
is less than $25,000 or less than one percent of the then Outstanding
Amount of the Notes.
(v) Notwithstanding Section 2.09 or any other provision of
------------
this Section, the Issuer may (A) collect, liquidate, sell or otherwise
dispose of Receivables and Financed Equipment as and to the extent
permitted or required by the Basic Documents and (B) make cash
payments out of the Trust Accounts as and to the extent permitted or
required by the Basic Documents.
SECTION 11.02. Form of Documents Delivered to Indenture Trustee. In
------------------------------------------------
any case where several matters are required to be certified by, or covered
by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but
one such Person may certify or give an opinion with respect to some matters
and one or more other such Persons as to other matters, and any such Person
may certify or give an opinion as to such matters in one or several
documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Servicer, the Seller, the
Issuer or the Administrator, stating that the information with respect to
such factual matters is in the possession of the Servicer, the Seller, the
Issuer or the Administrator, unless such counsel
54
<PAGE>
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term
hereof, it is intended that the truth and accuracy, at the time of the
granting of such application or at the effective date of such certificate
or report (as the case may be), of the facts and opinions stated in such
document shall in such case be conditions precedent to the right of the
Issuer to have such application granted or to the sufficiency of such
certificate or report. The foregoing shall not, however, be construed to
affect the Indenture Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in
Article VI.
- ----------
SECTION 11.03. Acts of Noteholders. (a) Any request, demand,
-------------------
authorization, direction, notice, consent, waiver or other action provided
by this Indenture to be given or taken by Noteholders may be embodied in
and evidenced by one or more instruments of substantially similar tenor
signed by such Noteholders in person or by agents duly appointed in
writing; and except as herein otherwise expressly provided such action
shall become effective when such instrument or instruments are delivered to
the Indenture Trustee, and, where it is hereby expressly required, to the
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 6.01)
------------
conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture
Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be
done by the Indenture Trustee or the Issuer in reliance thereon, whether or
not notation of such action is made upon such Note.
SECTION 11.04. Notices, etc. to Indenture Trustee, Issuer and Rating
-----------------------------------------------------
Agencies. Any request, demand, authorization, direction, notice, consent,
- --------
waiver or Act of Noteholders or other
55
<PAGE>
documents provided or permitted by this Indenture to be made upon, given or
furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Indenture Trustee and
received at its Corporate Trust Office, or
(b) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and
mailed, first-class, postage prepaid, to the Issuer addressed to:
Caterpillar Financial Asset Trust 1996-A, in care of Chemical Bank
Delaware, as Owner Trustee, 1201 Market Street, 9th Floor, Wilmington,
Delaware 19801, Attention: Corporate Trust Administration Department,
with a copy to the Administrator, at the following
address: Caterpillar Financial Services Corporation, 1822 West End
Avenue, Nashville, Tennessee 37203-1071 or at any other address
previously furnished in writing to the Indenture Trustee by Issuer or
the Administrator. The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Indenture Trustee.
(c) the Rating Agencies by the Issuer, the Indenture Trustee or
the Owner Trustee shall be sufficient for every purpose hereunder if
in writing, personally delivered or mailed by certified mail, return
receipt requested to (i) in the case of Moody's, at the following
address: Moody's Investors Service, Inc., ABS Monitoring Department,
99 Church Street, New York, New York 10007 and (ii) in the case of
Standard & Poor's, at the following address: Standard & Poor's Ratings
Services, 26 Broadway (10th Floor), New York, New York 10004,
Attention of Asset Backed Surveillance Department; or as to each of
the foregoing, at such other address as shall be designated by written
notice to the other parties.
SECTION 11.05. Notices to Noteholders; Waiver. Where this Indenture
------------------------------
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class, postage prepaid to each Noteholder
affected by such event, at such Noteholder's address as it appears on the
Note Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Noteholders is given by mail, neither the failure to mail such
notice nor any defect in any notice so mailed to any particular Noteholder
shall affect the sufficiency of such notice with respect to other
Noteholders, and any notice that is mailed in the manner herein provided
shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent
of such notice. Waivers of notice by Noteholders shall be filed with the
Indenture Trustee but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such a waiver.
56
<PAGE>
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture
Trustee shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or
obligations created hereunder and shall not under any circumstance
constitute a Default or Event of Default.
SECTION 11.06. Alternate Payment and Notice
----------------------------
Provisions. Notwithstanding any provision of this Indenture or any of the
- ----------
Notes to the contrary, to the extent satisfactory to the Indenture Trustee,
the Issuer may enter into any agreement with any Holder of a Note providing
for a method of payment, or notice by the Indenture Trustee or any Paying
Agent to such Holder, that is different from the methods provided for in
this Indenture for such payments or notices. The Issuer will furnish to
the Indenture Trustee a copy of each such agreement and the Indenture
Trustee will cause payments to be made and notices to be given in
accordance with such agreements.
SECTION 11.07. Conflict with Trust Indenture Act. If any provision
---------------------------------
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the
TIA, such required provision shall control.
The provisions of TIA Sec.Sec. 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
SECTION 11.08. Effect of Headings and Table of Contents. The Article
----------------------------------------
and Section headings herein and the Table of Contents are for convenience
only and shall not affect the construction hereof.
SECTION 11.09. Successors and Assigns. All covenants and agreements
----------------------
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not.
All covenants and agreements of the Indenture Trustee in this
Indenture shall bind its successors, co-trustees and agents of the
Indenture Trustee.
SECTION 11.10. Separability. In case any provision in this Indenture
------------
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
SECTION 11.11. Benefits of Indenture. Nothing in this Indenture or
---------------------
in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person
57
<PAGE>
with an ownership interest in any part of the Trust Estate, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
SECTION 11.12. Legal Holidays. In any case where the date on which
--------------
any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on
such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the date on which nominally due, and no
interest shall accrue for the period from and after any such nominal date.
SECTION 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. Counterparts. This Indenture may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and
the same instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject
----------------------
to recording in any appropriate public recording offices, such recording is
to be effected by the Issuer and at its expense accompanied by an Opinion
of Counsel (which may be counsel to the Indenture Trustee or any other
counsel reasonably acceptable to the Indenture Trustee) to the effect that
such recording is necessary either for the protection of the Noteholders or
any other Person secured hereunder or for the enforcement of any right or
remedy granted to the Indenture Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken, directly
----------------
or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee or the Indenture Trustee on the Notes or under this Indenture or
any certificate or other writing delivered in connection herewith or
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except
as any such Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any
unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Article VI, VII and VIII of the
Trust Agreement.
58
<PAGE>
SECTION 11.17. No Petition. The Indenture Trustee, by entering into
-----------
this Indenture, and each Noteholder, by accepting a Note, hereby covenant
and agree that they will not at any time institute against the Seller or
the Trust, or voluntarily join in any institution against the Seller or the
Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States
federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the Basic
Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable
----------
prior notice, it will permit any representative of the Indenture Trustee,
during the Issuer's normal business hours, to examine all the books of
account, records, reports, and other papers of the Issuer, to make copies
and extracts therefrom, to cause such books to be audited by Independent
certified public accountants, and to discuss the Issuer's affairs, finances
and accounts with the Issuer's officers, employees, and Independent
certified public accountants, all at such reasonable times and as often as
may be reasonably requested. The Indenture Trustee shall, and shall cause
its representatives, to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable
applications for confidential treatment are unavailing) and except to the
extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
59
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto
duly authorized, all as of the day and year first above written.
CATERPILLAR FINANCIAL ASSET
TRUST 1996-A,
By: CHEMICAL BANK DELAWARE, not in
its individual capacity but
solely as Owner Trustee,
By: /s/ John J. Cashin
-----------------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but as
Indenture Trustee,
By: /s/ Barbara G. Grosse
-----------------------------------------
Name: Barbara G. Grosse
Title: Assistant Vice President
<PAGE>
STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared John J. Cashin known to
me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said
national banking association and that she/he executed the same as the
corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 22nd day of May,
1996.
__________________________
Notary Public
[Seal]
My commission expires:
______________________
61
<PAGE>
STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared Barbara G. Grosse known
to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of
the said Delaware banking corporation and that she/he executed the same as
the corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 22nd day of May,
1996.
__________________________
Notary Public
[Seal]
My commission expires:
______________________
62
<PAGE>
EXHIBIT A
SCHEDULE OF RECEIVABLES
A-1
<PAGE>
EXHIBIT B
FORM OF SALE AND SERVICING AGREEMENT
See Exhibit 4.3(A) filed herewith.
B-1
<PAGE>
EXHIBIT C
FORM OF DEPOSITORY AGREEMENT
C-1
<PAGE>
EXHIBIT D
FORM OF NOTE
REGISTERED $___________*
No. ____
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.________
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) - ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
[THIS NOTE WAS ISSUED ON MAY 22, 1996. IT IS POSSIBLE THAT APPLICABLE
LAW AND PROPOSED TREASURY REGULATIONS COULD BE INTERPRETED TO PROVIDE THAT
ALL INTEREST PAYMENTS ON THIS NOTE ARE TO BE TREATED AS PART OF THE STATED
REDEMPTION PRICE AT MATURITY OF THIS NOTE (I.E., PRINCIPAL) THEREBY CAUSING
THIS NOTE TO BE TREATED AS HAVING BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT
("OID") FOR FEDERAL INCOME TAX PURPOSES. IN SUCH CASE, THE FOLLOWING
INFORMATION WOULD BE APPLICABLE, ASSUMING THAT THIS NOTE PAYS IN ACCORDANCE
WITH PROJECTED CASH FLOWS BASED ON CERTAIN ASSUMPTIONS USED IN PRICING THE
NOTES: (I) THE AMOUNT OF OID AS A PERCENTAGE OF THE ORIGINAL PRINCIPAL
AMOUNT OF THIS NOTE WOULD BE APPROXIMATELY ____%; AND (II)
- --------------------
* Denominations of $1,000 and integral multiples thereof.
D-1
<PAGE>
THE ANNUAL YIELD OF THIS NOTE FOR PURPOSES OF COMPUTING OID WOULD BE
APPROXIMATELY ___% PER ANNUM. THE ACTUAL YIELD TO MATURITY AND OID ON THIS
CERTIFICATE MAY DIFFER FROM THE PROJECTED AMOUNTS. THE PREPAYMENT
ASSUMPTION USED IN DETERMINING THE ANNUAL YIELD FOR FEDERAL INCOME TAX
PURPOSES IS ___% OF CPR.]
D-2
<PAGE>
CATERPILLAR FINANCIAL ASSET TRUST 1996-A
[5.418%] [5.90%] [6.30%] [CLASS A-l] [CLASS A-2]
[CLASS A-3] [MONEY MARKET]
ASSET BACKED NOTES
Caterpillar Financial Asset Trust 1996-A, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as
the "Issuer"), for value received, hereby promises to pay to [_________],
or registered assigns, the principal sum of [____________] DOLLARS payable
on each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $[INSERT INITIAL
PRINCIPAL AMOUNT OF NOTE] and the denominator of which is [$85,000,000 [for
Class A-1 Notes]] [$139,000,000 [for Class A-2 Notes]] [$133,021,000 [for
Class A-3 Notes] ] by (ii) the aggregate amount, if any, payable from the
Note Distribution Account in respect of principal on the [Class A-1] [Class
A-2] [Class A-3] Notes pursuant to Section 8.02(c) of the Indenture;
---------------
provided, however, entire unpaid principal amount of this Note shall be due
- -------- -------
and payable on the earlier of [the May 1997 Distribution Date [for Class
A-1]] [the July 1999 Distribution Date [for Class A-2]] [and May 2002
Distribution for the [Class A-3]] and the Redemption Date, if any, pursuant
to Section 10.01(a) of the Indenture. No payments of principal of the
----------------
Class A-2 Notes shall be made until the principal of the Class A-l Notes
has been paid in its entirety, and no payments of principal of the Class A-
3 Notes shall be made until the principal of the Class A-1 Notes and the
Class A-2 Notes has been paid in its entirety. The Issuer will pay
interest on this Note at the [Class A-1] [Class A-2] [Class A-3] Note
Interest Rate on each Distribution Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date after giving effect to all
payments of principal made on such preceding Distribution Date (or in the
case of the first Distribution Date, on the initial principal amount of
this Note). Interest on this Note will accrue for each Distribution Date
from and including the most recent Distribution Date on which interest has
been paid to but excluding such Distribution Date or, for the initial
Distribution Date from May 22, 1996 to but excluding such Distribution
Date. Interest will be computed on the basis of a 360-day year of twelve
30-day months. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of
this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
D-3
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this
Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: CATERPILLAR FINANCIAL ASSET
TRUST 1996-A,
By:Chemical Bank Delaware, not in
its individual capacity but
solely as Owner Trustee under
the Trust Agreement,
By:_____________________________
Name:
Title:
D-4
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Indenture Trustee,
By:____________________________________
Name:
Title:
D-5
<PAGE>
[REVERSE OF NOTE]
This Note is one of the [Class A-1] [Class A-2] [Class A-3] Notes of a
duly authorized issue of Notes of the Issuer, designated as its [5.418%]
[5.90%] [6.30%] [Class A-1] [Class A-2] [Class A-3] [Money Market] Asset
Backed Notes (herein called the "Notes"), all issued under an Indenture
dated as of May 1, 1996 (such indenture, as supplemented or amended, is
herein called the "Indenture"), between the Issuer and The First National
Bank of Chicago, as trustee (the "Indenture Trustee", which term includes
any successor Indenture Trustee under the Indenture), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the
Issuer, the Indenture Trustee and the Holders of the Notes. The Notes are
subject to all terms of the Indenture. All terms used in this Note that
are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Distribution Date in an
amount described on the face hereof. "Distribution Date" means the 25th
-----------------
day of each calendar month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing June 25, 1996.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the [[May 1997] Distribution
Date [for Class A-1]] [the [July 1999] Distribution Date [for Class A-2]
[the May 2002 Distribution Date [for Class A-3]] and the Redemption Date,
if any, pursuant to Section 10.01(a) of the Indenture. Notwithstanding the
----------------
foregoing, the entire unpaid principal amount of the Notes shall be due and
payable on the date on which an Event of Default shall have occurred and be
continuing and the Indenture Trustee or the Holders of the Notes
representing a majority of the Outstanding Amount of the Notes have
declared the Notes to be immediately due and payable in the manner provided
in Section 5.02 of the Indenture. All principal payments on the Notes of a
------------
Class shall be made pro rata to the Noteholders of such Class entitled
thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not
in full payment of this Note, shall be made by check mailed to the Person
whose name appears as the Registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee.
Such checks shall be mailed to the Person entitled thereto at the address
of such Person as it appears on the Note Register as of the applicable
Record Date without requiring that this Note be submitted for notation of
payment. Any reduction in the principal amount of this Note (or any one or
more Predecessor Notes) effected by any payments made on any Distribution
Date
D-6
<PAGE>
shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Distribution Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the Registered Holder hereof as of the Record
Date preceding such Distribution Date by notice mailed within five days of
such Distribution Date and the amount then due and payable shall be payable
only upon presentation and surrender of this Note at the Indenture
Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City
of New York.
The Issuer shall pay interest on overdue installments of interest at
the [Class A-l] [Class A-2] [Class A-3] Note Interest Rate to the extent
lawful.
[As provided in the Indenture, the Class A-3 Notes may be redeemed in
whole, but not in part, at the option of the Servicer, on any Distribution
Date on or after the date on which the Pool Balance is less than or equal
to ten percent of the Initial Pool Balance.]
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note
Register upon surrender of this Note for registration of transfer at the
office or agency designated by the issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof
or his attorney duly authorized in writing, with such signature guaranteed
by a commercial bank or trust company located, or having a correspondent
located, in The City of New York or the city in which the Corporate Trust
Office is located, or a member firm of a national securities exchange, and
such other documents as the Indenture Trustee may require, and thereupon
one or more new Notes of authorized denominations and in the same aggregate
principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to
pay a sum sufficient to cover any tax or other governmental charge that may
be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or the Owner Trustee
in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed and except
that any such partner, owner or beneficiary shall be fully liable, to the
extent
D-7
<PAGE>
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to
such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that
by accepting the benefits of the Indenture that such Noteholder will not at
any time institute against the Trust or the Seller, or join in any
institution against the Trust or the Seller of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under
any United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the Basic
Documents.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the
day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or
not this Note be overdue, and neither the Issuer, the Indenture Trustee nor
any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Issuer and the rights of the Holders of the Notes under the Indenture
at any time by the Issuer with the consent of the Holders of Notes
representing a majority of the Outstanding Amount of all Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders
of Notes representing specified percentages of the Outstanding Amount of
the Notes, on behalf of the Holders of all the Notes, to waive compliance
by the Issuer with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note (or any one of more Predecessor Notes)
shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Indenture Trustee and
the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set
forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and
D-8
<PAGE>
remedies of the parties hereunder and thereunder shall be determined in
accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the issuer, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, place, and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither The First National Bank of Chicago
in its individual capacity, any owner of a beneficial interest in the
Issuer, nor any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on, or performance of, or omission to perform, any
of the covenants, obligations or indemnifications contained in this Note or
the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Owner Trustee for
the sole purposes of binding the interests of the Owner Trustee in the
assets of the Issuer. The Holder of this Note by the acceptance hereof
agrees that, except as expressly provided in the Basic Documents in the
case of an Event of Default under the Indenture, the Holder shall have no
claim against any of the foregoing for any deficiency, loss or claim
therefrom; provided, however, that nothing contained herein shall be taken
-------- -------
to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
D-9
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
______________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _____________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: ___________________ ______________________*
Signature Guaranteed:
- --------------------
*
NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change
whatsoever.
D-10
Exhibit 4.2(A)
[EXECUTION COPY]
CATERPILLAR FINANCIAL ASSET TRUST 1996-A
AMENDED AND RESTATED TRUST AGREEMENT
between
CATERPILLAR FINANCIAL FUNDING CORPORATION,
as Seller
and
CHEMICAL BANK DELAWARE,
as Owner Trustee
Dated as of May 1, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Capitalized Terms . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions . . . . . . 3
ARTICLE II
ORGANIZATION
SECTION 2.01. Name . . . . . . . . . . . . . . . . . . 4
SECTION 2.02. Office . . . . . . . . . . . . . . . . . 4
SECTION 2.03. Purpose and Powers . . . . . . . . . . . 4
SECTION 2.04. Appointment of Owner Trustee . . . . . . 5
SECTION 2.05. Initial Capital Contribution of
Trust Estate . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.06. Declaration of Trust . . . . . . . . . . 6
SECTION 2.07. Liability of Owners . . . . . . . . . . . 6
SECTION 2.08. Title to Trust Property . . . . . . . . . 6
SECTION 2.09. Situs of Trust . . . . . . . . . . . . . 6
SECTION 2.10. Representations and Warranties
of Seller . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.11. Gross Income and Loss
Allocations . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.12. Reserved . . . . . . . . . . . . . . . . 8
SECTION 2.13. Special Allocations . . . . . . . . . . . 8
SECTION 2.14. Liquidating Profit or Loss . . . . . . . 9
SECTION 2.15. Tax Allocations . . . . . . . . . . . . . 9
SECTION 2.16. Amended and Restated Trust
Agreement . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.17. Required Net Worth . . . . . . . . . . . 9
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.01. Initial Ownership . . . . . . . . . . . . 9
SECTION 3.02. Form of Certificates . . . . . . . . . . 10
SECTION 3.03. Authentication of Certificates . . . . . 10
SECTION 3.04. Registration of Transfer and
Exchange of Certificates . . . . . . . . . . . . . . . 10
SECTION 3.05. Mutilated, Destroyed, Lost or
Stolen Certificates . . . . . . . . . . . . . . . . . . 11
i
<PAGE>
SECTION 3.06. Persons Deemed Owners . . . . . . . . . . 11
SECTION 3.07. Access to List of
Certificateholders' Names and Addresses . . . . . . . . 11
SECTION 3.08. Maintenance of Office or Agency . . . . . 12
SECTION 3.09. Appointment of Paying Agents . . . . . . 12
SECTION 3.10. Disposition by Seller . . . . . . . . . . 12
SECTION 3.11. Statements to
Certificateholders . . . . . . . . . . . . . . . . . . 13
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. Prior Notice to Owners with
Respect to Certain Matters . . . . . . . . . . . . . . 13
SECTION 4.02. Action By Owners with Respect
to Certain Matters . . . . . . . . . . . . . . . . . . 13
SECTION 4.03. Action By Owners with Respect
to Bankruptcy . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.04. Restrictions on Owners' Power . . . . . . 14
SECTION 4.05. Majority Control . . . . . . . . . . . . 14
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.01. Establishment of Trust Account . . . . . 14
SECTION 5.02. Application of Trust Funds . . . . . . . 15
SECTION 5.03. Method of Payment . . . . . . . . . . . . 15
SECTION 5.04. No Segregation of Monies; No
Interest . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.05. Accounting and Report to the
Noteholders, Owners, the Internal Revenue
Service and Others . . . . . . . . . . . . . . . . . . 16
SECTION 5.06. Signature on Returns; Tax
Matters Partner . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.07. Capital Accounts . . . . . . . . . . . . 16
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.01. General Authority . . . . . . . . . . . . 17
SECTION 6.02. General Duties . . . . . . . . . . . . . 17
SECTION 6.03. Action Upon Instruction . . . . . . . . . 17
SECTION 6.04. No Duties Except as Specified
in This Agreement or in Instructions . . . . . . . . . 18
SECTION 6.05. No Action Except under
Specified Documents or Instructions . . . . . . . . . . 19
SECTION 6.06. Restrictions . . . . . . . . . . . . . . 19
ii
<PAGE>
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties . . . . . 19
SECTION 7.02. Furnishing of Documents . . . . . . . . . 20
SECTION 7.03. Representations and Warranties . . . . . 20
SECTION 7.04. Reliance; Advice of Counsel . . . . . . . 21
SECTION 7.05. Not Acting in Individual
Capacity . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7.06. Owner Trustee Not Liable for
Certificates, Notes or Receivables . . . . . . . . . . 21
SECTION 7.07. Owner Trustee May Own
Certificates and Notes . . . . . . . . . . . . . . . . 22
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.01. Owner Trustee's Fees and
Expenses . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 8.02. Indemnification . . . . . . . . . . . . . 22
SECTION 8.03. Payments to the Owner Trustee . . . . . . 23
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.01. Termination of Trust Agreement . . . . . 23
SECTION 9.02. Dissolution upon Bankruptcy of
the Seller . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.01. Eligibility Requirements for
Owner Trustee . . . . . . . . . . . . . . . . . . . . . 25
SECTION 10.02. Resignation or Removal of
Owner Trustee . . . . . . . . . . . . . . . . . . . . . 25
SECTION 10.03. Successor Owner Trustee . . . . . . . . 26
SECTION 10.04. Merger or Consolidation of
Owner Trustee . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.05. Appointment of Co-Trustee or
Separate Trustee . . . . . . . . . . . . . . . . . . . 26
iii
<PAGE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Supplements and Amendments . . . . . . . 28
SECTION 11.02. No Legal Title to Owner Trust
Estate in Owners . . . . . . . . . . . . . . . . . . . 29
SECTION 11.03. Limitations on Rights of
Others . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.04. Notices . . . . . . . . . . . . . . . . 29
SECTION 11.05. Severability . . . . . . . . . . . . . . 29
SECTION 11.06. Separate Counterparts . . . . . . . . . 29
SECTION 11.07. Successors and Assigns . . . . . . . . . 30
SECTION 11.08. Covenant of the Seller . . . . . . . . . 30
SECTION 11.09. No Petition . . . . . . . . . . . . . . 30
SECTION 11.10. No Recourse . . . . . . . . . . . . . . 30
SECTION 11.11. Headings . . . . . . . . . . . . . . . . 31
SECTION 11.12. GOVERNING LAW . . . . . . . . . . . . . 31
SECTION 11.13. Certificate Transfer
Restrictions . . . . . . . . . . . . . . . . . . . . . 31
SECTION 11.14. Seller Payment Obligation . . . . . . . 31
EXHIBITS
EXHIBIT A FORM OF CERTIFICATE . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B FORM OF CERTIFICATE OF TRUST . . . . . . . . . . . . . . B-1
EXHIBIT C CERTIFICATEHOLDER CERTIFICATION . . . . . . . . . . . . C-1
iv
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT dated as of May 1, 1996, between
CATERPILLAR FINANCIAL FUNDING CORPORATION, a Nevada corporation, as Seller,
and CHEMICAL BANK DELAWARE, a Delaware banking corporation, as Owner
Trustee.
ARTICLE I
DEFINITIONS
SECTION 1.01. Capitalized Terms. For all purposes of this Agreement,
-----------------
the following terms shall have the meanings set forth below:
"Administration Agreement" means the Administration Agreement dated as
of May 1, 1996, among the Administrator, the Trust, the Seller and the
Indenture Trustee, as the same may be amended, modified or supplemented
from time to time.
"Administrator" means Caterpillar Financial Services Corporation, a
Delaware corporation, or any successor Administrator under the
Administration Agreement.
"Agreement" shall mean this Trust Agreement, as the same may be
amended and supplemented from time to time.
"Basic Documents" shall mean the Purchase Agreement, the Sale and
Servicing Agreement, the Indenture, the Administration Agreement, the
Depository Agreement, the Custodial Agreement, the Notes, the Certificates
and the other documents and certificates delivered in connection therewith.
"Benefit Plan" shall have the meaning assigned to such term in Section
-------
11.13.
- -----
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Sec. 3801 et seq., as the same may be amended from
--------- -------
time to time.
"Capital Accounts" shall have the meaning set forth in Section 5.07
------------
hereof.
"Certificate" shall mean a certificate evidencing the beneficial
interest of an Owner in the Trust, substantially in the form attached
hereto as Exhibit A.
"Certificate Distribution Account" shall have the meaning assigned to
such term in Section 5.01.
------------
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit B which has been filed for the Trust pursuant to Section 3810(a)
of the Business Trust Statute.
<PAGE>
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.04.
------------
"Certificateholder Certification" shall mean a certification with
respect to non-foreign status and Benefit Plan status in the form of
Exhibit C hereto.
- ---------
"Certificateholder" or "Holder" shall mean a Person in whose name a
Certificate is registered.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located
at 1201 Market Street, 9th Floor, Wilmington, Delaware 19801; or at such
other address as the Owner Trustee may designate by notice to the Owners
and the Seller, or the principal corporate trust office of any successor
Owner Trustee (the address of which the successor owner trustee will notify
the Owners and the Seller).
"Indenture Trustee" shall mean The First National Bank of Chicago, not
in its individual capacity but solely as Indenture Trustee under the
Indenture, and any successor Indenture Trustee under the Indenture.
"Seller" shall mean Caterpillar Financial Funding Corporation in its
capacity as Seller hereunder.
"Depository Agreement" means the agreement among the Trust, the
Indenture Trustee, the Administrator and The Depository Trust Company,
dated as of the Closing Date, substantially in the form of Exhibit C to the
---------
Indenture.
"Expenses" shall have the meaning assigned to such term in Section
-------
8.02.
- ----
"Liquidating Distribution" means, as the case may be, (i) the portion
of the proceeds of a sale of assets described in Section 9.02 of this
------------
Agreement distributed to Owners and the Seller pursuant to Section 9.01(b)
of the Sale and Servicing Agreement or (ii) the amount of any distribution
to Owners and the Seller in connection with the termination of the Trust
under Section 9.01(a) of this Agreement.
---------------
"Liquidating Profit or Loss" means the Profit or Loss determined with
respect to a sale of assets described in Section 9.02 of this Agreement or
------------
the transactions associated with a final distribution described in Section
-------
9.01(a) of this Agreement.
- -------
"Owner" shall mean each Holder of a Certificate.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing
2
<PAGE>
Agreement, all funds on deposit from time to time in the Trust Accounts and
the Certificate Distribution Account and all other property of the Trust
from time to time, including any rights of the Owner Trustee and the Trust
pursuant to the Sale and Servicing Agreement and the Administration
Agreement.
"Owner Trustee" shall mean Chemical Bank Delaware, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor Owner Trustee hereunder.
"Paying Agent" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.09 and shall initially be Chemical Bank.
------------
"Profits" and "Losses" mean, for each calendar month or other period,
an amount equal to the Trust's taxable income or loss for such period,
other than Liquidating Profit or Loss, determined in accordance with Code
section 703(a) (such taxable income or loss to include all items of income,
gain, loss or deduction required to be stated separately pursuant to Code
section 703(a)(1)), adjusted to reflect items of income exempt from federal
income tax and items of expenditure described in Code section 705(a)(2)(B)
(or treated as so described pursuant to Treasury Regulations).
"Record Date" shall mean, with respect to any Distribution Date, the
close of business on the last calendar day of the month preceding the month
in which such Distribution Date occurs.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement among the Trust, the Seller, as seller, and Caterpillar Financial
Services Corporation, as servicer, dated as of May 1, 1996, as the same may
be amended, modified or supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trust" shall mean the trust established by this Agreement.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms
-----------------------------
used herein and not otherwise defined have the meanings assigned to them in
the Sale and Servicing Agreement or, if not defined therein, in the
Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
3
<PAGE>
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such
certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Agreement or in any such
certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder," and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) All calculations of the amount of interest accrued on the
Certificates shall be made on the basis of a 360-day year consisting of
twelve 30-day months.
ARTICLE II
ORGANIZATION
SECTION 2.01. Name. The Trust created hereby shall be known as
----
"Caterpillar Financial Asset Trust 1996-A," in which name the Owner Trustee
may conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.02. Office. The office of the Trust shall be in care of
------
the Owner Trustee at the Corporate Trust Office or at such other address in
the State of Delaware as the Owner Trustee may designate by written notice
to the Owners and the Seller.
SECTION 2.03. Purpose and Powers. (a) The purpose of the Trust is
------------------
to engage in the following activities:
(i) to issue the Class A-1 Notes, Class A-2 Notes and the Class
A-3 Notes pursuant to the Indenture and the Certificates pursuant to
this Agreement, and to sell $85,000,000 aggregate principal amount of
the Class A-1 Notes, $139,000,000 aggregate principal amount of Class
A-2 Notes and $133,021,000 aggregate principal amount of the Class A-3
Notes to Merrill, Lynch, Pierce, Fenner & Smith ("Merrill Lynch"),
4
<PAGE>
Goldman, Sachs & Co. and UBS Securities LLC upon the written order of
the Seller and $14,876,157 aggregate principal amount of the
Certificates to Merrill Lynch upon the written order of the Seller;
(ii) with the proceeds of the sale of the Notes and the
Certificates, to pay the Seller the amounts owed pursuant to Section
2.01 of the Sale and Servicing Agreement, by directing Merrill Lynch
as representative of the Seller to wire transfer such proceeds in
accordance with instructions received from the Seller;
(iii) with the proceeds from capital contributions from the Seller
to pay the organizational, start-up and transactional expenses of the
Trust, and with the proceeds from the sale of the Notes and
Certificates, to fund the Reserve Account;
(iv) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Owners pursuant to the terms of the Sale and
Servicing Agreement any portion of the Trust Estate released from the
Lien of, and remitted to the Trust pursuant to, the Indenture;
(v) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(vi) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(vii) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Owners and the Noteholders.
The Trust shall not engage in any activity other than in connection with
the foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
SECTION 2.04. Appointment of Owner Trustee. The Seller hereby
----------------------------
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.05. Initial Capital Contribution of Trust Estate. The
--------------------------------------------
Seller hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Seller, as of the date hereof, of
the foregoing contribution, which shall constitute the initial Owner Trust
Estate and shall be deposited in the Certificate Distribution Account. The
Seller shall pay organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
5
<PAGE>
SECTION 2.06. Declaration of Trust. The Owner Trustee hereby
--------------------
declares that it will hold the Owner Trust Estate in trust upon and subject
to the conditions set forth herein for the use and benefit of the Owners,
subject to the obligations of the Trust under the Basic Documents. It is
the intention of the parties hereto that the Trust constitute a business
trust under the Business Trust Statute and that this Agreement constitute
the governing instrument of such business trust. It is the intention of
the parties hereto that, for income and franchise tax purposes, the Trust
shall be treated as a partnership. The parties agree that, unless
otherwise required by appropriate tax authorities, the Trust will file or
cause to be filed annual or other necessary returns, reports and other
forms consistent with the characterization of the Trust as a partnership
for such tax purposes. Effective as of the date hereof, the Owner Trustee
shall have all rights, powers and duties set forth herein and in the
Business Trust Statute with respect to accomplishing the purposes of the
Trust.
SECTION 2.07. Liability of Owners. (a) The Seller shall be liable
-------------------
directly to and will indemnify the injured party for all losses, claims,
damages, liabilities and expenses of the Trust (including Expenses, to the
extent that, if all amounts due on the Notes and Certificates were paid in
full at the time such liability becomes due, the remaining assets of the
Trust would be insufficient to pay such amount) to the extent that the
Seller would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Seller were a general
partner; provided, however, that the Seller shall not be liable for any
-------- -------
losses incurred by a Certificateholder in the capacity of an investor in
the Certificates or a Noteholder in the capacity of an investor in the
Notes. In addition, any third party creditors of the Trust (other than in
connection with the obligations described in the preceding proviso for
which the Seller shall not be liable) shall be deemed third party
beneficiaries of this paragraph. The obligations of the Seller under this
paragraph shall be evidenced by the Certificates described in Section 3.10,
------------
which for purposes of the Business Trust Statute shall be deemed to be a
separate class of Certificates from all other Certificates issued by the
Trust; provided, however, that the rights and obligations evidenced by all
-------- -------
Certificates, regardless of class, shall, except as provided in this
Section, be identical.
(b) No Owner, other than to the extent set forth in subsection
----------
2.07(a), shall have any personal liability for any liability or obligation
- -------
of the Trust.
SECTION 2.08. Title to Trust Property. Legal title to all the Owner
-----------------------
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to
any part of the Owner Trust Estate to be vested in a trustee or trustees,
in which case title shall be deemed to be vested in the Owner Trustee, a
co-trustee and/or a separate trustee, as the case may be.
SECTION 2.09. Situs of Trust. The Trust will be located and
--------------
administered in the State of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of
Delaware or the State of New York. The Trust shall not have any employees
in any state other than Delaware; provided, however, that nothing herein
-------- -------
shall restrict or prohibit the Owner Trustee from having employees within
or without the State of Delaware. Payments will be received by the Trust
only in Delaware or New York, and payments will be
6
<PAGE>
made by the Trust only from Delaware or New York. The only office of the
Trust will be at the Corporate Trust Office in Delaware.
SECTION 2.10. Representations and Warranties of Seller. The Seller
----------------------------------------
hereby represents and warrants to the Owner Trustee that:
(a) The Seller is duly organized and validly existing as a
corporation in good standing under the laws of the State of Nevada,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(b) The Seller is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the failure to so qualify
or to obtain such license or approval would render any Receivable
unenforceable that would otherwise be enforceable by the Seller, the
Servicer or the Owner Trustee.
(c) The Seller has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Seller has full
power and authority to sell and assign the property to be sold and
assigned to and deposited with the Trust and the Seller shall have
duly authorized such sale and assignment and deposit to the Trust by
all necessary corporate action; and the execution, delivery and
performance of this Agreement has been duly authorized by the Seller
by all necessary corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or by-laws of the Seller, or any
indenture, agreement or other instrument to which the Seller is a
party or by which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the best
of the Seller's knowledge, any order, rule or regulation applicable to
the Seller of any court, federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties.
(e) There are no proceedings or investigations pending, or, to
the best of Seller's knowledge, threatened, before any court, federal
or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties
which (i) assert the invalidity of this Agreement or any of the Basic
Documents, (ii) seek to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the Basic
Documents, or (iii) seek any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this
Agreement or any of the Basic Documents.
7
<PAGE>
SECTION 2.11. Gross Income and Loss Allocations. After giving effect
---------------------------------
to special allocations set forth in Section 2.13 of this Agreement and for
------------
purposes of maintaining Capital Accounts under Section 5.07 of this
------------
Agreement, gross income of the Trust for any calendar month as determined
for Federal income tax purposes shall be allocated as follows:
(a) first, among the Owners as of the close of the last day of
such calendar month, in proportion to their ownership of the principal
amount of Certificates on such date, an amount of gross income equal
to the sum of (i) the amount of interest that accrues in such calendar
month on the Certificates in accordance with their terms, including
interest accruing thereon at the Pass-Through Rate monthly and
interest on amounts previously due under the Certificates and not yet
paid as provided therein and (ii) the portion of market discount on
the Receivables accrued during such month that is allocable to the
excess of the initial aggregate principal amount of the Certificates
over their initial aggregate issue price; and
(b) the balance of gross income, if any, to the Seller.
If the ordinary income of the Trust for any month is insufficient for the
allocations described in clause (a) above, subsequent items of ordinary
income shall first be allocated to make up such shortfall before being
allocated as provided in clause (b). Items of loss and deduction of the
Trust for any month as determined for Federal income tax purposes shall be
allocated among the Certificateholders to the extent, if any, that the
Servicer determines the Certificateholders are reasonably expected to bear
an economic loss as a result of a shortfall in payments on the Receivables.
Such allocations shall be made out of deductions (to the extent thereof)
and, thereafter, out of losses, and shall be made among the
Certificateholders as of the end of such month in proportion to their
ownership of principal amount of Certificates on such date. All remaining
items of loss and deduction shall be allocated to the Seller. If any items
of loss or deduction are allocated to Certificateholders and the Servicer
subsequently determines that the economic loss to Certificateholders will
be less than was expected at the time such allocations were made,
additional items of gross income will be allocated to Certificateholders in
subsequent periods to offset the excess allocations of losses and
deductions to Certificateholders before any items of gross income are
allocated to the Seller as provided in clause (b).
SECTION 2.12. Reserved.
--------
SECTION 2.13. Special Allocations. (a) In the event any Owner
-------------------
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or
(6), items of Trust income and gain shall be specially allocated to such
Owner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations, the deficit, if any, in the balance
of the Capital Account of such Owner as quickly as possible. This Section
-------
2.13(a) is intended to comply with the qualified income offset provision in
- -------
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations.
(b) In the event the initial issue price of Certificates differs from
their initial principal amount, there shall be specially allocated to the
Owners the portion, if any, of the offset for
8
<PAGE>
premium (in the case the issue price of the Certificates exceeds their
principal amount) or market discount income (in the case the principal
amount of the Certificates exceeds their issue price) on the Receivables
accruing for a calendar month that is attributable to such difference.
SECTION 2.14. Liquidating Profit or Loss. Liquidating Profit or Loss
--------------------------
shall be allocated, after all other adjustments are made to the Capital
Accounts (including adjustments to reflect the Liquidating Distribution),
as follows:
(a) First, among the Owners in proportion to their ownership of
the principal amount of Certificates, in an amount that would cause
their Capital Account balances to equal zero (in the case of the
Seller, taking into account the Capital Account balance of the Seller
only to the extent it relates to Certificates owned by the Seller);
and
(b) Any balance, to the Seller.
SECTION 2.15. Tax Allocations. For income tax purposes, each item of
---------------
income, gain, loss and deduction of the Trust shall be allocated among the
Owners and the Seller in accordance with their respective shares of gross
income and losses, as determined under Section 2.11 of this Agreement and
------------
taking into account the special allocations set forth in Section 2.13,
------------
subject to the provisions of Section 704(c) of the Code. Notwithstanding
anything to the contrary set forth in this Agreement, the Seller is
authorized to modify the allocations of this Section 2.15 and Sections
------------ --------
2.11, 2.13 and 2.14 if necessary or appropriate, in the Seller's sole
- ---- ---- ----
discretion, for the allocations to fairly reflect the economic gain, income
or loss to the Seller or the Owners, or as otherwise required by the Code
or the Treasury Regulations.
SECTION 2.16. Amended and Restated Trust Agreement. This Agreement
------------------------------------
amends and restates in its entirety the Trust Agreement dated as of May 1,
1996 between the Seller and Owner Trustee.
SECTION 2.17. Required Net Worth. For so long as any Notes or
------------------
Certificates shall remain outstanding, the Seller shall take all actions
necessary to maintain its net worth (exclusive of its interest in the
Trust) equal to the greater of (a) $1,500,000 or (b) the lesser of
$50,000,000 or such other amount as satisfies the then existing Internal
Revenue Service guidelines concerning the net worth requirements for
general partners of partnerships, as set forth in Revenue Procedure 92-88
or successor pronouncements.
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.01. Initial Ownership. Upon the formation of the Trust by
-----------------
the contribution by the Seller pursuant to Section 2.05 and until the
------------
issuance of the Certificates, the Seller shall be the sole beneficiary of
the Trust.
9
<PAGE>
SECTION 3.02. Form of Certificates. The Certificates shall be issued
--------------------
in denominations of $250,000 and integral multiples of $1,000 in excess
thereof; provided, however, that not more than two Certificates may be
-------- -------
issued in a denomination not an integral multiple of $1,000 and the
Certificates issued to the Seller in accordance with Section 3.10 may be
------------
issued in such denominations as would equal at least 1.0% of the
Certificate Balance. The Certificates shall be executed on behalf of the
Trust by manual or facsimile signature of a Trust Officer of the Owner
Trustee. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been
affixed, authorized to sign on behalf of the Trust, shall, when duly
authenticated pursuant to Section 3.03, be validly issued and entitled to
------------
the benefits of this Agreement, notwithstanding that such individuals or
any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such
offices at the date of authentication and delivery of such Certificates.
SECTION 3.03. Authentication of Certificates. Concurrently with the
------------------------------
initial sale of the Receivables to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Certificates in an
aggregate principal amount equal to the initial Certificate Balance to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Seller, signed by its Chairman of the Board, its
President, any Vice President, its Treasurer, its Secretary or any
Assistant Treasurer, without further corporate action by the Seller, in
authorized denominations. No Certificate shall entitle its holder to any
benefit under this Agreement, or shall be valid for any purpose, unless
there shall appear on such Certificate a certificate of authentication
substantially in the form set forth in Exhibit A, executed by the Owner
---------
Trustee or the Owner Trustee's authentication agent, by manual signature;
such authentication shall constitute conclusive evidence that such
Certificate shall have been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
SECTION 3.04. Registration of Transfer and Exchange of
----------------------------------------
Certificates. The Certificate Registrar shall keep or cause to be kept, at
- ------------
the office or agency maintained pursuant to Section 3.08, a Certificate
------------
Register in which, subject to such reasonable regulations as it may
prescribe, the Owner Trustee shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein
provided. Chemical Bank shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.08, the Owner Trustee
------------
shall execute, authenticate and deliver (or shall cause its authenticating
agent to authenticate and deliver), in the name of the designated
transferee or transferees, one or more new Certificates in authorized
denominations of a like aggregate amount dated the date of authentication
by the Owner Trustee or any authenticating agent. The Owner Trustee shall
not register a transfer of any Certificate unless the transferee of the
Certificate delivers to the Certificate Registrar and authenticating agent
an executed Certificateholder Certification. At the option of a Holder,
Certificates may be exchanged for other Certificates of authorized
denominations of a like aggregate amount upon surrender of the Certificates
to be exchanged at the office or agency maintained pursuant to Section
-------
3.08.
- ----
10
<PAGE>
Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate
Registrar duly executed by the Holder or his attorney duly authorized in
writing, along with a Certificateholder Certification duly executed by the
transferee of such Certificate. Each Certificate surrendered for
registration of transfer and exchange shall be cancelled and subsequently
disposed of by the Owner Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen
------------------------------------
Certificates. If (a) any mutilated Certificate shall be surrendered to
- ------------
the Certificate Registrar, or if the Certificate Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there shall be delivered to the Certificate Registrar
and the Owner Trustee such security or indemnity as may be required by them
to save each of them harmless, then in the absence of notice that such
Certificate shall have been acquired by a bona fide purchaser, the Owner
Trustee on behalf of the Trust shall execute and the Owner Trustee, or the
Owner Trustee's authenticating agent, shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and denomination. In
connection with the issuance of any new Certificate under this Section, the
Owner Trustee or the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant
to this Section shall constitute conclusive evidence of an ownership
interest in the Trust, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
SECTION 3.06. Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer, the Owner Trustee or the
Certificate Registrar may treat the Person in whose name any Certificate
shall be registered in the Certificate Register as the Owner of such
Certificate for the purpose of receiving distributions pursuant to Section
-------
5.02 and for all other purposes whatsoever, and neither the Owner Trustee
- ----
nor the Certificate Registrar shall be bound by any notice to the contrary.
SECTION 3.07. Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
- ---------
Servicer and the Seller, within 15 days after receipt by the Owner Trustee
of a request therefor from the Servicer or the Seller in writing, a list,
in such form as the Servicer or the Seller may reasonably require, of the
names and addresses of the Certificateholders as of the most recent Record
Date. If three or more Certificateholders or one or more Holders of
Certificates evidencing not less than 25% of the Certificate Balance apply
in writing to the Owner Trustee, and such application states that the
applicants desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates and such
application shall be accompanied by a copy
11
<PAGE>
of the communication that such applicants propose to transmit, then the
Owner Trustee shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to
the current list of Certificateholders. Each Holder, by receiving and
holding a Certificate, shall be deemed to have agreed not to hold either
the Seller or the Owner Trustee accountable by reason of the disclosure of
its name and address, regardless of the source from which such information
was derived.
SECTION 3.08. Maintenance of Office or Agency. The Owner Trustee
-------------------------------
shall maintain in the Borough of Manhattan, The City of New York, an office
or offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or
upon the Owner Trustee in respect of the Certificates and the Basic
Documents may be served. The Owner Trustee initially designates Chemical
Bank, 55 Water Street, New York, New York 10041 as its principal corporate
trust office for such purposes. The Owner Trustee shall give prompt written
notice to the Seller and to the Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
SECTION 3.09. Appointment of Paying Agents. The Paying Agent shall
----------------------------
make distributions to Certificateholders from the Certificate Distribution
Account pursuant to Section 5.02 and shall report the amounts of such
------------
distributions to the Owner Trustee. Any Paying Agent shall have the
revocable power to withdraw funds from the Certificate Distribution Account
for the purpose of making the distributions referred to above. The Owner
Trustee may revoke such power and remove the Paying Agent if the Owner
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement in any material
respect. The Paying Agent shall initially be Chemical Bank, and any
co-paying agent chosen by Chemical Bank, and acceptable to the Owner
Trustee. Chemical Bank shall be permitted to resign as Paying Agent upon
30 days' written notice to the Owner Trustee. In the event that Chemical
Bank shall no longer be the Paying Agent, the Owner Trustee shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company).
The Owner Trustee shall cause such successor Paying Agent or any additional
Paying Agent appointed by the Owner Trustee to execute and deliver to the
Owner Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Owner Trustee that as Paying
Agent, such successor Paying Agent or additional Paying Agent will hold all
sums, if any, held by it for payment to the Certificateholders in trust for
the benefit of the Certificateholders entitled thereto until such sums
shall be paid to such Certificateholders. The Paying Agent shall return
all unclaimed funds to the Owner Trustee and upon removal of a Paying Agent
such Paying Agent shall also return all funds in its possession to the
Owner Trustee. The provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall
------------- ---- ---- ----
apply to the Owner Trustee also in its role as Paying Agent, for so long as
the Owner Trustee shall act as Paying Agent and, to the extent applicable,
to any other paying agent appointed hereunder. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 3.10. Disposition by Seller. On the Closing Date, the Seller
---------------------
shall purchase Certificates representing at least 1.00% of the Certificate
Balance and, thereafter, shall retain beneficial and record ownership of
Certificates representing at least 1.00% of the Certificate Balance. Any
attempted transfer of any Certificate that would reduce such interest of
the Seller
12
<PAGE>
below 1.00% of the Certificate Balance shall be void. The Owner Trustee
shall cause any Certificate issued to the Seller to contain a legend
stating "THIS CERTIFICATE IS NOT TRANSFERABLE."
SECTION 3.11. Statements to Certificateholders. The Owner Trustee
--------------------------------
shall forward to each Certificateholder on the related Distribution Date
all statements provided to it by the Servicer pursuant to Section 5.06 of
the Sale and Servicing Agreement.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. Prior Notice to Owners with Respect to Certain
----------------------------------------------
Matters. With respect to the following matters, the Owner Trustee shall
- -------
not take action unless at least 30 days before the taking of such action,
the Owner Trustee shall have notified the Certificateholders in writing of
the proposed action and the Holders shall not have notified the Owner
Trustee in writing prior to the 30th day after such notice is given that
such Holders have withheld consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (other
than an action to collect on a Receivable) and the compromise of any
action, claim or lawsuit brought by or against the Trust (other than
an action to collect on a Receivable);
(b) the election by the Trust to file an amendment to the
Certificate of Trust;
(c) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is not required
and such amendment materially adversely affects the interest of the
Owners;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner that would not materially adversely affect the
interests of the Owners; or
(f) the appointment pursuant to the Indenture of a successor
Note Registrar, Paying Agent or Trustee or the appointment pursuant to
this Agreement of a successor Certificate Registrar, or the consent to
the assignment by the Note Registrar, Paying Agent or Trustee or
Certificate Registrar of its obligations under the Indenture or this
Agreement, as applicable.
SECTION 4.02. Action By Owners with Respect to Certain Matters. The
------------------------------------------------
Owner Trustee shall not have the power, except upon the direction of the
Owners, to (a) remove the
13
<PAGE>
Administrator under the Administration Agreement pursuant to Section 8
thereof, (b) appoint a successor Administrator pursuant to Section 8 of the
Administration Agreement, (c) remove the Servicer under the Sale and
Servicing Agreement pursuant to Section 8.01 thereof or (d) except as
expressly provided in the Basic Documents, sell the Receivables after the
termination of the Indenture. The Owner Trustee shall take the actions
referred to in the preceding sentence only upon written instructions signed
by the Owners.
SECTION 4.03. Action By Owners with Respect to Bankruptcy. The Owner
-------------------------------------------
Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the unanimous prior approval of
all Owners and the delivery to the Owner Trustee by each such Owner of a
certificate certifying that such Owner reasonably believes that the Trust
is insolvent.
SECTION 4.04. Restrictions on Owners' Power. The Owners shall not
-----------------------------
direct the Owner Trustee to take or refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the
Owner Trustee under this Agreement or any of the Basic Documents or would
be contrary to Section 2.03 nor shall the Owner Trustee be obligated to
------------
follow any such direction, if given.
SECTION 4.05. Majority Control. Except as expressly provided herein,
----------------
any action that may be taken by the Owners under this Agreement may be
taken by the Holders of Certificates evidencing a majority of the
Certificate Balance. Except as expressly provided herein, any written
notice of the Owners delivered pursuant to this Agreement shall be
effective if signed by Holders of Certificates evidencing a majority of the
Certificate Balance at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.01. Establishment of Trust Account. The Owner Trustee, for
------------------------------
the benefit of the Certificateholders, shall establish and maintain in the
name of the Trust an Eligible Deposit Account (the "Certificate
Distribution Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Certificateholders.
The Owner Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Certificate Distribution Account
and in all proceeds thereof. Except as otherwise provided herein, the
Certificate Distribution Account shall be under the sole dominion and
control of the Owner Trustee for the benefit of the Certificateholders.
If, at any time, the Certificate Distribution Account ceases to be an
Eligible Deposit Account, the Owner Trustee (or the Seller on behalf of the
Owner Trustee, if the Certificate Distribution Account is not then held by
the Owner Trustee or an affiliate thereof) shall within 10 Business Days
following notification of such occurrence (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency may consent)
establish a new Certificate Distribution Account as an
14
<PAGE>
Eligible Deposit Account and shall transfer any cash and/or any investments
to such new Certificate Distribution Account.
SECTION 5.02. Application of Trust Funds. (a) On each Distribution
--------------------------
Date, the Owner Trustee will distribute to Certificateholders, on a pro
rata basis, amounts deposited in the Certificate Distribution Account
pursuant to Sections 5.04 and 5.05 of the Sale and Servicing Agreement on
or before such Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement provided to the Owner Trustee by the
Servicer pursuant to Section 5.06(a) of the Sale and Servicing Agreement on
such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the
amount otherwise distributable to the Owner in accordance with this
Section. The Owner Trustee is hereby authorized and directed to retain
from amounts otherwise distributable to the Owners sufficient funds for the
payment of any tax that is legally owed or required to be withheld by the
Trust (but such authorization shall not prevent the Owner Trustee from
contesting any such tax in appropriate proceedings, and withholding payment
of such tax, if permitted by law, pending the outcome of such proceedings).
The amount of any withholding tax imposed with respect to an Owner shall be
treated as cash distributed to such Owner at the time it is withheld by the
Trust and remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to a distribution,
the Owner Trustee may in its sole discretion withhold such amounts in
accordance with this clause (c). In the event that an Owner wishes to
apply for a refund of any such withholding tax, the Owner Trustee shall
reasonably cooperate with such Owner in making such claim so long as such
Owner agrees to reimburse the Owner Trustee for any out-of-pocket expenses
incurred.
SECTION 5.03. Method of Payment. Subject to Section 9.01(c),
----------------- ---------------
distributions required to be made to Certificateholders on any Distribution
Date shall be made to each Certificateholder of record on the preceding
Record Date either by wire transfer, in immediately available funds, to the
account of such Holder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder shall have provided to the
Certificate Registrar appropriate written instructions at least five
Business Days prior to such Distribution Date and such Holder's
Certificates in the aggregate evidence a denomination of not less than
$1,000,000, or, if not, by check mailed to such Certificateholder at the
address of such holder appearing in the Certificate Register.
SECTION 5.04. No Segregation of Monies; No Interest. Subject to
-------------------------------------
Section 5.01 and 5.02, monies received by the Owner Trustee hereunder need
- ------------ ----
not be segregated in any manner except to the extent required by law or the
Sale and Servicing Agreement and may be deposited under such general
conditions as may be prescribed by law, and the Owner Trustee shall not be
liable for any interest thereon.
15
<PAGE>
SECTION 5.05. Accounting and Report to the Noteholders, Owners, the
-----------------------------------------------------
Internal Revenue Service and Others. The Owner Trustee shall (a) maintain
- -----------------------------------
(or cause to be maintained) the books of the Trust on a fiscal year basis
ending December 31, (or such other period as may be required by applicable
law), with the first year being a short year ending December 31, 1996, and
on the accrual method of accounting, (b) deliver to each Owner, as may be
required by the Code and applicable Treasury Regulations, such information
as may be required (including Schedule K-1) to enable each Owner to prepare
its federal and state income tax returns, (c) file such tax returns
relating to the Trust (including a partnership information return, Form
1065), and make such elections as may from time to time be required or
appropriate under any applicable state or federal statute or rule or
regulation thereunder so as to maintain the Trust's characterization as a
partnership for federal income tax purposes, (d) cause such tax returns to
be signed in the manner required by law and (e) collect or cause to be
collected any withholding tax as described in and in accordance with
Section 5.02(c) with respect to income or distributions to Owners. As
- ---------------
applicable, the Owner Trustee shall elect under Section 1278 of the Code to
include in income currently any market discount that accrues with respect
to the Receivables or shall offset premium against interest income or
original issue discount accruing with respect to the Receivables. The
Owner Trustee shall not make the election provided under Section 754 of the
Code.
SECTION 5.06. Signature on Returns; Tax Matters Partner. (a) The
-----------------------------------------
tax returns of the Trust shall be signed by the Seller, as "general
partner" of the partnership created hereunder for tax purposes.
(b) The Seller shall be the "tax matters partner" of the Trust
pursuant to the Code.
SECTION 5.07. Capital Accounts. The Trust shall maintain accounts
----------------
("Capital Accounts") with respect to each Owner (including the Seller).
For this purpose, Capital Accounts shall be maintained in accordance with
the following provisions:
(a) Each Owner's Capital Account shall be increased by the
Capital Contributions (as defined below) of such Owner, such Owner's
distributive share of Profits (and any Liquidating Profits) and any
items in the nature of income or gain which are specially allocated to
such Owner pursuant to Section 2.13 of this Agreement.
------------
(b) Each Owner's Capital Account shall be reduced by any amount
distributed to such Owner (including, in the case of the Seller, any
amount released or otherwise distributed to the Seller from the
Reserve Account under Section 5.05(b) of the Sale and Servicing
Agreement), such Owner's distributive share of Losses (and any
Liquidating Loss), and any items in the nature of expenses or Losses
which are specially allocated to such Owner pursuant to Section 2.13
------------
of this Agreement.
(c) In the event all or a portion of a Certificate is
transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to
the extent it related to such Certificate or a portion thereof.
16
<PAGE>
"Capital Contribution" means the amount of any cash and the fair
market value of any property contributed to the Trust by a
Certificateholder (including any amounts deemed to be contributed in
connection with the original issuance of the Certificates), including, in
the case of the Seller, the amount of any Receivables contributed by the
Seller (with such amount for Receivables intended to reflect the excess of
the Receivables and monies due thereon or with respect thereto, including
accrued but unpaid interest and finance charges, conveyed to the Trust by
the Seller on the Closing Date under Article II of the Sale and Servicing
Agreement over the amount paid to the Seller thereunder). The foregoing
provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with section
1.704-l(b) of the Treasury Regulations and shall be interpreted in a manner
consistent therewith.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.01. General Authority. The Owner Trustee is authorized and
-----------------
directed to execute and deliver the Basic Documents to which the Trust is
to be a party and each certificate or other document attached as an exhibit
to or contemplated by the Basic Documents to which the Trust is to be a
party, or any amendment thereto or other agreement, in each case, in such
form as the Seller shall approve as evidenced conclusively by the Owner
Trustee's execution thereof. In addition to the foregoing, the Owner
Trustee is authorized, but shall not be obligated, to take all actions
required of the Trust pursuant to the Basic Documents. The Owner Trustee
is further authorized from time to time to take such action as the
Administrator directs in writing with respect to the Basic Documents.
SECTION 6.02. General Duties. 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 the Basic
Documents and to administer the Trust in the interest of the Owners,
subject to the Basic Documents and in accordance with the provisions of
this Agreement. Notwithstanding the foregoing, the Owner Trustee shall be
deemed to have discharged its duties and responsibilities hereunder and
under the Basic Documents to the extent the Administrator has agreed in the
Administration Agreement to perform any act or to discharge any duty of the
Owner Trustee hereunder or under any Basic Document, and the Owner Trustee
shall not be liable for the default or failure of the Administrator to
carry out its obligations under the Administration Agreement.
SECTION 6.03. Action Upon Instruction. (a) Subject to Article IV,
----------------------- ----------
the Owners may, by written instruction, direct the Owner Trustee in the
management of the Trust. Such direction may be exercised at any time by
written instruction of the Owners pursuant to Article IV.
----------
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner
17
<PAGE>
Trustee or is contrary to the terms hereof or of any Basic Document or is
otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Basic Document, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the circumstances) to
the Owners requesting instruction as to the course of action to be adopted,
and to the extent the Owner Trustee acts in good faith in accordance with
any written instruction of the Owners received, the Owner Trustee shall not
be liable on account of such action to any Person. If the Owner Trustee
shall not have received appropriate instruction within ten days of such
notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it
may, but shall be under no duty to, take or refrain from taking such
action, not inconsistent with this Agreement or the Basic Documents, as it
shall deem to be in the best interest of the Owners, and shall have no
liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any
such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to
the Owners requesting instruction and, to the extent that the Owner Trustee
acts or refrains from acting in good faith in accordance with any such
instruction received, the Owner Trustee shall not be liable, on account of
such action or inaction, to any Person. If the Owner Trustee shall not
have received appropriate instruction within 10 days of such notice (or
within such shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action, not inconsistent
with this Agreement or the Basic Documents, as it shall deem to be in the
best interests of the Owners, and shall have no liability to any Person for
such action or inaction.
SECTION 6.04. No Duties Except as Specified in This Agreement or in
-----------------------------------------------------
Instructions. The Owner Trustee shall not have any duty or obligation to
- ------------
manage, make any payment with respect to, register, record, sell, dispose
of, or otherwise deal with the Owner Trust Estate, or to otherwise take or
refrain from taking any action under, or in connection with, any document
contemplated hereby to which the Owner Trustee is a party, except as
expressly provided by the terms of this Agreement or in any document or
written instruction received by the Owner Trustee pursuant to Section 6.03;
------------
and no implied duties or obligations shall be read into this Agreement or
any Basic Document against the Owner Trustee. The Owner Trustee shall have
no responsibility for filing any financing or continuation statement in any
public office at any time or to otherwise perfect or maintain the
perfection of any security interest or lien granted to it hereunder or to
prepare or file any Securities and Exchange Commission filing for the Trust
or to record this Agreement or any Basic Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly
take all action as may be necessary to
18
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discharge any liens on any part of the Owner Trust Estate that result from
actions by, or claims against, the Owner Trustee that are not related to
the ownership or the administration of the Owner Trust Estate.
SECTION 6.05. No Action Except under Specified Documents or
---------------------------------------------
Instructions. The Owner Trustee shall not manage, control, use, sell,
- ------------
dispose of or otherwise deal with any part of the Owner Trust Estate except
(i) in accordance with the powers granted to and the authority conferred
upon the Owner Trustee pursuant to this Agreement, (ii) in accordance with
the Basic Documents and (iii) in accordance with any document or
instruction delivered to the Owner Trustee pursuant to Section 6.03.
------------
SECTION 6.06. Restrictions. The Owner Trustee shall not take any
------------
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.03 or (b) that, to the actual knowledge of the Owner Trustee,
- ------------
would result in the Trust's becoming taxable as a corporation for federal
income tax purposes. The Owners shall not direct the Owner Trustee to take
action that would violate the provisions of this Section.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties. The Owner Trustee
-------------------------------
accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to such trusts but only upon the terms of this
Agreement. The Owner Trustee also agrees to disburse all moneys actually
received by it constituting part of the Owner Trust Estate upon the terms
of the Basic Documents and this Agreement. The Owner Trustee shall not be
answerable or accountable hereunder or under any Basic Document under any
circumstances, except (i) for its own willful misconduct or negligence or
(ii) in the case of the inaccuracy of any representation or warranty
contained in Section 7.03 expressly made by the Owner Trustee. In
------------
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
instructions of the Administrator or any Owner;
(c) no provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur
any financial liability in the performance of any of its rights or
powers hereunder or under any Basic Document, if the Owner Trustee
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured or provided to it;
19
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(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect
of the validity or sufficiency of this Agreement or for the due
execution hereof by the Seller or for the form, character,
genuineness, sufficiency, value or validity of any of the Owner Trust
Estate or for or in respect of the validity or sufficiency of the
Basic Documents, other than the certificate of authentication on the
Certificates, and the Owner Trustee shall in no event assume or incur
any liability, duty, or obligation to any Noteholder or to any Owner,
other than as expressly provided for herein and in the Basic
Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Indenture Trustee or the Servicer
under any of the Basic Documents or otherwise, and the Owner Trustee
shall have no obligation or liability to perform the obligations of
the Trust under this Agreement or the Basic Documents that are
required to be performed by the Administrator under the Administration
Agreement, the Indenture Trustee under the Indenture or the Servicer
under the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any Basic Document, at
the request, order or direction of any of the Owners, unless such
Owners have offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of
the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Basic Document shall not be construed as a duty,
and the Owner Trustee shall not be answerable for other than its
negligence or willful misconduct in the performance of any such act.
SECTION 7.02. Furnishing of Documents. The Owner Trustee shall
-----------------------
furnish (a) to the Owners promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to
the Owner Trustee under the Basic Documents and (b) to Noteholders promptly
upon written request therefor, copies of the Purchase Agreement, the Sale
and Servicing Agreement, the Administration Agreement and the Trust
Agreement.
SECTION 7.03. Representations and Warranties. The Owner Trustee
------------------------------
hereby represents and warrants to the Seller, for the benefit of the
Owners, that:
(a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement.
20
<PAGE>
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of the Owner Trustee
or any judgment or order binding on it, or constitute any default
under its charter documents or by-laws or any indenture, mortgage,
contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
SECTION 7.04. Reliance; Advice of Counsel. (a) The Owner Trustee
---------------------------
shall incur no liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond, or other document or paper believed by it to be
genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee may accept a certified copy of a resolution of the board
of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that
the same is in full force and effect. As to any fact or matter the method
of the determination of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on a certificate, signed by
the president or any vice president or by the treasurer or other authorized
officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any
action taken or omitted to be taken by it in good faith in reliance
thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Basic Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them,
and the Owner Trustee shall not be liable for the conduct 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 persons to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel, accountants or
other such persons and not contrary to this Agreement or any Basic
Document.
SECTION 7.05. Not Acting in Individual Capacity. Except as provided
---------------------------------
in this Article VII, in accepting the trusts hereby created Chemical Bank
Delaware acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by
reason of the transactions contemplated by this Agreement or any Basic
Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof.
SECTION 7.06. Owner Trustee Not Liable for Certificates, Notes or
---------------------------------------------------
Receivables. The recitals contained herein and in the Certificates (other
- -----------
than the signature and counter-signature
21
<PAGE>
of the Owner Trustee on the Certificates and its representations and
warranties in Section 7.03) shall be taken as the statements of the Seller
------------
and the Owner Trustee assumes no responsibility for the correctness
thereof. The Owner Trustee makes no representations as to the validity or
sufficiency of this Agreement, or of the Certificates (other than the
signature and countersignature of the Owner Trustee on the Certificates) or
the Notes or of any other Basic Document or of any Receivable or related
documents. The Owner Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability
of any Receivable, or the perfection and priority of any security interest
created by any Receivable in any Financed Equipment or the maintenance of
any such perfection and priority, or for or with respect to the sufficiency
of the Owner Trust Estate or its ability to generate the payments to be
distributed to Certificateholders under this Agreement or the Noteholders
under the Indenture, including, without limitation: the existence,
condition and ownership of any Financed Equipment; the existence and
enforceability of any insurance thereon; the existence and contents of any
Receivable on any computer or other record thereof; the validity of the
assignment of any Receivable to the Trust or of any intervening assignment;
the completeness of any Receivable; the performance or enforcement of any
Receivable; the compliance by the Seller or the Servicer with any warranty
or representation made under any Basic Document or in any related document
or the accuracy of any such warranty or representation or any action of the
Administrator, the Indenture Trustee or the Servicer or any subservicer
taken in the name of the Owner Trustee.
SECTION 7.07. Owner Trustee May Own Certificates and Notes. The
--------------------------------------------
Owner Trustee in its individual or any other capacity may become the Owner
or pledgee of Certificates or Notes and may deal with the Seller, the
Administrator, the Indenture Trustee and the Servicer in banking
transactions with the same rights as it would have if it were not Owner
Trustee.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee
---------------------------------
shall receive as compensation for its services hereunder such fees as have
been separately agreed upon before the date hereof between the Seller and
the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed
by the Seller for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder; provided, however, that the Owner Trustee's right to enforce
such obligation shall be subject to the provisions of Section 11.09.
-------------
SECTION 8.02. Indemnification. The Seller shall be liable as primary
---------------
obligor for, and shall indemnify the Owner Trustee and its successors,
assigns, agents and servants (collectively, the "Indemnified Parties") from
and against, any and all liabilities, obligations, losses, damages, taxes,
claims, actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind
and nature whatsoever (collectively, "Expenses") which may at any time be
imposed on, incurred by, or asserted against the Owner
22
<PAGE>
Trustee or any Indemnified Party in any way relating to or arising out of
this Agreement, the Basic Documents, the Owner Trust Estate, the
administration of the Owner Trust Estate or the action or inaction of the
Owner Trustee hereunder, except only that the Seller shall not be liable
for or required to indemnify the Owner Trustee from and against Expenses
arising or resulting from any of the matters described in the third
sentence of Section 7.01; provided, however, that the Owner Trustee's right
------------
to enforce such obligation shall be subject to the provisions of Section
-------
11.09. The indemnities contained in this Section shall survive the
- -----
resignation or termination of the Owner Trustee or the termination of this
Agreement. In any event of any claim, action or proceeding for which
indemnity will be sought pursuant to this Section, the Owner Trustee's
choice of legal counsel shall be subject to the approval of the Seller,
which approval shall not be unreasonably withheld.
SECTION 8.03. Payments to the Owner Trustee. Any amounts paid to the
-----------------------------
Owner Trustee pursuant to this Article VIII shall be deemed not to be a
------------
part of the Owner Trust Estate immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.01. Termination of Trust Agreement. (a) This Agreement
------------------------------
(other than Article VIII) and the Trust shall terminate and be of no
further force or effect, (i) upon the final distribution by the Owner
Trustee of all moneys or other property or proceeds of the Owner Trust
Estate in accordance with the terms of the Indenture, the Sale and
Servicing Agreement and Article V or (ii) at the time provided in Section
--------- -------
9.02. Any money or other property held as part of the Owner Trust Estate
- ----
following such distribution (and following a final distribution of proceeds
from a sale under Section 9.02) shall be distributed to the Seller. The
------------
bankruptcy, liquidation, dissolution, death or incapacity of any Owner,
other than the Seller as described in Section 9.02, shall not (x) operate
------------
to terminate this Agreement or the Trust, or (y) entitle such Owner's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of
the Trust or Owner Trust Estate or (z) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither the Seller nor any
---------------
Owner shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Certificateholders shall surrender their
Certificates to the Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of
such termination from the Servicer given pursuant to Section 9.01(c) of the
---------------
Sale and Servicing Agreement, stating (i) the Distribution Date upon or
with respect to which final payment of the Certificates shall be made upon
presentation and surrender of the Certificates at the office of the Paying
Agent therein designated, (ii) the amount of any such final payment and
(iii) that the Record Date
23
<PAGE>
otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Certificates at the
office of the Paying Agent therein specified. The Owner Trustee shall give
such notice to the Certificate Registrar (if other than the Owner Trustee)
and the Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates,
the Paying Agent shall cause to be distributed to Certificateholders
amounts distributable on such Distribution Date pursuant to Section 5.02.
------------
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall
give a second written notice to the remaining Certificateholders to
surrender their Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second
notice all the Certificates shall not have been surrendered for
cancellation, the Owner Trustee may take appropriate steps, or may appoint
an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed by the Owner Trustee to
the Seller.
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3810 of the Business Trust Statute.
SECTION 9.02. Dissolution upon Bankruptcy of the Seller. In the
-----------------------------------------
event that an Insolvency Event shall occur with respect to the Seller, this
Agreement shall be terminated in accordance with Section 9.01 90 days after
------------
the date of such Insolvency Event, unless, before the end of such 90-day
period, the Owner Trustee shall have received written instructions from (a)
each of the Certificateholders (other than the Seller), (b) each of the
Noteholders, and (c) holders of interests in the Reserve Account (other
than the Seller), if any, having interests with a value in excess of 50% of
all interests in the Reserve Account held by such Persons, in each case to
the effect that each such party disapproves of the liquidation of the
Receivables and termination of the Trust. Promptly after the occurrence of
any Insolvency Event with respect to the Seller, (i) the Seller shall give
the Indenture Trustee and the Owner Trustee written notice of such
Insolvency Event, (ii) the Owner Trustee shall, upon the receipt of such
written notice from the Seller, give prompt written notice to the
Certificateholders and the Indenture Trustee of the occurrence of such
event and (iii) the Indenture Trustee shall, upon receipt of written notice
of such Insolvency Event from the Owner Trustee or the Seller, give prompt
written notice to the Noteholders of the occurrence of such event;
provided, however, that any failure to give a notice required by this
- -------- -------
sentence shall not prevent or delay, in any manner, a termination of the
Trust pursuant to the first sentence of this Section 9.02. The termination
------------
of this Agreement shall constitute an Event of Default under the Indenture.
Upon a termination pursuant to this Section, the Owner Trustee shall direct
the Indenture Trustee promptly to sell the assets of the Trust (other than
the Trust Accounts and the Certificate Distribution Account) in a
commercially reasonable manner and on commercially reasonable terms
pursuant to Section 5.04 of the Indenture. The proceeds of such a sale of
the assets of the Trust shall be collected by the Indenture Trustee and
distributed pursuant to Section 5.04(b) of the Indenture.
24
<PAGE>
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.01. Eligibility Requirements for Owner Trustee. The Owner
------------------------------------------
Trustee shall at all times be a corporation satisfying the provisions of
Section 3807(a) of the Business Trust Statute; authorized to exercise
corporate trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authorities; and having (or having a parent which has) a rating of at least
Baa3 by Moody's and at least BBB- by Standard & Poor's. If such
corporation shall publish reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
In case at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Owner Trustee shall
resign immediately in the manner and with the effect specified in Section
-------
10.02.
- -----
SECTION 10.02. Resignation or Removal of Owner Trustee. The Owner
---------------------------------------
Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Administrator; provided,
--------
however, that such resignation and discharge shall only be effective upon
- -------
the appointment of a successor Owner Trustee. Upon receiving such notice
of resignation, the Administrator shall promptly appoint a successor Owner
Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee. If no successor Owner Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Owner Trustee may petition any
court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign
-------------
after written request therefor by the Administrator, or if at any time the
Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt
or insolvent, or a receiver of the Owner Trustee or of its property shall
be appointed, or any public officer shall take charge or control of the
Owner Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Administrator may
remove the Owner Trustee. If the Administrator shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the
Administrator shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered
to the outgoing Owner Trustee so removed and one copy to the successor
Owner Trustee and payment of all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.03 and payment of all fees and
-------------
expenses owed to the outgoing Owner Trustee. The Administrator shall
25
<PAGE>
provide notice of such resignation or removal of the Owner Trustee to each
of the Rating Agencies.
SECTION 10.03. Successor Owner Trustee. Any successor Owner Trustee
-----------------------
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver
-------------
to the Administrator and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become
effective and such successor Owner Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers,
duties, and obligations of its predecessor under this Agreement, with like
effect as if originally named as Owner Trustee. The predecessor Owner
Trustee shall upon payment of its fees and expenses deliver to the
successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Administrator and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other things
as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties,
and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner
Trustee shall be eligible pursuant to Section 10.01.
-------------
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Administrator shall mail notice of the successor of
such Owner Trustee to all Certificateholders, the Indenture Trustee, the
Noteholders and the Rating Agencies. If the Administrator shall fail to
mail such notice within 10 days after acceptance of appointment by the
successor Owner Trustee, the successor Owner Trustee shall cause such
notice to be mailed at the expense of the Administrator.
SECTION 10.04. Merger or Consolidation of Owner Trustee. Any
----------------------------------------
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate
trust business of the Owner Trustee, shall be the successor of the Owner
Trustee hereunder; provided such corporation shall be eligible pursuant to
--------
Section 10.01, without the execution or filing of any instrument or any
- -------------
further act on the part of any of the parties hereto; anything herein to
the contrary notwithstanding; provided, further that the Owner Trustee
-------- -------
shall mail notice of such merger or consolidation to the Rating Agencies.
SECTION 10.05. Appointment of Co-Trustee or Separate
-------------------------------------
Trustee. Notwithstanding any other provisions of this Agreement, at any
- -------
time, for the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Owner Trust Estate or any Financed Equipment may
at the time be located, the Administrator and the Owner Trustee acting
jointly shall have the power and shall execute and deliver all instruments
to appoint one or more Persons approved by the Owner Trustee to act as
co-trustee, jointly with the Owner Trustee, or separate trustee or separate
trustees, of all or any part of the Owner Trust Estate, and to vest in such
Person, in such capacity, such title to the Trust, or any part thereof,
and, subject to the
26
<PAGE>
other provisions of this Section, such powers, duties, obligations, rights
and trusts as the Administrator and the Owner Trustee may consider
necessary or desirable. If the Administrator shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do,
the Owner Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to
meet the terms of eligibility as a successor trustee pursuant to Section
-------
10.01 and no notice of the appointment of any co-trustee or separate
- -----
trustee shall be required pursuant to Section 10.03.
-------------
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties, and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised
or performed by the Owner Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Owner
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties,
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Administrator and the Owner Trustee acting jointly may
at any time accept the resignation of or remove any separate trustee
or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the
estates or property specified in its instrument of appointment, either
jointly with the Owner Trustee or separately, as may be provided therein,
subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Owner Trustee. Each such
instrument shall be filed with the Owner Trustee and a copy thereof given
to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect
of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed,
all of its estates, properties, rights, remedies and trusts shall vest in
and be exercised by the Owner Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
27
<PAGE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Supplements and Amendments. This Agreement may be
--------------------------
amended by the Seller and the Owner Trustee, with prior written notice to
the Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this
Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that such action shall not, as
-------- -------
evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Seller and
the Owner Trustee, with prior written notice to the Rating Agencies, with
the consent of the Holders of Notes evidencing not less than a majority of
the Outstanding Amount of the Notes and the consent of the Holders of
Certificates evidencing not less than a majority of the Certificate
Balance, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the
Certificateholders; 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 Receivables or distributions that
shall be required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the
Outstanding Amount of the Notes and the Certificate Balance required to
consent to any such amendment, without the consent of the holders of all
the outstanding Notes and Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and
each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Indenture Trustee pursuant to this Section to approve
the particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The manner
of obtaining such consents (and any other consents of Certificateholders
provided for in this Agreement or in any other Basic Document) and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Owner Trustee may
prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement. The Owner
28
<PAGE>
Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Owner Trustee's own rights, duties or immunities under
this Agreement or otherwise.
SECTION 11.02. No Legal Title to Owner Trust Estate in Owners. The
----------------------------------------------
Owners shall not have legal title to any part of the Owner Trust Estate.
The Owners shall be entitled to receive distributions with respect to their
undivided ownership interest therein only in accordance with Articles V and
----------
IX. No transfer, by operation of law or otherwise, of any right, title,
- --
and interest of the Owners to and in their ownership interest in the Owner
Trust Estate shall operate to terminate this Agreement or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to
it of legal title to any part of the Owner Trust Estate.
SECTION 11.03. Limitations on Rights of Others. Except for Section
------------------------------- -------
2.07, the provisions of this Agreement are solely for the benefit of the
- ----
Owner Trustee, the Seller, the Owners, the Administrator and, to the extent
expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed
to give to any other Person any legal or equitable right, remedy or claim
in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 11.04. Notices. (a) Unless otherwise expressly specified or
-------
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days
after mailing if mailed by certified mail, postage prepaid (except that
notice to the Owner Trustee shall be deemed given only upon actual receipt
by the Owner Trustee), if to the Owner Trustee, addressed to the Corporate
Trust Office; if to the Seller, addressed to Caterpillar Financial Funding
Corporation, Greenview Plaza, 2950 East Flamingo Road, Suite E-4, Las
Vegas, Nevada 89121; or, as to each party, at such other address as shall
be designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at
the address of such Holder as shown in the Certificate 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
Certificateholder receives such notice.
SECTION 11.05. Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 11.06. Separate Counterparts. This Agreement may be executed
---------------------
by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
29
<PAGE>
SECTION 11.07. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon, and inure to the benefit of, the
Seller, the Owner Trustee and its successors and each Owner and its
successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by an
Owner shall bind the successors and assigns of such Owner.
SECTION 11.08. Covenant of the Seller. In the event that (a) the
----------------------
Certificate Balance shall be reduced by Realized Losses and (b) any
litigation with claims in excess of $1,000,000 to which the Seller is a
party which shall be reasonably likely to result in a material judgment
against the Seller that the Seller will not be able to satisfy shall be
commenced by an Owner, during the period beginning nine months following
the commencement of such litigation and continuing until such litigation is
dismissed or otherwise terminated (and, if such litigation has resulted in
a final judgment against the Seller, such judgment has been satisfied) the
Seller shall not pay any dividend to Caterpillar Financial Services
Corporation, or make any distribution on or in respect of its capital stock
to Caterpillar Financial Services Corporation, or repay the principal
amount of any indebtedness of the Seller held by Caterpillar Financial
Services Corporation, unless (i) after giving effect to such payment,
distribution or repayment, the Seller's liquid assets shall not be less
than the amount of actual damages claimed in such litigation or (ii) the
Rating Agency Condition shall have been satisfied with respect to any such
payment, distribution or repayment. The Seller further agrees that prior
to the termination of the Trust it shall not revoke, modify or otherwise
amend any agreements with Caterpillar Financial Services Corporation in
effect on the Closing Date in any manner that would adversely affect the
rights of the Seller to receive from Caterpillar Financial Services
Corporation contributions of capital or payments on demand pursuant to such
agreements. The Seller further covenants and agrees that it will not enter
into any transaction or take any action (other than any transaction or
action contemplated by this Agreement or any of the Basic Documents) if, as
a result of such transaction or action, any rating of either the Notes or
the Certificates by any of the Rating Agencies would be downgraded or
withdrawn.
SECTION 11.09. No Petition. The Owner Trustee, by entering into this
-----------
Agreement (not in its individual capacity but solely as Owner Trustee),
each Certificateholder, by accepting a Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement,
hereby covenant and agree that they will not, prior to the date which is
one year and one day after the termination of the Trust, institute against
the Seller, or join in any institution against the Seller of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, this Agreement or any of the Basic Documents.
SECTION 11.10. No Recourse. Each Certificateholder by accepting a
-----------
Certificate acknowledges that such Certificateholder's Certificates
represent beneficial interests in the Trust only and do not represent
interests in or obligations of the Seller, the Servicer, the Administrator,
the Owner Trustee, the Indenture Trustee or any Affiliate thereof, and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated in this Agreement, the Certificates or
the other Basic Documents.
30
<PAGE>
SECTION 11.11. Headings. The headings of the various Articles and
--------
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13. Certificate Transfer Restrictions. (a) The
---------------------------------
Certificates may not be acquired by or for the account of (i) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) which is subject to the
provisions of Title I of ERISA, (ii) a plan (as defined in Section
4975(e)(1) of the Code other than a governmental or church plan described
in Section 4975(g)(2) or (3) of the Code), or (iii) any entity whose
underlying assets include "plan assets" by reason of any such plan's
investment in the entity (excluding any investment company that is
registered under the Investment Company Act of 1940, as amended) (each, a
"Benefit Plan"). By accepting and holding a Certificate, the Holder thereof
shall be deemed to have represented and warranted that it is not a Benefit
Plan, and that no assets of a Benefit Plan were used to acquire the
Certificate and shall deliver to the Owner Trustee at the time of
acquisition of a Certificate a duly executed Certificateholder
Certification in the form set forth in Exhibit C.
---------
(b) The Certificates may not be acquired by or for the account of an
individual or entity that is not a U.S. person as defined in Section
7701(a)(30) of the Code. By accepting and holding a Certificate, the
Holder shall be deemed to have represented and warranted under penalties of
perjury that it (or, if it is acting as a nominee, the beneficial owner) is
a U.S. person and shall deliver to the Owner Trustee, at the time of
acquisition of a Certificate and thereafter from time to time upon request,
a duly executed Certificateholder Certification in the form set forth in
Exhibit C.
SECTION 11.14. Seller Payment Obligation. The Seller shall be
-------------------------
responsible for payment of the Administrator's fees under the
Administration Agreement (to the extent not paid pursuant to Section 5.04
of the Sale and Servicing Agreement) and shall reimburse the Administrator
for all expenses and liabilities of the Administrator incurred thereunder.
31
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
CHEMICAL BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee,
By: /s/ John J. Cashin
-------------------------------------------
Name: John J. Cashin
Title:Senior Trust Officer
CATERPILLAR FINANCIAL
FUNDING CORPORATION,
as Seller,
By: /s/ Frank C. Carder
-------------------------------------------
Name: Frank C. Carder
Title:Treasurer
Acknowledged and accepted
with respect to Section 9.02 of this Trust Agreement:
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity,
solely in its capacity as Indenture Trustee
By: /s/ Barbara G. Grosse
-------------------------------------------------------
Name: Barbara G. Grosse
Title: Assistant Vice President
and Assistant Secretary
<PAGE>
EXHIBIT A
NUMBER $____________
R- CUSIP NO.___________
SEE REVERSE FOR CERTAIN DEFINITIONS
[THIS CERTIFICATE IS NOT TRANSFERRABLE]*/
-
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF (i) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) WHICH IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (ii) A PLAN (AS DEFINED IN
SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") OTHER THAN A PLAN DESCRIBED IN SECTION 4975(g)(2) OR (3) OF THE
CODE), OR (iii) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF A PLAN'S INVESTMENT IN THE ENTITY (EXCLUDING ANY INVESTMENT
COMPANY THAT IS REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED). BY ACCEPTING AND HOLDING THIS CERTIFICATE, THE HOLDER HEREOF AND
THE CERTIFICATE OWNER SHALL EACH BE DEEMED TO HAVE REPRESENTED AND
WARRANTED THAT IT IS NOT SUCH A PLAN AND THAT NO ASSETS OF SUCH A PLAN WERE
USED TO ACQUIRE THIS CERTIFICATE AND SHALL DELIVER TO THE OWNER TRUSTEE AT
THE TIME OF ACQUISITION OF A CERTIFICATE A DULY EXECUTED CERTIFICATION IN
THE FORM SET FORTH IN EXHIBIT C.
THE CERTIFICATES MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF AN
INDIVIDUAL OR ENTITY THAT IS NOT A U.S. PERSON AS DEFINED IN SECTION
7701(A)(30) OF THE CODE. BY ACCEPTING AND HOLDING A CERTIFICATE, THE
HOLDER SHALL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT (OR, IF IT
IS ACTING AS A NOMINEE, THE BENEFICIAL OWNER) IS A U.S. PERSON AND SHALL
DELIVER TO THE OWNER TRUSTEE, AT THE TIME OF ACQUISITION OF A CERTIFICATE
AND THEREAFTER FROM TIME TO TIME UPON REQUEST, A DULY EXECUTED
CERTIFICATION IN THE FORM SET FORTH IN EXHIBIT C.
- --------------------
*/ To be included in the Seller's 1% Certificate.
- -
A-1
<PAGE>
CATERPILLAR FINANCIAL ASSET TRUST 1996-A
6.55% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of retail installment sale contracts
secured by new and used machinery and certain monies due or received
thereunder and sold to the Trust (as defined below) by Caterpillar
Financial Funding Corporation.
(This Certificate does not represent an interest in or obligation of
Caterpillar Financial Funding Corporation, Caterpillar Financial Services
Corporation, Caterpillar Inc. or any of their respective affiliates, except
to the extent described below.)
THIS CERTIFIES THAT _________________ is the registered Owner of a
____________ DOLLAR ($________) nonassessable (subject to Section 2.07 of
------------
the Trust Agreement (as defined below)), fully-paid, fractional undivided
interest in Caterpillar Financial Asset Trust 1996-A (the "Trust") formed
by Caterpillar Financial Funding Corporation, a Nevada corporation (the
"Seller").
The Trust was created pursuant to an Amended and Restated Trust
Agreement as of May 1, 1996 (the "Trust Agreement"), between the Seller and
Chemical Bank Delaware, as owner trustee (the "Owner Trustee"), a summary
of certain of the pertinent provisions of which is set forth below. To the
extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Trust Agreement or the Sale and
Servicing Agreement dated as of May 1, 1996 (the "Sale and Servicing
Agreement"), among the Trust, the Seller and Caterpillar Financial Services
Corporation, as servicer (the "Servicer"), as applicable.
This Certificate is one of the duly authorized Certificates designed
as "6.55% Asset Backed Certificates" (herein called the "Certificates").
Also issued under the Indenture dated as of May 1, 1996, between the Trust
and The First National Bank of Chicago, as indenture trustee, are Notes
designated as "Class A-1 5.418% Money Market Asset Backed Notes" (the "A-1
Notes"), "Class A-2 5.90% Asset Backed Notes" (the "A-2 Notes") and "Class
A-3 6.30% Asset Backed Notes" (the "A-3 Notes"; together with the A-1 Notes
and the A-2 Notes, the "Notes"). This Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement, to
which Trust Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound. The property
of the Trust includes a pool of retail installment sale contracts secured
by new and used equipment (the "Receivables"), all monies received on or
after May 1, 1996 from payments on the Receivables, security interests in
the equipment financed thereby and certain other cross-collateralized
equipment, certain bank accounts and the proceeds thereof, proceeds from
claims on certain insurance policies and certain other rights under the
Trust Agreement and the Sale and Servicing Agreement, all right, title, and
interest of the Seller in and to the Purchase Agreement dated as of May 1,
1996, between Caterpillar Financial Services Corporation and the Seller and
all proceeds of the foregoing. The Holder of this Certificate acknowledges
and agrees that its rights
A-2
<PAGE>
to receive distributions in respect of this Certificate are subordinated to
the rights of the Noteholders as described in the Sale and Servicing
Agreement and the Indenture.
Under the Trust Agreement, there will be distributed on the 25th day
of each month or, if such day is not a Business Day, the next Business Day
(the "Distribution Date"), commencing on July 25, 1996, to the Person in
whose name this Certificate is registered at the close of business on the
last calendar day of the month preceding the month in which such
Distribution Date occurs (the "Record Date") such Certificateholder's
fractional undivided interest in the amount to be distributed to
Certificateholders on such Distribution Date.
It is the intent of the Seller, the Servicer and the
Certificateholders that, for purposes of federal income, state and local
income and franchise and any other income taxes, the Trust will be treated
as a partnership and the Certificateholders (including the Seller) will be
treated as partners in that partnership. The Seller and the other
Certificateholders by acceptance of a Certificate, agree to treat, and to
take no action inconsistent with the treatment of, the Certificates for
such tax purposes as partnership interests in the Trust.
Notwithstanding any prior termination of the Trust Agreement, each
Certificateholder, by its acceptance of a Certificate, covenants and agrees
that it shall not, prior to the date which is one year and one day after
the termination of the Trust with respect to the Issuer or the Seller,
acquiesce, petition or otherwise invoke or cause the Issuer or the Seller
to invoke the process of any court or government authority for the purpose
of commencing or sustaining a case against the Issuer or the Seller, under
any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or the Seller or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the
Issuer or the Seller.
Distributions on this Certificate will be made as provided in the
Trust Agreement by the Owner Trustee by wire transfer or check mailed to
the Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any notation
hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Certificate will
be made after due notice by the Owner Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate
at the office or agency maintained for the purpose by the Owner Trustee in
the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual
signature, this Certificate shall not entitle the Holder hereof to any
benefit under the Trust Agreement or the Sale and Servicing Agreement or be
valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE.
A-3
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Certificate to be duly
executed.
CATERPILLAR FINANCIAL ASSET
TRUST 1996-A,
By: CHEMICAL BANK DELAWARE,
as Owner Trustee
Dated: By: ___________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
CHEMICAL BANK DELAWARE, or CHEMICAL BANK DELAWARE,
as Owner Trustee as Owner Trustee
By______________________,
Authenticating Agent
By:___________________________ By:________________________________
Authorized Signatory Authorized Signatory
A-4
<PAGE>
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in,
the Seller, the Servicer, Caterpillar Inc., the Owner Trustee or any
affiliates of any of them and no recourse may be had against such parties
or their assets, except as may be expressly set forth or contemplated
herein or in the Trust Agreement or the Basic Documents. In addition, this
Certificate is not guaranteed by any governmental agency or instrumentality
and is limited in right of payment to certain collections with respect to
the Receivables (and certain other amounts), all as more specifically set
forth herein and in the Sale and Servicing Agreement and the Trust
Agreement. The Certificates are limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more
specifically set forth in the Sale and Servicing Agreement and the Trust
Agreement. A copy of each of the Sale and Servicing Agreement and the
Trust Agreement may be examined during normal business hours at the
principal office of the Seller, and at such other places, if any,
designated by the Seller, by any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
the Seller and the rights of the Certificateholders under the Trust
Agreement at any time by the Seller and the Owner Trustee with the consent
of the holders of the Notes and the Certificateholders each voting as a
class evidencing a majority of the outstanding Notes and the Certificate
Balance, respectively. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and on all future Holders of
this Certificate and of any Certificate issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Trust
Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Borough of Manhattan, The City of New York,
accompanied by a written instrument of transfer in force satisfactory to
the Owner Trustee and the Certificate Registrar duly executed by the Holder
hereof or such Holder's attorney duly authorized in writing and a duly
executed Certificateholder Certification of the transferee thereof, and
thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee. The initial Certificate Registrar appointed under
the Trust Agreement is Chemical Bank, New York, New York.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $250,000 or integral multiples of $1,000 in
excess thereof. As provided in the Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but
the Owner Trustee or the Certificate
A-5
<PAGE>
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the Owner hereof for all purposes,
and none of the Owner Trustee, the Certificate Registrar or any such agent
shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to
the Trust Agreement and the Sale and Servicing Agreement and the
disposition of all property held as part of the Trust. The Servicer of the
Receivables may at its option purchase the corpus of the Trust at a price
specified in the Sale and Servicing Agreement, and such purchase of the
Receivables and other property of the Trust will effect early retirement of
the Certificates; provided, however, such right of purchase is exercisable
-------- -------
only on any Distribution Date on which the Pool Balance is less than 10% of
the Initial Pool Balance.
The Certificates may not be acquired by (a) an employee benefit plan
(as defined in Section 3(3) of ERISA) which is subject to the provisions of
Title I of ERISA, (b) a plan (as defined in Section 4975(e)(1) of the Code
other than a governmental or church plan described in Section 4975(g)(2) or
(3) of the Code) or (c) any entity whose underlying assets include "plan
assets" by reason of any such plan's investment in the entity (excluding
any investment company that is registered under the Investment Company Act
of 1940, as amended) (each, a "Benefit Plan"). By accepting and holding
this Certificate, the Holder hereof shall be deemed to have represented and
warranted that it is not a Benefit Plan and that no assets of a Benefit
Plan were used to acquire this Certificate.
The Certificates may not be acquired by or for the account of an
individual or entity that is not a U.S. person as defined in Section
7701(a)(30) of the Code. By accepting and holding a Certificate, the
Holder thereof shall be deemed to have represented and warranted that it
(or, if it is acting as a nominee, the beneficial Owner) is a U.S. person.
Each Holder hereof shall deliver to the Owner Trustee, at the time of
acquisition of a Certificate and thereafter from time to time upon request,
a duly executed Certificateholder Certification in the form set forth in
Exhibit C to the Trust Agreement, which certification pertains to the
representations made in the preceding two paragraphs.
A-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
___________________________________________________________________________
__
(Please print or type name and address, including postal zip code, of
assignee)
___________________________________________________________________________
_
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
______________________________________________________ Attorney to transfer
said Certificate on the books of the Certificate Register, with full power
of substitution in the premises.
Dated: __________________________________________*
Signature Guaranteed:
_________________________________________*
____________________
* NOTICE: The signature to this assignment must correspond with the name
as it appears upon the face of the within Certificate in every
particular, without alteration, enlargement or any change whatever.
<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST OF
CATERPILLAR FINANCIAL ASSET TRUST 1996-A
THIS Certificate of Trust of CATERPILLAR FINANCIAL ASSET TRUST 1996-A
(the "Trust"), dated May 1, 1996, is being duly executed and filed by
Chemical Bank Delaware, a Delaware banking corporation, as trustee, to form
a business trust under the Delaware Business Trust Act (12 Del. Code, Sec.
---------
3801 et seq.).
-- ----
1. Name. The name of the business trust formed hereby is CATERPILLAR
----
FINANCIAL ASSET TRUST 1996-A.
2. Delaware Trustee. The name and business address of the trustee of
----------------
the Trust in the State of Delaware is Chemical Bank Delaware, 1201 Market
Street, 9th Floor, Wilmington, Delaware 19801, Attention: Corporate Trustee
Administration Department.
3. Effective Date. This Certificate of Trust shall be effective as
--------------
of its filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
[Owner Trustee], not in its
individual capacity but solely
as Owner Trustee,
By:
-----------------------------------
Name:
Title:
B-1
<PAGE>
EXHIBIT C
CERTIFICATEHOLDER CERTIFICATION
This Certificateholder Certification ("Certification") is
delivered pursuant to Section 11.13(b) of Caterpillar Financial Asset Trust
----------------
1996-A Amended and Restated Trust Agreement, dated as of May 1, 1996 (the
"Trust Agreement"), between Caterpillar Financial Funding Corporation and
Chemical Bank Delaware, as Owner Trustee, 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 Caterpillar Financial Asset Trust 1996-A 6.55%
Asset Backed Certificate (the "Certificate"). Capitalized terms used but
not defined in this Certification have the respective meanings given them
in the Trust Agreement.
Each holder must complete Part I, Part II (if the holder is a
nominee), and in all cases sign and otherwise complete Part III of Section
A.
Section A. To confirm to the Trust that the provisions of Section
---------
1446 of the Internal Revenue Code (relating to withholding tax on foreign
partners) do not apply in respect of the Certificate held by the
undersigned, the undersigned hereby certifies:
Part I - Complete Either A or B
A. Individual as Beneficial Owner
1. I am (The Beneficial Owner is) not a non-resident alien for
purposes of U.S. income taxation;
2. My (The Beneficial Owner's) name and home address are
_____________________________________________
_____________________________________________
_____________________________________________; and
3. My (The Beneficial Owner's) U.S. taxpayer identification
number (Social Security Number) is ______________________.
B. Corporate, Partnership or other Entity as Beneficial Owner
1. ________________________________ (Name of the 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);
C-1
<PAGE>
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
(Social Security Number) is _______________.
Part II - Nominees
If the undersigned is the nominee for the Beneficial Owner, the
undersigned certifies that this Certification 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 Trust at least thirty (30) days prior to
the date that the form relied upon becomes obsolete, and (ii) in connection
with change in Beneficial Owners, the undersigned agrees to submit a new
Certification of Non-Foreign Status to the Trust promptly after such
change.
Part III - Declaration
The undersigned, as the Beneficial Owner or a nominee thereof, agrees
to notify the Trust within sixty (60) days of the date that the Beneficial
Owner becomes a foreign person. The undersigned understands that this
Certification may be disclosed to the Internal Revenue Service by the Trust
and any false statement contained therein could be punishable by fines,
imprisonment or both.
C-2
<PAGE>
Under penalty of perjury, I declare that I have examined this
Certification and to the best of my knowledge and belief it is true,
correct and complete and, if applicable, I further declare that I have the
authority* to sign this document
________________________________________________________________
Name
________________________________________________________________
Title (if applicable)
________________________________________________________________
Signature and Date
*NOTE: If signed pursuant to a power of attorney, the power of attorney
must accompany this Certification.
THE CERTIFICATION CONTAINED IN THIS SECTION A WILL BECOME OBSOLETE AT
THE END OF THE THIRD YEAR AFTER THE TAXABLE YEAR OF THE TRUST DURING WHICH
THIS CERTIFICATION IS DELIVERED TO THE TRUST.
Section B. The undersigned hereby certifies:
---------
1. I am not an employee benefit plan (as defined in Section
3(3) of ERISA) which is subject to the provisions of Title I
of ERISA.
2. I am not a plan (as defined in Section 4975(e)(1) of the
Code other than a governmental or church plan described in
Section 4975(g)(2) or (3) of the Code).
3. I am not any entity whose underlying assets include "plan
assets" by reason of any such plan's investment in the
entity (excluding any investment company that is registered
under the Investment Company Act of 1940, as amended) (each,
a "Benefit Plan").
C-3
<PAGE>
I declare that I have examined this Certification and to the best of
my knowledge and belief it is true, correct and complete and, if
applicable, I further declare that I have the authority* to sign this
document
________________________________________________________________
Name
________________________________________________________________
Title (if applicable)
________________________________________________________________
Signature and Date
*NOTE: If signed pursuant to a power of attorney, the power of attorney
must accompany this Certification.
C-4
Exhibit 4.3(A)
[EXECUTION COPY]
============================================================================
SALE AND SERVICING AGREEMENT
among
CATERPILLAR FINANCIAL ASSET TRUST 1996-A
Issuer
CATERPILLAR FINANCIAL FUNDING CORPORATION
Seller
and
CATERPILLAR FINANCIAL SERVICES CORPORATION
Servicer
Dated as of May 1, 1996
============================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01.Definitions . . . . . . . . . . . . . . . . 1
SECTION 1.02.Other Definitional Provisions . . . . . . . 19
SECTION 1.03.Calculations . . . . . . . . . . . . . . . 19
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01.Conveyance of Receivables . . . . . . . . . 19
SECTION 2.02.Closing . . . . . . . . . . . . . . . . . . 20
SECTION 2.03.Books and Records . . . . . . . . . . . . . 20
ARTICLE III
THE RECEIVABLES
SECTION 3.01.Representations and Warranties of
Seller . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.02.Repurchase by Seller or CFSC Upon
Breach . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.03.Custody of Receivable Files . . . . . . . . 22
SECTION 3.04.Duties of Servicer . . . . . . . . . . . . 22
SECTION 3.05.Acceptance by Issuer and the
Indenture Trustee of the Receivables;
Certification by the Indenture Trustee . . . . . . . . 23
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01.Duties of Servicer . . . . . . . . . . . . 25
SECTION 4.02.Collection of Receivable Payments . . . . . 25
SECTION 4.03.Realization upon Receivables . . . . . . . 26
SECTION 4.04.Physical Damage Insurance . . . . . . . . . 26
SECTION 4.05.Maintenance of Security Interests
in Financed Equipment . . . . . . . . . . . . . . . . 26
SECTION 4.06.Covenants of Servicer . . . . . . . . . . . 26
SECTION 4.07.Purchase by Servicer of
Receivables upon Breach . . . . . . . . . . . . . . . 26
SECTION 4.08.Servicing Fee . . . . . . . . . . . . . . . 27
SECTION 4.09.Servicer's Certificate . . . . . . . . . . 27
i
<PAGE>
SECTION 4.10.Annual Statement as to
Compliance; Notice of Default . . . . . . . . . . . . 27
SECTION 4.11.Annual Independent Certified
Public Accountants' Report . . . . . . . . . . . . . . 28
SECTION 4.12.Servicer Expenses . . . . . . . . . . . . . 28
ARTICLE V
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.01.Establishment of Trust Accounts . . . . . . 29
SECTION 5.02.Collections . . . . . . . . . . . . . . . . 31
SECTION 5.03.Additional Deposits . . . . . . . . . . . . 31
SECTION 5.04.Distributions . . . . . . . . . . . . . . . 31
SECTION 5.05.Reserve Account . . . . . . . . . . . . . . 32
SECTION 5.06.Statements to Certificateholders
and Noteholders . . . . . . . . . . . . . . . . . . . 34
SECTION 5.07.Net Deposits . . . . . . . . . . . . . . . 36
ARTICLE VI
THE SELLER
SECTION 6.01.Representations of Seller . . . . . . . . . 37
SECTION 6.02.[Reserved] . . . . . . . . . . . . . . . . 38
SECTION 6.03.Liability of Seller; Indemnities . . . . . 38
SECTION 6.04.Merger or Consolidation of, or
Assumption of the Obligations of, Seller . . . . . . . 39
SECTION 6.05.Limitation on Liability of Seller
and Others . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.06.Seller May Own Certificates or
Notes . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VII
THE SERVICER
SECTION 7.01.Representations of Servicer . . . . . . . . 40
SECTION 7.02.Indemnities of Servicer . . . . . . . . . . 41
SECTION 7.03.Merger or Consolidation of, or
Assumption of the Obligations of, Servicer . . . . . . 42
SECTION 7.04.Limitation on Liability of
Servicer and Others . . . . . . . . . . . . . . . . . 43
SECTION 7.05.CFSC Not To Resign as Servicer . . . . . . 43
ARTICLE VIII
DEFAULT
SECTION 8.01.Servicer Default . . . . . . . . . . . . . 44
ii
<PAGE>
SECTION 8.02.Appointment of Successor . . . . . . . . . . . . . . . . 45
SECTION 8.03.Notification to Noteholders and
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.04.Waiver of Past Defaults . . . . . . . . . . . . . . . . . 46
ARTICLE IX
TERMINATION
SECTION 9.01.Optional Purchase of All
Receivables; Trust Termination . . . . . . . . . . . . . . . . . . . 47
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01.Amendment . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.02.Protection of Title to Trust . . . . . . . . . . . . . . 49
SECTION 10.03.Notices . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.04.Assignment . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.05.Limitations on Rights of Others . . . . . . . . . . . . 51
SECTION 10.06.Severability . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.07.Separate Counterparts . . . . . . . . . . . . . . . . . 51
SECTION 10.08.Headings . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.09.Governing Law . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.10.Assignment to Indenture Trustee . . . . . . . . . . . . 52
SECTION 10.11.Nonpetition Covenants . . . . . . . . . . . . . . . . . 52
SECTION 10.12.Limitation of Liability of Owner
Trustee and Indenture Trustee . . . . . . . . . . . . . . . . . . . 52
SCHEDULE A - Schedule of Receivables . . . . . . . . . . . . . . . A-1
SCHEDULE B - Location of Receivables Files . . . . . . . . . . . . B-1
SCHEDULE C-1 - Form of Indenture Trustee's Initial Certification
C-1-1
SCHEDULE C-2 - Form of Indenture Trustee's Final Certification C-2-1
SCHEDULE D - Servicer's Certificate . . . . . . . . . . . . . . . . D-1
SCHEDULE E - Officers' Certificate . . . . . . . . . . . . . . . . E-1
iii
<PAGE>
SALE AND SERVICING AGREEMENT dated as of May 1, 1996, among
CATERPILLAR FINANCIAL ASSET TRUST 1996-A, a Delaware business trust (the
"Issuer"), CATERPILLAR FINANCIAL FUNDING CORPORATION, a Nevada corporation
(the "Seller"), and CATERPILLAR FINANCIAL SERVICES CORPORATION, a Delaware
corporation (the "Servicer").
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with retail installment sale contracts for the
purchase of machinery acquired or originated by Caterpillar Financial
Services Corporation in the ordinary course of its business;
WHEREAS the Seller has purchased such portfolio of receivables from
Caterpillar Financial Services Corporation and desires to sell such
portfolio of receivables to the Issuer; and
WHEREAS Caterpillar Financial Services Corporation desires to service
such receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Whenever used in this Agreement, the
-----------
following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Administration Agreement" means the Administration Agreement dated as
of May 1, 1996 among the Trust, the Seller, CFSC, as Administrator, and The
First National Bank of Chicago, as indenture trustee, as the same may be
amended and supplemented from time to time.
"Administration Fee" means the fee payable to the Administrator
pursuant to Section 3 of the Administration Agreement.
"Administrator" means the administrator under the Administration
Agreement.
"Affiliate" has the meaning assigned thereto in Section 1.01 of the
Indenture.
"Agreement" means this Sale and Servicing Agreement, as the same may
be amended and supplemented from time to time.
"Amount Financed" with respect to a Receivable means the sum of (i)
the amount advanced under the Receivable toward the purchase price of the
related Financed Equipment, plus (ii) with respect to an Over-Rate
Receivable, the related purchase premium paid by CFSC to the related
Dealer, and (iii) any related costs.
<PAGE>
"APR" or "Annual Percentage Rate" of a Receivable means the annual
percentage rate of interest of such Receivable set forth on the Schedule of
Receivables.
"Basic Documents" has the meaning assigned to such term in the
Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions or trust companies in New York, New York,
Nashville, Tennessee, Chicago, Illinois and Wilmington, Delaware are
authorized or obligated by law, regulation or executive order to remain
closed.
"Caterpillar" means Caterpillar Inc., a Delaware corporation, and its
successors.
"Certificate Balance" equals, on the Closing Date, $14,876,157 and,
thereafter, equals $14,876,157, reduced by all amounts allocable to
principal previously distributed to Certificateholders and as further
reduced pursuant to Section 5.05(e), and as increased pursuant to Section
--------------- -------
5.05(e).
- -------
"Certificate Distribution Account" has the meaning assigned to such
term in the Trust Agreement.
"Certificate Final Scheduled Distribution Date" means the May 2002
Distribution Date.
"Certificate Pool Factor" means 1.0000000 as of the Closing Date, and
as of the close of business on any Distribution Date thereafter a
seven-digit decimal figure equal to the Certificate Balance as of such date
(after giving effect to reductions of the Certificate Balance on such date)
divided by the Certificate Balance at the Closing Date.
"Certificateholders" has the meaning assigned to such term in the
Trust Agreement.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of (a) the Certificateholders' Principal
Distributable Amount and (b) the Certificateholders' Interest Distributable
Amount.
"Certificateholders' Interest Carryover Shortfall" means, with respect
to any Distribution Date, the sum of (a) the excess of (i) the sum of (A)
the Monthly Certificate Interest for the preceding Distribution Date and
(B) any outstanding Certificateholders' Interest Carryover Shortfall on
such preceding Distribution Date, over (ii) the amount in respect of
interest that is actually deposited in the Certificate Distribution Account
on the preceding Distribution Date, plus (b) interest on such excess, to
the extent permitted by law, at the Pass-Through Rate from such preceding
Distribution Date through the current Distribution Date.
"Certificateholders' Interest Distributable Amount" means, with
respect to any Distribution Date, the sum of (a) the Monthly Certificate
Interest for such Distribution Date and the (b) Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
2
<PAGE>
"Certificateholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date, (a) prior to the Distribution Date
on which the principal amount of the Class A-1 Notes and the Class A-2
Notes have been reduced to zero, zero, (b) on or after the Distribution
Date on which the principal amount of the Class A-1 Notes and the Class A-2
Notes are reduced to zero, the Certificateholder's Percentage of the amount
by which the Principal Distribution Amount for such Distribution Date
exceeds the outstanding principal amount of the Class A-1 Notes and the
Class A-2 Notes immediately prior to such Distribution Date and (c) on or
after the first Distribution Date on which the principal amount of the
Class A-3 Notes has been reduced to zero, 100% of the Principal
Distribution Amount (less the portion thereof required on such first
Distribution Date to reduce the outstanding principal amount of the Notes
to zero); provided, however, that if, as described in the proviso to the
-------- -------
definition of "Class A-3 Noteholders' Percentage", 100% of the Principal
Distribution Amount is required to be deposited in the Note Distribution
Account, then no portion of the Principal Distribution Amount will be
deposited in the Certificate Distribution Account until the Notes have been
paid in full.
"Certificateholders' Percentage" means 100% minus the Class A-3
Noteholders' Percentage (if any Class A-3 Notes are outstanding).
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the sum of (a) the excess of (i) the sum of
(A) the Certificateholders' Monthly Principal Distributable Amount for such
Distribution Date and (B) any outstanding Certificateholders' Principal
Carryover Shortfall from the preceding Distribution Date, over (ii) the
amount in respect of principal that is actually deposited in the
Certificate Distribution Account on such current Distribution Date and (b)
without duplication of clause (a), the unreimbursed portion of the amount
by which the Certificate Balance has been reduced pursuant to Section
-------
5.05(e).
- -------
"Certificateholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of (a) the Certificateholders'
Monthly Principal Distributable Amount for such Distribution Date and (b)
the Certificateholders' Principal Carryover Shortfall as of the close of
business on the preceding Distribution Date; provided, however, that the
-------- -------
sum of (a) and (b) shall not exceed the Certificate Balance, and on the
Certificate Final Scheduled Distribution Date, the Certificateholders'
Principal Distributable Amount will include the amount necessary (after
giving effect to the other amounts to be deposited in the Certificate
Distribution Account on such Distribution Date and allocable to principal)
to reduce the Certificate Balance to zero.
"Certificates" has the meaning assigned to such term in the Trust
Agreement.
"CFSC" means Caterpillar Financial Services Corporation, a Delaware
corporation, and its successors.
"Class" means the Class A-1 Notes, the Class A-2 Notes or the Class A-
3 Notes, as applicable.
3
<PAGE>
"Class A-1 Note Final Scheduled Distribution Date" means the May 1997
Distribution Date.
"Class A-1 Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date, the lesser of (a) 100% of the
Principal Distribution Amount and (b) the outstanding principal balance of
the Class A-1 Notes.
"Class A-1 Noteholders' Principal Carryover Shortfall" means, as of
the close of any Distribution Date, the excess of (a) the sum of (i) the
Class A-1 Noteholders' Monthly Principal Distributable Amount for such
Distribution Date and (ii) any outstanding Class A-1 Noteholders' Principal
Carryover Shortfall as of the preceding Distribution Date over (b) the
amount in respect of principal that is actually deposited in the Note
Distribution Account and allocated to the Class A-1 Notes for such
Distribution Date.
"Class A-1 Noteholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of (a) the Class A-1 Noteholders'
Monthly Principal Distributable Amount for such Distribution Date and (b)
the Class A-1 Noteholders' Principal Carryover Shortfall as of the close of
the preceding Distribution Date; provided, however, that the sum of (a) and
-------- -------
(b) shall not exceed the outstanding principal amount of the Class A-1
Notes, and on the Class A-1 Final Scheduled Distribution Date, the Class A-
1 Noteholders' Principal Distributable Amount will include the amount
necessary (after giving effect to the other amounts to be deposited in the
Note Distribution Account on such Distribution Date and allocable to
principal) to reduce the outstanding principal amount of the Class A-1
Notes to zero.
"Class A-1 Note Interest Rate" has the meaning assigned to such term
in the Indenture.
"Class A-1 Note Pool Factor" means 1.0000000 as of the Closing Date,
and as of the close of business on any Distribution Date thereafter means a
seven-digit decimal figure equal to the outstanding principal amount of the
Class A-1 Notes as of such date (after giving effect to payments in
reduction of the principal amount of the Class A-1 Notes on such date)
divided by the original outstanding principal amount of the Class A-1
Notes.
"Class A-2 Final Scheduled Distribution Date" means the July 1999
Distribution Date.
"Class A-2 Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date, (a) if such Distribution Date is
prior to the Distribution Date on which the principal amount of the Class
A-1 Notes is reduced to zero, zero; (b) if such Distribution Date is the
Distribution Date on which the principal amount of the Class A-1 Notes is
reduced to zero, the amount, if any, by which the Principal Distribution
Amount exceeds the outstanding principal amount of the Class A-1 Notes
immediately prior to such Distribution Date; and (c) if such Distribution
Date is after the Distribution Date on which the principal amount of the
Class A-1 Notes has been reduced to zero, 100% of the Principal
Distribution Amount.
"Class A-2 Noteholders' Principal Carryover Shortfall" means, as of
the close of any Distribution Date, the excess of (a) the sum of (i) the
Class A-2 Noteholders' Monthly Principal
4
<PAGE>
Distributable Amount for such Distribution Date and (ii) any outstanding
Class A-2 Noteholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date over (b) the amount in respect of principal
that is actually deposited in the Note Distribution Account and allocated
to the Class A-2 Notes.
"Class A-2 Noteholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of (a) the Class A-2 Noteholders'
Monthly Principal Distributable Amount for such Distribution Date and (b)
the Class A-2 Noteholders' Principal Carryover Shortfall as of the close of
the preceding Distribution Date; provided, however, that the sum of (a) and
-------- -------
(b) shall not exceed the outstanding principal amount of the Class A-2
Notes, and on the Class A-2 Final Scheduled Distribution Date, the Class A-
2 Noteholders' Principal Distributable Amount will include the amount
necessary (after giving effect to the other amounts to be deposited in the
Note Distribution Account on such Distribution Date and allocable to
principal) to reduce the outstanding principal amount of the Class A-2
Notes to zero.
"Class A-2 Note Interest Rate" has the meaning assigned to such term
in the Indenture.
"Class A-2 Note Pool Factor" means 1.0000000 as of the Closing Date
and as of the close of business on any Distribution Date thereafter means a
seven-digit decimal figure equal to the outstanding principal balance of
the Class A-2 Notes as of such date (after giving effect to payments in
reduction of the principal amount of the Class A-2 Notes on such date)
divided by the original outstanding principal amount of the Class A-2
Notes.
"Class A-3 Final Scheduled Distribution Date" means the May 2002
Distribution Date.
"Class A-3 Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date, (a) if such Distribution Date is
prior to the Distribution Date on which the principal amount of the Class
A-1 Notes and Class A-2 Notes is reduced to zero, zero; (b) if such
Distribution Date is the Distribution Date on which the principal amount of
the Class A-1 Notes and Class A-2 Notes is reduced to zero, the Class A-3
Noteholders' Percentage of the amount, if any, by which the Principal
Distribution Amount exceeds the outstanding principal amount of the Class
A-1 Notes and Class A-2 Notes immediately prior to such Distribution Date;
and (c) if such Distribution Date is after the Distribution Date on which
the principal amount of the Class A-1 Notes and Class A-2 Notes has been
reduced to zero, the Class A-3 Noteholders' Percentage of the Principal
Distribution Amount.
"Class A-3 Noteholders' Percentage" means 96%; provided that if the
--------
amount on deposit in the Reserve Account is less than the lesser of (a)
2.25% of the Initial Pool Balance and (b) the sum of (i) the outstanding
principal amount of the Notes and (ii) the Certificate Balance, then, with
respect to each Distribution Date thereafter, the Class A-3 Noteholders'
Percentage shall be 100%.
"Class A-3 Noteholders' Principal Carryover Shortfall" means, as of
the close of any Distribution Date, the excess of (a) the sum of (i) the
Class A-3 Noteholders' Monthly Principal Distributable Amount for such
Distribution Date and (ii) any outstanding Class A-3 Noteholders'
5
<PAGE>
Principal Carryover Shortfall as of the close of the preceding Distribution
Date over (b) the amount in respect of principal that is actually deposited
in the Note Distribution Account and allocated to the Class A-3 Notes.
"Class A-3 Noteholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of (a) the Class A-3 Noteholders'
Monthly Principal Distributable Amount for such Distribution Date and (b)
the Class A-3 Noteholders' Principal Carryover Shortfall as of the close of
the preceding Distribution Date; provided, however, that the sum of (a) and
-------- -------
(b) shall not exceed the outstanding principal amount of the Class A-3
Notes, and on the Class A-3 Final Scheduled Distribution Date, the Class A-
3 Noteholders' Distributable Principal Amount will include the amount
necessary (after giving effect to the other amounts to be deposited in the
Note Distribution Account on such Distribution Date and allocable to
principal) to reduce the outstanding principal amount of the Class A-3
Notes to zero.
"Class A-3 Note Interest Rate" has the meaning assigned to such term
in the Indenture.
"Class A-3 Note Pool Factor" means 1.0000000 as of the Closing Date
and, as of the close of business on any Distribution Date thereafter means
a seven-digit decimal figure equal to the outstanding principal amount of
the Class A-3 Notes as of such date (after giving effect to payments in
reduction of the principal amount of the Class A-3 Notes on such date)
divided by the original outstanding principal amount of the Class A-3
Notes.
"Closing Date" means May 22, 1996.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.01.
------------
"Collection Period" means, with respect to the first Distribution
Date, the one calendar month period ending on and including May 31, 1996
and, with respect to each subsequent Distribution Date, the immediately
preceding one calendar month period. Any amount stated "as of the close of
business on the last day of a Collection Period" shall give effect to the
following calculations as determined as of the end of the day on such last
day: (1) all applications of collections and (2) all distributions to be
made on the following Distribution Date.
"Commission" means the Securities and Exchange Commission.
"Contract" means, with respect to any Receivable, a retail installment
sale contract for the purchase of machinery or equipment and shall include
all documents relating to an amendment or modification of such Contract.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this
Agreement is located at One First National Plaza, Suite 0126, Chicago,
Illinois, Attention: Corporate Trust Services Division, except that for
purposes of Section 3.02
6
<PAGE>
of the Indenture, such term shall mean the office or agency of the
Indenture Trustee in the Borough of Manhattan, the City of New York which
office at the date hereof is located at 14 Wall Street, Eighth Floor, New
York, New York, 10005; or at such other address as the Indenture Trustee
may designate from time to time by notice to the Noteholders, the Owner
Trustee and the Seller, or the principal corporate trust office of any
successor Indenture Trustee (the address of which the successor Indenture
Trustee will notify the Noteholders, the Owner Trustee and the Seller);
provided that for purposes of Section 3.02 of the Indenture, the address of
any such office shall be in the Borough of Manhattan in the City of New
York.
"Cross-Collateralized Equipment" means, with respect to any Contract,
an item of machinery, other than the related Financed Equipment, which is
owned by the related Obligor and which also secures an Obligor's
indebtedness under the respective Receivable in addition to the related
Financed Equipment.
"Custodian" means The First National Bank of Chicago, as custodian of
the Receivable Files, and each successor thereto pursuant to the Custodial
Agreement.
"Custodial Agreement" means the Custodial Agreement, dated as of May
1, 1996, among CFSC, as originator and Servicer, the Seller, as depositor,
the Issuer, and The First National Bank of Chicago, as Indenture Trustee
and Custodian, as the same may be amended and supplemented from time to
time.
"Cut-off Date" means May 1, 1996.
"Dealer" means the dealer who sold an item of Financed Equipment
securing a Receivable.
"Dealer Receivable" means a Receivable originated by a Dealer and
acquired by CFSC from such Dealer.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC and are susceptible to physical delivery, transfer thereof to
the Indenture Trustee or its nominee or custodian by physical delivery
to the Indenture Trustee or its nominee or custodian endorsed to, or
registered in the name of, the Indenture Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102 of the UCC) transfer thereof (i)
by delivery of such certificated security endorsed to, or registered
in the name of, the Indenture Trustee or its nominee or custodian or
endorsed in blank to a financial intermediary (as defined in Section
8-313 of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated
securities as belonging to the Indenture Trustee or its nominee or
custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by
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<PAGE>
the Indenture Trustee or its nominee or custodian, or (ii) by delivery
thereof to a "clearing corporation" (as defined in Section 8-102(3) of
the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of
the transferor and increasing the appropriate securities account of a
financial intermediary by the amount of such certificated security,
the identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its
nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying
such certificated securities as belonging to the Indenture Trustee or
its nominee or custodian (all of the foregoing, "Physical Property"),
and, in any event, any such Physical Property in registered form shall
be in the name of the Indenture Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Trust Account Property (as defined herein) to the Indenture Trustee or
its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury,
the Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable Federal regulations and Articles 8 and 9 of the UCC:
book-entry registration of such Trust Account Property to an
appropriate book-entry account maintained with a Federal Reserve Bank
by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial
intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Indenture Trustee or its nominee or
custodian of the purchase by the Indenture Trustee or its nominee or
custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such
book-entry security held through the Federal Reserve System pursuant
to Federal book-entry regulations as belonging to the Indenture
Trustee or its nominee or custodian and indicating that such custodian
holds such Trust Account Property solely as agent for the Indenture
Trustee or its nominee or custodian; and such additional or
alternative procedures as may hereafter become appropriate to effect
complete transfer of ownership of any such Trust Account Property to
the Indenture Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation
thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the
sending of a confirmation by the financial intermediary of the
purchase by the Indenture Trustee or its nominee or custodian of such
uncertificated security, and
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<PAGE>
the making by such financial intermediary of entries on its books and
records identifying such uncertificated securities as belonging to the
Indenture Trustee or its nominee or custodian and such additional or
alternative procedures as may hereafter become appropriate to effect
complete transfer of ownership of any such Trust Account Property to
the Indenture Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation
thereof.
"Determination Date" means, with respect to any Distribution Date, the
fifth Business Day prior to such Distribution Date.
"Distribution Date" means the 25th day of each calendar month or, if
such day is not a Business Day, the immediately following Business Day,
commencing on June 25, 1996.
"Eligible Deposit Account" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the
laws of the United States of America or any one of the states thereof or
the District of Columbia (or any domestic branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution
shall have a credit rating from each Rating Agency in one of its generic
rating categories which signifies investment grade.
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee, the Owner Trustee, Chemical Bank as long as it is paying
agent under the Trust Agreement or The First National Bank of Chicago, so
long as it is a paying agent under the Indenture, or (b) a depository
institution organized under the laws of the United States of America or any
one of the states thereof or the District of Columbia (or any domestic
branch of a foreign bank) (i)(A) which has either (1) a long-term unsecured
debt rating of AAA or better by Standard & Poor's and Aaa or better by
Moody's or (2) a short-term unsecured debt rating or a certificate of
deposit rating of A-1+ by Standard & Poor's and P-1 or better by Moody's,
or any other long-term, short-term or certificate of deposit rating
acceptable to the Rating Agencies and (B) whose deposits-are insured by the
FDIC or (ii)(A) the parent of which has a long-term or short-term unsecured
debt rating acceptable to the Rating Agencies and (B) whose deposits are
insured by the FDIC. If so qualified, the Indenture Trustee, the Owner
Trustee, Chemical Bank or The First National Bank of Chicago may be
considered an Eligible Institution for the purposes of clause (b) of this
definition.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities (other than any such instrument or security
issued by CFSC or any of its Affiliates) represented by instruments in
bearer or registered form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the
laws of the United States of America
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<PAGE>
or any state thereof (or any domestic branch of a foreign bank) and
subject to supervision and examination by Federal or State banking or
depository institution authorities; provided, however, that at the
-------- -------
time of the investment or contractual commitment to invest therein,
the commercial paper or other short-term unsecured debt obligations
(other than such obligations the rating of which is based on the
credit of a Person other than such depository institution or trust
company) thereof shall have a credit rating from each Rating Agency in
the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each Rating
Agency in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each
Rating Agency in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee
or any of their respective Affiliates is investment manager or
advisor);
(e) [Reserved];
(f) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(g) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with (i) a depository institution
or trust company (acting as principal) described in clause (b) or (ii)
a depository institution or trust company the deposits of which are
insured by FDIC; or
(h) any other investment permitted by each of the Rating
Agencies.
"Financed Equipment" means an item of machinery, together with all
accessions thereto, which was financed pursuant to the terms of the related
Contract and secures an Obligor's indebtedness under the respective
Receivable.
"Fitch" means Fitch Investors Service, L.P., or its successor.
"Governmental Authority" means the United States of America, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Holder" or "Noteholder" has the meaning assigned to such term in
Section 1.01 of the Indenture.
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"Indenture" means the Indenture dated as of May 1, 1996, between the
Issuer and the Indenture Trustee, as the same may be amended and
supplemented from time to time.
"Indenture Trustee" means The First National Bank of Chicago, in its
capacity as trustee under the Indenture, its successors in interest and any
successor trustee under the Indenture.
"Initial Pool Balance" means the Pool Balance as of the Cut-off Date,
which is $371,897,157.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in
the premises in respect of such Person or any substantial part of its
property in an involuntary case under any applicable Federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial
part of its property, or ordering the winding-up or liquidation of such
Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 90 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable Federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or
the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for
any substantial part of its property, or the making by such Person of any
general assignment for the benefit of creditors, or the failure by such
Person generally to pay its debts as such debts become due, or the taking
of action by such Person in furtherance of any of the foregoing.
"Investment Earnings" means, with respect to any Distribution Date,
the investment earnings (net of losses and investment expenses) on amounts
on deposit in the Trust Accounts to be deposited into the Collection
Account on such Distribution Date pursuant to Section 5.01(b).
---------------
"Issuer" means Caterpillar Financial Asset Trust 1996-A.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind with respect to any Receivable other than
mechanics' liens and any liens which attach to such Receivable by operation
of law as a result of any act or omission by the related Obligor.
"Liquidated Receivable" means any Receivable which has been liquidated
by the Servicer through the sale or other disposition of the related
Financed Equipment.
"Liquidation Proceeds" means, with respect to any Liquidated
Receivable, the moneys collected in respect thereof, from whatever source
(including the proceeds of insurance policies with respect to the related
Financed Equipment or Obligor on a Liquidated Receivable) during the
Collection Period in which such Receivable became a Liquidated Receivable,
net of the sum
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<PAGE>
of any amounts expended by the Servicer in connection with such liquidation
and any amounts required by law to be remitted to the Obligor on such
Liquidated Receivable.
"Monthly A-1 Note Interest" means, with respect to any Distribution
Date, an amount equal to one-twelfth of the product of (a) the Class A-1
Note Interest Rate and (b) the outstanding principal balance of the A-1
Notes as of the close of business on the preceding Distribution Date after
giving effect to all payments of principal made to the A-1 Noteholders on
such preceding Distribution Date; provided, however, that with respect to
-------- -------
the first Distribution Date, interest on the outstanding principal balance
of the A-1 Notes will accrue from and including the Closing Date to but
excluding the June 1996 Distribution Date and will be calculated on the
basis of a 360-day year of twelve 30-day months.
"Monthly A-2 Note Interest" means, with respect to any Distribution
Date, an amount equal to one-twelfth of the product of (a) the Class A-2
Note Interest Rate and (b) the outstanding principal balance of the A-2
Notes as of the close of business on the preceding Distribution Date after
giving effect to all payments of principal made to the A-2 Noteholders on
such preceding Distribution Date; provided, however, that with respect to
-------- -------
the first Distribution Date, interest on the outstanding principal balance
of the A-2 Notes will accrue from and including the Closing Date to but
excluding the June 1996 Distribution Date and will be calculated on the
basis of a 360-day year of twelve 30-day months.
"Monthly A-3 Note Interest" means, with respect to any Distribution
Date, an amount equal to one-twelfth of the product of (a) the Class A-3
Note Interest Rate and (b) the outstanding principal balance of the A-3
Notes as of the close of business on the preceding Distribution Date after
giving effect to all payments of principal made to the A-3 Noteholders on
such preceding Distribution Date; provided, however, that with respect to
-------- -------
the first Distribution Date, interest on the outstanding principal balance
of the A-3 Notes will accrue from and including the Closing Date to but
excluding the June 1996 Distribution Date and will be calculated on the
basis of a 360-day year of twelve 30-day months.
"Monthly Certificate Interest" means, with respect to any Distribution
Date, an amount equal to one-twelfth of the product of (a) the Pass-Through
Rate and (b) the Certificate Balance as of the close of business on the
preceding Distribution Date after giving effect to all distributions in
respect of principal made to the Certificateholders on such preceding
Distribution Date; provided, however, that with respect to the first
-------- -------
Distribution Date, interest on the outstanding Certificate Balance will
accrue from and including the Closing Date to but excluding the June 1996
Distribution Date and will be calculated on the basis of a 360-day year of
twelve 30-day months.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Net APR" has the meaning assigned to such term in the Indenture.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.01.
------------
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<PAGE>
"Note Register" or "Note Registrar" have the meanings specified in
Section 2.04 of the Indenture.
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of (a) the Noteholders' Principal Distributable
Amount and (b) the Noteholders' Interest Distributable Amount.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date, the sum of (a) the excess of (i) the sum of (A) the
Noteholders' Monthly Interest Distributable Amount for the preceding
Distribution Date and (B) any outstanding Noteholders' Interest Carryover
Shortfall on such preceding Distribution Date, over (ii) the amount in
respect of interest that is actually deposited in the Note Distribution
Account on such preceding Distribution Date, plus (b) interest on the
amount of interest due but not paid to Noteholders on the preceding
Distribution Date, to the extent permitted by law, at the Class A-1 Note
Interest Rate, Class A-2 Note Interest Rate and/or and Class A-3 Note
Interest Rate, as applicable, borne by such Notes from and including such
preceding Distribution Date to but excluding the current Distribution Date.
"Noteholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of (a) the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and (b) the Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, an amount equal to the sum of the Monthly
A-1 Note Interest, the Monthly A-2 Note Interest and the Monthly A-3 Note
Interest for such Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of (a) the Class A-1 Noteholders' Principal
Distributable Amount, (b) the Class A-2 Noteholders' Principal
Distributable Amount and (c) the Class A-3 Noteholders' Principal
Distributable Amount.
"Notes" means the Class A-1 Notes, the Class A-2 Notes and the Class
A-3 Notes, collectively.
"Notes of a Class" or "Class of Notes" means all Notes included in
Class A-1 Notes, all Notes included in Class A-2 Notes, or all Notes
included in Class A-3 Notes, whichever is appropriate.
"Obligor" on a Receivable means (a) the purchaser or co-purchasers of
the Financed Equipment and (b) any other Person, including the related
Dealer, who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed by (a) the chairman
of the board, the president, the vice chairman of the board, the executive
vice president, any vice president, a
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<PAGE>
treasurer or any assistant treasurer and (b) a secretary or assistant
secretary, in each case of the Seller or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel who
may be an employee of or counsel to the Seller or the Servicer, which
counsel shall be acceptable to the Indenture Trustee, the Owner Trustee
and/or the Rating Agencies, as applicable.
"Original Contract" means with respect to each Receivable, a related
Contract that satisfies the following conditions:
(a) (i) Such Contract states as part of its terms:
"Although multiple counterparts of this document may be signed,
only the counterpart accepted, acknowledged and certified by CFSC
on the signature page thereof as the original will constitute
original chattel paper."; and
(ii) CFSC has accepted, acknowledged and certified one originally
executed copy or version of such Contract (and no other) by
stamping on the signature page thereon the following legend and
executing the same where indicated (which execution will be
effected in red by use of a stamp containing a replica of an
authorized signatory of CFSC):
ACCEPTED, ACKNOWLEDGED AND CERTIFIED BY
CATERPILLAR FINANCIAL SERVICES CORPORATION AS THE
ORIGINAL.
By: _______________________
Title: _____________________ ; or
(b) Such Contract is in "snap-set" or other form for which only one
original may be produced.
"Outstanding" has the meaning assigned to such term in Section 1.01 of
the Indenture.
"Outstanding Amount" means the aggregate principal amount of all
Notes, or a Class of Notes, as applicable, outstanding at the date of
determination.
"Over-Rate Receivable" means a Receivable which has been purchased by
CFSC from a Dealer for a price greater than the principal amount thereof
stated in the related Contract.
"Owner" means the Holder of a Certificate.
"Owner Trust Estate" has the meaning assigned to such term in the
Trust Agreement.
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<PAGE>
"Owner Trustee" means Chemical Bank Delaware in its capacity as Owner
Trustee under the Trust Agreement, its successors in interest and any
successor owner trustee under the Trust Agreement.
"Pass-Through Rate" means, with respect to the Certificates on a
Distribution Date, a rate per annum equal to 6.55%.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Pool Balance" means, at any time, the aggregate of the Principal
Balances of the Receivables at the end of the preceding Collection Period,
after giving effect to (i) all payments received from Obligors and Purchase
Amounts remitted by the Seller or the Servicer, as the case may be, for
such Collection Period, and (ii) all Realized Losses on Liquidated
Receivables during such Collection Period.
"Pool Factor" means 1.0000000 as of the Cut-off Date and, as of the
close of business on the last day of a Collection Period thereafter means a
seven digit decimal figure equal to the Pool Balance as of such date
divided by the Initial Pool Balance.
"Principal Balance" of a Receivable, as of the close of business on
the last day of a Collection Period or as of the Cut-off Date, as
applicable, means the Amount Financed minus the sum of (i) that portion of
all Scheduled Payments paid on or prior to such day allocable to principal
using the actuarial method based on the related APR, (ii) any payment of
the Purchase Amount with respect to the Receivable purchased by the
Servicer or repurchased by the Seller and allocable to principal and (iii)
any prepayment in full or any partial prepayments (including any
Liquidation Proceeds) applied to reduce the Principal Balance of the
Receivable.
"Principal Distribution Amount" means, with respect to any
Distribution Date, the sum of the following amounts, without duplication,
with respect to the preceding Collection Period: (i) that portion of all
collections on the Receivables (including any Liquidation Proceeds and any
amounts received from Dealers with respect to Receivables) allocable to
principal; (ii) the amount of Realized Losses for the related Collection
Period (except to the extent included in (iii) below) and (iii) the
Principal Balance of each Receivable that the Servicer became obligated to
purchase or that the Seller became obligated to repurchase during the
related Collection Period (except to the extent included in (i) above).
"Purchase Agreement" means the Purchase Agreement dated as of May 1,
1996, between the Seller and CFSC, as the same may be amended and
supplemented from time to time.
"Purchase Amount" means the amount, as of the close of business on the
last day of a Collection Period, required to prepay in full the respective
Receivable under the terms thereof (including interest at the related APR
to the end of the month of purchase).
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<PAGE>
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.07 or repurchased as of such time by the Seller pursuant to
- ------------
Section 3.02.
- ------------
"Rating Agencies" means Moody's and Standard & Poor's. If no such
organization or successor is in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization or other comparable
Person designated by the Seller, notice of which designation shall be given
to the Indenture Trustee, the Owner Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall have notified the Seller, the Servicer, the Owner Trustee and
the Indenture Trustee in writing that such action will not result in a
reduction or withdrawal of the then current rating of any Class of Notes or
the Certificates.
"Realized Loss" means, with respect to any Collection Period, for any
Liquidated Receivable the excess of (a) the Principal Balance of such
Liquidated Receivable over the Liquidation Proceeds with respect to such
Receivable for such Collection Period to the extent allocable to principal
and (b) amounts payable by any Dealer with respect to Over-Rate Receivables
which are deemed uncollectible by the Servicer.
"Receivable" means any Contract listed on Schedule A hereto (which
Schedule may be in the form of microfiche).
"Receivable Files" means the documents specified in Sections 3.03(a)
----------------
and (b).
- -------
"Recoveries" means, with respect to any Liquidated Receivable, (a)
monies collected in respect thereof, from whatever source, but after (i)
such Receivable became a Liquidated Receivable and (ii) the proceeds from
the sale or other disposition of the related Financed Equipment have been
received by the Servicer for deposit in the Collection Account, net of (b)
the sum of any amounts expended by the Servicer for the account of the
Obligor and any amounts required by law to be remitted to the Obligor.
"Reserve Account" means the account designated as such, established
and maintained pursuant to Section 5.01(a).
---------------
"Reserve Account Initial Deposit" means the initial deposit by the
Seller on the Closing Date of $17,665,115.
"Schedule of Receivables" means the schedule of Receivables attached
hereto as Schedule A.
"Scheduled Payment" on a Receivable means the scheduled periodic
payment of principal and interest required to be made by the Obligor.
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<PAGE>
"Securities" means, collectively, the Notes and the Certificates.
"Seller" means Caterpillar Financial Funding Corporation, a Nevada
corporation, and its successors in interest to the extent permitted
hereunder.
"Servicer" means CFSC, as the servicer of the Receivables, and each
successor to CFSC (in the same capacity) pursuant to Section 7.03 or 8.02.
------------ ----
"Servicer Default" means an event specified in Section 8.01.
------------
"Servicer's Certificate" means an Officers' Certificate of the
Servicer delivered pursuant to Section 4.09, substantially in the form of
------------
Schedule D or in such other form that is acceptable to the Indenture
- ----------
Trustee, the Owner Trustee and the Servicer.
"Servicer's Yield" means, with respect to any Receivable, any late
fees, extension fees and other administrative fees or similar charges
allowed by applicable law with respect to such Receivable.
"Servicing Fee" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to
Section 4.08.
- ------------
"Servicing Fee Rate" means 1.0% per annum.
"Specified Reserve Account Balance" with respect to any Distribution
Date means the greater of (i) 4.75% of the Pool Balance as of the close of
business on the last day of the preceding Collection Period and
(ii) $8,367,686; provided, however, that the amount in clause (i) with
respect to a Distribution Date (referred to herein as the "Current
Distribution Date") shall be equal to the amount calculated for such clause
(i) for the Distribution Date immediately preceding such Current
Distribution Date if any of the following events occur:
(a) the aggregate of the Realized Losses realized from the
Cut-off Date through the end of the Collection Period preceding
such Current Distribution Date exceeds the amount equal to 2.25%
of the Initial Pool Balance;
(b) the sum of (i) 12 times the aggregate of the Realized
Losses realized during the Collection Period immediately
preceding such current Distribution Date plus (ii) the aggregate
Principal Balance of all Receivables since the Cut-off Date as of
the last day of the Collection Period immediately preceding such
Current Distribution Date as to which the related Financed
Equipment has been repossessed but which has not become a
Liquidated Receivable exceeds the amount equal to 2.00% of the
Pool Balance at the beginning of such Collection Period; or
(c) the aggregate amount of Scheduled Payments that are
delinquent by more than 60 days as of the end of the Collection
Period immediately preceding
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<PAGE>
such Current Distribution Date exceeds an amount equal to 3.75%
of the Pool Balance as of the end of such Collection Period;
provided, further, that (x) the Specified Reserve Account Balance shall not
- -------- -------
exceed the sum of the outstanding principal amount of the Notes and the
Certificate Balance and (y) upon payment of all principal and interest due
on the Notes and the Certificates, the Specified Reserve Account Balance
shall be zero.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., or its successor.
"Total Distribution Amount" means, for each Distribution Date, the sum
of the aggregate collections in respect of Receivables (including any
Liquidation Proceeds, any Purchase Amounts paid by the Seller and/or the
Servicer and any amounts received from Dealers with respect to Receivables)
received during the related Collection Period and Investment Earnings on
the Trust Accounts during such Collection Period, excluding all payments
and proceeds (including any Liquidation Proceeds and any amounts received
from Dealers with respect to Receivables) of (i) any Receivables the
Purchase Amount of which has been included in the Total Distribution Amount
in a prior Collection Period, (ii) any Liquidated Receivable after and to
the extent of the reassignment of such Liquidated Receivable by the Trust
to the Seller and (iii) any Servicer's Yield.
"Transaction Equipment" means, collectively, the Financed Equipment
and, if applicable, the Cross-Collateralized Equipment.
"Transfer Date" means, with respect to any Distribution Date, the
Business Day preceding such Distribution Date.
"Trust" means the Issuer.
"Trust Accounts" has the meaning assigned thereto in Section 5.01(b).
---------------
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the
form of deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise), including the Reserve Account
Initial Deposit, and all proceeds of the foregoing.
"Trust Agreement" means the Amended and Restated Trust Agreement dated
as of May 1, 1996, between the Seller and the Owner Trustee, as the same
may be amended and supplemented from time to time.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security
interest of the Indenture for the benefit of the Noteholders (including,
without limitation, all property and interests Granted (as defined in the
Indenture) to the Indenture Trustee), including all proceeds thereof.
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"Trust Officer" means, (a) in the case of the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Trust Officer,
Secretary, Assistant Secretary or any other officer of the Indenture
Trustee customarily performing functions similar to those performed by any
of the above designated officers and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officers' knowledge of and familiarity with the particular subject, and (b)
with respect to the Owner Trustee, any officer in the Corporate Trustee
Administration Department of the Owner Trustee with direct responsibility
for the administration of the Trust Agreement and the Basic Documents on
behalf of the Owner Trustee.
"UCC" has the meaning assigned thereto in Section 1.01 of the
Indenture.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms
-----------------------------
used herein and not otherwise defined herein have the meanings assigned to
them in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined
in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such
certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Agreement or in any such
certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section, Schedule
and Exhibit references contained in this Agreement are references to
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without
limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
SECTION 1.03. Calculations. For all purposes of this Agreement,
------------
interest shall be computed on the basis of a 360-day year consisting of
twelve 30-day months.
19
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ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01. Conveyance of Receivables. In consideration of the
-------------------------
Issuer's delivery to or upon the order of the Seller of (i)
$370,797,236.28, and (ii) a Certificate in the principal amount of
$149,157, the Seller does hereby sell, transfer, assign, set over and
otherwise convey to the Issuer, without recourse (subject to the
obligations herein) all right, title and interest of the Seller in and to
the following, whether now owned or hereafter acquired:
(a) the Receivables, and all moneys (including accrued interest)
due thereunder on or after the Cut-off Date;
(b) the interest of the Seller in the Trust Accounts and all
amounts credited thereto;
(c) the interest of the Seller in the security interests in the
Transaction Equipment granted by Obligors pursuant to the Receivables
and any other interest of the Seller in the Transaction Equipment;
(d) the interest of the Seller in any proceeds with respect to
the Receivables from claims on any physical damage, credit life or
disability insurance policies covering Financed Equipment or Obligors;
(e) all right, title and interest of the Seller in and to the
Purchase Agreement, including the right of the Seller to cause CFSC to
repurchase Receivables from the Seller under certain circumstances;
(f) the interest of the Seller in any proceeds from recourse to
or other payments by Dealers; and
(g) the proceeds of any and all of the foregoing.
SECTION 2.02. Closing.
-------
The conveyance of the Receivables shall take place at the offices of
Orrick, Herrington & Sutcliffe, 666 Fifth Avenue, 18th Floor, New York, New
York 10103, on the Closing Date, simultaneously with the closing of the
transactions contemplated by the Purchase Agreement, the underwriting
agreements related to the Notes and the Certificates and the other Basic
Documents. Upon the acceptance by the Seller of the proceeds of the sale
of the Notes and the Certificates, the ownership of each Receivable and the
contents of the related Receivable File is vested in the Issuer, subject
only to the lien of the Indenture.
20
<PAGE>
SECTION 2.03. Books and Records.
-----------------
The transfer of each Receivable shall be reflected on the Seller's
balance sheets and other financial statements prepared in accordance with
generally accepted accounting principles as a transfer of assets by the
Seller to the Issuer. The Seller shall be responsible for maintaining, and
shall maintain, a complete and accurate set of books and records and
computer files for each Receivable which shall be clearly marked to reflect
the ownership of each Receivable by the Issuer.
ARTICLE III
THE RECEIVABLES
SECTION 3.01. Representations and Warranties of Seller. The Seller
----------------------------------------
makes the following representations and warranties as to the Receivables on
which the Issuer is deemed to have relied in acquiring the Receivables.
Such representations and warranties speak as of the execution and delivery
of this agreement, but shall survive the sale, transfer and assignment of
the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) Title. It is the intention of the Seller that the transfer and
-----
assignment herein contemplated constitute a sale of the Receivables from
the Seller to the Issuer and that the beneficial interest in and title to
such Receivables not be part of the debtor's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. No Receivable has been sold, transferred, assigned or
pledged by the Seller to any Person other than the Issuer. Immediately
prior to the transfer and assignment herein contemplated, the Seller had
good and marketable title to each Receivable, free and clear of all Liens
and rights of others and, immediately upon the transfer thereof, the Issuer
shall have good and marketable title to each such Receivable, free and
clear of all Liens and rights of others; and the transfer has been
perfected under the UCC.
(b) All Actions Taken. All actions necessary in any jurisdiction to
-----------------
be taken (i) to give the Issuer a first priority perfected ownership
interest in the Receivables (exclusive of Receivables for which a
governmental entity is the Obligor) (including without limitation delivery
of the Receivables Files pursuant to the Custodial Agreement), and (ii) to
give the Indenture Trustee a first priority perfected security interest
therein (including, without limitation, UCC filings with the Delaware and
Nevada Secretaries of State and precautionary UCC filings with the
Tennessee Secretary of State).
(c) Possession of Receivable Files. All of the Receivables Files have
------------------------------
been or will be delivered to the Custodian on or prior to the Closing Date
or as otherwise provided in Section 3.03.
21
<PAGE>
(d) No Consents Required. All approvals, authorizations, consents,
--------------------
orders or other actions of any Person or of any Governmental Authority
required in connection with the execution and delivery by the Seller of
this Agreement or any other Basic Document, the performance by the Seller
of the transactions contemplated by this Agreement or any other Basic
Document and the fulfillment by the Seller of the terms hereof or thereof,
have been obtained or have been completed and are in full force and effect
(other than approvals, authorizations, consents, orders or other actions
which if not obtained or completed or in full force and effect would not
have a material adverse effect on the Seller or the Issuer or upon the
collectibility of any Receivable or upon the ability of the Seller to
perform its obligations under this Agreement).
SECTION 3.02. Repurchase by Seller or CFSC Upon Breach. (a) The
----------------------------------------
Seller, the Servicer, CFSC or the Owner Trustee, as the case may be, shall
inform the other parties to the Agreement, CFSC and the Indenture Trustee
promptly, in writing, upon the discovery of any breach of the Seller's
representations and warranties made pursuant to Section 3.01 or any breach
------------
of CFSC's representations and warranties made pursuant to Section 3.02(b)
of the Purchase Agreement. Unless any such breach shall have been cured by
the last day of the second month following the month of the discovery
thereof by the Owner Trustee or receipt by the Owner Trustee of written
notice from the Seller or the Servicer of such breach, the Seller shall be
obligated, and, if necessary, the Seller or the Owner Trustee shall
enforce, the obligation of CFSC, if any, under Section 6.02(a)(i) of the
Purchase Agreement to repurchase any Receivable materially and adversely
affected by any such breach as of such last day (or, at the Seller's
option, as of the last day of the first month following the month of the
discovery).
(b) In consideration of the repurchase of the Receivable, the Seller
shall remit the Purchase Amount in the manner specified in Section 5.03;
------------
provided, however, that the obligation of the Seller to repurchase any
- -------- -------
Receivable arising solely as a result of a breach of CFSC's representations
and warranties pursuant to Section 3.02(b) of the Purchase Agreement is
subject to the receipt by the Seller of the Purchase Amount from CFSC.
Subject to the provisions of Section 6.03, the sole remedy of the Issuer,
------------
the Owner Trustee, the Indenture Trustee, the Noteholders or the
Certificateholders with respect to a breach of representations and
warranties pursuant to Section 3.01 and the agreement contained in this
------------
Section shall be to require the Seller to repurchase Receivables pursuant
to this Section, subject to the conditions contained herein, or to enforce
CFSC's obligation, if any, to the Seller to repurchase such Receivables
pursuant to the Purchase Agreement. The Owner Trustee shall have no duty
to conduct any affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Receivable pursuant to this
Section.
SECTION 3.03. Custody of Receivable Files. The Seller, the Issuer
---------------------------
and the Indenture Trustee have appointed the Custodian pursuant to the
Custodial Agreement, and the Custodian has thereby accepted such
appointment, to act as the agent of the Seller, the Issuer and the
Indenture Trustee as custodian of the following documents:
(a) the Original Contract related to each Receivable; and
22
<PAGE>
(b) with respect to each Dealer Receivable, any documents used to
assign such Dealer Receivable and the related Dealer's security
interest in the Transaction Equipment to CFSC.
SECTION 3.04. Duties of Servicer.
------------------
(a) Receivable Files. The Servicer shall maintain such accurate and
----------------
complete accounts, records and computer systems pertaining to each
Receivable File as shall enable itself and the Issuer to comply with this
Agreement. In performing its duties, the Servicer shall act with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to the receivable files relating to all comparable
receivables that the Servicer services for itself or others. The Servicer
shall conduct, or cause to be conducted, periodic audits of the related
accounts, records and computer systems, in such a manner as shall enable
the Issuer or the Indenture Trustee to verify the accuracy of the
Servicer's record keeping. The Servicer shall promptly report to the
Issuer and the Indenture Trustee any failure on its part to maintain its
accounts, records and computer systems as herein provided and promptly take
appropriate action to remedy any such failure. Nothing herein shall be
deemed to require an initial review or any periodic review by the Issuer,
the Owner Trustee or the Indenture Trustee.
(b) Access to Records. The Servicer shall notify the Owner Trustee
-----------------
and the Indenture Trustee of any change in the location of its principal
place of business in writing not later than 90 days after any such change.
The Servicer shall make available to the Owner Trustee and the Indenture
Trustee, or their respective duly authorized representatives, attorneys or
auditors, a list of locations of the related accounts, records and computer
systems maintained by the Servicer at such times as the Owner Trustee or
the Indenture Trustee shall instruct. The Indenture Trustee shall have
access to such accounts, records and computer systems.
(c) Safekeeping. The Servicer shall hold on behalf of the Issuer (i)
-----------
all file stamped copies of UCC financing statements evidencing the security
interest of CFSC in Transaction Equipment, and (ii) any and all documents,
other than the Receivable Files, that CFSC or the Seller shall keep on
file, in accordance with its customary procedures, relating to a
Receivable, an Obligor or Transaction Equipment, and shall maintain such
accurate and complete records pertaining to each Receivable as shall enable
the Issuer to comply with this Agreement. Upon instruction from the
Indenture Trustee, the Servicer shall release any such UCC Filing or other
document to the Indenture Trustee, the Indenture Trustee's agent, or the
Indenture Trustee's designee, as the case may be, at such place or places
as the Indenture Trustee may designate, as soon as practicable.
SECTION 3.05. Acceptance by Issuer and the Indenture Trustee of the
-----------------------------------------------------
Receivables; Certification by the Indenture Trustee.
- ---------------------------------------------------
(a) The Issuer hereby acknowledges constructive receipt, through the
Custodian, for each Receivable, of a Receivable File in the form delivered
to it by the Seller and declares that it will hold such documents and any
amendments, replacements or supplements thereto, as well as any other
assets delivered to it, in trust upon and subject to the conditions set
forth in the Trust
23
<PAGE>
Agreement for the benefit of the Certificateholders, subject to the terms
and conditions of the Indenture and this Agreement. By its acknowledgment
of this Agreement, the Indenture Trustee agrees to execute and deliver on
the Closing Date an acknowledgement of receipt by it, or by the Custodian
on its behalf, of a Receivables File for each Receivable in the form
attached as Schedule C-1 hereto, and declares that it will hold such
documents and any amendments, replacements or supplements thereto, as well
as any other assets delivered to it in trust upon and subject to the
conditions of the Indenture for the benefit of the Noteholders and, to the
extent set forth therein and herein, for the benefit of the
Certificateholders. The Indenture Trustee agrees to review (or cause to be
reviewed) each Receivable File within 45 days after the Closing Date and to
deliver to the Seller, the Issuer, the Owner Trustee, each Rating Agency
and the Servicer a final certification in the form attached hereto as
Schedule C-2 to the effect that, as to each Receivable listed on the
Schedules of Receivables (other than any Receivable paid in full or any
Receivable specifically identified in such certification as not covered by
such certification): (i) all documents required to be delivered to it
pursuant to this Agreement (including without limitation each of the items
listed in Section 3.03(a) and (b)) are in its possession, (ii) such
documents have been reviewed by it and have not been mutilated, damaged,
torn or otherwise physically altered (handwritten additions, changes or
corrections shall not constitute physical alteration if initialled by the
Obligor) and relate to such Receivable, and (iii) based on its examination
and only as to the foregoing documents, the information set forth on the
Schedule of Receivables accurately reflects the information set forth on
the Receivable Files. The Indenture Trustee shall be under no duty or
obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are
other than what they purport to be on their face.
(b) If the Indenture Trustee during the process of reviewing the
Receivable Files finds any document constituting a part of a Receivable
File which is not executed, has not been received, is unrelated to the
related Receivable identified on Schedule A hereto, or does not conform to
the requirements of Section 3.03 or substantively to the description
thereof as set forth on the Schedule of Receivables, the Indenture Trustee
shall promptly so notify the Servicer, the Owner Trustee and the Seller.
In performing any such review, the Indenture Trustee may conclusively rely
on the Servicer as to the purported genuineness of any such document and
any signature thereon. It is understood that the scope of the Indenture
Trustee's review of the Receivable Files is limited solely to confirming
that the documents listed in Section 3.03 have been executed and received
and relate to the Receivable Files identified on the Schedule of
Receivables. The Servicer agrees to use reasonable efforts to cause to be
remedied a material defect in a document constituting part of a Receivable
File of which it is so notified by the Indenture Trustee. If, however, the
Servicer has not caused to be remedied any defect described in such final
certification by the last day of the second month following the month of
receipt by it of the final certification referred to in paragraph (a) of
this Section 3.05, and such defect materially and adversely affects the
interests of the Noteholders or Certificateholders in the related
Receivable, the Seller shall remit the Purchase Amount in the manner
specified in Section 5.03; provided, however, that the obligation of the
-------- -------
Seller to repurchase any Receivable is subject to the receipt by the Seller
of the Purchase Amount from CFSC. Subject to the provisions of Section
5.03, the sole remedy of the Issuer, the Owner Trustee, the Indenture
24
<PAGE>
Trustee, the Noteholders or the Certificateholders with respect to such a
defect and the agreement contained in this Section shall be to require the
Seller to repurchase Receivables pursuant to this Section, subject to the
conditions contained herein, or to enforce CFSC's obligation to the Seller
to repurchase such Receivables pursuant to the Purchase Agreement. The
Owner Trustee shall have no duty to conduct any affirmative investigation
as to the occurrence of any condition requiring the repurchase of any
Receivable pursuant to this Section.
(c) Upon receipt by the Indenture Trustee of a certification of the
Servicer of a repurchase of a Receivable described in Section 3.05(b) above
and receipt of the Purchase Amount, the Indenture Trustee is required to
release to CFSC the related Receivables File and shall execute, without
recourse, and deliver such instruments of transfer as may be necessary to
transfer such Receivable to CFSC.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01. Duties of Servicer. The Servicer, as agent for the
------------------
Issuer (to the extent provided herein), shall manage, service, administer
and make collections on the Receivables (other than Purchased Receivables)
with reasonable care, using that degree of skill and attention that the
Servicer exercises with respect to all comparable receivables that it
services for itself or others. The Servicer's duties shall include
calculating, billing, collection and posting of all payments, responding to
inquiries of Obligors on such Receivables, investigating delinquencies,
reporting tax information to Obligors (to the extent required under the
related Contracts), accounting for collections, and furnishing monthly and
annual statements to the Owner Trustee and the Indenture Trustee with
respect to distributions. Subject to the provisions of Section 4.02, the
------------
Servicer shall follow its customary standards, policies and procedures in
performing its duties as Servicer. Without limiting the generality of the
foregoing, the Servicer is authorized and empowered to execute and deliver,
on behalf of itself, the Issuer, the Owner Trustee, the Indenture Trustee,
the Certificateholders and the Noteholders or any of them, any and all
instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other comparable instruments, with respect to such
Receivables or to the Transaction Equipment securing such Receivables. If
the Servicer shall commence a legal proceeding to enforce a Receivable, the
Issuer (in the case of a Receivable other than a Purchased Receivable)
shall thereupon be deemed to have automatically assigned, solely for the
purpose of collection, such Receivable to the Servicer. If in any
enforcement suit or legal proceeding it shall be held that the Servicer may
not enforce a Receivable on the ground that it shall not be a real party in
interest or a holder entitled to enforce such Receivable, the Owner Trustee
shall, at the Servicer's expense and direction, take steps to enforce such
Receivable, including bringing suit in its name or the name of the Owner
Trustee, the Indenture Trustee, the Certificateholders or the Noteholders.
The Owner Trustee shall upon the written request of the Servicer furnish
the Servicer with any powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to carry out its servicing
and administrative duties hereunder.
25
<PAGE>
SECTION 4.02. Collection of Receivable Payments. The Servicer shall
---------------------------------
make reasonable efforts to collect all payments called for under the terms
and provisions of the Receivables as and when the same shall become due and
shall follow such collection procedures as it follows with respect to all
comparable machinery receivables that it services for itself or others. In
connection therewith, the Servicer may grant extensions, rebates or
adjustments on a Receivable; provided, however, that if the Servicer
-------- -------
extends the date for final payment by the Obligor of any Receivable beyond
the date one month prior to the Class A-3 Final Scheduled Distribution Date
and the Certificate Final Scheduled Distribution Date, it shall promptly
purchase the Receivable from the Issuer in accordance with the terms of
Section 4.07. The Servicer may in its discretion waive any other amounts
- ------------
of Servicer's Yield that may be collected in the ordinary course of
servicing a Receivable. The Servicer shall not agree to any reduction of
the underlying interest rate on any Receivable or, subject to the
foregoing, of the amount of any Scheduled Payment on a Receivable.
Notwithstanding anything in this Agreement to the contrary, any Recoveries
shall be paid to the Seller and any Liquidated Receivables shall be
assigned by the Trust to the Seller (to extent the Principal Balance
thereof has been distributed as part of the Principal Distributable
Amount).
SECTION 4.03. Realization upon Receivables. On behalf of the Issuer,
----------------------------
the Servicer shall use its best efforts, consistent with its customary
servicing procedures, to repossess or otherwise realize upon the
Transaction Equipment securing any Receivable as to which the Servicer
shall have determined eventual payment in full is unlikely. The Servicer
shall follow such customary and usual practices and procedures as it shall
deem necessary or advisable in its servicing of comparable receivables,
which may include selling the Transaction Equipment at public or private
sale. The foregoing shall be subject to the provision that, in any case in
which any item of Transaction Equipment shall have suffered damage, the
Servicer shall not expend funds in connection with the repair or the
repossession of such Transaction Equipment unless it shall determine in its
discretion that such repair and/or repossession will increase the
Liquidation Proceeds by an amount greater than the amount of such expenses.
SECTION 4.04. Physical Damage Insurance. The Servicer shall, in
-------------------------
accordance with its customary servicing procedures, require that each
Obligor shall have obtained physical damage insurance covering the
Transaction Equipment as of the execution of the Receivable.
SECTION 4.05. Maintenance of Security Interests in Financed
---------------------------------------------
Equipment. The Servicer shall, in accordance with its customary servicing
- ---------
procedures, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable (including each Receivable on
which a governmental entity is the Obligor) in the related Financed
Equipment. The Servicer is hereby authorized to take such steps as are
necessary to re-perfect such security interest or to maintain such
perfected security interest on behalf of the Issuer and the Indenture
Trustee in the event of the relocation of Financed Equipment, or for any
other reason.
SECTION 4.06. Covenants of Servicer. The Servicer shall not: (i)
---------------------
release the Transaction Equipment securing any Receivable from the security
interest granted by such Receivable in whole or in part except (A) in
accordance with Section 4.03 above or (B) in the
------------
26
<PAGE>
event of payment in full by the Obligor thereunder; (ii) impair the rights
of the Issuer, the Indenture Trustee, the Certificateholders or the
Noteholders in any Receivable; (iii) increase the number of Scheduled
Payments due under a Receivable except in accordance with the terms thereof
or the terms of Section 4.02; or (iv) fail to return a Receivable File
------------
released to it pursuant to Section 3.3 of the Custodial Agreement within
five (5) Business Days of such release.
SECTION 4.07. Purchase by Servicer of Receivables upon Breach. The
-----------------------------------------------
Servicer or the Owner Trustee shall inform the other party and the
Indenture Trustee, the Seller and CFSC promptly, in writing, upon the
discovery of any breach pursuant to Section 4.02, 4.05 or 4.06. Unless the
------------ ---- ----
breach shall have been cured by the last day of the second month following
such discovery (or, at the Seller's election, the last day of the first
following month) (except for the failure to return a released Receivable
File, for which there is no grace period beyond the specified five (5)
Business Days), the Servicer shall purchase any Receivable materially and
adversely affected by such breach. If the Servicer takes any action
pursuant to Section 4.02 that impairs the rights of the Issuer, the
------------
Indenture Trustee, the Certificateholders or the Noteholders in any
Receivable or as otherwise provided in Section 4.02, the Servicer shall
------------
purchase such Receivable. In consideration of the purchase of any such
Receivable pursuant to either of the two preceding sentences, the Servicer
shall remit the Purchase Amount in the manner specified in Section 5.03.
------------
Subject to Section 7.02, the sole remedy of the Issuer, the Owner Trustee,
------------
the Indenture Trustee, the Certificateholders or the Noteholders with
respect to a breach pursuant to Section 4.02, 4.05 or 4.06 shall be to
------------ ---- ----
require the Servicer to purchase Receivables pursuant to this Section. The
Owner Trustee shall have no duty to conduct any affirmative investigation
as to the occurrence of any condition requiring the purchase of any
Receivable pursuant to this Section. The parties hereto intend that the
Servicer will not intentionally breach or cause a breach pursuant to
Section 4.02, 4.05 or 4.06 in order to provide direct or indirect assurance
- ------------ ---- ----
to the Seller, the Indenture Trustee, the Owner Trustee, the Noteholders,
or the Certificateholders, as applicable, against loss by reason of the
bankruptcy or insolvency (or other credit condition) of, or default by, the
Obligor on, or the uncollectibility of, any Receivable.
SECTION 4.08. Servicing Fee. On each Determination Date, the
-------------
Servicer shall be entitled to receive the Servicing Fee in respect of the
immediately preceding Collection Period equal to the product of (a)
one-twelfth of the Servicing Fee Rate and (b) the Pool Balance as of the
first day of such preceding Collection Period. The Servicer shall also be
entitled to any Servicer's Yield with respect to Receivables, collected
(from whatever source) on the Receivables, which Servicer's Yield shall be
paid to the Servicer pursuant to Section 5.07.
------------
SECTION 4.09. Servicer's Certificate. On each Determination Date,
----------------------
the Servicer shall deliver to the Owner Trustee, the Indenture Trustee and
the Seller, with a copy to the Rating Agencies, a Servicer's Certificate
containing all information necessary to make the distributions pursuant to
Sections 5.04 and 5.05 for the Collection Period preceding the date of such
- ------------- ----
Servicer's Certificate. Neither the Owner Trustee nor the Indenture
Trustee shall be required to determine, confirm or recalculate the
information contained in the Servicer's Certificate. Receivables to be
purchased by the Servicer or to be repurchased by the Seller
27
<PAGE>
shall be identified by the Servicer by account number with respect to such
Receivable as specified in Schedule A.
----------
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.
----------------------------------------------------
(a) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee and the Rating Agencies, on or before April 30 of each year
beginning April 30, 1997, an Officers' Certificate stating that (i) a
review of the activities of the Servicer during the preceding 12-month
period ending on December 31 (or, in the case of April 30, 1997, the period
from the Closing Date to December 31, 1996) and of its performance under
this Agreement has been made under such officers' supervision and (ii) to
the best of such officers' knowledge, based on such review, the Servicer
has fulfilled in all material respects all its obligations under this
Agreement throughout such period or, if there has been a default in the
fulfillment of any such obligation in any material respect, specifying each
such default known to such officers and the nature and status thereof. The
Indenture Trustee shall send a copy of such certificate and the report
referred to in Section 4.11 to the Rating Agencies. A copy of such
certificate and the report referred to in Section 4.11 may be obtained by
any Certificateholder by a request in writing to the Owner Trustee at its
address in Section 10.03.
-------------
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five (5) Business Days thereafter,
written notice in an Officers' Certificate of any event which with the
giving of notice or lapse of time, or both, would become a Servicer Default
under Section 8.01(a) or (b).
--------------- ---
SECTION 4.11. Annual Independent Certified Public Accountants'
------------------------------------------------
Report. In order to confirm that the servicing of the Receivables has been
- ------
conducted in compliance with the terms of this Agreement, the Servicer
shall cause a firm of independent certified public accountants, which may
also render other services to the Servicer, the Seller or CFSC, to deliver
to the Owner Trustee and the Indenture Trustee on or before April 30 of
each year beginning April 30, 1997, a report addressed to the Board of
Directors of the Servicer, the Owner Trustee and the Indenture Trustee, to
the effect that such firm has examined the financial statements of CFSC and
issued its report thereon and that such examination (a) was made in
accordance with generally accepted auditing standards and accordingly
included such tests of the accounting records and such other auditing
procedures as such firm considered necessary in the circumstances; (b)
included tests relating to machinery installment sale contracts serviced
for others in accordance with requirements agreed to by the Servicer and
the Indenture Trustee, to the extent the tests are applicable to the
servicing obligations set forth in this Agreement; and (c) discloses the
results of such tests during the preceding 12-month period ended
December 31 (or, in the case of the report due on or before April 30, 1997,
the period from the Closing Date to December 31, 1996) that, in the firm's
opinion, such program requires such firm to report.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
28
<PAGE>
SECTION 4.12. Servicer Expenses. The Servicer shall be required to
-----------------
pay all expenses incurred by it in connection with its activities
hereunder, including fees and disbursements of independent accountants,
taxes imposed on the Servicer and expenses incurred in connection with
distributions and reports to the Owner Trustee, the Indenture Trustee,
Certificateholders and Noteholders.
ARTICLE V
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.01. Establishment of Trust Accounts.
-------------------------------
(a) (i) The Seller, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Collection Account"),
bearing a designation clearly indicating that the funds deposited therein
are held for the benefit of the Noteholders and the Certificateholders.
(ii) The Seller, for the benefit of the Noteholders, shall establish
and maintain in the name of the Indenture Trustee an Eligible Deposit
Account (the "Note Distribution Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Noteholders.
(iii) The Seller, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited therein
are held for the benefit of the Noteholders and the Certificateholders.
(b) Funds on deposit in the Collection Account, the Note Distribution
Account and the Reserve Account (collectively the "Trust Accounts") shall
be invested by the Indenture Trustee in Eligible Investments selected by
the Servicer; provided, however, it is understood and agreed that the
-------- -------
Indenture Trustee shall not be liable for any loss arising from such
investment in Eligible Investments. All such Eligible Investments shall be
held by the Indenture Trustee for the benefit of the Noteholders and the
Certificateholders or the Noteholders, as applicable; provided, however,
-------- -------
that on each Distribution Date all investment earnings (net of losses and
investment expenses) on funds on deposit therein shall be deposited into
the Collection Account and shall be deemed to constitute a portion of the
Total Distribution Amount. Other than as permitted by the Rating Agencies,
funds on deposit in the Trust Accounts shall be invested in Eligible
Investments that will mature so that such funds will be available at the
close of business on the Transfer Date preceding the immediately following
Distribution Date; provided, however, that funds on deposit in Trust
-------- -------
Accounts may be invested in Eligible Investments of the Indenture Trustee
which may mature so that such funds will be available on the Distribution
Date. Funds deposited in a Trust Account on a Transfer Date which
immediately precedes a Distribution Date
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upon the maturity of any Eligible Investments are not required to be
invested overnight, but if so invested, such investments must meet the
conditions of the immediately preceding sentence.
(c) (i) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts
and in all proceeds thereof (including all income thereon) and all such
funds, investments, proceeds and income shall be part of the Trust Estate.
The Trust Accounts shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Noteholders and the
Certificateholders or the Noteholders, as applicable. If, at any time, any
of the Trust Accounts ceases to be an Eligible Deposit Account, the
Indenture Trustee (or the Servicer on its behalf) shall within 10 Business
Days (or such longer period, not to exceed 30 calendar days, as to which
each Rating Agency may consent) establish a new Trust Account as an
Eligible Deposit Account and shall transfer any cash and/or any investments
to such new Trust Account. So long as The First National Bank of Chicago
is an Eligible Institution, any Trust Account may be maintained with it in
an Eligible Deposit Account.
(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that if held in deposit accounts
shall be held solely in the Eligible Deposit Accounts; and each such
Eligible Deposit Account shall be subject to the exclusive custody and
control of the Indenture Trustee, and the Indenture Trustee shall have
sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical Property
shall be delivered to the Indenture Trustee in accordance with
paragraph (a) of the definition of "Delivery" and shall be held,
------------- --------
pending maturity or disposition, solely by the Indenture Trustee or a
financial intermediary (as such term is defined in Section 8-313(4) of
the UCC) acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
-------------
definition of "Delivery" and shall be maintained by the Indenture
--------
Trustee, pending maturity or disposition, through continued book-entry
registration of such Trust Account Property as described in such
paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by
clause (C) above shall be delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
------------- --------
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued registration of the Indenture Trustee's
(or its nominee's) ownership of such security.
(iii) The Servicer shall have the power, revocable by the Indenture
Trustee or by the Owner Trustee with the consent of the Indenture Trustee,
to instruct the Indenture Trustee to make withdrawals and payments from the
Trust Accounts for the purpose of permitting the
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Servicer or the Owner Trustee to carry out its respective duties hereunder
or permitting the Indenture Trustee to carry out its duties under the
Indenture.
(iv) The Indenture Trustee is hereby authorized to execute purchase
and sales directed by the Servicer through the facilities of its own
trading or capital markets operations. The Indenture Trustee shall send
statements to the Servicer monthly reflecting activity for each amount
created hereunder for the preceding month. Although the Servicer
recognizes that it may obtain a broker confirmation at no additional cost,
the Servicer hereby agrees that confirmations of investments are not
required to be issued by the Indenture Trustee for each month in which a
monthly statement is rendered. No statement need be rendered pursuant to
the provision hereof if no activity occurred in the account for such month.
SECTION 5.02. Collections. Subject to Section 5.03, the Servicer
----------- ------------
shall remit to the Collection Account (i) all payments by or on behalf of
the Obligors with respect to the Receivables (other than Purchased
Receivables) and (ii) all Liquidation Proceeds (except to the extent of
Recoveries applied in accordance with Section 4.02), in each case as
------------
collected during each Collection Period within two Business Days of receipt
and identification thereof. Notwithstanding the foregoing, if (i) CFSC is
the Servicer, (ii) a Servicer Default shall not have occurred and be
continuing and (iii) CFSC maintains a short-term rating of at least A-1 by
Standard & Poor's and P-1 by Moody's, the Servicer may remit such
collections with respect to each Collection Period to the Collection
Account on or before the second Business Day prior to the following
Distribution Date. For purposes of this Article V, the phrase "payments by
or on behalf of Obligors" shall mean payments made with respect to the
Receivables by Persons other than the Servicer or CFSC.
SECTION 5.03. Additional Deposits. The Servicer and the Seller shall
-------------------
deposit or cause to be deposited in the Collection Account the Purchase
Amounts with respect to Purchased Receivables as set forth in the
immediately following sentence, and the Servicer shall deposit in the
Collection Account all amounts to be paid under Section 9.01 as set forth
------------
therein. The Servicer and the Seller will deposit the Purchase Amount with
respect to each Purchased Receivable when such obligations are due, unless,
with respect to Purchase Amounts to be remitted by the Servicer, the
Servicer shall be permitted to make deposits monthly prior to each
Distribution Date pursuant to Section 5.02, in which case such deposits
------------
shall be made in accordance with such Section. The Servicer shall account
for Purchase Amounts paid by itself and the Seller separately.
SECTION 5.04. Distributions. (a) On each Determination Date, the
-------------
Servicer shall calculate all amounts required to determine the amounts to
be deposited in the Note Distribution Account and the Certificate
Distribution Account.
(b) On the second Business Day prior to each Distribution Date, the
Servicer shall instruct the Indenture Trustee, which instruction shall be
in the form of Exhibit C to Schedule E (or such other form that is
--------- ----------
acceptable to the Indenture Trustee and the Servicer), to make the
following deposits and distributions for receipt by the Servicer or deposit
in the applicable Trust Account or Certificate Distribution Account by
11:00 A.M. (New York time) on such following
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Distribution Date to the extent of funds deposited into the Collection
Account, in the following order of priority:
(i) to the Servicer (if CFSC or an Affiliate is not the
Servicer), the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods;
(ii) to the Administrator under the Administration Agreement, the
Administration Fee and all unpaid Administration Fees from prior
Collection Periods;
(iii) to the Note Distribution Account, the Noteholders' Interest
Distributable Amount;
(iv) to the Note Distribution Account, the Class A-1 Noteholders'
Principal Distributable Amount;
(v) to the Note Distribution Account, the Class A-2 Noteholders'
Principal Distributable Amount;
(vi) to the Note Distribution Account, the Class A-3 Noteholders'
Principal Distributable Amount;
(vii) to the Certificate Distribution Account, the
Certificateholders' Interest Distributable Amount;
(viii) to the Certificate Distribution Account, the
Certificateholders' Principal Distributable Amount;
(ix) to the Servicer (if CFSC or an Affiliate is the Servicer),
the Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods; and
(x) to the Reserve Account, the remaining Total Distribution
Amount.
(c) Notwithstanding anything in this Section 5.04 to the contrary, if
an Event of Default under the Indenture occurs and the maturities of the
Notes are accelerated pursuant to Section 5.02 of the Indenture,
collections on the Receivables shall be applied by the Indenture Trustee in
accordance with Section 5.04(b) of the Indenture.
SECTION 5.05. Reserve Account. (a) On the Closing Date, the Seller
---------------
shall deposit the Reserve Account Initial Deposit into the Reserve Account.
The Servicer shall determine the Specified Reserve Account Balance for each
Distribution Date.
(b) (i) If the amount on deposit in the Reserve Account on any
Distribution Date (after giving effect to all deposits or withdrawals
therefrom on such Distribution Date), prior to the May 1998 Distribution
Date is greater than the Specified Reserve Account Balance for such
Distribution Date, the Servicer shall instruct the Indenture Trustee to
distribute the amount of
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such excess to the Seller; provided that if, after giving effect to all
--------
payments made on the Notes and Certificates on such Distribution Date, the
Pool Balance as of the end of the preceding Collection Period is less than
the sum of (x) the outstanding principal amount of the Notes and (y) the
Certificate Balance, such excess amount shall not be distributed to the
Seller and shall be retained in the Reserve Account available for
application in accordance with Sections 5.05(c) and (d). Amounts properly
---------------- ---
distributed to the Seller pursuant to this Section 5.05(b)(i) shall be
------------------
deemed released from the Trust and the security interest therein granted to
the Indenture Trustee, and the Seller shall in no event thereafter be
required to refund any such distributed amounts.
(ii) On each Distribution Date, commencing with the May 1998
Distribution Date, if the amount on deposit in the Reserve Account (after
taking into account any deposits thereto pursuant to Section 5.04(b)(ix)
-------------------
and any withdrawals therefrom pursuant to Section 5.05(c) and (d)) is
--------------- ---
greater than the Specified Reserve Account Balance for such Distribution
Date (which shall be calculated to give effect to the reduction in the
outstanding principal balance of the Notes to result from the deposits made
in the Note Distribution Account pursuant to Section 5.04(b)(iv), (v) and
------------------- ---
(vi) or 5.05(c) on such Distribution Date), then the Servicer shall
- ---- -------
instruct the Indenture Trustee to deposit the entire amount of such excess
to the Note Distribution Account (x) for distribution to Class A-2
Noteholders as principal (until the Class A-2 Notes have been paid in full)
and then (y) for distribution to the Class A-3 Noteholders as principal
(until the Class A-3 Notes have been paid in full). The amount of such
excess not distributed to the Class A-3 Noteholders following their payment
in full pursuant to the terms of the immediately preceding sentence shall
be distributed to the Seller.
(c) In the event that the Noteholders' Distributable Amount for a
Distribution Date exceeds the amount deposited into the Note Distribution
Account pursuant to Section 5.04(b)(iii), (iv), (v) and (vi) on such
-------------------- ---- --- ----
Distribution Date, the Indenture Trustee shall withdraw from the Reserve
Account on such Distribution Date, upon receipt of the instruction from the
Servicer pursuant to Section 5.04(b), to the extent of funds available
therein, an amount equal to such excess, and the Indenture Trustee shall
deposit such amount into the Note Distribution Account pursuant to the
terms of the Indenture.
(d) In the event that the Certificateholders' Distributable Amount for
a Distribution Date exceeds the amount deposited in the Certificate
Distribution Account pursuant to Section 5.04(b)(vii) and (viii) on such
-------------------- ------
Distribution Date, the Indenture Trustee shall withdraw on such
Distribution Date from the Reserve Account, upon receipt of the instruction
of the Servicer pursuant to Section 5.04(b), to the extent of funds
available therein after giving effect to paragraph (c) above, an amount
equal to such excess, and the Indenture Trustee shall deposit such amount
into the Certificate Distribution Account pursuant to the terms of the
Indenture.
(e) The Certificate Balance shall be reduced on any Distribution Date
by the excess, if any, of (i) the sum of (A) the Certificate Balance (after
giving effect to the reduction in the Certificate Balance to result from
the deposits made in the Certificate Distribution Account pursuant to
Sections 5.04(b)(viii) and 5.05(d) on such Distribution Date (and the
- ---------------------- -------
resulting distributions pursuant to the Trust Agreement)) and (B) the
aggregate outstanding principal balance of the Notes (after giving effect
to the reduction in the aggregate outstanding principal
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<PAGE>
balance of the Notes to result from the deposits made in the Note
Distribution Account on such Distribution Date and on prior Distribution
Dates) over (ii) the sum of (A) the Pool Balance as of the close of
business on the last day of the preceding Collection Period and (B) the
amount on deposit in the Reserve Account after giving effect to any
distributions therefrom on such Distribution Date. Thereafter, the
Certificate Balance shall be increased to the extent that any portion of
the Total Distribution Amount is available to pay the existing
Certificateholders' Principal Carryover Shortfall before making any
deposits to the Reserve Account pursuant to Section 5.04(b)(ix), but not by
-------------------
more than the aggregate reductions in the Certificate Balance pursuant to
this paragraph.
(f) Notwithstanding anything in Sections 5.05(d) and (e) to the
contrary, if on any Distribution Date on which any Notes are outstanding
the amount on deposit in the Reserve Account is less than the amount equal
to 0.75% of the Pool Balance as of the end of the immediately preceding
Collection Period, then amounts will be withdrawn from the Reserve Account
on such Distribution Date only to the extent needed to pay any Noteholders'
Interest Distributable Amount and Certificateholders' Interest
Distributable Amount otherwise unpaid on such date, and no funds may be
withdrawn from the Reserve Account on such Distribution Date to pay any
portion of the Noteholders' Principal Distributable Amount or any
Certificateholders' Principal Distributable Amount, in each case otherwise
unpaid on such date.
(g) Notwithstanding anything in this Section 5.05 to the contrary, if
an Event of Default under the Indenture occurs and the maturities of the
Notes are accelerated pursuant to Section 5.02 of the Indenture, amounts on
deposit in the Reserve Account shall be applied by the Indenture Trustee in
accordance with Section 5.04(a) of the Indenture.
SECTION 5.06. Statements to Certificateholders and Noteholders. (a)
------------------------------------------------
On the second Business Day prior to each Distribution Date, the Servicer
shall provide to the Indenture Trustee (with a copy to the Rating Agencies)
and to the Owner Trustee (for the Owner Trustee to forward to each
Certificateholder of record pursuant to the Trust Agreement) a statement
substantially in the form of Exhibit A to Schedule E (or such other form
---------- ----------
that is acceptable to the Indenture Trustee, the Owner Trustee and the
Servicer) setting forth at least the following information as to the Notes
(separately stating such information as to the Class A-1 Notes, the Class
A-2 Notes and the Class A-3 Notes) and the Certificates, to the extent
applicable:
(i) the amount of such distribution allocable to principal;
(ii) the amount of such distribution allocable to interest;
(iii) the Pool Balance as of the close of business on the last day
of the preceding Collection Period;
(iv) the outstanding principal balance of each class of the
Notes, the Class A-1 Note Pool Factor, the Class A-2 Note Pool Factor,
the Class A-3 Note Pool Factor, the Certificate Balance and the
Certificate Pool Factor, in each case as of the close of
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business on the last day of the preceding Collection Period, after
giving effect to payments allocated to principal reported under (i)
above;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(vi) the amount of the Administration Fee paid to the
Administrator with respect to such Collection Period;
(vii) the aggregate amount of the Purchase Amounts for Purchased
Receivables with respect to the related Collection Period paid by each
of the Seller and the Servicer (accounted for separately);
(viii) the amount of Realized Losses, if any, for such Collection
Period;
(ix) the balance of the Reserve Account on such Distribution
Date, after giving effect to withdrawals made on such Distribution
Date;
(x) the Specified Reserve Account Balance for such Distribution
Date;
(xi) the Noteholders' Distributable Amount, the components
thereof, and the amount, if any, to be withdrawn from the Reserve
Account and deposited into the Note Distribution Account pursuant to
Section 5.05(c); and
(xii) the Certificateholder's Distributable Amount, the components
thereof, and the amount, if any, to be withdrawn from the Reserve
Account and deposited into the Certificate Distribution Account
pursuant to Section 5.05(d).
Each amount set forth pursuant to paragraph (i), (ii) or (v) above
shall be expressed as a dollar amount per $1,000 of original principal
balance of a Note or Certificate, as applicable.
(b) On the second Business Day prior to each Distribution Date, the
Servicer shall provide to the Indenture Trustee (with a copy to the Rating
Agencies) for the Indenture Trustee to forward to each Noteholder of
record, a statement substantially in the form of Exhibit B to Schedule E
--------- ----------
(or such other form that is acceptable to the Indenture Trustee and the
Servicer) setting forth at least the following information as to the Notes
(to the extent applicable, separately stating such information for the
Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes) to the extent
applicable with respect to such Distribution Date for the preceding
Collection Period;
(i) the amount of such distribution allocable to principal;
(ii) the amount of such distribution allocable to interest;
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(iii) the Pool Balance as of the close of business on the last day
of the preceding Collection Period;
(iv) the outstanding principal balance of each class of the
Notes, the Class A-1 Note Pool Factor, the Class A-2 Note Pool Factor,
the Class A-3 Note Pool Factor, the Certificate Balance and the
Certificate Pool Factor as of the close of business on the last day of
the preceding Collection Period, after giving effect to payments
allocated to principal reported under (i) above;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to such Collection Period;
(vi) the amount of the Administration Fee paid to the
Administrator with respect to such Collection Period;
(vii) the aggregate amount of the Purchase Amounts for Purchased
Receivables with respect to such Collection Period;
(viii) the amount of Realized Losses, if any, for such Collection
Period; and
(ix) the balance of the Reserve Account on such Distribution
Date, after giving effect to withdrawals made on such Distribution
Date;
(x) the Specified Reserve Account Balance for such Distribution
Date;
(xi) the Noteholders' Distributable Amount, the components
thereof, and the amount, if any, to be withdrawn from the Reserve
Account and deposited into the Note Distribution Account pursuant to
Section 5.05(c); and
(xii) the Certificateholder's Distributable Amount, the components
thereof, and the amount, if any, to be withdrawn from the Reserve
Account and deposited into the Certificate Distribution Account
pursuant to Section 5.05(d).
Each amount set forth pursuant to subclause (i), (ii) or (v) above
shall be expressed as a dollar amount per $1,000 of original principal
balance of a Note.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of the Indenture, the
Indenture Trustee shall mail to each Person who at any time during such
calendar year shall have been a Noteholder and received any payment
thereon, a statement containing the amounts described in (i) and (ii) above
and any other information required by applicable tax laws, for the purposes
of such Noteholder's preparation of Federal income tax returns.
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The Indenture Trustee shall only be required to provide to the
Noteholders the information furnished to it by the Servicer. The
Indenture Trustee shall not be required to determine, confirm or recompute
any such information.
SECTION 5.07. Net Deposits. As an administrative convenience, so
------------
long as CFSC is the Servicer and the Administrator, if the Servicer is
permitted to remit collections monthly rather than within two Business Days
of their receipt and identification pursuant to Section 5.02, the Servicer
------------
will be permitted to make the deposit of collections on the Receivables and
Purchase Amounts for or with respect to the Collection Period net of
distributions to be made to the Servicer and the Administrator with respect
to such Collection Period (and the Servicer shall pay amounts owing to the
Administrator directly); provided, that regardless of the required
frequency of remittances, the Servicer shall be paid the Servicer's Yield
by means of the Servicer making the deposit of such collections net of the
Servicer's Yield. The Servicer, however, will account to the Owner
Trustee, the Indenture Trustee, the Noteholders and the Certificateholders
as if the Servicing Fee and Administration Fee was paid individually.
ARTICLE VI
THE SELLER
SECTION 6.01.Representations of Seller. The Seller makes the
-------------------------
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution
and delivery of this Agreement and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Seller is duly
------------------------------
organized and validly existing as a corporation in good standing under
the laws of the State of Nevada with the power and authority to own
its properties and to conduct its business as such properties are
currently owned and such business is presently conducted, and had at
all relevant times, and has, the power, authority and legal right to
acquire and own the Receivables.
(b) Due Qualification. The Seller is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which
the failure to so qualify or to obtain any such license or approval
would render any Receivable unenforceable that would otherwise be
enforceable by the Seller or the Owner Trustee.
(c) Power and Authority. The Seller has the power and
-------------------
authority to execute and deliver this Agreement and to carry out its
terms; the Seller has full power and authority to sell and assign the
Receivables and other property to be sold and assigned to and
deposited with the Issuer and the Seller and has duly authorized such
sale and assignment to the Issuer by all necessary corporate action;
and the execution,
37
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delivery and performance of this Agreement has been duly authorized by
the Seller by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal,
------------------
valid and binding obligation of the Seller enforceable in accordance
with its terms, except to the extent that such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and the remedy of specific performance and injunctive
relief may be subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(e) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the fulfillment of the terms hereof
do not (i) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time)
a default under, the articles of incorporation or by-laws of the
Seller, or any indenture, agreement or other instrument to which the
Seller is a party or by which it shall be bound; (ii) result in the
creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); or (iii) or violate any
law or, to the best of the Seller's knowledge, any order, rule or
regulation applicable to the Seller of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(f) No Proceedings. There are no proceedings or
--------------
investigations pending, or to the Seller's best knowledge, threatened,
before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or
its properties: (i) asserting the invalidity of this Agreement, the
Indenture, the Notes, the Certificates or any of the other Basic
Documents, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions
contemplated by this Agreement, the Indenture or any of the other
Basic Documents; (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this
Agreement, the Indenture, the Notes, the Certificates or any other of
the Basic Documents or (iv) which might adversely affect the Federal
or state income tax attributes of the Notes or the Certificates.
SECTION 6.02. [Reserved].
---------
SECTION 6.03. Liability of Seller; Indemnities. The Seller shall be
--------------------------------
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Custodian and the Indenture Trustee and their
officers, directors and agents from and against any taxes that may at any
time be asserted against the Issuer, the Owner Trustee, the Custodian
38
<PAGE>
or the Indenture Trustee or their respective officers, directors, and
agents with respect to the sale of the Receivables to the Issuer or the
issuance and original sale of the Certificates and the Notes, including any
sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of the Issuer, not including
any taxes asserted with respect to ownership of the Receivables or Federal
or other income taxes arising out of the transactions contemplated by this
Agreement) and costs and expenses in defending against the same.
(b) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Custodian and the Indenture Trustee and their
officers, directors, and agents from and against any loss, liability or
expense incurred by reason of (i) the Seller's willful misfeasance, bad
faith or negligence in the performance of its duties under this Agreement,
or by reason of reckless disregard of its obligations and duties under this
Agreement and (ii) the Seller's or the Issuer's violation or alleged
violation of Federal or state securities laws in connection with the
offering and sale of the Notes and the Certificates.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee, the Custodian or the Indenture Trustee and
the termination of this Agreement and shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Seller shall have
made any indemnity payments pursuant to this Section 6.03 and the Person to
------------
or on behalf of whom such payments are made thereafter shall collect any of
such amounts from others, such Person shall promptly repay such amounts to
the Seller, without interest.
SECTION 6.04. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Seller. Any Person (a) into which the Seller may be merged
- ----------------------
or consolidated, (b) which may result from any merger or consolidation to
which the Seller shall be a party or (c) which may succeed to the
properties and assets of the Seller substantially as a whole, which Person
in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Seller under this Agreement, shall be the
successor to the Seller hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement;
provided, however, that (i) immediately after giving effect to such
- -------- -------
transaction, no representation or warranty made pursuant to Section 3.01
------------
shall have been breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer Default shall
have occurred and be continuing, (ii) the Seller shall have delivered to
the Owner Trustee and the Indenture Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section and
that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, (iii) the Rating
Agency Condition shall have been satisfied with respect to such transaction
and (iv) the Seller shall have delivered to the Owner Trustee and the
Indenture Trustee an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all actions necessary to perfect the interests of
the Owner Trustee and the Indenture Trustee have been taken, including 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 Owner Trustee and Indenture Trustee,
respectively, in the Receivables and reciting the details of such filings,
or (B) stating that, in the opinion of such counsel, no such
39
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action shall be necessary to preserve and protect such interests.
Notwithstanding anything herein to the contrary, the execution of the
foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii) and (iv) above shall be conditions to the consummation of the
transactions referred to in clause (a), (b) or (c) above.
SECTION 6.05. Limitation on Liability of Seller and Others. The
--------------------------------------------
Seller and any director or officer or employee or agent of the Seller may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Seller shall not be under any obligation to
appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under this Agreement, and that in its opinion
may involve it in any expense or liability.
SECTION 6.06. Seller May Own Certificates or Notes. The Seller and
------------------------------------
any Affiliate (other than CFSC) thereof may in its individual or any other
capacity become the owner or pledgee of Certificates or Notes with the same
rights as it would have if it were not the Seller or an Affiliate thereof,
except as expressly provided herein (including, without limitation, the
definition of "Outstanding" contained in each of the Indenture and the
Trust Agreement) or in any Basic Document.
ARTICLE VII
THE SERVICER
SECTION 7.01. Representations of Servicer. The Servicer makes the
---------------------------
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution
and delivery of the Agreement (or as of the date a Person (other than the
Indenture Trustee) becomes Servicer pursuant to Sections 7.03 and 8.02, in
------------- ----
the case of a successor to the Servicer) and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is a
------------------------------
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has the
corporate power and authority to own its properties and to conduct the
business in which it is currently engaged, and had at all relevant
times, and has, the power, authority and legal right to acquire, own,
sell and service the Receivables.
(b) Power and Authority. The Servicer has the power and
-------------------
authority to execute and deliver this Agreement and to carry out its
terms; and the execution, delivery and performance of this Agreement
have been duly authorized by the Servicer by all necessary corporate
action.
(c) Binding Obligation. This Agreement constitutes a legal,
------------------
valid and binding obligation of the Servicer enforceable in accordance
with its terms, except that such
40
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enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, and the remedy of specific performance
and injunctive relief may be subject to certain equitable defenses and
to the discretion of the court before which any proceeding therefor
may be brought.
(d) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the fulfillment of the terms hereof
shall not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of
time) a default under, the articles of incorporation or by-laws of the
Servicer, or any indenture, agreement or other instrument to which the
Servicer is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement or other instrument
(other than this Agreement); nor violate any law or, to the best of
the Servicer's knowledge, any order, rule or regulation applicable to
the Servicer of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or its properties.
(e) No Proceedings. To the Servicer's best knowledge, there are
--------------
no proceedings or investigations pending, or threatened, before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of this Agreement, the
Indenture, the Notes, the Certificates or any of the other Basic
Documents; (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions
contemplated by this Agreement, the Indenture or any of the other
Basic Documents; (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this
Agreement, the Indenture, the Notes, the Certificates or any of the
other Basic Documents ; or (iv) relating to the Servicer and which
might adversely affect the Federal or state income tax attributes of
the Notes or the Certificates.
(f) No Consents Required. All approvals, authorizations,
--------------------
consents, orders or other actions of any Person or of any Governmental
Authority required in connection with the execution and delivery by
the Servicer of this Agreement or any other Basic Document, the
performance by the Servicer of the transactions contemplated by this
Agreement or any other Basic Document and the fulfillment by the
Servicer of the terms hereof or thereof, have been obtained or have
been completed and are in full force and effect (other than approvals,
authorizations, consents, orders or other actions which if not
obtained or completed or in full force and effect would not have a
material adverse effect on the Servicer or the Issuer or upon the
collectibility of any Receivable or upon the ability of the Servicer
to perform its obligations under this Agreement).
SECTION 7.02. Indemnities of Servicer. The Servicer shall be liable
-----------------------
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
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(a) The Servicer shall defend, indemnify and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Custodian, the
Noteholders, the Certificateholders and the Seller and any of the
officers, directors and agents of the Issuer, the Owner Trustee, the
Indenture Trustee, the Custodian and the Seller from and against any
and all costs, expenses, losses, damages, claims and liabilities,
arising out of or resulting from the use, ownership or operation by
the Servicer or any Affiliate (other than the Seller) thereof of any
Transaction Equipment.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Custodian and
the Seller and their respective officers, directors and agents from
and against (i) any taxes that may at any time be asserted against any
such Person with respect to the transactions contemplated herein,
including any sales, gross receipts, general corporation, tangible
personal property, privilege or license taxes (but, in the case of the
Issuer, not including any taxes asserted with respect to, and as of
the date of, the sale of the Receivables to the Issuer or the issuance
and original sale of the Certificates and the Notes, or asserted with
respect to ownership of the Receivables, or Federal or other income
taxes arising out of distributions on the Certificates or the Notes)
and (ii) costs and expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Seller, the
Custodian, the Certificateholders and the Noteholders and any of the
officers, directors and agents of the Issuer, the Owner Trustee, the
Indenture Trustee and the Seller from and against any and all costs,
expenses, losses, claims, damages and liabilities to the extent that
any such cost, expense, loss, claim, damage or liability arose out of,
or was imposed upon any such Person through, the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement or on account of the
failure of the Servicer to be qualified to do business as a foreign
corporation or to have obtained a license or approval in any
jurisdiction.
(d) The Servicer shall indemnify, defend and hold harmless the
Owner Trustee, the Custodian and the Indenture Trustee and their
respective officers, directors and agents from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance or performance of the
trusts and duties herein, and in the case of the Owner Trustee, in the
Trust Agreement, in the case of the Custodian, the Custodial Agreement
and in the case of the Indenture Trustee, the Indenture, except to the
extent that any such cost, expense, loss, claim, damage or liability:
(i) shall be due to the willful misfeasance, bad faith or negligence
(except for errors in judgment) of the Owner Trustee or the Indenture
Trustee, as applicable; or (ii) shall arise from the breach by the
Owner Trustee of any of its representations or warranties set forth in
Section 7.03 of the Trust Agreement.
(e) The Servicer shall pay any and all taxes levied or assessed
upon all or any part of the Owner Trust Estate, other than any taxes
asserted with respect to, and as of the
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date of, the sale of the Receivables to the Issuer or the issuance and
original sale of the Certificates and the Notes, or Federal or other
income taxes imposed on the Issuer because of its classification or
reclassification for tax purposes, or Federal or other income taxes
arising out of distributions on the Certificates or the Notes.
For purposes of this Section, in the event of the termination of the
rights and obligations of CFSC (or any successor thereto pursuant to
Section 7.03) as Servicer pursuant to Section 8.01, or a resignation by
- ------------ ------------
such Servicer pursuant to this Agreement, such Servicer shall be deemed to
be the Servicer pending appointment of a successor Servicer (other than the
Indenture Trustee) pursuant to Section 8.02.
------------
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of
this Agreement and shall include reasonable fees and expenses of counsel
and expenses of litigation. If the Servicer shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom
such payments are made thereafter collects any of such amounts from others,
such Person shall promptly repay such amounts to the Servicer, without
interest.
SECTION 7.03. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Servicer. Any Person (a) (i) into which the Servicer may
- ------------------------
be merged or consolidated, (ii) which may result from any merger or
consolidation to which the Servicer shall be a party, (iii) which may
succeed to the properties and assets of the Servicer substantially as a
whole, or (iv) which is a corporation 50% or more of the voting stock of
which is owned, directly or indirectly, by Caterpillar, and (b) in the case
of any of (i), (ii), (iii) or (iv), which has executed an agreement of
assumption to perform every obligation of the Servicer hereunder, shall be
the successor to the Servicer under this Agreement without further act on
the part of any of the parties to this Agreement; provided, however, that
-------- -------
(w) immediately after giving effect to such transaction, no Servicer
Default, and no event which, after notice or lapse of time, or both, would
become a Servicer Default shall have occurred and be continuing, (x) the
Servicer shall have delivered to the Owner Trustee and the Indenture
Trustee an Officers' Certificate and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent
provided for in this Agreement relating to such transaction have been
complied with, (y) the Rating Agency Condition shall have been satisfied
with respect to such transaction and (z) the Servicer shall have delivered
to the Owner Trustee and the Indenture Trustee an Opinion of Counsel either
(A) stating that, in the opinion of such counsel, 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
Owner Trustee and the Indenture Trustee, respectively, in the Receivables
and reciting the details of such filings or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interests. Notwithstanding anything herein to the contrary,
the execution of the foregoing agreement of assumption and compliance with
clauses (w), (x), (y) and (z) above shall be conditions to the consummation
of the transactions referred to in clause (a), (b), (c), or (d) above.
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SECTION 7.04. Limitation on Liability of Servicer and Others.
----------------------------------------------
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Issuer, the
Noteholders or the Certificateholders, except as provided under this
Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement or for errors in judgment; provided,
--------
however, that this provision shall not protect the Servicer or any such
- -------
person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties
or by reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director or officer or employee or agent
of the Servicer as the case may be, may rely in good faith on any document
of any kind prima facie properly executed and submitted by any person
respecting any matters arising under this Agreement.
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 Receivables 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 any reasonable action that it may deem necessary or desirable in
respect of this Agreement and the other Basic Documents and the rights and
duties of the parties to this Agreement and the other Basic Documents and
the interests of the Certificateholders under this Agreement and the
Noteholders under the Indenture.
SECTION 7.05. CFSC Not To Resign as Servicer. Subject to the
------------------------------
provisions of Section 7.03, CFSC shall not resign from the obligations and
------------
duties hereby imposed on it as Servicer under this Agreement except upon
determination that the performance of its duties under this Agreement shall
no longer be permissible under applicable law (if it is also determined
that such determination may not be reversed). Notice of any such
determination permitting the resignation of CFSC shall be communicated to
the Owner Trustee and the Indenture Trustee at the earliest practicable
time (and, if such communication is not in writing, shall be confirmed in
writing at the earliest practicable time) and any such determination shall
be evidenced by an Opinion of Counsel to such effect delivered to the Owner
Trustee and the Indenture Trustee concurrently with or promptly after such
notice. No such resignation shall become effective until the Indenture
Trustee or a successor Servicer shall have assumed the responsibilities and
obligations of CFSC in accordance with Section 8.02.
------------
ARTICLE VIII
DEFAULT
SECTION 8.01. Servicer Default. If any one of the following events
----------------
(a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer (i) to deliver to the Indenture
Trustee for deposit in any of the Trust Accounts or the Certificate
Distribution Account any required payment or (ii) to direct the
Indenture Trustee to make any required distribution
44
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therefrom that shall continue unremedied for a period of three
Business Days after written notice of such failure is received by the
Servicer from the Owner Trustee or the Indenture Trustee or after
discovery of such failure by an officer of the Servicer; or
(b) failure on the part of the Servicer or the Seller, as the
case may be, duly to observe or to perform in any material respect any
other covenants or agreements of the Servicer or the Seller (as the
case may be) set forth in this Agreement or any other Basic Document,
which failure shall (i) materially and adversely affect the rights of
Certificateholders or Noteholders and (ii) continues unremedied for a
period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given (A)
to the Servicer or the Seller (as the case may be) by the Owner
Trustee or the Indenture Trustee or (B) to the Servicer or the Seller
(as the case may be), and to the Owner Trustee and the Indenture
Trustee by the Holders of Notes evidencing not less than 25% of the
outstanding Amount of the Notes or "Holders" (as defined in the Trust
Agreement) of Certificates evidencing not less than 25% of the
outstanding Certificate Balance; or
(c) an Insolvency Event occurs with respect to the Seller or the
Servicer;
then, and in each and every case, so long as the Servicer Default shall not
have been remedied, either the Indenture Trustee, or the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by
notice then given in writing to the Servicer (and to the Indenture Trustee
and the Owner Trustee if given by the Noteholders) may terminate all the
rights and obligations (other than the obligations set forth in Section
-------
7.02 hereof) of the Servicer under this Agreement. On or after the receipt
- ----
by the Servicer of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Notes, the
Certificates or the Receivables or otherwise, shall, without further
action, pass to and be vested in the Indenture Trustee or such successor
Servicer as may be appointed under Section 8.02; and, without limitation,
------------
the Indenture Trustee and the Owner Trustee are hereby authorized and
empowered to execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments,
and to do or accomplish all other acts or things necessary or appropriate
to effect the purposes of such notice of termination, whether to complete
the transfer and endorsement of the Receivables and related documents, or
otherwise. The predecessor Servicer shall cooperate with the successor
Servicer, the Indenture Trustee and the Owner Trustee in effecting the
termination of the responsibilities and rights of the predecessor Servicer
under this Agreement, including the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by
the predecessor Servicer for deposit, or shall thereafter be received by it
with respect to a Receivable. All reasonable costs and expenses (including
reasonable attorneys' fees) incurred in connection (x) with transferring
the computer or other records to the successor Servicer in the form
requested and (y) amending this Agreement to reflect such succession as
Servicer pursuant to this Section shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses.
Upon receipt of notice of the occurrence of a Servicer Default, the Owner
Trustee shall give notice thereof to the Rating Agencies.
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<PAGE>
SECTION 8.02. Appointment of Successor. (a) Upon the Servicer's
------------------------
receipt of notice of termination, pursuant to Section 8.01 or the
------------
Servicer's resignation in accordance with the terms of this Agreement, the
predecessor Servicer shall continue to perform its functions as Servicer
under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the earlier of (x) the date 45 days from the delivery to
the Owner Trustee and the Indenture Trustee of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor
Servicer shall become unable to act as Servicer, as specified in the notice
of resignation and accompanying Opinion of Counsel. In the event of the
Servicer's termination hereunder, the Indenture Trustee shall appoint a
successor Servicer, and the successor Servicer shall accept its appointment
by a written assumption in form acceptable to the Owner Trustee and the
Indenture Trustee. In the event that a successor Servicer has not been
appointed at the time when the predecessor Servicer has ceased to act as
Servicer in accordance with this Section, pending the appointment of and
acceptance by a successor Servicer, the Indenture Trustee without further
action shall automatically be appointed and serve as the successor Servicer
and the Indenture Trustee shall be entitled to the Servicing Fee and the
Servicer's Yield. Notwithstanding the above, the Indenture Trustee shall,
if it shall be legally unable so to act, appoint or petition a court of
competent jurisdiction to appoint, any established institution who has
demonstrated its capability to service the Receivables to the satisfaction
of the Indenture Trustee, as the successor to the Servicer under this
Agreement, having a net worth of not less than $50,000,000 and whose
regular business shall include the servicing of receivables comparable with
the Receivables, as the successor to the Servicer under this Agreement.
The Indenture Trustee, acting in its capacity as successor Servicer,
and any successor Servicer appointed by it, shall have no responsibility or
obligation (i) for any breach by any predecessor Servicer of any of its
representations and warranties, or (ii) any acts or omissions of CFSC or
any other Servicer prior to its termination.
(b) Upon appointment, the successor Servicer (including the Indenture
Trustee acting as successor servicer) shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating
thereto placed on the predecessor Servicer and shall be entitled to the
Servicing Fee and the Servicer's Yield and all the rights granted to the
predecessor Servicer by the terms and provisions of this Agreement.
(c) Subject to the Indenture Trustee's right to appoint a successor
Servicer pursuant to Section 8.02(a) after the Indenture Trustee has become
---------------
the Servicer pending the appointment of and acceptance by a successor
Servicer, the Servicer may not resign unless it is prohibited from serving
as such by law.
(d) Notwithstanding any other provision of this Agreement, neither the
Indenture Trustee nor any successor Servicer shall be deemed in default,
breach or violation of this Agreement as a result of the failure of CFSC or
any Servicer (i) to cooperate with the Indenture Trustee or any
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<PAGE>
successor Servicer pursuant to Section 8.01, (ii) to deliver funds required
------------
to be deposited to any Trust Account, or (iii) to deliver files or records
relative to the Receivables as may be requested by the Indenture Trustee or
successor Servicer.
SECTION 8.03. Notification to Noteholders and Certificateholders.
--------------------------------------------------
Upon any termination of, or appointment of a successor to, the Servicer
pursuant to this Article VIII, the Owner Trustee shall give prompt written
------------
notice thereof to Certificateholders and the Indenture Trustee shall give
prompt written notice thereof to Noteholders and the Rating Agencies.
SECTION 8.04. Waiver of Past Defaults. The Holders of Notes
-----------------------
evidencing not less than a majority of the Outstanding Amount of the Notes
(or, if no Notes are Outstanding, the "Holders" (as defined in the Trust
Agreement) of Certificates evidencing not less than a majority of the
outstanding Certificate Balance may, on behalf of all Noteholders and
Certificateholders, waive in writing any default by the Servicer in the
performance of its obligations hereunder and its consequences, except a
default in making any required deposits to or payments from any of the
Trust Accounts in accordance with this Agreement. Upon any such waiver of
a past default, such default shall cease to exist, and any Servicer 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 thereto.
SECTION 8.05. Appointment of Custodians. CFSC, the Seller, the
-------------------------
Issuer and the Indenture Trustee may, with the consent of the Servicer and
notice to the Rating Agencies, appoint The First National Bank of Chicago,
as Custodian to hold all or a portion of the Receivable Files as agent for
such Person during such time as such Person owns or has an interest in the
Receivables, in accordance with the Custodial Agreement. The First
National Bank of Chicago is appointed Custodian and, for so long as it
shall be the Custodian thereunder, agrees to comply with the terms of the
Custodial Agreement applicable to it. The Indenture Trustee agrees to
comply with the terms of the Custodial Agreement and to enforce the terms
and provisions thereof against the Custodian for the benefit of the
Noteholders and the Certificateholders.
ARTICLE IX
TERMINATION
SECTION 9.01. Optional Purchase of All Receivables; Trust
-------------------------------------------
Termination. (a) If on the last day of any Collection Period the Pool
- -----------
Balance is less than 10% of the Initial Pool Balance, the Servicer shall
have the option to purchase the Owner Trust Estate, other than the Trust
Accounts, which purchase shall be effective as of such last day; provided,
--------
however, that the Servicer may not effect any such purchase so long as the
- -------
rating on CFSC's long-term debt obligations is less than Baa3 by Moody's,
unless the Owner Trustee and the Indenture Trustee shall have received an
Opinion of Counsel to the effect that such purchase would not constitute a
fraudulent conveyance. To exercise such option, the Servicer shall deposit
in the Collection Account on or prior to the second Business Day prior to
the next succeeding Distribution Date
47
<PAGE>
an amount equal to the aggregate Purchase Amount for the Receivables
(including defaulted Receivables but not including Liquidated Receivables)
pursuant to Section 5.03 and shall succeed to all interests in and to the
------------
Trust.
(b) Upon any sale of the assets of the Trust pursuant to Section 9.02
of the Trust Agreement, the Servicer shall instruct the Indenture Trustee
to apply the proceeds from such sale after all payments and reserves
therefrom have been made (the "Insolvency Proceeds") in accordance with
Section 5.04(b) of the Indenture.
(c) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee and the Indenture Trustee as soon as
practicable after the Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder
(other than rights to receive payments under Section 5.05(b)), and the
---------------
Owner Trustee will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment. The Agreement may be amended by the Seller,
---------
the Servicer and the Trust, with the consent of the Indenture Trustee, but
without the consent of any of the Noteholders or the Certificateholders, to
cure any ambiguity, to correct or supplement any provisions in this
Agreement or for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions in this Agreement or of
modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that such action shall not, as
-------- -------
evidenced by an Opinion of Counsel delivered to the Owner Trustee and the
Indenture Trustee, adversely affect in any material respect the interests
of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Seller,
the Servicer and the Trust, with the consent of the Indenture Trustee, the
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and the consent of the "Holders" (as
defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the Certificate Balance, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of
the Noteholders or the Certificateholders; 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 Receivables
or distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (b) reduce the aforesaid portion
of the Outstanding Amount of the Notes and the aforesaid portion of
Certificate Balance,
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<PAGE>
the Holders and "Holders" of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Notes
and the "Holders" (as defined in the Trust Agreement) of all the
outstanding Certificates.
Prior to the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such
amendment or consent to each of the Rating Agencies. Promptly after the
execution of any such amendment or consent, the Owner Trustee shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder and the Indenture Trustee.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel
referred to in Section 10.02(i)(1). The Owner Trustee and the Indenture
-------------------
Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Owner Trustee's or the Indenture Trustee's, as
applicable, own rights, duties or immunities under this Agreement or
otherwise.
SECTION 10.02. Protection of Title to Trust. (a) The Seller shall
----------------------------
take all actions necessary to perfect, and maintain perfection of, the
interests of the Owner Trustee and the Indenture Trustee in the
Receivables. In the event it is determined that the Indenture Trustee's or
the Issuer's interests are no longer perfected, such actions shall include
but shall not be limited to enforcement of the terms of the Custodial
Agreement and of Section 6.02 of the Purchase Agreement. In addition,
without limiting the rights of the Indenture Trustee or the Issuer
specified in the immediately preceding sentence, the Seller shall execute
and file such financing statements and cause to be executed and filed such
continuation statements, all in such manner and in such places as may be
required by law fully to present, maintain, and protect the interest of the
Issuer and the interest of the Indenture Trustee in the Receivables and in
the proceeds thereof. The Seller shall deliver (or cause to be delivered)
to the Owner Trustee and the Indenture Trustee file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as
available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed in accordance
with paragraph (a) above or otherwise seriously misleading within the
meaning of Sec. 9-402(7) of the UCC (regardless of whether such a filing was
ever made), unless it shall have given the Owner Trustee and the Indenture
Trustee at least five days' prior written notice thereof and, if
applicable, shall have timely filed appropriate amendments to any and all
previously filed financing statements or continuation statements (so that
the Lien of the Issuer or the Indenture Trustee is not adversely affected).
49
<PAGE>
(c) Each of the Seller and the Servicer shall have an obligation to
give the Owner Trustee and the Indenture Trustee at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement (regardless of
whether such a filing was ever made) and shall promptly, if applicable,
file any such amendment. The Servicer shall at all times maintain each
office from which it shall service Receivables, and its principal executive
office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including
payments and Recoveries made and payments owing (and the nature of each)
and (ii) reconciliation between payments or Recoveries on (or with respect
to) each Receivable and the amounts from time to time deposited in the
Collection Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that
refer to a Receivable shall indicate clearly the interest of the Issuer
(which interest has been acquired from the Seller) and the Indenture
Trustee in such Receivable and that such Receivable is owned by the Issuer
and has been pledged to the Indenture Trustee. Indication of the Issuer's
interest (which interest has been acquired from the Seller) and the
Indenture Trustee's interest in a Receivable shall be deleted from or
modified on the Servicer's computer systems when, and only when, the
related Receivable shall have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in
receivables comparable with the Receivables, to any prospective purchaser,
lender or other transferee, the Servicer shall give to such prospective
purchaser, lender or other transferee computer tapes, records or printouts
(including any restored from backup archives) that, if they shall refer in
any manner whatsoever to any Receivable, shall indicate clearly that such
Receivable has been sold and is owned by the Issuer and has been pledged to
the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and its agents at
any time during normal business hours to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee or
to the Indenture Trustee, within five Business Days, a list of all
Receivables (by contract number and name of Obligor) then held as part of
the Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before
such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
50
<PAGE>
(1) promptly after the execution and delivery of this Agreement
and of each amendment thereto, an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all actions have been
taken that are necessary fully to perfect the interests of the Owner
Trustee and the Indenture Trustee in the Receivables, and reciting the
details of such action or referring to prior Opinions of Counsel in
which such details are given, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to perfect such
interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three
months after the Cut-off Date, an Opinion of Counsel, dated as of a
date during such 90-day period, either (A) stating that, in the
opinion of such counsel, all actions have been taken, and, if
applicable, all financing statements and continuation statements have
been executed and filed, that are necessary fully to perfect the
interests of the Owner Trustee and the Indenture Trustee in the
Receivables and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B)
stating that, in the opinion of such counsel, no such action shall be
necessary to perfect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken
in the following year to perfect such interest.
(j) The Seller shall, to the extent required by applicable law, cause
the Certificates and the Notes to be registered with the Commission
pursuant to Section 12(b) or Section 12(g) of the Exchange Act within the
time periods specified in such sections.
SECTION 10.03. Notices. All demands, notices and communications upon
-------
or to the Seller, the Servicer, the Issuer, the Owner Trustee, the
Indenture Trustee or the Rating Agencies under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in
the case of the Seller, to Caterpillar Financial Funding Corporation,
Greenview Plaza, 2950 East Flamingo Road, Suite E-4, Las Vegas, Nevada
89121, (702-735-2514), (b) in the case of the Servicer, to Caterpillar
Financial Services Corporation, 3322 West End Avenue, Nashville, TN 37203-
1071 (615-386-5800), (c) the case of the Issuer or the Owner Trustee, at
the "Corporate Trust Office" (as defined in the Trust Agreement), (d) in
the case of the Indenture Trustee, at the Corporate Trust Office, (e) in
the case of Moody's, to Moody's Investors Service, Inc., ABS Monitoring
Department, 99 Church Street, New York, New York 10007 and (f) in the case
of Standard & Poor's, to Standard & Poor's Ratings Services, 26 Broadway
(15th Floor), New York, New York 10004, Attention of Asset Backed
Surveillance Department, or, as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
SECTION 10.04. Assignment. Notwithstanding anything to the contrary
----------
contained herein, except as provided in Sections 6.04 and 7.03 and as
------------- ----
provided in the provisions of this Agreement concerning the resignation of
the Servicer, this Agreement may not be assigned by the Seller or the
Servicer.
51
<PAGE>
SECTION 10.05. Limitations on Rights of Others. The provisions of
-------------------------------
this Agreement are solely for the benefit of the Seller, the Servicer, the
Issuer, the Owner Trustee, the Certificateholders, the Indenture Trustee
and the Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 10.06. Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 10.07. Separate Counterparts. This Agreement may be executed
---------------------
by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 10.08. Headings. The headings of the various Articles and
--------
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 10.09. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS, REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.10. Assignment to Indenture Trustee. The Seller hereby
-------------------------------
acknowledges and consents to any mortgage, pledge, assignment and grant of
a security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of all right, title and
interest of the Issuer in, to and under the Receivables and the other
property constituting the Owner Trust Estate and/or the assignment of any
or all of the Issuer's rights and obligations hereunder to the Indenture
Trustee.
SECTION 10.11. Nonpetition Covenants. (a) Notwithstanding any prior
---------------------
termination of this Agreement, the Servicer, the Seller, the Owner Trustee
and the Indenture Trustee shall not, prior to the date which is one year
and one day after the termination of this Agreement with respect to the
Issuer, acquiesce, petition or otherwise invoke or cause the Issuer to
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any Federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Issuer or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the Issuer.
52
<PAGE>
(b) Notwithstanding any prior termination of this Agreement, the
Servicer, the Issuer, the Owner Trustee and the Indenture Trustee shall
not, prior to the date which is one year and one day after the termination
of this Agreement with respect to the Seller, acquiesce, petition or
otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case
against the Seller under any Federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Seller or any
substantial part of its property, or ordering the winding up or liquidation
of the affairs of the Seller.
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture
------------------------------------------------------
Trustee. (a) Notwithstanding anything contained herein to the contrary,
- -------
this Agreement has been countersigned by Chemical Bank Delaware not in its
individual capacity but solely in its capacity as Owner Trustee of the
Issuer, and in no event shall Chemical Bank Delaware in its individual
capacity or, except as expressly provided in the Trust Agreement, as
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been acknowledged and accepted by The First National Bank of
Chicago not in its individual capacity but solely as Indenture Trustee, and
in no event shall The First National Bank of Chicago have any liability for
the representations, warranties, covenants, agreements or other obligations
of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer.
53
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers as of the day and year first
above written.
CATERPILLAR FINANCIAL ASSET TRUST
1996-A
By:CHEMICAL BANK DELAWARE,
not in its individual capacity but solely as
Owner Trustee on behalf of the Trust,
By: /s/ John J. Cashin
----------------------------------------------
Name: John J. Cashin
Title:Senior Trust Officer
CATERPILLAR FINANCIAL FUNDING
CORPORATION,
Seller,
By: /s/ Frank C. Carder
----------------------------------------------
Name: F.C. Carder
Title:Treasurer
CATERPILLAR FINANCIAL SERVICES
CORPORATION,
Servicer,
By: /s/ Ali Bahaj
----------------------------------------------
Name: Ali Bahaj
Title:Vice President
Acknowledged and Accepted:
The First National Bank of Chicago,
not in its individual capacity
but solely as Indenture Trustee and as Custodian
By: /s/ Barbara G. Grosse
----------------------------------------------------------
Name: Barbara G. Grosse
Title: Assistant Vice President
and Assistant Secretary
54
<PAGE>
SCHEDULE A
Schedule of Receivables
-----------------------
[On file with Caterpillar Financial Services Corporation and the Trustee]
<PAGE>
SCHEDULE B
Location of Receivable Files
----------------------------
The First National Bank of Chicago, as Custodian
3322 West End Avenue
Nashville, Tennessee 37203-1071
B-1
<PAGE>
SCHEDULE C-1
FORM OF INDENTURE TRUSTEE INITIAL CERTIFICATION
-----------------------------------------------
________________, 1996
[Trust]
[Servicer]
[Seller]
Re: Sale and Servicing Agreement (the "Sale and Servicing
Agreement"), dated as of May 1, 1996 among Caterpillar
Financial Services Corporation as Servicer, Caterpillar
Financial Funding Corporation and Caterpillar Financial
Asset Trust 1996-A
Gentlemen:
In accordance with Section 3.05 of the Sale and Servicing Agreement,
the undersigned, as Indenture Trustee under the Indenture, hereby certifies
that it or the Custodian on its behalf has received a Receivable File with
respect to each Receivable listed in the Schedule of Receivables and the
documents contained therein appear to bear original signatures.
Neither the Indenture Trustee nor the Custodian on its behalf has made
any independent examination of any such documents beyond the review
specifically required in the above-referenced Sale and Servicing Agreement.
The Indenture Trustee makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any such documents
contained in the Receivables Files, or (ii) collectibility, insurability,
effectiveness or suitability of any Receivable identified on the Schedule
of Receivables.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-referenced Sale and Servicing
Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Indenture Trustee
By:
------------------------------------------
C-1-1
<PAGE>
SCHEDULE C-2
FORM OF INDENTURE TRUSTEE FINAL CERTIFICATION
---------------------------------------------
___________, 1996
[Trust]
[Servicer]
[Seller]
Re: Sale and Servicing Agreement (the "Sale and Servicing
Agreement"), dated as of May 1, 1996 among Caterpillar
Financial Services Corporation, as Servicer, Caterpillar
Financial Funding Corporation and Caterpillar Financial
Asset Trust 1996-A
Gentlemen:
In accordance with the provisions of Section 3.05 of the
above-referenced Sale and Servicing Agreement, the undersigned, as
Indenture Trustee under the Indenture, hereby certifies that as to each
Receivable listed on the Schedule of Receivables (other than any Receivable
paid in full or any Receivable listed on the exception report attached
hereto), it or the Custodian on its behalf has reviewed the Receivables
Files delivered to it or the Custodian on its behalf pursuant to Section
3.03 of the Sale and Servicing Agreement and has determined that (i) all
such documents are in its possession or in the possession of the Custodian
on its behalf, (ii) all documents to be included in the Receivables Files
pursuant to the Sale and Servicing Agreement including, without limitation,
the Original Contract have been reviewed by it or the Custodian on its
behalf and have not been mutilated, damaged, torn or otherwise physically
altered and relate to such Receivable and (iii) based on its examination,
or the examination of the Custodian on its behalf, and only as to the
foregoing documents, the information set forth on the Schedule of
Receivables respecting such Receivables accurately reflects the information
set forth in the Receivables .
Neither the Indenture Trustee nor the Custodian on its behalf has made
any independent examination of such documents beyond the review
specifically required in the above-referenced Sale and Servicing Agreement.
The Indenture Trustee makes no representations as to: (i) the validity,
legality, enforceability or genuineness of any documents contained in the
Receivable Files, or (ii) the collectibility, insurability, effectiveness
or suitability of any Receivable identified on the Schedule of Receivables.
C-2-1
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-referenced Sale and Servicing
Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Indenture Trustee
By:___________________________
Name:
Title:
C-2-2
<PAGE>
SCHEDULE D
Servicer's Certificate
----------------------
The undersigned hereby certify that (i) they are, respectively, a duly
elected [title] and [title] of Caterpillar Financial Services Corporation
and (ii) this Servicing Certificate complies with the requirements of, and
is being delivered pursuant to, Section 4.09 of the Sale and Servicing
------------
Agreement (the "Sale and Servicing Agreement") dated as of May 1, 1996
between Caterpillar Financial Asset Trust 1996-A, Caterpillar Financial
Funding Corporation and Caterpillar Financial Services Corporation.
Dated:_________________ _____________________________
Name:
Title:
______________________________
Name:
Title:
D-1
<PAGE>
Distribution Date: ______________
(i) Servicing Fee;
(ii) Administration Fee;
(iii) Total Distribution Amount;
(iv) the weighted average Net APR for the related Collection
Period;
(v) clause (i) of Noteholders' Monthly Interest Distributable
Amount;
(vi) Noteholders' Interest Carryover Shortfall;
(vii) clause (ii) of Noteholders' Monthly Interest Distributable
Amount;
(viii) Noteholders' Monthly Interest Distributable Amount;
(ix) Class A-1 Noteholders' Monthly Distribution Amount;
(x) Class A-1 Noteholders' Principal Carryover Shortfall;
(xi) Class A-1 Noteholders' Principal Distributable Amount;
(xii) [Intentionally Omitted];
(xiii) Class A-2 Noteholders' Monthly Principal Distribution
Amount;
(xiv) Class A-2 Noteholders' Principal Carryover Shortfall;
(xv) Class A-2 Noteholders' Principal Monthly Distributable
Amount;
(xvi) Class A-3 Noteholders' Percentage;
(xvii) Class A-3 Noteholders' Monthly Principal Distribution
Amount;
(xviii) Class A-3 Noteholders' Principal Carryover Shortfall;
(xix) Class A-3 Noteholders' Monthly Distributable Amount;
(xx) the Noteholders' Principal Distributable Amount;
D-2
<PAGE>
(xxi) the amount of principal to be distributed to the Class A-2
Noteholders and/or Class A-3 Noteholders pursuant to Section
-------
5.05(b)(ii);
-----------
(xxii) [intentionally omitted];
(xxiii) Monthly Certificate Interest;
(xxiv) Certificateholders' Interest Carryover Shortfall;
(xxv) Certificateholders' Interest Distributable Amount;
(xxvi) Certificateholders' Percentage;
(xxvii) Certificateholders' Monthly Principal Distributable Amount;
(xxviii) Certificateholders' Principal Carryover Shortfall;
(xxix) Certificateholders' Principal Distributable Amount;
(xxx) Certificateholders' Distributable Amount;
(xxxi) the amount to be deposited into the Reserve Account pursuant
to Section 5.04(b);
---------------
(xxxii) the Specified Reserve Account Balance;
(xxxiii) the excess, if any, of the amount in the Reserve Account
(after giving effect to Section 5.04(b)) over the Specified
---------------
Reserve Account Balance;
(xxxiv) the amount to be distributed from the Reserve Account to the
Seller pursuant to Section 5.05(b)(i) or (ii), as
------------------ ----
applicable;
(xxxv) the amount to be withdrawn from the Reserve Account and
deposited into the Note Distribution Account pursuant to
Section 5.05(c) (separately stating interest and principal);
---------------
(xxxvi) the amount to be withdrawn from the Reserve Account and
deposited into the Certificate Distribution Account pursuant
to Section 5.05 (separately stating interest and principal);
------------
(xxxvii) the Pool Balance as of the close of business on the last day
of the related Collection Period;
D-3
<PAGE>
(xxxviii) the outstanding principal amount of the Class A-1 Notes, the
Class A-1 Note Pool Factor, the outstanding principal amount
of the Class A-2 Notes, the Class A-2 Note Pool Factor, the
outstanding principal amount of the Class A-3 Notes, the
Class A-3 Note Pool Factor, the Certificate Balance and the
Certificate Pool Factor as of the close of business on the
last day of the related Collection Period, after giving
effect to payments of principal on such Distribution Date;
(xxxix) the aggregate amount of the Purchase Amounts for Purchased
Receivables with respect to the related Collection Period;
(xl) the amount of Realized Losses, if any, for the related
Collection Period; and
(xli) the balance of the Reserve Account on such Distribution
Date, after giving effect to distributions made on such
Distribution Date.
(xlii) the Specified Reserve Account Balance for such Distribution
Date and the following:
(a)(i) the aggregate of the Realized Losses realized from
the Cut-off Date through the end of the Collection
Period preceding such Distribution Date and (ii)
the amount equal to 2.25% of the Initial Pool
Balance;
(b)(i) the sum of (x) 12 times the Realized Losses
realized during the Collection Period immediately
preceding such Distribution Date and (y) the
aggregate Principal Balance of all Receivables as
to which the related Financed Equipment has been
repossessed but which has not become a Liquidated
Receivable and (ii) the amount equal to 2.00% of
the Pool Balance at the beginning of such
Collection Period; or
(c)(i) the aggregate amount of Scheduled Payments that
are delinquent by more than 60 days as of the end
of the Collection Period immediately preceding
such Distribution Date and (ii) the amount equal
to 3.75% of the Pool Balance as of the end of such
Collection Period.
D-4
<PAGE>
SCHEDULE E
Officers' Certificate
---------------------
The undersigned hereby certify that (i) they are, respectively, a duly
elected [title] and [title] of Caterpillar Financial Services Corporation,
(ii) Exhibit A hereto complies with the requirements of, and is being
---------
delivered pursuant to, Section 5.08(a) of the Sale and Servicing Agreement
---------------
(the "Sale and Servicing Agreement") dated as of May 1, 1996 between
Caterpillar Financial Asset Trust 1996-A, Caterpillar Financial Funding
Corporation and Caterpillar Financial Services Corporation, (iii) Exhibit B
---------
hereto complies with the requirements of, and is delivered pursuant to,
Section 5.07(b) of the Sale and Servicing Agreement, and (iv) Exhibit C
- --------------- ---------
hereto complies with the requirements of, and is being delivered pursuant
to, Section 5.04(b) of the Sale and Servicing Agreement.
---------------
Dated:________________________ ______________________________
Name:
Title:
______________________________
Name:
Title:
E-1
<PAGE>
EXHIBIT A
---------
TO SCHEDULE E
Statement for Certificateholders
pursuant to Section 5.08(a)
- --------------------------------
Distribution Date:___________________
(i) Amount of principal being paid or distributed:
(a) Class A-1 Notes:_______________ ($____ per $[___]
original principal
amount)
(b) Class A-2 Notes:_______________ ($____ per $[___]
original principal
amount)
(c) Class A-3 Notes:_______________ ($____ per $[___]
original principal
amount)
(d) Certificates:__________________ ($ per $[___]
original principal
amount)
(e) Total:_______________
(ii) (a) Amount of interest being paid or distributed:
(a) Class A-1 Notes:_____________ ($____ per $[___]
original principal
amount)
(b) Class A-2 Notes:_____________ ($____ per $[___]
original principal
amount)
(c) Class A-3 Notes:_____________ ($____ per $[___]
original principal
amount)
(d) Certificates:________________ ($____ per $[___]
original principal
amount)
(e) Total:_______________
(iii) Pool Balance at end of related Collection Period:________.
A-1
<PAGE>
(iv) after giving effect to distributions on this Distribution Date:
(a) (1) outstanding principal amount of Class
A-1 Notes:_____________
(2) Class A-1 Note Pool Factor:______________
(b) (1) outstanding principal amount of Class
A-2 Notes:_____________
(2) Class A-2 Note Pool Factor:____________
(c) (1) outstanding principal amount of Class
A-3 Notes:_____________
(2) Class A-3 Note Pool Factor:____________
(d) (1) Certificate Balance:_____________
(2) Certificate Pool Factor:____________
(v) Amount of Servicing Fee being paid :____________.
(vi) Amount of Administration Fee being paid:____________.
(vii) Aggregate Purchase Amounts for Collection Period:____________.
(viii) Aggregate amount of Realized Losses for the Collection
Period:____________.
(ix) Amount in Reserve Account:_______________.
A-2
<PAGE>
EXHIBIT B
---------
TO SCHEDULE E
Statement for Noteholders
pursuant to Section 5.08(a)
- --------------------------------
Distribution Date:___________________
(i) Amount of principal being paid on Notes:
(a) Class A-1 Notes:_______________ ($____ per $[___]
original principal
amount)
(b) Class A-2 Notes:_______________ ($____ per $[___]
original principal
amount)
(c) Class A-3 Notes:_______________ ($____ per $[___]
original principal
amount)
(d) Total:_______________
(ii) Amount of interest being paid or distributed:
(a) Class A-1 Notes:_____________ ($____ per $[___]
original principal
amount)
(b) Class A-2 Notes:_____________ ($____ per $[___]
original principal
amount)
(c) Class A-3 Notes:_____________ ($____ per $[___]
original principal
amount)
(d) Total:_______________
(iii) Pool Balance at end of related Collection Period:_________.
(iv) after giving effect to distributions on this Distribution Date:
(a) (1) outstanding principal amount of Class
A-1 Notes:_________
(2) Class A-1 Note Pool Factor:______________
(b) (1) outstanding principal amount of Class
A-2 Notes:_____________
B-1
<PAGE>
(2) Class A-2 Note Pool Factor:__________
(c) (1) outstanding principal amount of Class
A-3 Notes:_____________
(2) Class A-3 Note Pool Factor:__________
(d) (1) Certificate Balance:__________
(v) Amount of Servicing Fee being paid:____________.
(vi) Amount of Administration Fee being paid:____________.
(vii) Aggregate Purchase Amounts for Collection Period:____________.
(viii) Aggregate amount of Realized Losses for the Collection
Period:__________.
(ix) Amount in Reserve Account:___________________.
B-2
<PAGE>
EXHIBIT C
---------
TO SCHEDULE E
Instructions to the Indenture Trustee for payments and deposits pursuant to
Section 5.04(b) of the Sale and Servicing Agreement:
- ---------------
Date:________
(i) Payment of Servicing Fee (including any previously unpaid
Servicing Fees) to Servicer: __________.
(ii) Payment of Administration Fee to
Administrator: ______________.
(iii) Noteholders' Interest Distributable Amount to be deposited
into Noteholders' Distribution
Account: __________.
(iv) Noteholders' Principal Distributable Amount to be deposited
into Noteholders' Distribution
Account: __________.
(v) Certificateholders' Interest Distributable Amount to be
deposited into Certificateholders' Distribution Account:
__________.
(vi) Certificateholders' Principal Distributable Amount to be
deposited into Certificateholders' Distribution Account:
__________.
(vii) Deposit to Reserve Account: __________.
(viii) (A) Distribute Excess Reserve Account Amount to Seller:
____________.
(B) Pay Excess Reserve Account Amount to Noteholders.
C-1
Exhibit 10.1(A)
[EXECUTION COPY]
CATERPILLAR FINANCIAL SERVICES CORPORATION
AND
CATERPILLAR FINANCIAL FUNDING CORPORATION
PURCHASE AGREEMENT
Dated as of May 1, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional
Provisions . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01. Conveyance of Receivables . . . . . . . 3
SECTION 2.02. Ownership and Custody of
Receivables Files. . . . . . . . . . . . . . . . . . 4
SECTION 2.03. Books and Records. . . . . . . . . . . 4
SECTION 2.04. Custody of Receivable Files . . . . . . 4
SECTION 2.05 Acceptance by Purchaser of
the Receivables; Certification
by the Indenture Trustee . . . . . . . . . . . . . . 4
SECTION 2.06. The Closing . . . . . . . . . . . . . . 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and
Warranties of Purchaser . . . . . . . . . . . . . . . 6
SECTION 3.02. Representations and
Warranties of Seller . . . . . . . . . . . . . . . . 7
ARTICLE IV
CONDITIONS
SECTION 4.01. Conditions to the
Obligation of the Purchaser . . . . . . . . . . . . . 12
SECTION 4.02. Conditions to Obligation of
Seller . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.03. Junior Liens on Financed
Equipment. . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
COVENANTS OF THE SELLER AND THE PURCHASER
SECTION 5.01. Protection of Right, Title
and Interest . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.02. Other Liens or Interests . . . . . . . 13
SECTION 5.03. Chief Executive Office . . . . . . . . 14
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SECTION 5.04. Corporate Existence . . . . . . . . . . 14
SECTION 5.05. Indemnification . . . . . . . . . . . . 16
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. Obligations of Seller . . . . . . . . . 16
SECTION 6.02. Repurchase Events . . . . . . . . . . . 16
SECTION 6.03. Purchaser Assignment of
Repurchased Receivables . . . . . . . . . . . . . . . 16
SECTION 6.04. Trust . . . . . . . . . . . . . . . . . 17
SECTION 6.05. Amendment . . . . . . . . . . . . . . . 17
SECTION 6.06. Waivers . . . . . . . . . . . . . . . . 17
SECTION 6.07. Notices . . . . . . . . . . . . . . . . 17
SECTION 6.08. Costs and Expenses . . . . . . . . . . 18
SECTION 6.09. Representations of Seller
and Purchaser . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.10. Confidential Information . . . . . . . 18
SECTION 6.11. Headings and
Cross-References . . . . . . . . . . . . . . . . . . 18
SECTION 6.12. Governing Law . . . . . . . . . . . . . 18
SECTION 6.13. Counterparts . . . . . . . . . . . . . 18
EXHIBIT A Assignment
SCHEDULE A Schedule of Receivables
ii
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PURCHASE AGREEMENT dated as of May 1, 1996, between CATERPILLAR
FINANCIAL SERVICES CORPORATION, a Delaware corporation (the "Seller"), and
CATERPILLAR FINANCIAL FUNDING CORPORATION, a Nevada corporation (the
"Purchaser").
WHEREAS in the regular course of its business, the Seller has
originated or purchased certain fixed-rate retail installment sale
contracts secured by new and used machinery and equipment; and
WHEREAS the Seller and the Purchaser wish to set forth the terms
pursuant to which the Receivables (as hereinafter defined) are to be sold
by the Seller to the Purchaser, which Receivables will be transferred by
the Purchaser, pursuant to the Sale and Servicing Agreement (as hereinafter
defined), to Caterpillar Financial Asset Trust 1996-A (the "Trust"), which
Trust will issue 6.55% Asset Backed Certificates (the "Certificates")
representing fractional undivided interests in, and Class A-1 5.418% Money
Market Asset Backed Notes, Class A-2 5.90% Asset Backed Notes and Class A-3
6.30% Asset Backed Notes (collectively, the "Notes") secured by, such
Receivables and the other property of the Trust.
NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration and the mutual terms and covenants contained herein,
the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. Definitions. Except as otherwise specified herein or
-----------
as the context may otherwise require, the following terms have the
respective meanings set forth below for all purposes of this Agreement.
"Affiliate" means, with respect to any specified Person, any other
---------
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control", when
used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, by contract
or otherwise; and the terms "controlled by," "controlling" and "under
common control with" have meanings correlative to the foregoing.
"Agreement" shall mean this Purchase Agreement, as the same may be
---------
amended, modified or supplemented from time to time.
"Assignment" shall mean the document of assignment attached to this
----------
Agreement as Exhibit A.
"Basic Documents" shall have the meaning given such term in the
---------------
Indenture.
<PAGE>
"Certificate" shall have the meaning given such term in the Trust
-----------
Agreement.
"Closing Date" shall mean May 22, 1996.
------------
"Indenture" shall mean the Indenture dated as of May 1, 1996 between
---------
the Trust and The First National Bank of Chicago, as indenture trustee, as
the same may be amended, modified or supplemented from time to time.
"Person" means any individual, corporation, estate, partnership, joint
------
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Prospectus" shall mean the Prospectus (which consists of a base
----------
prospectus and a prospectus supplement, each dated May 15, 1996) pursuant
to which the Notes and Certificates were offered.
"Purchaser" shall mean Caterpillar Financial Funding Corporation, a
---------
Nevada corporation, its successors and assigns.
"Receivable" shall mean any Contract listed on the Schedule of
----------
Receivables.
"Repurchase Event" shall have the meaning specified in Section
---------------- -------
6.02(a).
- -------
"Sale and Servicing Agreement" shall mean the Sale and Servicing
----------------------------
Agreement dated as of May 1, 1996, among the Trust, the Purchaser (in its
capacity as seller thereunder) and the Seller (in its capacity as Servicer
thereunder), as the same may be amended, modified or supplemented from time
to time.
"Schedule of Receivables" shall mean the list of Receivables annexed
-----------------------
hereto as Schedule A (which may be in the form of microfiche).
"Seller" shall mean Caterpillar Financial Services Corporation, a
------
Delaware corporation, its successors and assigns.
"UCC" means, unless the context otherwise requires, the Uniform
---
Commercial Code, as in effect in the relevant jurisdiction, as amended from
time to time.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms
-----------------------------
used herein and not otherwise defined have the meanings assigned to them in
the Sale and Servicing Agreement or, if not defined therein, in the
Indenture, or if not defined therein, in the Trust Agreement.
(b) All terms defined in this Agreement shall have the meanings
contained herein when used in any document made or delivered pursuant
hereto unless otherwise defined therein.
2
<PAGE>
(c) As used in this Agreement and in any document made or delivered
pursuant hereto or thereto, accounting terms not defined in this Agreement
or in any such other document, and accounting terms partly defined in this
Agreement or in any such other document to the extent not defined, shall
have the respective meanings given to them under generally accepted
accounting principles. To the extent that the definitions of accounting
terms in this Agreement or in any such other document are inconsistent with
the meanings of such terms under generally accepted accounting principles,
the definitions contained in this Agreement or in any such other document
shall control.
(d) The words "hereof," "herein," "hereunder," and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01. Conveyance of Receivables. In consideration of the
-------------------------
sale on the Closing Date of $371,897,157 in Principal Balance of
Receivables, the Purchaser shall (i) deliver to or upon the order of the
Seller an amount equal to $353,132,121.28 in cash and (ii) accept a capital
contribution from the Seller equal to $18,765,035.72. The Seller does
hereby sell, transfer, assign, set over and otherwise convey to the
Purchaser, without recourse (subject to the obligations herein), all right,
title and interest in and to the following, whether now owned or hereafter
acquired:
(a) all right, title and interest of the Seller, in and to the
Receivables, and all moneys (including accrued interest) due
thereunder on and after the Cut-off Date;
(b) the interest of the Seller in the security interests in the
Transaction Equipment granted by Obligors pursuant to the Receivables
and any other interest of the Seller in such Transaction Equipment;
(c) the interest and rights of the Seller in any proceeds with
respect to the Receivables from claims on any physical damage, credit
life or disability insurance policies covering Financed Equipment or
Obligors, as the case may be;
(d) the interest of the Seller in any proceeds from recourse to
or other payments by Dealers on Receivables; and
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(e) the proceeds of any and all of the foregoing.
SECTION 2.02. Ownership and Custody of Receivables Files.
-------------------------------------------
(a) Upon the acceptance by the Seller of the amount set forth in
Section 2.01, the ownership of each Receivable and the
------------
contents of the related Receivables File shall be vested in
the Purchaser.
(b) In connection with the sale of the Receivables, pursuant to
Section 2.01, the Seller has delivered or caused to be
------------
delivered each Receivables File to the Custodian on behalf
of the Purchaser.
SECTION 2.03. Books and Records.
------------------
The transfer of each Receivable shall be reflected on the Seller's
balance sheets and other financial statements prepared in accordance with
generally accepted accounting principles as a sale of assets by the Seller
to the Purchaser. The Seller shall be responsible for maintaining, and
shall maintain, a complete and accurate set of accounts, records and
computer files for each Receivable which shall be clearly marked to reflect
the ownership of each Receivable by the Purchaser.
SECTION 2.04. Custody of Receivable Files. The Purchaser has
---------------------------
appointed the Custodian pursuant to the Custodial Agreement, and the
Custodian thereby accepted such appointment, to act as agent of the
Purchaser as custodian of the Receivables Files.
SECTION 2.05. Acceptance by Purchaser of the Receivables;
Certification
by the Indenture Trustee.
------------------------
(a) The Purchaser hereby acknowledges constructive receipt of,
through the Custodian, for each Receivable, a Receivables File in the
form delivered to it by the Seller, and declares that it will hold
such documents and any amendments, replacements or supplements
thereto, as well as any other assets transferred pursuant to the terms
hereof. Pursuant to the Sale and Servicing Agreement, the Custodial
Agreement and this Agreement, the Indenture Trustee will, for the
benefit of the Purchaser, review (or cause to be reviewed) each of the
documents in the Receivables Files within 45 days after the Closing
Date and to deliver a final certification in the form attached to the
Sale and Servicing Agreement as Exhibit C-2 to the effect that, as to
each Receivable listed in the Schedule of Receivables (other than any
Receivable paid in full or any Receivable specifically identified in
such certification as not covered by such certification), (i) all
documents required to be delivered to it pursuant to this Agreement
are in its possession, (ii) such documents have been reviewed by it
and have not been mutilated, damaged, torn or otherwise physically
altered (handwritten additions, changes or corrections shall not
constitute physical alteration if initialled by the Obligor) and
related to such Receivable, and (iii) based on its examination and
only as to the foregoing documents, the information set forth on the
Schedule of Receivables accurately reflects the information
4
<PAGE>
set forth in the Receivables File. Pursuant to the Sale and Servicing
Agreement, the Custodial Agreement and this Agreement, the Indenture
Trustee shall be under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable or appropriate for the
represented purpose or that they are other than what they purport to
be on their face.
(b) If the Indenture Trustee during the process of reviewing the
Receivable Files finds any document constituting a part of a
Receivable File which is not executed, has not been received, is
unrelated to the related Receivable identified on Schedule A hereto,
or does not conform to the requirements of Section 3.03 of the Sale
and Servicing Agreement or substantively to the description thereof as
set forth in the Schedule of Receivables, the Indenture Trustee is
required in the Sale and Servicing Agreement to promptly give notice
of same. In performing any such review, the Indenture Trustee may
conclusively rely on the Seller as to the purported genuineness of any
such document and any signature thereon. It is understood that the
scope of the Indenture Trustee's review of the Receivable Files is
limited solely to confirming that the documents listed in Section 2.04
have been executed and received and relate to the Receivable Files
identified in the Schedule of Receivables. The Seller agrees to use
reasonable efforts to cause to be remedied a material defect in a
document constituting part of a Receivables File of which it is so
notified by the Indenture Trustee. If, however, within 60 days after
receipt by it of notice with respect to such defect the Seller has not
caused to be remedied any defect described in such final certification
and such defect materially and adversely affects the interest of the
Purchaser in the related Receivable, the Seller shall remit the
Purchase Amount to the Purchaser. The sole remedy of the Issuer, the
Owner Trustee, the Indenture Trustee, the Noteholders or the
Certificateholders with respect to a breach shall be to require the
Seller to repurchase Receivables pursuant to this Section, subject to
the conditions contained herein. The Owner Trustee shall have no duty
to conduct any affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Receivable pursuant to this
Section.
SECTION 2.06. The Closing.
-----------
The conveyance of the Receivables shall take place at the offices of
Orrick, Herrington & Sutcliffe, 666 5th Avenue, 18th Floor, New York, New
York 10103, on the Closing Date, simultaneously with the closing of the
transactions contemplated by the Sale and Servicing Agreement, the
underwriting agreements related to the Notes and the Certificates and the
other Basic Documents.
5
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of Purchaser. The
-------------------------------------------
Purchaser hereby represents and warrants to the Seller as of the date
hereof and as of the Closing Date:
(a) Organization and Good Standing. The Purchaser is duly
------------------------------
organized, validly existing in good standing under the laws of the
State of Nevada, and has the power and authority to own its properties
and to conduct the business in which it is currently engaged, and had
at all relevant times, and has, the power, authority and legal right
to acquire and own the Receivables.
(b) Due Qualification. The Purchaser is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which
the ownership or lease of property or the conduct of its business
shall require such qualifications.
(c) Power and Authority. The Purchaser has the power and
-------------------
authority to execute and deliver this Agreement and to carry out its
terms and the execution, delivery and performance of this Agreement
has been duly authorized by the Purchaser by all necessary corporate
action.
(d) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of
time) a default under, the certificate of incorporation or by-laws of
the Purchaser, or any indenture, agreement or other instrument to
which the Purchaser is a party or by which it is bound; nor result in
the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other
instrument (other than the Sale and Servicing Agreement and the
Indenture); nor violate any law or, to the best of the Purchaser's
knowledge, any order, rule or regulation applicable to the Purchaser
of any court, federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the
Purchaser or its properties.
(e) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the Purchaser's best knowledge, threatened, before any
court, federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the
Purchaser or its properties which (i) assert the invalidity of this
Agreement, (ii) seek to prevent the consummation of any of the
transactions contemplated by this Agreement or (iii) seek any
determination or ruling that might materially and adversely affect the
performance by the Purchaser of its obligations under, or the validity
or enforceability of, this Agreement.
6
<PAGE>
SECTION 3.02. Representations and Warranties of Seller. (a) The
----------------------------------------
Seller hereby represents and warrants to the Purchaser of the date hereof
and as of the Closing Date:
(i) Organization and Good Standing. The Seller is duly
------------------------------
organized, validly existing in good standing under the laws of the
State of Delaware, and has the power and authority to own its
properties and to conduct the business in which it is currently
engaged, and had at all relevant times, and has, the power, authority
and legal right to acquire and own the Receivables.
(ii) Due Qualification. The Seller is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which
the ownership or lease of property or the conduct of its business
shall require such qualifications.
(iii) Power and Authority. The Seller has the power and
-------------------
authority to execute and deliver this Agreement and to carry out its
terms; the Seller has full power and authority to sell and assign the
property sold and assigned to the Purchaser hereby and has duly
authorized such sale and assignment to the Purchaser by all necessary
corporate action; and the execution, delivery and performance of this
Agreement has been duly authorized by the Seller by all necessary
corporate action.
(iv) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the fulfillment of the terms hereof
neither conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of
time) a default under, the certificate of incorporation or by-laws of
the Seller, or any indenture, agreement or other instrument to which
the Seller is a party or by which it is bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement or other instrument
(other than this Agreement); nor violate any law or, to the best of
the Seller's knowledge, any order, rule or regulation applicable to
the Seller of any court, federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties.
(v) No Proceedings. There are no proceedings or investigations
--------------
pending, or, to the best of Seller's knowledge, threatened, before any
court, federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller
or its properties which (A) assert the invalidity of this Agreement,
(B) seek to prevent the consummation of any of the transactions
contemplated by this Agreement, or (C) seek any determination or
ruling that might materially and adversely affect the performance by
the Seller of its obligations under, or the validity or enforceability
of, this Agreement.
(vi) No Consents Required. All approvals, authorizations,
--------------------
consents, orders or other actions of any Person or of any Governmental
Authority required in connection with the execution and delivery by
the Seller of this Agreement or any other Basic
7
<PAGE>
Document, the performance by the Seller of the transactions
contemplated by this Agreement or any other Basic Document and the
fulfillment by the Seller of the terms hereof or thereof, have been
obtained or have been completed and are in full force and effect
(other than approvals, authorizations, consents, orders or other
actions which if not obtained or completed or in full force and effect
would not have a material adverse effect on the Seller or upon the
collectibility of any Receivable or upon the ability of the Seller to
perform its obligations under this Agreement).
(b) The Seller makes the following representations and warranties as
to the Receivables on which the Purchaser relied in accepting the
Receivables. The parties hereto acknowledge that the representations and
warranties below require the Seller to monitor conditions that it may not
have the ability to monitor. Accordingly, wherever the Seller makes, or is
deemed to make, a representation that it cannot monitor, such
representation shall be made as if prefaced with the phrase "to the best of
the Seller's knowledge"; provided, however, that the determination as to
-------- -------
whether a Repurchase Event has occurred pursuant to Section 6.02 of this
------------
Agreement shall be made without reliance on the phrase described above.
Such representations and warranties speak as of the execution and delivery
of this Agreement but shall survive the sale, transfer and assignment of
the Receivables to the Purchaser and the subsequent assignments and
transfers of the Receivables pursuant to the Sale and Servicing Agreement
and pursuant to the Indenture:
(i) Characteristics of Receivables. Each Receivable (A) was
------------------------------
originated in the United States of America by the Seller in the
ordinary course of business or was originated by a Dealer in the
ordinary course of business, in each case in connection with the
retail sale by a Dealer of Financed Equipment in the ordinary course
of such Dealer's business, was fully and properly executed by the
parties thereto, and if originated by such Dealer, was purchased by
the Seller from such Dealer and was validly assigned by such Dealer to
the Seller in accordance with its terms, (B) has created a valid,
subsisting and enforceable first priority security interest in favor
of the Seller in the Financed Equipment, and if applicable, a valid,
subsisting and enforceable security interest in favor of the Seller in
the Cross-Collateralized Equipment, which security interests are
assignable by the Seller to the Purchaser, by the Purchaser to the
Issuer and by the Issuer to the Indenture Trustee, (C) contains
customary and enforceable provisions such that the rights and remedies
of the holder thereof are adequate for realization against the
collateral of the benefits of the security, and (D) provides for fixed
payments (except as described below) on a periodic basis, yields
interest at a fixed-rate and is prepayable without premium or penalty
at any time. Except for each Over-Rate Receivable, the fixed payments
provided for are sufficient to amortize the Amount Financed of such
Receivable by maturity and yield interest at the annual percentage
rate specified in the related Contract for the relevant Receivable
(which is the APR specified in the Schedule of Receivables for such
Receivable). With respect to an Over-Rate Receivable, the principal
balance outstanding under the related Contract is prepayable by the
related Obligor without premium or penalty at any time; provided, that
the related Dealer Agreement provides for payment by the related
Dealer to the Seller of the excess of the Principal Balance of such
Receivable over the principal balance required to be repaid by such
Obligor on any prepayment pursuant to the terms of the related
Contract. With
8
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respect to each Over-Rate Receivable, the fixed payments provided for
as of the Cut-off Date are sufficient to amortize the Principal
Balance of such Receivable by maturity and yield interest at the APR
specified in the Schedule of Receivables for the such Over-Rate
Receivable.
(ii) Schedule of Receivables. The information set forth in the
-----------------------
Schedule of Receivables to this Agreement is true and correct in all
material respects as of the opening of business on the Cut-off Date
and no selection procedures believed to be adverse to the Noteholders
or the Certificateholders were utilized in selecting the Receivables.
The computer tape regarding the Receivables made available to the
Purchaser and its assigns is true and correct in all respects.
(iii) Compliance with Law. Each Receivable and the sale of the
-------------------
Financed Equipment complied at the time it was originated or made, and
at the execution of this Agreement complies in all material respects,
with all requirements of applicable federal, state and local laws and
regulations thereunder, including usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair
Credit Reporting Act, the Fair Debt Collection Practices Act, the
Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the
Federal Reserve Board's Regulations B and S, and other equal credit
opportunity and disclosure laws.
(iv) Binding Obligations. Each Receivable represents the
-------------------
genuine, legal, valid and binding payment obligation in writing of the
Obligor, enforceable by the holder thereof (which as of the Closing
Date is the Seller) in accordance with its terms, subject to
bankruptcy, insolvency and other laws relating to the enforcement of
creditors' rights generally and to general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law). Such enforceability has not been and is not
adversely affected by whether or not the Seller was or is qualified to
do business in the state in which the Obligor was or is located.
(v) Security Interest in Financed Equipment. Immediately prior
---------------------------------------
to the sale, assignment and transfer thereof, each Receivable shall be
secured by a validly perfected first priority security interest in the
Financed Equipment in favor of the Seller as secured party.
(vi) Receivables in Force. No Receivable has been satisfied,
--------------------
subordinated or rescinded, nor has any Financed Equipment been
released from the lien granted by the related Receivable in whole or
in part. No Receivable is rescindable on the basis of whether or not
the Seller was or is qualified to do business in the state in which
the Obligor was or is located.
(vii) Prospectus Information. As of the Cut-off Date, each
----------------------
Receivable conforms and all Receivables in the aggregate conform, in
all material respects, to the description set forth in the Prospectus,
including all statistical data or otherwise.
9
<PAGE>
(viii) No Amendments. No Receivable has been amended such that
-------------
the amount of the Obligor's Scheduled Payments has been increased or
decreased, except for increases or decreases resulting from the
inclusion of any premium for forced-placed physical damage insurance
covering the Financed Equipment.
(ix) No Defenses. No right of rescission, setoff, counterclaim
-----------
or defense has been asserted or threatened with respect to any
Receivable.
(x) No Liens. No liens or claims have been filed for work,
--------
labor or materials relating to any Financed Equipment that are liens
prior to, or equal or coordinate with, the security interest in the
Financed Equipment granted by the Receivable.
(xi) No Default. No Receivable has a payment that is more than
----------
90 days overdue as of the Cut-off Date and, except as permitted in
this paragraph, no default, breach, violation or event permitting
acceleration under the terms of any Receivable has occurred and is
continuing; and (except for payment defaults continuing for a period
of not more than 90 days) no continuing condition that with notice or
the lapse of time would constitute a default, breach, violation or
event permitting acceleration under the terms of any Receivable has
arisen; and the Seller has not waived and shall not waive any of the
foregoing.
(xii) Insurance. The Seller, in accordance with its customary
---------
procedures, has determined that the Obligor has obtained physical
damage insurance covering the Financed Equipment, and under the terms
of the Receivable the Obligor is required to maintain such insurance.
(xiii) Title. It is the intention of the Seller that the
-----
transfer and assignment herein contemplated constitute a sale of the
Receivables from the Seller to the Purchaser, and that the beneficial
interest in and title to the Receivables not be part of the debtor's
estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. No Receivable has been
sold, transferred, assigned or pledged by the Seller to any Person
other than the Purchaser. Immediately prior to the transfer and
assignment herein contemplated, the Seller has good and marketable
title to each Receivable, free and clear of all Liens, encumbrances,
security interests and rights of others and, immediately upon the
transfer thereof, the Purchaser shall have good and marketable title
to each Receivable, free and clear of all Liens, tax, governmental or
similar liens, encumbrances, security interests and rights of others;
and the transfer of the Receivables to the Purchaser has been
perfected under the UCC.
(xiv) Lawful Assignment. No Receivable has been originated in,
-----------------
or is subject to the laws of, any jurisdiction under which the sale,
transfer and assignment of such Receivable or any Receivable under
this Agreement, the Sale and Servicing Agreement or the Indenture is
unlawful, void or voidable.
10
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(xv) All Actions Taken. All actions necessary to give the
-----------------
Purchaser a first priority perfected ownership interest in the
Receivables pursuant to the applicable UCC have been taken.
(xvi) One Original. There is only one Original Contract related
------------
to each Receivable.
(xvii) Maturity of Receivables. Each Receivable has a final
-----------------------
scheduled payment date due not later than the May 2001 Distribution
Date as of the Cut-off Date and the weighted average remaining term of
the Receivables is 42 months as of the Cut-off Date.
(xviii) Location of Receivable Files. The Receivable Files are
----------------------------
kept at the location listed in Schedule B to the Sale and Servicing
Agreement.
(xix) Outstanding Principal Balance. Each Receivable has an
-----------------------------
outstanding principal balance of at least $5,135 as of the Cut-off
Date.
(xx) No Bankruptcies. No Obligor on any Receivable as of the
---------------
Cut-off Date was noted in the related Receivable File as having filed
for bankruptcy or as being subject to a bankruptcy proceeding and to
the Seller's knowledge no such proceeding is pending or threatened
against any Obligor.
(xxi) No Repossessions. No Financed Equipment securing any
----------------
Receivable is in repossession status.
(xxii) Chattel Paper. Each Receivable constitutes "chattel
-------------
paper" within the meaning of the UCC of the State of Tennessee.
(xxiii) U.S. Obligors. None of the Receivables is due from any
-------------
Person which does not have a mailing address in the United States of
America.
(xxiv) One Original. There is only one Original Contract
------------
related to each Receivable. With respect to each Receivable, CFSC has
a perfected, first priority ownership or security interest in such
Receivable, free and clear of all Liens, encumbrances, security
interests or rights of others.
(xxv) Payment Frequency. As of the Cut-off Date and as shown on
-----------------
the books of the Seller, Receivables having an aggregate principal
balance equal to approximately 75.97% of the aggregate principal
balance of all Receivables had monthly scheduled payments; and as of
the Cut-off Date and as shown on the books of the Seller, Receivables
having an aggregate principal balance equal to approximately 24.03% of
the aggregate principal balance of all Receivables had scheduled
payments which have monthly scheduled payments other than certain
months specified therein for which payment is skipped.
11
<PAGE>
(xxvi) Interest Accrual. Each Receivable is, as of the Closing
----------------
Date, accruing interest.
(xxvii) Notification of Obligors. With respect to each Dealer
------------------------
Receivable, the related Obligor has been notified with respect to the
assignment of the related Contract to CFSC.
ARTICLE IV
CONDITIONS
SECTION 4.01. Conditions to the Obligation of the Purchaser. The
---------------------------------------------
obligation of the Purchaser to purchase the Receivables is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations
-----------------------------------
and warranties of the Seller hereunder shall be true and correct on
the Closing Date with the same effect as if then made, and the Seller
shall have performed all obligations to be performed by it hereunder
on or prior to the Closing Date.
(b) Computer Files Marked. The Seller shall, at its own expense
---------------------
on or prior to the Closing Date, (i) indicate in its computer files
that receivables created in connection with the Receivables have been
sold to the Purchaser pursuant to this Agreement and sold by the
Purchaser to the Trust pursuant to the Sale and Servicing Agreement
and (ii) deliver to the Purchaser the Schedule of Receivables
certified by the Chairman, the President, a Vice President, Secretary,
the Treasurer or an Assistant Treasurer of the Seller to be true,
correct and complete.
(c) Documents to be Delivered by Seller at Closing.
----------------------------------------------
(i) Assignment. On the Closing Date, the Seller will
----------
execute and deliver the Assignment. The Assignment shall be
substantially in the form of Exhibit A hereto.
(ii) Evidence of UCC Filings for Sale to Purchaser. On or
---------------------------------------------
prior to the Closing Date, the Seller shall deliver to the
Purchaser, for its inspection and review, completed UCC requests
for information, dated on or before the Closing Date, listing all
effective financing statements filed with the Tennessee Secretary
of State listing the Seller as debtor.
(iii) Evidence of Possession by the Custodian. On the
---------------------------------------
Closing Date, the Seller shall provide the Purchaser with copies
of the executed Transfer Certificate and Trust Receipt referred
to in Section 3.1 of the Custodial Agreement.
12
<PAGE>
(iv) Other Documents. Such other documents as the
---------------
Purchaser may reasonably request.
(d) Other Transactions. The transactions contemplated by the
------------------
Sale and Servicing Agreement and the Indenture to be consummated on
the Closing Date shall be consummated on such date.
SECTION 4.02. Conditions to Obligation of Seller. The obligation of
----------------------------------
the Seller to sell the Receivables to the Purchaser is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations
-----------------------------------
and warranties of the Purchaser hereunder shall be true and correct on
the Closing Date with the same effect as if then made, and the
Purchaser shall have performed all obligations to be performed by it
hereunder on or prior to the Closing Date.
(b) Receivables Purchase Price. On the Closing Date, the
--------------------------
Purchaser shall have delivered to the Seller the purchase price
specified in Section 2.01.
------------
SECTION 4.03. Junior Liens on Financed Equipment. The Seller agrees
----------------------------------
not to exercise its right to foreclose upon, and will not transfer to third
parties its rights with respect to, any junior liens on any item of
Financed Equipment if such junior liens have not been assigned to the
Purchaser pursuant to Section 2.01, until (i) the related Receivable has
------------
been paid in full or (ii) the related first priority lien on the Financed
Equipment assigned to the Purchaser pursuant to Section 2.01 has been
------------
foreclosed upon or released.
ARTICLE V
COVENANTS OF THE SELLER AND THE PURCHASER
The Seller and the Purchaser agree with each other as follows;
provided, however, that to the extent that any provision of this Article
- -------- -------
conflicts with any provision of the Sale and Servicing Agreement, the Sale
and Servicing Agreement shall govern:
SECTION 5.01. Protection of Right, Title and Interest. (a) Further
--------------------------------------- -------
Assurances. The Seller shall take all actions to preserve and protect the
- ----------
right, title and interest of the Purchaser in and to the Receivables and
the other property included in the Owner Trust Estate. The Purchaser
shall cooperate fully with the Seller in connection with the obligations
set forth above and will execute any and all documents reasonably required
to fulfill the purpose of this paragraph.
(b) Name Change. Within 15 days after the Seller makes any change in
-----------
its name, identity or corporate structure, the Seller shall give the
Purchaser notice of any such change.
13
<PAGE>
SECTION 5.02. Other Liens or Interests. Except for the conveyances
------------------------
hereunder and pursuant to the Sale and Servicing Agreement, the Indenture
and the other Basic Documents, the Seller will not sell, pledge, assign or
transfer to any Person, or grant, create, incur, assume or suffer to exist
any Lien on, any interest in, to and under the Receivables, and the Seller
shall defend the right, title and interest of the Purchaser in, to and
under the Receivables against all claims of third parties claiming through
or under the Seller or any Dealer; provided, however, that the Seller's
-------- -------
obligations under this Section shall terminate one year and one day after
the termination of the Trust pursuant to the Trust Agreement.
SECTION 5.03. Chief Executive Office. During the term of the
----------------------
Receivables, the Seller will maintain its chief executive office in one of
the United States, except Louisiana or Vermont.
SECTION 5.04. Corporate Existence. (a) During the term of this
-------------------
Agreement, the Purchaser will keep in full force and effect its existence,
rights and franchises as a corporation under the laws of Nevada and will
obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, the Basic Documents and each
other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the Sale and Servicing Agreement and
the transactions contemplated hereby.
(b) The Seller will not take any action or fail to take any action if
such act or omission would cause the Purchaser not to observe the covenants
set forth in Section 5.04(c) of this Agreement or to violate the provisions
---------------
of the Purchaser's certificate of incorporation.
(c) The Purchaser and the Seller agree that Purchaser's and the
Seller's businesses shall be conducted as follows, and neither Purchaser
nor the Seller shall take any action or fail to take any action if such act
or omission would cause such businesses not to be conducted as follows:
(i) The Purchaser will maintain both an office at which its
business is and will be conducted and a telephone number separate from
the Seller or any of the Seller's Affiliates.
(ii) At least two of the Purchaser's directors are not and will
not be directors, officers or employees of the Seller or any of the
Seller's Affiliates.
(iii) The Purchaser will maintain corporate records and books
and accounts separate from those of the Seller or any of the Seller's
Affiliates.
(iv) Except as expressly permitted by the Sale and Servicing
Agreement with respect to collections on the Receivables prior to the
transfer of such collections to the Collection Account, the
Purchaser's funds will not be commingled with those of the Seller or
any of the Seller's Affiliates, and the Purchaser shall maintain bank
accounts separate from those of the Seller or any of the Seller's
Affiliates.
14
<PAGE>
(v) The Seller shall maintain records permitting a determination
on a daily basis of the amount and location of any of its funds which
are commingled as permitted under clause (iv) above.
-----------
(vi) The Board of Directors of the Purchaser will take
appropriate corporate action (including without limitation holding
meetings or acting by unanimous consent) to authorize all of the
Purchaser's corporate actions, and minutes shall be maintained by the
Purchaser separate and apart from those of the Seller or any of the
Seller's Affiliates.
(vii) The Purchaser shall at all times be adequately capitalized
to engage in the transactions contemplated at its formation.
(viii) The Purchaser shall not incur or guarantee any debt other
than under the Sale and Servicing Agreement, nor shall the Purchaser
make any loans, other than as permitted by the Purchaser's Certificate
of Incorporation.
(ix) The Purchaser shall not engage in any transaction with the
Seller or any of the Seller's Affiliates on terms more favorable than
in a similar transaction involving a third party.
(x) The Purchaser shall at all times use its own stationery.
(xi) The Purchaser shall always be described as a separate
corporation, and never as a department, division or otherwise of the
Seller or any of the Seller's Affiliates.
(xii) The Purchaser shall act solely in its own corporate name
and through its own authorized officers and agents. Neither the
Purchaser nor any of Purchaser's Affiliates shall be appointed agent
of the Seller, except as expressly provided for by the Sale and
Servicing Agreement and the Administration Agreement.
(xiii) The data and records (including computer records) used by
the Purchaser or the Seller in the collection and administration of
the Receivables shall reflect the Purchaser's ownership interest
therein.
(xiv) Other than organizational expenses, the Purchaser shall be
responsible for the payment of all expenses, indebtedness and other
obligations incurred by it.
(xv) The Purchaser shall at all times hold itself out to the
public under the Purchaser's own name as a legal entity separate and
distinct from the Seller and any of the Seller's Affiliates.
(xvi) None of the Purchaser's funds nor any of the funds held by
the Seller on behalf of the Purchaser or the holders of the
Certificates or the Notes shall be invested in securities issued by
the Seller or any of the Seller's Affiliates.
15
<PAGE>
(d) The Purchaser and the Seller will each furnish to the other on or
before April 30 of each year for so long as any Certificate or Note remains
outstanding an Officer's Certificate to the effect that all of its
obligations under this Section 5.04 have been fulfilled throughout the
------------
preceding calendar year, or, if there has been any default in the
fulfillment of any such obligations, specifying each such default known to
the signer thereof and the nature and status thereof.
(e) The Seller will not transfer or assign any interest in the
Purchaser except pursuant to an instrument under which the transferee or
assignee of such interest expressly assumes the performance of all
covenants of the Seller to be performed or observed under this Section
-------
5.04.
- ----
(f) The annual audited financial statements of the Purchaser and the
Seller will reflect the results of the issuance of the Certificates in
accordance with generally accepted accounting principles and also disclose
that the assets of the Seller are not available to pay creditors of the
Purchaser or any other Affiliate of the Seller.
SECTION 5.05. Indemnification. (a) The Seller shall indemnify the
---------------
Purchaser for any liability as a result of the failure of a Receivable to
be originated in compliance with all requirements of law and for any breach
of any of its representations and warranties contained herein, other than
the representations and warranties made pursuant to Section 3.02(b) for
---------------
which the sole remedy shall be provided by Section 6.02 hereof; provided,
------------ --------
however, that the Seller shall indemnify the Purchaser for any liability
- -------
arising from a breach of Section 3.02(b)(ii), (iii) and (xxv). These
------------------- ----- -----
indemnity obligations shall be in addition to any obligation that the
Seller may otherwise have.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. Obligations of Seller. The obligations of the Seller
---------------------
under this Agreement shall not be affected by reason of any invalidity,
illegality or irregularity of any Receivable.
SECTION 6.02. Repurchase Events. (a) The Seller hereby covenants and
-----------------
agrees with the Purchaser for the benefit of the Purchaser, the Indenture
Trustee, the Noteholders, the Owner Trustee and the Certificateholders that
the occurrence of a breach of any of the Seller's representations and
warranties contained in Section 3.02(b) (other than the representation and
---------------
warranty contained in Section 3.02(b)(xxv)) in respect of a Receivable
------------
shall constitute an event obligating the Seller to repurchase such
Receivable ("Repurchase Events"), at the Purchase Amount from the Purchaser
or from the Trust.
(b) These repurchase obligations of the Seller shall constitute the
sole remedies to the Purchaser, the Indenture Trustee, the Noteholders, the
Owner Trustee or the Certificateholders against the Seller with respect to
any Repurchase Event.
16
<PAGE>
(c) The terms and conditions of the Seller's obligation to enforce
its right of repurchase pursuant to this Section 6.02 shall be governed by
Section 3.02 of the Sale and Servicing Agreement.
SECTION 6.03. Purchaser Assignment of Repurchased Receivables. With
-----------------------------------------------
respect to all Receivables repurchased by the Seller pursuant to this
Agreement, the Purchaser shall assign, without recourse, representation or
warranty, to the Seller all the Purchaser's right, title and interest in
and to such Receivables, and all security and documents relating thereto.
SECTION 6.04. Trust. The Seller acknowledges and agrees that (a) the
-----
Purchaser will, pursuant to the Sale and Servicing Agreement, sell the
Receivables to the Trust and assign its rights under this Agreement to the
Trust, (b) the Trust will, pursuant to the Indenture, assign such
Receivables and such rights to the Indenture Trustee and (c) the
representations and warranties contained in this Agreement and the rights
of the Purchaser under this Agreement, including under Section 6.02, are
------------
intended to benefit the Trust, the Certificateholders and the Noteholders
(and may be enforced directly by the Indenture Trustee on behalf of the
Noteholders and by the Owner Trustee on behalf of the Trust or the
Certificateholders). The Seller hereby consents to all such sales and
assignments.
SECTION 6.05. Amendment. This Agreement may be amended from time to
---------
time, with prior written notice to the Rating Agencies, by a written
amendment duly executed and delivered by the Seller and the Purchaser,
without the consent of the Noteholders or the Certificateholders, for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or Certificateholders; provided that
--------
such amendment will not, in the Opinion of Counsel, materially and
adversely affect the interest of any Noteholder or any Certificateholder.
This Agreement may also be amended by the Seller and the Purchaser, with
prior written notice to the Rating Agencies, with the consent of the
holders of Notes evidencing a majority in the Outstanding Amount of the
Notes and the holders of Certificates evidencing a majority of the
Certificate Balance for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of Noteholders or Certificateholders;
provided, however, that no such amendment may (i) increase or reduce in any
- -------- -------
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that are required to be made for
the benefit of Noteholders or Certificateholders or (ii) reduce the
aforesaid percentage of the Notes and Certificates which are required to
consent to any such amendment, without the consent of the holders of all
the outstanding Notes and Certificates.
SECTION 6.06. Waivers. No failure or delay on the part of the
-------
Purchaser in exercising any power, right or remedy under this Agreement or
the Assignment shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude and any other
or further exercise thereof or the exercise of any other power, right or
remedy.
SECTION 6.07. Notices. All demands, notices and communications under
-------
this Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt
17
<PAGE>
requested, and shall be deemed to have been duly given upon receipt (a) in
the case of the Seller, to Caterpillar Financial Services Corporation, 3322
West End Avenue, Nashville, TN 37203-0983, (615) 386-5800; (b) in the case
of the Purchaser, to Caterpillar Financial Funding Corporation, Greenview
Plaza, 2950 East Flamingo Road, Suite E-4, Las Vegas, Nevada 89121 (702)
735-2514; (c) in the case of Moody's, to Moody's Investors Service, Inc.,
ABS Monitoring Department, 99 Church Street, New York, New York 10007; and
(d) in the case of Standard & Poor's, to Standard & Poor's Ratings
Services, 26 Broadway (10th Floor), New York, New York 10004, Attention of
Asset Backed Surveillance Department; or as to each of the foregoing, at
such other address as shall be designated by written notice to the other
parties.
SECTION 6.08. Costs and Expenses. The Seller will pay all expenses
------------------
incident to the performance of its obligations under this Agreement, and
the Seller agrees to pay all reasonable out-of-pocket costs and expenses of
the Purchaser, excluding fees and expenses of counsel, in connection with
the perfection as against third parties of the Purchaser's right, title and
interest in and to the Receivables and the enforcement of any obligation of
the Seller hereunder.
SECTION 6.09. Representations of Seller and Purchaser. The
---------------------------------------
respective agreements, representations, warranties and other statements by
the Seller and the Purchaser set forth in or made pursuant to this
Agreement shall remain in full force and effect and will survive the
closing under Section 2.02.
------------
SECTION 6.10. Confidential Information. The Purchaser 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 Purchaser's
rights hereunder, under the Receivables, under the Sale and Servicing
Agreement or the Indenture or any other Basic Document or as required by
any of the foregoing or by law.
SECTION 6.11. 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.
SECTION 6.12. Governing Law. THIS AGREEMENT AND THE ASSIGNMENTS
-------------
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 6.13. 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.
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers duly authorized as of the date and
year first above written.
CATERPILLAR FINANCIAL FUNDING
CORPORATION
By: /s/ Frank C. Carder
---------------------------
Name: Frank C. Carder
Title: Treasurer
CATERPILLAR FINANCIAL SERVICES
CORPORATION
By: /s/ Ali Bahaj
---------------------------
Name: Ali Bahaj
Title: Vice President
<PAGE>
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement (the
"Purchase Agreement") dated as of May 1, 1996, between the undersigned and
Caterpillar Financial Funding Corporation (the "Purchaser"), the
undersigned does hereby sell, assign, transfer, set over and otherwise
convey unto the Purchaser, without recourse, (i) all right, title and
interest of the Seller, in and to the Receivables, and all moneys
(including accrued interest) due thereunder on and after Cut-off Date; (ii)
the interests of the Seller in the security interests in the Transaction
Equipment granted by the Obligors pursuant to the Receivables and any other
interest of the Seller in such Transaction Equipment; (iii) the interest
and rights of the Seller in any proceeds with respect to the Receivables
from claims on any physical damage, credit life or disability insurance
policies relating to the Financed Equipment or Obligors, as the case may
be; (iv) the interest of the Seller in any proceeds from recourse to or
other payments by Dealers on Receivables; and (v) the proceeds of any and
all of the foregoing.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Purchase Agreement and is to be governed by the Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of May 22, 1996.
CATERPILLAR FINANCIAL SERVICES
CORPORATION
By:__________________________
Name:
Title:
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
[On file with Caterpillar Financial Services Corporation and the Trustee]
Exhibit 10.2(A)
[EXECUTION COPY]
CATERPILLAR FINANCIAL ASSET TRUST 1996-A
Class A-1 5.418% Money Market Asset Backed Notes
and
Class A-2 5.90% Asset Backed Notes
Class A-3 6.30% Asset Backed Notes
ADMINISTRATION AGREEMENT
Dated as of May 1, 1996
CATERPILLAR FINANCIAL SERVICES CORPORATION
Administrator
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. Duties of Administrator . . . . . . . . . . . . . . . . . . . 2
2. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. Additional Information To Be Furnished to Issuer . . . . . . . 7
5. Independence of Administrator . . . . . . . . . . . . . . . . 8
6. No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . 8
7. Other Activities of Administrator . . . . . . . . . . . . . . 8
8. Term of Agreement; Resignation and Removal of Administrator . 8
9. Action upon Termination, Resignation or Removal . . . . . . . 9
10. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 10
12. Successors and Assigns . . . . . . . . . . . . . . . . . . . 11
13. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 11
14. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 11
15. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 11
16. Severability . . . . . . . . . . . . . . . . . . . . . . . . 11
17. Not Applicable to Caterpillar Financial Services Corporation
in Other Capacities . . . . . . . . . . . . . . . . . . . . . 11
18. Limitation of Liability of Owner Trustee and Trustee . . . . 11
19. Third-Party Beneficiary . . . . . . . . . . . . . . . . . . . 12
20. Successor Servicer and Administrator . . . . . . . . . . . . 12
21. Nonpetition Covenants . . . . . . . . . . . . . . . . . . . . 12
EXHIBIT A - Form of Power of Attorney
i
<PAGE>
ADMINISTRATION AGREEMENT dated as of May 1, 1996, among CATERPILLAR
FINANCIAL ASSET TRUST 1996-A, a Delaware business trust (the "Issuer"),
CATERPILLAR FINANCIAL SERVICES CORPORATION, a Delaware corporation, as
administrator (the "Administrator"), CATERPILLAR FINANCIAL FUNDING
CORPORATION, a Nevada corporation (the "Seller"), and THE FIRST NATIONAL
BANK OF CHICAGO, a national banking association, not in its individual
capacity but solely as Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS the Issuer is issuing the Class A-1 5.418% Money Market Asset
Backed Notes (the "A-1 Notes"), the Class A-2 5.90% Asset Backed Notes
("Class A-2 Notes") and the Class A-3 6.30% Asset Backed Notes (the "A-3
Notes"; together with the A-1 Notes and A-2 Notes, the "Notes") pursuant to
the Indenture dated as of May 1, 1996 (as amended, modified or supplemented
from time to time in accordance with the provisions thereof, the
"Indenture"), between the Issuer and the Indenture Trustee.
WHEREAS the Issuer has entered into certain agreements in connection
with the issuance of the Notes and of certain beneficial ownership
interests of the Issuer, including (i) a Sale and Servicing Agreement dated
as of May 1, 1996 (the "Sale and Servicing Agreement") (capitalized terms
used herein and not defined herein shall have the meanings assigned such
terms in the Sales and Servicing Agreement, or if not defined therein, in
the Indenture) among the Issuer, Caterpillar Financial Services Corporation
("CFSC"), as servicer, and the Seller, (ii) a Depository Agreement dated
May 22, 1996 (the "Depository Agreement") among the Issuer, the Indenture
Trustee and The Depository Trust Company, (iii) the Indenture, and (iv) the
Custodial Agreement dated as of May 1, 1996 (the "Custodial Agreement")
among CFSC, the Seller, the Issuer, the Indenture Trustee and The First
National Bank of Chicago, as custodian (the "Custodian") (the Sale and
Servicing Agreement, the Depository Agreement, the Custodial Agreement and
the Indenture being hereinafter referred to collectively as the "Related
Agreements");
WHEREAS pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (a) the
Notes and the collateral therefor pledged pursuant to the Indenture (the
"Collateral") and (b) the beneficial ownership interests in the Issuer (the
holders of such interests being referred to herein as the "Owners");
WHEREAS the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner
Trustee referred to in the preceding clause, and to provide such additional
services consistent with the terms of this Agreement and the Related
Agreements as the Issuer and the Owner Trustee may from time to time
request;
WHEREAS the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and
the Owner Trustee on the terms set forth herein;
<PAGE>
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 agree as follows:
1. Duties of Administrator. (a) Duties with Respect to the Related
----------------------- ----------------------------------
Agreements. (i) The Administrator agrees to perform all its duties as
- ----------
Administrator and the duties of the Issuer and the Owner Trustee under the
Depository Agreement. In addition, the Administrator shall consult with
the Owner Trustee regarding the duties of the Issuer and the Owner Trustee
under the Related Agreements. The Administrator shall monitor the
performance of the Issuer and shall advise the Owner Trustee when action is
necessary to comply with the Issuer's or the Owner Trustee's duties under
the Related Agreements. The Administrator shall prepare for execution by
the Issuer or the Owner Trustee or shall cause the preparation by other
appropriate persons of all such documents, 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 any Related
Agreement. In furtherance of the foregoing, the Administrator shall take
all appropriate action that it is the duty of the Issuer or the Owner
Trustee to take pursuant to the Indenture including, without limitation,
such of the foregoing as are required with respect to the following matters
under the Indenture (references are to sections of the Indenture):
(A) the duty to cause the Note Register to be kept and to give
the Indenture Trustee notice of any appointment of a new Note
Registrar and the location, or change in location, of the Note
Register (Section 2.04);
(B) the notification of Noteholders of the final principal
payment on their Notes (Section 2.07(b));
(C) the fixing or causing to be fixed of any specified record
date and the notification of the Indenture Trustee and Noteholders
with respect to special payment dates, if any (Section 2.07(c));
(D) the preparation of or obtaining of the documents and
instruments required for authentication of the Notes, if any, and
delivery of the same to the Indenture Trustee (Section 2.02);
(E) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release
of collateral (Section 2.09);
(F) the duty to cause newly appointed Paying Agents, if any, to
deliver to the Indenture Trustee the instrument specified in the
Indenture regarding funds held in trust (Section 3.03);
(G) the direction to Paying Agents to pay to the Indenture
Trustee all sums held in trust by such Paying Agents (Section 3.03);
2
<PAGE>
(H) the obtaining and preservation of the Issuer's qualification
to do business in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of the
Indenture, the Notes, the Collateral and each other instrument and
agreement included in the Trust Estate;
(I) the preparation of all supplements, amendments, financing
statements, continuation statements, if any, instruments of further
assurance and other instruments, in accordance with Section 3.05 of
the Indenture, necessary to protect the Trust Estate (Section 3.05);
(J) the obtaining of the Opinion of Counsel on the Closing Date
and the annual delivery of Opinions of Counsel, in accordance with
Section 3.06 of the Indenture, as to the Trust Estate, and the annual
delivery of the Officers' Certificate and certain other statements, in
accordance with Section 3.09 of the Indenture, as to compliance with
the Indenture (Sections 3.06 and 3.09);
(K) the identification to the Indenture Trustee in an Officers'
Certificate of a Person with whom the Issuer has contracted to perform
its duties under the Indenture (Section 3.07(b));
(L) the notification of the Indenture Trustee and the Rating
Agencies of a Servicer Default pursuant to the Sale and Servicing
Agreement and, if such Servicer Default arises from the failure of the
Servicer to perform any of its duties under the Sale and Servicing
Agreement, the taking of all reasonable steps available to remedy such
failure (Section 3.07(d));
(M) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligation under the
Indenture (Section 3.11(b));
(N) the delivery of notice to the Indenture Trustee of each
Event of Default and each default by the Servicer or Seller under the
Sale and Servicing Agreement (Section 3.19);
(O) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officers' Certificate and the obtaining of the Opinion of Counsel and
the Independent Certificate relating thereto (Section 4.01);
(P) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Trust Estate in a commercially
reasonable manner if an Event of Default shall have occurred and be
continuing (Section 5.04);
(Q) the preparation and delivery of notice to Noteholders of the
removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.08);
3
<PAGE>
(R) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of any co-trustee or separate trustee (Sections
6.08 and 6.10);
(S) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee
is not the Note Registrar (Section 7.01);
(T) the preparation and, after execution by the Issuer, the
filing with the Commission, any applicable state agencies and the
Indenture Trustee of documents required to be filed on a periodic
basis with, and summaries thereof as may be required by rules and
regulations prescribed by, the Commission and any applicable state
agencies and the transmission of such summaries, as necessary, to the
Noteholders (Section 7.03);
(U) the opening of one or more accounts in the Trust's name, the
preparation of Issuer Orders, Officers' Certificates and Opinions of
Counsel and all other actions necessary with respect to investment and
reinvestment of funds in the Trust Accounts (Sections 8.02 and 8.03);
(V) the preparation of an Issuer Request and Officers'
Certificate and the obtaining of an Opinion of Counsel and Independent
Certificates, if necessary, for the release of the Trust Estate as
defined in the Indenture (Sections 8.04 and 8.05);
(W) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with respect
to such supplemental indentures (Sections 9.01, 9.02 and 9.03);
(X) the execution of new Notes conforming to any supplemental
indenture (Section 9.06);
(Y) the notification of Noteholders of redemption of the Notes
(Section 10.02);
(Z) the preparation of all Officers' Certificates, Opinions of
Counsel and Independent Certificates with respect to any requests by
the Issuer to the Indenture Trustee to take any action under the
Indenture (Section 11.01(a));
(AA) the preparation and delivery of Officers' Certificates and
the obtaining of Independent Certificates, if necessary, for the
release of property from the lien of the Indenture (Section 11.01(b));
(BB) the notification of the Rating Agencies, upon the failure
of the Indenture Trustee to give such notification, of the information
required pursuant to Section 11.04 of the Indenture (Section 11.04);
4
<PAGE>
(CC) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment
and notice provisions (Section 11.06);
(DD) the recording of the Indenture, if applicable (Section
11.15); and
(EE) causing the Servicer to comply with Sections 4.09, 4.10,
4.11 and 5.06 of the Sale and Servicing Agreement.
(ii) The Administrator will:
(A) pay the Indenture Trustee from time to time reasonable
compensation for all services rendered by the Indenture Trustee under
the Indenture (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an
express trust);
(B) except as otherwise expressly provided in the Indenture,
reimburse the Indenture Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Indenture
Trustee in accordance with any provision of the Indenture (including
the reasonable compensation, expenses and disbursements of its agents
and either in-house counsel or outside counsel, but not both), except
any such expense, disbursement or advance as may be attributable to
its negligence or bad faith;
(C) indemnify the Indenture Trustee and its agents for, and to
hold them harmless against, any losses, liability or expense incurred
without negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of the transactions
contemplated by the Indenture, including the reasonable costs and
expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or
duties under the Indenture; and
(D) indemnify the Owner Trustee and its agents for, and to hold
them harmless against, any losses, liability or expense incurred
without negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of the transactions
contemplated by the Trust Agreement, including the reasonable costs
and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or
duties under the Trust Agreement.
(b) Additional Duties. (i) In addition to the duties of the
-----------------
Administrator set forth above, the Administrator 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, 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 the Related Agreements, and at the request of the Owner
Trustee shall take all appropriate action that it is the duty of the Issuer
or the Owner Trustee to take pursuant to the Related Agreements. Subject
to Section 5 of this Agreement, and in accordance with the directions of
---------
the Owner Trustee, the Administrator shall administer, perform or supervise
the performance of such other activities in
5
<PAGE>
connection with the Collateral (including the Related Agreements) as are
not covered by any of the foregoing provisions and as are expressly
requested by the Owner Trustee and are reasonably within the capability of
the Administrator.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding tax
is imposed on the Trust's payments (or allocations of income) to an "Owner"
as contemplated in Section 5.02(c) of the Trust Agreement. Any such notice
shall specify the amount of any withholding tax required to be withheld by
the Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Owner Trustee set forth in Sections 2.11,
2.13, 2.14, 5.05(a), (b), (c) and (d) and Section 5.07 of the Trust
Agreement with respect to, among other things, accounting and reports to
Certificateholders and the maintenance of Capital Accounts; provided,
--------
however, that the Owner Trustee shall retain responsibility for the
- -------
distribution of the Schedule K-1s necessary to enable each
Certificateholder to prepare its federal and state income tax returns.
(iv) The Administrator may satisfy its obligations with respect to
clauses (ii) and (iii) above by retaining, at the expense of the
Administrator, a firm of independent public accountants (the "Accountants")
acceptable to the Owner Trustee which shall perform the obligations of the
Administrator thereunder. In connection with paragraph (ii) above, the
Accountants will provide prior to June 25, 1996, a letter in form and
substance satisfactory to the Owner Trustee as to whether any tax
withholding is then required and, if required, the procedures to be
followed with respect thereto to comply with the requirements of the Code.
The Accountants shall be required to update the letter in each instance
that any additional tax withholding is subsequently required or any
previously required tax withholding shall no longer be required.
(v) The Administrator shall perform the duties of the Administrator
specified in Section 10.02 of the Trust Agreement required to be performed
in connection with the resignation or removal of the Owner Trustee, and any
other duties expressly required to be performed by the Administrator under
the Trust Agreement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions 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 Administrator's opinion, no less favorable to the Issuer than would be
available from unaffiliated parties.
(vii) It is the intention of the parties hereto that the Administrator
shall, and the Administrator hereby agrees to, execute on behalf of the
Issuer or the Owner Trustee all such documents, 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 the
Basic Documents. In furtherance thereof, the Owner Trustee shall, on
behalf of itself and of the Issuer, execute and
6
<PAGE>
deliver to the Administrator, and to each successor Administrator appointed
pursuant to the terms hereof, one or more powers of attorney substantially
in the form of Exhibit A hereto, appointing the Administrator the attorney-
in-fact of the Owner Trustee and the Issuer for the purpose of executing on
behalf of the Owner Trustee and the Issuer all such documents, reports,
filings, instruments, certificates and opinions.
(c) Non-Ministerial Matters. (i) With respect to matters that in
-----------------------
the reasonable judgment of the Administrator are non-ministerial, the
Administrator shall not take any action unless within a reasonable time
before the taking of such action, the Administrator shall have notified the
Owner Trustee of the proposed action and the Owner Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of
the preceding sentence, "non-ministerial matters" shall include, without
limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the
Issuer (other than in connection with the collection of the
Receivables);
(C) the amendment, change or modification of the Related
Agreements;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Trustees pursuant to the Indenture or the
appointment of successor Administrators or successor Servicers, or the
consent to the assignment by the Note Registrar, Paying Agent or
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement,
the Administrator shall not be obligated to, and shall not, (x) make any
payments to the Noteholders or Certificateholders under the Related
Agreements, (y) sell the Trust Estate pursuant to Section 5.04 of the
Indenture or (z) take any other action that the Issuer directs the
Administrator not to take on its behalf.
2. Records. The Administrator shall maintain appropriate books of
-------
account and records relating to services performed hereunder, which books
of account and records shall be accessible for inspection by the Issuer,
the Owner Trustee, the Indenture Trustee and the Seller at any time during
normal business hours.
3. Compensation. As compensation for the performance of the
------------
Administrator's obligations under this Agreement, the Administrator shall
be entitled to $500 per month which shall be payable in accordance with
Section 5.04 of the Sale and Servicing Agreement. The Seller shall
reimburse the Administrator for any of its liabilities and expenses related
to its performance hereunder or under any Related Document (including
without limitation those expenses set forth in Section 1(a)(ii) of this
Agreement).
7
<PAGE>
4. Additional Information To Be Furnished to Issuer. The
------------------------------------------------
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably
request.
5. Independence of Administrator. For all purposes of this
-----------------------------
Agreement, the Administrator shall be an independent contractor and shall
not be subject to the supervision of the Issuer or the Owner Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer, the
Administrator shall have no authority to act for or represent the Issuer or
the Owner Trustee in any way and shall not otherwise be deemed an agent of
the Issuer or the Owner Trustee.
6. No Joint Venture. Nothing contained in this Agreement shall (i)
----------------
constitute the Administrator and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) be construed to
impose any liability as such on any of them or (iii) be deemed to confer on
any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
7. Other Activities of Administrator. Nothing herein shall prevent
---------------------------------
the Administrator or its affiliates from engaging in other businesses or,
in its sole discretion, from acting in a similar capacity as an
administrator for any other person or entity even though such person or
entity may engage in business activities similar to those of the Issuer,
the Owner Trustee or the Indenture Trustee.
8. Term of Agreement; Resignation and Removal of
---------------------------------------------
Administrator. (a) This Agreement shall continue in force until the
- -------------
dissolution of the Issuer, upon which event this Agreement shall
automatically terminate.
(b) Subject to Section 8(e) and (f), the Administrator may resign its
--------------------
duties hereunder by providing the Issuer with at least 60 days prior
written notice.
(c) Subject to Section 8(e) and (f), the Issuer may remove the
--------------------
Administrator without cause by providing the Administrator with at least 60
days prior written notice.
(d) Subject to Section 8(e) and (f), at the sole option of the
--------------------
Issuer, the Administrator may be removed immediately upon written notice of
termination from the Issuer to the Administrator if any of the following
events shall occur:
(i) the Administrator shall default in the performance of any of
its duties under this Agreement and, after notice of such default,
shall not cure such default within ten days (or, if such default
cannot be cured in such time, shall not give within ten days such
assurance of cure as shall be reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a
decree or order for relief, and such decree or order shall not have
been vacated within 60 days, in respect
8
<PAGE>
of the Administrator in any involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect
or appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for the Administrator or any
substantial part of its property or order the winding-up or
liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief
in an involuntary case under any such law, or shall consent to the
appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for the Administrator or any
substantial part of its property, shall consent to the taking of
possession by any such official of any substantial part of its
property, shall make any general assignment for the benefit of
creditors or shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in clause
(ii) or (iii) of this Section shall occur, it shall give written notice
thereof to the Issuer and the Indenture Trustee within seven days after the
happening of such event.
(e) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have
been appointed by the Issuer and (ii) such successor Administrator shall
have agreed in writing to be bound by the terms of this Agreement in the
same manner as the Administrator is bound hereunder.
(f) The appointment of any successor Administrator shall be effective
only after satisfaction of the Rating Agency Condition with respect to the
proposed appointment.
9. Action upon Termination, Resignation or Removal. Promptly upon
-----------------------------------------------
the effective date of termination of this Agreement pursuant to Section
-------
8(a) or the resignation or removal of the Administrator pursuant to Section
- ---- -------
8(b) or (c), respectively, the Administrator shall be entitled to be paid
- ---- ---
all fees and reimbursable expenses accruing to it to the date of such
termination, resignation or removal. The Administrator shall forthwith upon
such termination pursuant to Section 8(a) deliver to the Issuer all
------------
property and documents of or relating to the Collateral then in the custody
of the Administrator. In the event of the resignation or removal of the
Administrator pursuant to Section 8(b) or (c), respectively, the
------------ ---
Administrator shall cooperate with the Issuer and take all reasonable steps
requested to assist the Issuer in making an orderly transfer of the duties
of the Administrator.
9
<PAGE>
10. Notices. Any notice, report or other communication given
-------
hereunder shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to
Caterpillar Financial Asset Trust 1996-A
Chemical Bank Delaware, as Owner Trustee
1201 Market Street
9th Floor
Wilmington, Delaware 19801
Attention: Corporate Trustee Administration Department
(b) if to the Administrator, to
Caterpillar Financial Services Corporation
3322 West End Avenue
Nashville, TN 37203-1071
(c) if to the Indenture Trustee, to
The First National Bank of Chicago
One North State Street
Chicago, Illinois 60602
(d) if to the Seller, to
Caterpillar Financial Funding Corporation
2950 East Flamingo Road
Suite E-4
Las Vegas, Nevada 89121
or to such other address as any party shall have provided to the other
parties in writing. Any notice required to be in writing hereunder shall be
deemed given if such notice is mailed by certified mail, postage prepaid,
or hand-delivered to the address of such party as provided above, except
that notices to the Indenture Trustee are effective only upon receipt.
11. Amendments. This Agreement may be amended from time to time by a
----------
written amendment duly executed and delivered by the Issuer, the
Administrator and the Indenture Trustee, with the written consent of the
Owner Trustee, without the consent of the Noteholders and the
Certificateholders, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or
Certificateholders; provided that such amendment will not, in the Opinion
--------
of Counsel, materially and adversely affect the interest of any Noteholder
or Certificateholder. This Agreement may also be amended by the Issuer,
the Administrator and the Indenture Trustee with the written consent of the
Owner Trustee and the holders of Notes
10
<PAGE>
evidencing a majority in the Outstanding Amount of the Notes and the
holders of Certificates evidencing a majority of the Certificate Balance
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of Noteholders or the Certificateholders; provided,
--------
however, that no such amendment may (i) increase or reduce in any manner
- -------
the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that are required to be made for
the benefit of the Noteholders or Certificateholders or (ii) reduce the
aforesaid percentage of the holders of Notes and Certificates which are
required to consent to any such amendment, without the consent of the
holders of all the outstanding Notes and Certificates. Notwithstanding the
foregoing, the Administrator may not amend this Agreement without the
permission of the Seller, which permission shall not be unreasonably
withheld.
12. Successors and Assigns. This Agreement may not be assigned by
----------------------
the Administrator unless such assignment is previously consented to in
writing by the Issuer and the Owner Trustee and subject to the satisfaction
of the Rating Agency Condition in respect thereof. An assignment with such
consent and satisfaction, if accepted by the assignee, shall bind the
assignee hereunder in the same manner as the Administrator is bound
hereunder. Notwithstanding the foregoing, this Agreement may be assigned
by the Administrator without the consent of the Issuer or the Owner Trustee
to a corporation or other organization that is a successor (by merger,
consolidation or purchase of assets) to the Administrator, provided that
such successor organization executes and delivers to the Issuer, the Owner
Trustee and the Indenture Trustee an agreement in which such corporation or
other organization agrees to be bound hereunder by the terms of said
assignment in the same manner as the Administrator is bound hereunder.
Subject to the foregoing, this Agreement shall bind any successors or
assigns of the parties hereto.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT
OF LAW PROVISIONS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
14. Headings. The section headings hereof have been inserted for
--------
convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in counterparts,
------------
each of which when so executed shall together constitute but one and the
same agreement.
16. Severability. Any provision of this Agreement that is prohibited
------------
or unenforceable in any jurisdiction shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
11
<PAGE>
17. Not Applicable to Caterpillar Financial Services Corporation in
---------------------------------------------------------------
Other Capacities. Nothing in this Agreement shall affect any obligation
- ----------------
Caterpillar Financial Services Corporation may have in any other capacity.
18. Limitation of Liability of Owner Trustee and
--------------------------------------------
Trustee. (a) Notwithstanding anything contained herein to the contrary,
- -------
this instrument has been signed by Chemical Bank Delaware not in its
individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall Chemical Bank Delaware in its individual
capacity or any beneficial owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder, as to all of which recourse shall be had solely to
the assets of the Issuer. For all purposes of this Agreement, in the
performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been signed by The First National Bank of Chicago not in its
individual capacity but solely as Indenture Trustee and in no event shall
The First National Bank of Chicago have any liability for the
representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely
to the assets of the Issuer.
19. Third-Party Beneficiary. The Owner Trustee is a third-party
-----------------------
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party
hereto.
20. Successor Servicer and Administrator. The Administrator shall
------------------------------------
undertake, as promptly as possible after the giving of notice of
termination to the Servicer of the Servicer's rights and powers pursuant to
Section 8.02 of the Sale and Servicing Agreement, to enforce the provisions
of Section 8.02 with respect to the appointment of a successor Servicer.
Such successor Servicer shall, upon compliance with the last sentence of
the first paragraph of Section 8.02 of the Sale and Servicing Agreement,
become the successor Administrator hereunder; provided, however, that if
-------- -------
the Indenture Trustee shall become such successor Administrator, the
Indenture Trustee shall not be required to perform any obligations or
duties or conduct any activities as successor Administrator that would be
prohibited by law and not within the banking and trust powers of the
Indenture Trustee. In such event, the Indenture Trustee shall appoint a
sub-administrator to perform such obligations and duties.
21. Nonpetition Covenants. (a) Notwithstanding any prior
---------------------
termination of this Agreement, the Seller, the Administrator, the Owner
Trustee and the Indenture Trustee shall not, prior to the date which is one
year and one day after the termination of this Agreement with respect to
the Issuer, acquiesce, petition or otherwise invoke or cause the Issuer to
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any Federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
12
<PAGE>
official of the Issuer or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Issuer, the Administrator, the Owner Trustee and the Indenture Trustee
shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Seller, acquiesce,
petition or otherwise invoke or cause the Seller to invoke the process of
any court or government authority for the purpose of commencing or
sustaining a case against the Seller under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Seller or
any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Seller.
13
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
CATERPILLAR FINANCIAL ASSET
TRUST 1996-A
By: CHEMICAL BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee,
By: /s/ John J. Cashin
----------------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual
capacity but solely as Indenture
Trustee,
By: /s/ Barbara G. Grosse
----------------------------------------
Name: Barbara G. Grosse
Title: Assistant Vice President
and Assistant Secretary
CATERPILLAR FINANCIAL SERVICES
CORPORATION, as Administrator,
By: /s/ Ali Bahaj
----------------------------------------
Name: Ali Bahaj
Title: Vice President
CATERPILLAR FINANCIAL FUNDING
CORPORATION, as Seller
By: /s/ Frank C. Carder
----------------------------------------
Name: Frank C. Carder
Title: Treasurer
<PAGE>
EXHIBIT A
[Form of Power of Attorney]
POWER OF ATTORNEY
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, that ______________________, a
____________________________, not in its individual capacity but solely as
owner trustee ("Owner Trustee") for the Caterpillar Financial Asset Trust
1996-A ("Trust"), does hereby make, constitute and appoint
____________________________, as Administrator under the Administration
Agreement (as defined below), and its agents and attorneys, as Attorneys-
in-Fact to execute on behalf of the Owner Trustee or the Trust all such
documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Owner Trustee or the Trust to prepare, file or
deliver pursuant to the Related Documents (as defined in the Administration
Agreement), including, without limitation, to appear for and represent the
Owner Trustee and the Trust in connection with the preparation, filing and
audit of federal, state and local tax returns pertaining to the Trust, and
with full power to perform any and all acts associated with such returns
and audits that the Owner Trustee could perform, including without
limitation, the right to distribute and receive confidential information,
defend and assert positions in response to audits, initiate and defend
litigation, and to execute waivers of restriction on assessments of
deficiencies, consents to the extension of any statutory or regulatory time
limit, and settlements. For the purpose of this Power of Attorney, the
term "Administration Agreement" means the Administration Agreement dated as
of May 1, 1996, among the Trust, Caterpillar Financial Services
Corporation, as Administrator and Servicer, and The First National Bank of
Chicago, as Indenture Trustee, as such may be amended from time to time.
All powers of attorney for this purpose heretofore filed or executed
by the Owner Trustee are hereby revoked.
EXECUTED this 22nd day of May, 1996.
CHEMICAL BANK DELAWARE, not in its
individual capacity but solely as
Owner Trustee
By:
-------------------------------
Name:
Title:
Exhibit 10.3(A)
[EXECUTION COPY]
============================================================================
CUSTODIAL AGREEMENT
among
CATERPILLAR FINANCIAL SERVICES CORPORATION
Originator and Servicer
CATERPILLAR FINANCIAL FUNDING CORPORATION
Seller
CATERPILLAR FINANCIAL ASSET TRUST 1996-A
Issuer
and
THE FIRST NATIONAL BANK OF CHICAGO
Indenture Trustee and Custodian
DATED AS OF MAY 1, 1996
============================================================================
<PAGE>
TABLE OF CONTENTS
Page
- ----
ARTICLE I
DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . 2
Section 1.2. Interpretation of the Agreement . . . . . . . . . . 2
ARTICLE II
CUSTODIAL ARRANGEMENT
Section 2.1. Appointment as Custodian . . . . . . . . . . . . . . 2
Section 2.2. Maintenance of Office . . . . . . . . . . . . . . . 3
ARTICLE III
CUSTODIAL ARRANGEMENT
Section 3.1. Transfer of Receivables; Delivery of Documents . . . 3
Section 3.2. Certification . . . . . . . . . . . . . . . . . . . 4
Section 3.3. Release of Receivables Files . . . . . . . . . . . . 4
Section 3.4. Purchase; Payment In Full . . . . . . . . . . . . . 5
Section 3.5. Other Duties of Custodian . . . . . . . . . . . . . 5
Section 3.6. Access to Records . . . . . . . . . . . . . . . . . 6
Section 3.7. Instructions; Authority to Act . . . . . . . . . . . 6
ARTICLE IV
OWNERSHIP AND TRANSFER OF RECEIVABLES
Section 4.1. Transfer of Receivables . . . . . . . . . . . . . . 6
Section 4.2. Substitution and Purchase of Receivables . . . . . . 7
Section 4.3. No Service Charge for Transfer of Receivables . . . 7
Section 4.4. Defeasance . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V
CUSTODIAN
Section 5.1. Representations, Warranties and
Covenants of Custodian . . . . . . . . . . . 8
<PAGE>
Section 5.2. Charges and Expenses . . . . . . . . . . . . . . . . 9
Section 5.3. No Adverse Interests . . . . . . . . . . . . . . . . 9
Section 5.4. Inspections . . . . . . . . . . . . . . . . . . . . 10
Section 5.5. Insurance . . . . . . . . . . . . . . . . . . . . . 10
Section 5.6. Limitation of Liability . . . . . . . . . . . . . . 10
Section 5.7. Indemnification . . . . . . . . . . . . . . . . . . 10
Section 5.8. Further Rights of Custodian . . . . . . . . . . . . 10
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Amendment . . . . . . . . . . . . . . . . . . . . . 11
Section 6.2. Governing Law . . . . . . . . . . . . . . . . . . . 11
Section 6.3. Notices . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.4. Severability of Provisions . . . . . . . . . . . . . 12
Section 6.5. No Partnership . . . . . . . . . . . . . . . . . . . 12
Section 6.6. Termination of Agreement . . . . . . . . . . . . . . 12
Section 6.7. Counterparts . . . . . . . . . . . . . . . . . . . . 12
Section 6.8. Assignment . . . . . . . . . . . . . . . . . . . . . 12
Section 6.9. Headings . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.10. Advice of Counsel . . . . . . . . . . . . . . . . . 12
Section 6.11. No Petition . . . . . . . . . . . . . . . . . . . . 12
Section 6.12. Resignation of Custodian . . . . . . . . . . . . . 13
Section 6.13. Limitation of Liability of
Indenture Trustee and
Owner Trustee . . . . . . . . . . . . . . . 13
EXHIBIT A Custodian Certification . . . . . . . . . . . . . . . . A-1
EXHIBIT B Request for Release of Documents . . . . . . . . . . . . B-1
EXHIBIT C Transfer Certificate . . . . . . . . . . . . . . . . . . C-1
ii
<PAGE>
CUSTODIAL AGREEMENT
-------------------
THIS CUSTODIAL AGREEMENT is made as of May 1, 1996, by and among
CATERPILLAR FINANCIAL SERVICES CORPORATION (the "Originator"), CATERPILLAR
FINANCIAL SERVICES CORPORATION, as Servicer (the "Servicer"), CATERPILLAR
FINANCIAL FUNDING CORPORATION (the "Seller"), CATERPILLAR FINANCIAL ASSET
TRUST 1996-A (the "Trust"), THE FIRST NATIONAL BANK OF CHICAGO, as
Indenture Trustee under the Indenture (the "Indenture Trustee") and THE
FIRST NATIONAL BANK OF CHICAGO, as Custodian ("Custodian").
RECITALS
--------
WHEREAS, before the Closing Date the Originator is the owner of
the Receivables.
WHEREAS, pursuant to the Purchase Agreement, the Originator will
sell the Receivables to the Seller.
WHEREAS, pursuant to the Sale and Servicing Agreement, the Seller
will sell the Receivables acquired pursuant to the Purchase Agreement to
the Trust.
WHEREAS, pursuant to the Indenture, the Trust will Grant to the
Indenture Trustee, as trustee for the benefit of the Noteholders (and to
the extent set forth in the Sale and Servicing Agreement, the
Certificateholders), all of the Trust's right, title and interest in, to
and under the Receivables and the other assets of the Trust.
WHEREAS, during such time as the Seller, the Trust or the
Indenture Trustee owns or has an interest in the Receivables, such Person
or Persons shall be referred to herein as the "Receivables Holder", and the
Custodian shall hold all Receivables as bailee of the Seller, the Trust and
the Indenture Trustee (for the benefit of the Noteholders and, to the
extent set forth in the Sale and Servicing Agreement, the
Certificateholders) during such time as such Person is a Receivables
Holder. References in this Agreement to the Receivables Holder, when
referring to transfers or possession of, or security interests in,
Receivables, shall refer to Custodian, in its capacity as custodian for the
benefit of such Receivables Holder.
WHEREAS, in connection with the foregoing, the parties hereto
desire to provide for the custody and management of the Receivables
transferred pursuant to the Purchase Agreement, the Sale and Servicing
Agreement and the Indenture (each, a "Transfer").
WHEREAS, Custodian is a financial institution regulated by the
Comptroller of the Currency of the United States.
<PAGE>
WHEREAS, the Originator, the Seller, the Trust and the Indenture
Trustee, during such time as each such Person is a Receivables Holder,
desire to have the Custodian (i) hold the Receivables as custodian for each
such party, (ii) take possession of the Contracts and the Receivables Files
related to the Receivables, along with certain other documents specified in
this Agreement, as the custodian for, and bailee of, such Receivables
Holder in accordance with the terms and conditions of this Agreement, and
(iii) retain possession of the Contracts and Receivables Files and such
other documents as custodian for and bailee of the Indenture Trustee.
Custodian is willing and able to perform the duties and obligations of a
custodian and bailee as set forth herein.
WHEREAS, Servicer will act as servicer of the Receivables
pursuant to the Sale and Servicing Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the Originator, the Servicer, the Seller,
the Trust, the Indenture Trustee and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Certain capitalized terms used in
-----------
this Agreement and not otherwise defined herein shall have the respective
meanings assigned them in Article I of the Sale and Servicing Agreement
dated as of May 1, 1996 (the "Sale and Servicing Agreement") among the
Trust, the Seller and the Servicer or in Article I of the Indenture dated
as of May 1, 1996 (the "Indenture") between the Trust and the Indenture
Trustee. All references in this Agreement to Articles, Sections,
Subsections and Exhibits are to the same contained in or attached to this
Agreement unless otherwise specified. All terms defined in this Agreement
shall have the defined meanings when used in any certificate, notice or
other document made or delivered pursuant hereto unless otherwise defined
therein.
Section 1.2. Interpretation of the Agreement. In interpreting
-------------------------------
any mistake or ambiguity contained herein, the parties hereto agree to
resolve any such mistakes or ambiguities in favor of the Indenture Trustee
(for the benefit of the Noteholders, and to the extent set forth in the
Sale and Servicing Agreement, for the benefit of the Certificateholders).
ARTICLE II
CUSTODIAL ARRANGEMENT
Section 2.1. Appointment as Custodian. Subject to the terms and
------------------------
conditions hereof, the Seller, the Trust and the Indenture Trustee (for the
benefit of the Noteholders and, to the extent set forth in the Sale and
Servicing Agreement, the Certificateholders), as their interests may
appear, hereby appoint The First National Bank of Chicago, and The First
National Bank of Chicago hereby accepts such appointment, as Custodian to
maintain custody
2
<PAGE>
of the Receivables, the Contracts and the Receivables Files during such
time as each such Person is a Receivables Holder.
Section 2.2. Maintenance of Office. The Custodian agrees to
---------------------
maintain each Receivables File identified in Section 3.03 of the Sale and
Servicing Agreement and Section 2.04 of the Purchase Agreement at its
office located at 3322 West End Avenue, 6th Floor, Nashville, Tennessee
37203-1071, or at such of its other offices in Tennessee as Custodian shall
designate from time to time after giving the Originator, the Seller, the
Trust, each of the Rating Agencies and the Indenture Trustee prior written
notice, which office shall be maintained separate from the offices of the
Originator, the Seller and the Servicer and shall be at all times under the
exclusive dominion of the Custodian. None of the Custodian's employee's
shall be employees of the Originator, the Seller, the Servicer or any of
the Servicer's Affiliates.
ARTICLE III
CUSTODIAL ARRANGEMENT
Section 3.1. Transfer of Receivables; Delivery of Documents. On
----------------------------------------------
or before the Closing Date, the Originator shall deliver, or cause to be
delivered, to Custodian, the Receivables Files referred to in Section 2.04
of the Purchase Agreement and Section 3.03 of the Sale and Servicing
Agreement, including without limitation, the Original Contract evidencing
each Receivable. Until the Closing Date and the occurrence of the initial
Transfer described below, the Custodian shall hold the Receivables
(including the Receivables Files) as custodian and bailee for the
Originator.
On the Closing Date, the Originator shall deliver to the
Custodian a Transfer Certificate in the form attached hereto as Exhibit C
---------
evidencing the Transfer by the Originator to the Seller of the Receivables
pursuant to the Purchase Agreement. Upon receipt of the Transfer
Certificate duly executed by the Originator, the Custodian shall issue to
the Seller a Custodian Certification (as defined below) (the "Seller's
Custodian Certification"), as described in Section 3.2 below.
-----------
On the Closing Date, upon receipt of the Seller's Custodian
Certification, the Seller shall deliver to the Custodian a Transfer
Certificate in the form attached hereto as Exhibit C (a "Transfer
---------
Certificate") evidencing the Transfer by the Seller to the Trust of the
Receivables pursuant to the Sale and Servicing Agreement, together with the
Seller's Custodian Certification. Upon receipt of the Transfer Certificate
duly executed by the Seller and the Seller's Custodian Certification, the
Custodian shall issue to the Trust a Custodian Certification (the "Trust's
Custodian Certification"), as described in Section 3.2 below, and shall
-----------
cancel the Seller's Custodian Certification.
On the Closing Date, upon receipt of the Trust's Custodian
Certification, the Trust shall deliver to the Custodian a Transfer
Certificate in the form attached hereto as Exhibit C evidencing the
---------
Transfer by the Trust to the Indenture Trustee of the Receivables pursuant
to the Indenture, together with the Trust's Custodian Certification. Upon
receipt of
3
<PAGE>
the Transfer Certificate duly executed by the Trust and the Trust's
Custodian Certification, the Custodian shall issue to the Indenture Trustee
a Custodian Certification (the "Trustee's Custodian Certification"), as
described in Section 3.2 below, and shall cancel the Trust's Custodian
-----------
Certification.
Custodian hereby acknowledges receipt of the Purchase Agreement,
the Sale and Servicing Agreement and the Indenture. Custodian further
acknowledges that, on the Closing Date and pursuant to this Agreement, the
Purchase Agreement, the Sale and Servicing Agreement and the Indenture,
Custodian will be given possession of the Receivables Files relating to the
Receivables constituting a portion of the Collateral, each of which
Receivables will be described specifically on Schedule A to each of the
Purchase Agreement, the Sale and Servicing Agreement and the Indenture, a
copy of which will be delivered to Custodian simultaneously with the
delivery of the Receivables Files relating thereto. On and after the
Closing Date and the completion of the Transfers described above, and so
long as this Agreement shall remain in effect, Custodian shall hold the
Receivables Files now and hereafter, from time to time, in its sole custody
and control as custodian for and bailee of the Indenture Trustee, as
trustee for the benefit of the Noteholders and the Certificateholders (as
their interests may appear), unless and until released from the lien of the
Indenture and otherwise in accordance with the Sale and Servicing
Agreement, in which event, Custodian shall hold the Receivables and the
Receivables Files as trustee and bailee for the benefit of the applicable
Receivables Holder.
Section 3.2. Certification. Upon delivery to Custodian of the
-------------
Receivables Files, as specified in Section 3.1, Custodian shall review the
-----------
same on account of the Indenture Trustee in accordance with the terms of
Section 3.05 of the Sale and Servicing Agreement and (subject to Section
-------
4.1 hereof) shall confirm to the Indenture Trustee that all the documents
- ---
in the Receivables Files required to be delivered under Section 3.1 (being
-----------
the documents described in Section 3.03 of the Sale and Servicing
Agreement) have been delivered. Custodian shall hold such documents on
behalf of the Indenture Trustee pursuant to this Agreement. Upon
consummation of a Transfer in accordance with Article IV hereof, Custodian
----------
shall, with respect to the Receivables transferred to the applicable
Receivables Holder in connection with the applicable Transfer, as described
in Section 3.1 hereof, number, execute and deliver to the applicable
-----------
Receivables Holder (with a copy to the Originator) one or more
certifications (each, a "Custodian Certification") in the form attached
-----------------------
hereto as Exhibit A. Upon issuance of a Custodian Certification with
---------
respect to any Transfer, the Custodian Certification relating to such
Receivable previously delivered shall be deemed and marked cancelled with
respect to such Receivable.
Section 3.3. Release of Receivables Files. From time to time
----------------------------
and as provided in the Sale and Servicing Agreement, Custodian is hereby
authorized, upon written request of Servicer (with the approval of the
Indenture Trustee, which approval shall not be unreasonably withheld) in
the form annexed hereto as Exhibit B, to release to the Servicer the
---------
Receivables File related to any Receivable or the specific documents
identified in such request to the Servicer. All documents so released to
the Servicer shall be held by it in trust for the benefit of the Indenture
Trustee (for the benefit of the Noteholders and, to the extent set forth in
the Indenture and the Sale and Servicing Agreement, the
Certificateholders).
4
<PAGE>
Servicer shall return the Receivables File, or such other documents which
have been released to Servicer, to Custodian when Servicer's need therefor
in connection with a foreclosure, modification, termination or repossession
no longer exists, unless the Receivable shall be satisfied in full or
liquidated, in which case, upon receipt of a certification to such effect
from Servicer to Custodian in the form annexed hereto as Exhibit B, the
---------
related Receivables File shall be released by Custodian to Servicer, and
Custodian shall thereupon reflect any such liquidation on the related
Receivable. Pursuant to Section 4.07 of the Sale and Servicing Agreement,
(i) the Servicer shall return a Receivables File released to it within five
(5) Business Days of such release and (ii) if such Receivables File has not
been returned to the Custodian within such five (5) Business Day period,
the Servicer shall repurchase the related Receivable.
Notwithstanding anything herein or in any other Basic Document to
the contrary, (i) the Servicer shall return any Receivables File released
to it in connection with a modification of a Receivable to the Custodian on
the same day such file is released and (ii) the Custodian shall not release
a Receivables File to the Servicer in connection with a modification of a
Receivable if, after giving effect to the release of such Receivables File,
the aggregate Principal Balance of all Receivables having released
Receivables Files in connection with modifications exceeds $500,000.
Section 3.4. Purchase; Payment In Full. Upon the purchase of
-------------------------
any Receivable pursuant to Section 3.02, 3.05 or 4.07 of the Sale and
Servicing Agreement or Section 6.02 of the Purchase Agreement, or upon the
payment in full of any Receivable, which shall be evidenced by Custodian's
receipt of the request for release in the form annexed hereto as Exhibit B,
---------
Custodian shall promptly release the related Receivables File to Servicer
and the security interest in such Receivable and related Receivables File
granted by the Trust to the Indenture Trustee pursuant to the Indenture
shall terminate without any further action by the Custodian, the
Originator, the Seller or Indenture Trustee.
Section 3.5. Other Duties of Custodian. The Custodian shall
-------------------------
have and perform the other following powers and duties:
(a) Safekeeping. To segregate the Receivables and Receivables
-----------
Files from all other receivables and installment sale contracts and
similar records in its possession, to identify the Receivables Files
as being held and to hold the Receivables Files for and on behalf of
the Receivables Holders (which, on and after the Closing Date and
after completion of the Transfers described in Section 3.1, shall be
-----------
the Indenture Trustee for the benefit of the Noteholders and the
Certificateholders, as their interests may appear), to maintain
accurate records pertaining to each Contract and Receivable in the
Receivables Files, to provide monthly a list of all Receivable Files
held by it, together with a current exception report, and to provide
such information as is necessary to enable the Servicer to deliver the
reports and notifications required by Section 4.09 of the Sale and
Servicing Agreement. Custodian will promptly report to the Indenture
Trustee any failure on its part to hold the Receivables Files as
herein provided and promptly take appropriate action to remedy any
such failure.
5
<PAGE>
(b) Administration; Reports. In general, to attend to all non-
-----------------------
discretionary details in connection with maintaining custody of the
Receivables Files on behalf of the Receivables Holders as may be
expressly provided herein or as may be required or customary for a
custodian or bailee. In addition, Custodian shall assist the
Indenture Trustee and the Servicer (at Servicer's cost) generally in
the preparation of reports to holders or to regulatory bodies to the
extent necessitated by Custodian's custody of the Receivables Files.
Section 3.6. Access to Records. Custodian shall permit the
-----------------
Indenture Trustee and its duly authorized agents, attorneys or auditors and
those Persons permitted access pursuant to Section 4.12 of the Sale and
Servicing Agreement to inspect the Receivables Files and the books and
records maintained by the Custodian pursuant hereto at such reasonable
times as they may reasonably request, subject only to compliance with the
terms of the Sale and Servicing Agreement.
Section 3.7. Instructions; Authority to Act. The Custodian
------------------------------
shall be deemed to have received proper instructions with respect to the
Receivables Files upon its receipt of written instructions signed by a
Responsible Officer of the Indenture Trustee and may conclusively rely on
such instructions. In addition, the Custodian may conclusively rely upon
any release request delivered to it in the form attached as Exhibit B
---------
hereto duly executed by an authorized officer of the Servicer as set forth
on Annex 1 to Exhibit B and, if required by the terms thereof, by the
Indenture Trustee.
ARTICLE IV
OWNERSHIP AND TRANSFER OF RECEIVABLES
Section 4.1. Transfer of Receivables. The transfer of
-----------------------
Receivables in connection with any Transfer shall occur in the following
manner:
(i) Custodian shall, promptly upon receiving a Transfer
Certificate relating to the transfer of Receivables pursuant to a
Transfer:
(a) determine whether each document in the Receivables
File listed in Section 2.04 of the Purchase Agreement and Section
3.03 of the Sale and Servicing Agreement with respect to each
Receivable listed on the Receivable Schedule has been delivered
to Custodian, and whether Custodian is able to deliver a
Custodian Certification;
(b) promptly advise the applicable Receivables Holder,
the Indenture Trustee, the Originator, the Seller and each of the
Rating Agencies by telephone or by facsimile transmission if it
determines that any document referred to in (a) above has not
been so delivered and take no further action under this Section
-------
4.1 until it determines that such documents have been so
---
delivered;
6
<PAGE>
(c) upon determining that such documents have been so
delivered, Custodian shall issue and deliver to applicable
Receivables Holder the Custodian Certification in accordance with
Sections 3.1 and 3.2 of this Agreement; and
------------ ---
(ii) Custodian shall hold the Receivables Files for each
Receivables Holder subject to satisfaction of the conditions precedent
with respect to the applicable Transfer.
Section 4.2. Substitution and Purchase of Receivables. The
----------------------------------------
purchase of Receivables pursuant to Section 6.02 of the Purchase Agreement
and Section 3.02, Section 3.05(b) or Section 4.07 of the Sale and Servicing
Agreement shall occur in the following manner:
(i) On or before the date of such purchase, the Servicer
shall send the Indenture Trustee notice, with a copy to Custodian,
indicating the Receivables to be purchased and the aggregate purchase
prices to be paid on such date.
(ii) Upon receiving written confirmation in the form
annexed hereto as Exhibit B, from the Seller and the Trust that they
---------
have received the applicable Purchase Amount, Custodian shall return
to the applicable party (as identified to the Custodian by the
Indenture Trustee) Receivables Files related to the Receivables
purchased on such date.
Section 4.3. No Service Charge for Transfer of Receivables. No
---------------------------------------------
service charge shall be made for any transfer of Receivables, but Custodian
may require payment from the Servicer of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer
of Receivables.
Section 4.4. Defeasance. When a Receivable is purchased by the
----------
Servicer, the Seller or the Originator pursuant to the terms of the
Purchase Agreement and the Sale and Servicing Agreement, the applicable
Receivables Holder's interest in such Receivable and all Collateral with
respect to such Receivable shall terminate, such Receivable and related
Collateral shall revert to the Originator and the Receivables Holder's
rights, title and interest therein shall cease, and the Indenture Trustee
shall execute such instruments acknowledging termination and discharge of
such pledge and security interest as are required by applicable law.
ARTICLE V
CUSTODIAN
Section 5.1. Representations, Warranties and Covenants of
--------------------------------------------
Custodian. Custodian hereby represents and warrants to, and covenants
- ---------
with, the Originator, the Seller, the Servicer, the Trust and the Indenture
Trustee, that as of the date of each Custodian Certification:
7
<PAGE>
(i) Custodian is duly organized, validly existing and in
good standing under the laws of the United States;
(ii) Custodian has the full power and authority to hold
each Receivable, to hold title to the Receivables as custodian on
behalf of the Receivables Holders, and to execute, deliver and
perform, and to enter into and consummate all transactions
contemplated by this Agreement, has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and
delivered this Agreement, and this Agreement constitutes a legal,
valid and binding obligation of Custodian, enforceable against it in
accordance with its terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of
equitable remedies;
(iii) Neither the execution and delivery of this
Agreement, the delivery of Receivables to Custodian, the issuance of
the Custodian Certifications, the consummation of the transactions
contemplated hereby or thereby, nor the fulfillment of or compliance
with the terms and conditions of this Agreement will conflict with or
result in a breach of any of the terms, conditions or provisions of
Custodian's charter or bylaws or any agreement or instrument to which
Custodian is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or
result in the violation of any law, rule, regulation, order, judgment
or decree to which Custodian or its property is subject; except that
no representation or warranty is made as to compliance with laws and
regulations, other than those of the United States and the State of
Illinois, relating to qualifications, licensure or regulation of
custodians of receivables originated in states other than Illinois;
(iv) Custodian does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(v) To Custodian's knowledge after due inquiry, there is
no litigation pending or threatened, which if determined adversely to
Custodian, would adversely affect the execution, delivery or
enforceability of this Agreement, or any of the duties or obligations
of Custodian thereunder, or which would have a material adverse effect
on the financial condition of Custodian;
(vi) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by Custodian of or compliance by Custodian
with this Agreement or the consummation of the transactions
contemplated hereby or thereby; except that no representation or
warranty is made as to consents, approvals, authorizations or orders
of any courts or governmental agencies or bodies, other than those of
the United States and the State of Illinois, relating to
qualifications, licensure or regulation of custodians of receivables
originated in states other than Illinois;
8
<PAGE>
(vii) Upon written request of the Indenture Trustee,
Custodian shall take such steps as requested by the Indenture Trustee
to protect or maintain any interest in any Receivable; and
(viii) The Custodian has not been notified by any
party other than the Originator, the Seller, the Trust and the
Indenture Trustee that any such third party claims an interest in the
Receivables or the Receivables Files or is any such party requesting
the Custodian to act as a bailee with respect to the Receivables or
the Receivables Files.
Custodian makes no representations or warranties as to the
validity, legality, sufficiency, enforceability, perfection, genuineness or
prior recorded status of any of the documents contained in each Receivables
File or the collectability, insurability, effectiveness or suitability of
any Receivable.
Section 5.2. Charges and Expenses. The Seller will pay all fees
--------------------
of Custodian in connection with the performance of its duties hereunder in
accordance with written agreements to be entered into from time to time
between the parties hereto and Custodian, including fees and expenses of
counsel incurred by Custodian in the performance of its duties hereunder;
provided, however, that (i) Custodian shall in no event acquire any lien
upon any Receivable deposited under this Agreement or the Purchase
Agreement or the Sale and Servicing Agreement, or any claim against any
Receivables Holder by reason of the failure of the Seller to pay any of
such charges or expenses and (ii) in the event the Seller fails to pay the
fees and expenses of Custodian as set forth in such written agreements,
Custodian shall have no obligation to take actions or incur costs in
connection with this Agreement unless the Seller or another Person has made
adequate provision for payment of Custodian's fees and expenses. The
Seller shall indemnify the Custodian against payment of any documentary
stamp taxes, intangible taxes and other similar taxes, penalties and
interest incurred in connection with the Receivables and the transactions
contemplated hereby.
Section 5.3. No Adverse Interests. Custodian covenants and
--------------------
warrants to the Originator, the Seller, the Servicer, the Trust and the
Indenture Trustee, that as of the date of each Custodian Certification:
(i) it holds no adverse interest, by way of security or otherwise, in any
Receivable; and (ii) the execution of this Agreement and the creation of
the custodial relationship hereunder does not create any interest, by way
of security or otherwise, of Custodian in or to any Receivable, other than
Custodian's rights as custodian hereunder.
Section 5.4. Inspections. Upon reasonable prior written notice
-----------
to Custodian, the Servicer, the Seller, the Indenture Trustee and such
Person's agents, accountants, attorneys and auditors will be permitted
during normal business hours to examine Custodian's documents, records and
other papers in possession of or under the control of Custodian relating to
the Receivables.
Section 5.5. Insurance. Custodian shall, at its own expense,
---------
maintain at all times during the existence of this Agreement and keep in
full force and effect, (1) fidelity insurance, (2) theft of documents
insurance, and (3) forgery insurance subject to deductibles,
9
<PAGE>
all as is customary for amounts and with insurance companies reasonably
acceptable to the Servicer and the Indenture Trustee. A certificate of the
respective insurer as to each such policy or a blanket policy for such
coverage shall be furnished to the Servicer or the Indenture Trustee, upon
request, containing the insurer's statement or endorsement that such
insurance shall not terminate prior to receipt by such party, by registered
mail, of 10 days advance notice thereof.
Section 5.6. Limitation of Liability. Custodian assumes no
-----------------------
obligation, and shall be subject to no liability, under this Agreement,
except for its negligence or willful misconduct in the performance of the
obligations and duties as are specifically set forth herein. Custodian
shall not be liable for any action or non-action by it in reliance on
advice of counsel believed by it in good faith to be competent to give such
advice. Custodian may rely and shall be protected in acting upon any
written notice, order, request, direction or other document believed by it
to be genuine and to have been signed or presented by the proper party or
parties.
Section 5.7. Indemnification. Servicer agrees to indemnify
---------------
Custodian against, and to hold it harmless from, any liabilities, and any
related out-of-pocket expenses, which it may incur in connection with this
Agreement, the Sale and Servicing Agreement, the Purchase Agreement or the
Custodian Certifications, other than any liabilities and expenses arising
out of Custodian's negligence or willful misconduct. The Custodian agrees
to indemnify, defend and hold harmless the Indenture Trustee against any
liability to Noteholders and/or Certificateholders arising out of the
negligence or willful misconduct of the Custodian (a) in the preparation or
execution of any Custodian Certification or (b) resulting in the loss of
Receivables Files in the custody of the Custodian. This indemnity shall
include indemnification as to reasonable attorneys' fees and costs, whether
or not suit be brought, and including such fees and costs on appeal. The
Indenture Trustee shall give prompt written notice to the Custodian of any
claim for which indemnity is or may be sought and shall afford to the
Custodian the opportunity to defend such claim.
Section 5.8. Further Rights of Custodian. If the Custodian is
---------------------------
at any time uncertain of its obligations hereunder, the Custodian, upon
prior written notice to the Indenture Trustee, the Originator, the Seller
and the Servicer, may refrain from taking any action with respect to such
matter until such uncertainty is removed. If conflicting demands are made
on the Custodian with respect to any matter, the Indenture Trustee's demand
shall control, except during the period prior to the issuance of the
Trustee's Custodian Certification pursuant to Section 3.1 hereof, when the
-----------
applicable Receivables Holder's demand shall control and the Custodian
shall have the right to rely on such controlling demand. The Custodian
shall have the right in any such case to interplead any or all of the
documents contained in the Receivables Files in a court of competent
jurisdiction and, upon delivery thereof, shall have no further obligations
thereunder with respect to such documents.
(b) The obligations of the Custodian shall be determined solely
by the express provisions of this Agreement. No representation, warranty,
covenant or obligation of the Custodian shall be implied with respect to
this Agreement or the Custodian's service hereunder. Without limiting the
generality of the foregoing statement, except as specifically
10
<PAGE>
required herein, the Custodian shall be under no obligation to inspect,
review or examine the Receivables Files to determine that the contents
thereof are complete, genuine, enforceable or appropriate for the
represented purpose or that they have been actually recorded or filed in
required offices or that they are other than what they purport to be on
their face.
(c) No provision of this Agreement shall require the Custodian
to spend or risk its own funds or otherwise incur financial liability in
performance of its duties under this Agreement unless, pursuant to Section
5.2 hereof, adequate provision has been made for the reimbursement of the
Custodian's expenses hereunder.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Amendment. This Agreement may be amended from time
---------
to time by Custodian, the Originator, the Seller, the Servicer, the Trust
and the Indenture Trustee by written agreement signed by such parties and
upon satisfaction of the Rating Agency Condition.
SECTION 6.2. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK GOVERNING AGREEMENTS
MADE AND TO BE PERFORMED THEREIN, AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 6.3. Notices. All demands, notices and communication
-------
hereunder shall be in writing and shall be deemed to have been duly given
if personally delivered at or mailed by overnight mail, certified mail or
registered mail, postage prepaid, to (i) in the case of the Servicer and
the Originator, Caterpillar Financial Services Corporation, 3322 West End
Avenue, Nashville, Tennessee 37203-1071, (ii) in the case of the Seller,
Caterpillar Financial Funding Corporation, Greenview Plaza, 2950 Flamingo
Road, Suite E, Las Vegas, Nevada 89121, (iii) in the case of the Trust, c/o
Chemical Bank Delaware, as Owner Trustee, 1201 Market Street, Wilmington,
Delaware 19801, (iv) in the case of the Indenture Trustee, The First
National Bank of Chicago, One First National Plaza, Chicago, Illinois
60670-0126, (v) in the case of the Custodian, The First National Bank of
Chicago, One First National Plaza, Chicago, Illinois 60670-0126, and (vi)
in the case of the Rating Agencies, at their respective addresses set forth
in the Sale and Servicing Agreement, and, in each such case, at such other
addresses as may hereafter be furnished to each party hereto in writing.
Section 6.4. Severability of Provisions. If any one or more of
--------------------------
the covenants, agreements, provisions or terms of this Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other covenants, agreements,
provisions or terms of this Agreement.
11
<PAGE>
Section 6.5. No Partnership. Nothing herein contained shall be
--------------
deemed or construed to create a co-partnership or joint venture between
Custodian and the other parties hereto.
Section 6.6. Termination of Agreement. This Agreement shall be
------------------------
terminated upon termination of the Sale and Servicing Agreement or at the
option of Indenture Trustee on 30 days written notice to Custodian, the
Seller, the Trust and the Originator. Concurrently with, or as soon as
practicable after, the termination of this Agreement, Custodian shall
redeliver the Receivables Files to the Indenture Trustee at such place as
the Indenture Trustee may reasonably designate and until such redelivery,
Custodian shall hold such Receivables Files in its sole custody and control
as custodian for and bailee of the Indenture Trustee (for the benefit of
the Noteholders and, to the extent set forth in the Sale and Servicing
Agreement, the Certificateholders). In connection with the administration
of this Agreement, Custodian and the Indenture Trustee may agree from time
to time upon the interpretation of the provisions of this Agreement, as
such interpretation may in their opinion be consistent with the general
tenor and purposes of this Agreement, any such interpretation to be signed
and annexed hereto.
Section 6.7. Counterparts. This Agreement may be executed
------------
simultaneously in any number of counterparts, each of which counterparts
shall be deemed to be an original, and such counterparts shall constitute
but one and the same instrument.
Section 6.8. Assignment. No party hereto shall sell, pledge,
----------
assign or otherwise transfer this Agreement without the prior written
consent of the other parties hereto and satisfaction of the Rating Agency
Condition.
Section 6.9. Headings. Section headings are for reference
--------
purposes only and shall not be construed as a part of this Agreement.
Section 6.10. Advice of Counsel. Custodian shall be entitled to
-----------------
rely and act upon advice of counsel with respect to its performance
hereunder as Custodian and shall be without liability for any action
reasonably taken pursuant to such advice, provided that such action is not
in violation of application federal or state law. This paragraph shall not
negate Custodian's obligations under Section 5.7.
Section 6.11. No Petition. Custodian, by entering into this
-----------
Agreement, hereby covenants and agrees that it will not at any time
institute against the Seller or the Trust, or join in any institution
against the Seller or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings
under any United States federal or state bankruptcy or similar law in
connection with any obligations relating to the Certificates, the Notes,
this Agreement or any of the other Basic Documents.
Section 6.12. Resignation of Custodian. (a) The Custodian may
------------------------
at any time resign and terminate its obligations under this Agreement upon
at least 90 days' prior written notice to the Servicer and the Indenture
Trustee. The Custodian may be removed at any time
12
<PAGE>
at the written request of the Indenture Trustee. In the event of such
resignation or removal, the Indenture Trustee shall appoint a successor
custodian acceptable to the Servicer, which appointment must satisfy the
Rating Agency Condition. If the Servicer fails to appoint a successor
custodian within 30 days, the Indenture Trustee shall appoint a successor
custodian. In no event shall the resignation of the Custodian be effective
until a successor custodian is duly appointed hereunder. One original
counterpart of such instrument of appointment shall be delivered to each of
the Servicer, the Custodian and the successor custodian. The Servicer
shall notify the Rating Agencies of any such resignation or removal and the
appointment of a successor custodian.
(b) In the event of any resignation, the Custodian shall
promptly transfer to the successor custodian (or to the Indenture Trustee
if no successor custodian has been appointed) all of the Receivables
(including the Receivables Files) in its possession under this Agreement
and take such other action as may be requested by the Indenture Trustee to
effect the transfer of the Custodian's Receivables Files to the successor
custodian, which shall provide a written receipt for all such transferred
documents and instruments. On completion of such transfer, the Custodian
shall be relieved of all further responsibilities and obligations
hereunder.
Section 6.13. Limitation of Liability of Indenture Trustee and
------------------------------------------------
Owner Trustee. (a) Notwithstanding anything contained herein to the
- -------------
contrary, this Agreement has been executed by The First National Bank of
Chicago, not in its individual capacity but solely in its capacity as
Indenture Trustee and in no event shall The First National Bank of Chicago
in its individual capacity have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the
assets of the Issuer.
(b) Notwithstanding anything contained herein to the contrary,
this instrument has been countersigned by Chemical Bank Delaware, not in
its individual capacity but solely as Owner Trustee, and in no event shall
Chemical Bank Delaware have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, in the
performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Article VI, VII and VIII of the Trust Agreement.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their names to
be signed hereto by their respective officers thereunto duly authorized,
all as of the day and year first above written.
Originator
----------
CATERPILLAR FINANCIAL
SERVICES CORPORATION,
By /s/ Ali Bahaj
----------------------
Name: Ali Bahaj
Title: Vice President
Servicer
--------
CATERPILLAR FINANCIAL
SERVICES CORPORATION,
as Servicer
By /s/ Ali Bahaj
----------------------
Name: Ali Bahaj
Title: Vice President
Seller
------
CATERPILLAR FINANCIAL
FUNDING CORPORATION
By /s/ Frank C. Carder
----------------------
Name: Frank C. Carder
Title: Vice President
<PAGE>
CATERPILLAR FINANCIAL
ASSET TRUST 1996-A,
Chemical Bank Delaware, not in its
individual capacity but solely as
Owner Trustee under the Trust
Agreement
By /s/ John J. Cashin
----------------------
Name: John J. Cashin
Title: Senior Trust Officer
INDENTURE TRUSTEE
-----------------
THE FIRST NATIONAL BANK OF
CHICAGO,
as Indenture Trustee
By /s/ Barbara G. Grosse
----------------------
Name: Barbara G. Grosse
Title: Assistant Vice
President
and Assistant Secretary
CUSTODIAN
---------
THE FIRST NATIONAL BANK OF
CHICAGO,
as Custodian
By /s/ Barbara G. Grosse
----------------------
Name: Barbara G. Grosse
Title: Assistant Vice
President
and Assistant Secretary
<PAGE>
EXHIBIT A
---------
CUSTODIAN CERTIFICATION
Certification No._____
May 1, 1996
To: [SELLER]
[TRUST]
[INDENTURE TRUSTEE]
Re: Custodial Agreement, dated as of May 1, 1996 (the "Custodial
---------
Agreement"), by and among Caterpillar Financial Services
---------
Corporation (the "Originator"), Caterpillar Financial
Services Corporation, as Servicer (the "Servicer"),
Caterpillar Financial Funding Corporation (the "Seller"),
Caterpillar Financial Asset Trust 1996-A (the "Trust"), The
First National Bank of Chicago, as Indenture Trustee (the
"Indenture Trustee") and The First National Bank of Chicago,
as Custodian (the "Custodian")
Gentlemen:
In accordance with the provisions of Section 3.2 of the above-
-----------
referenced Custodial Agreement, the undersigned, as Custodian, hereby
certifies that it has received all of the items listed in Section 3.1 of
-----------
the Custodial Agreement with respect to each Receivable identified on the
Receivable Schedule (the "Receivable Schedule") attached hereto dated as of
May 1, 1996. The undersigned, as Custodian, confirms that the Receivable
number in each Receivables File conforms to the respective Receivable
number listed on the Receivable Schedule. Capitalized terms used herein
without definition shall have the meanings ascribed to them in the
Custodial Agreement.
Custodian further certifies that as to each Receivable, Custodian
holds the Receivable in its name as custodian for the benefit of [the
Seller] [the Trust] [the Indenture Trustee], without written notice (a) of
any adverse claims, liens or encumbrances, (b) that any Receivable was
overdue or has been dishonored, (c) of evidence on the face of any
Receivable or other document in the Receivables File of any security
interest therein, or (d) of any defense against or claim to the Receivable
by any other party.
Custodian makes no representations or warranties as to the
validity, legality, sufficiency, enforceability, genuineness or prior
recorded status of any of the documents contained in each Receivables File
or the collectability, insurability, effectiveness or suitability of any
Receivable.
A-1
<PAGE>
Custodian confirms that it holds each Receivable and the other
documents in the related Receivables File for the benefit of [the
Seller][the Trust][the Indenture Trustee]. Custodian hereby acknowledges
and agrees that it is holding such Receivables now and hereafter, from time
to time, in its custody or control as bailee for the [the Seller][the
Trust][the Indenture Trustee], if the transfer of Receivables is deemed not
to be an absolute transfer of such Receivables, subject to the continuing
pledge and security interest granted by [Originator][the Seller][the Trust]
to [the Seller][the Trust][the Indenture Trustee] under the [Purchase
Agreement] [Sale and Servicing Agreement][Indenture].
Upon repurchase or substitution of the Receivables to which this
Custodian Certification relates and payment of the applicable repurchase
price, the Receivables to which this Custodian Certification relates shall
be returned and released by Custodian to [the Seller][the Trust][the
Indenture Trustee], and this Custodian Certification shall be and be deemed
to be canceled by Custodian and of no force and effect.
________________________
________________,
as Custodian
By_______________________
Name:
Title:
A-2
<PAGE>
EXHIBIT B
---------
REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
To: [Custodian]
Re: Custodial Agreement, dated as of May 1, 1996, by and among
Caterpillar Financial Services Corporation (the
"Originator"), Caterpillar Financial Services Corporation,
as Servicer (the "Servicer"), Caterpillar Financial Funding
Corporation (the "Seller"), Caterpillar Financial Asset
Trust 1996-A (the "Trust"), The First National Bank of
Chicago, as Indenture Trustee (the "Indenture Trustee") and
The First National Bank of Chicago, as Custodian
("Custodian")
In connection with the administration of the Receivables held by
you as Custodian under the above-referenced Custodial Agreement,
[_________], on behalf of [________], requests the release, and
acknowledges receipt, of the following for the Receivable described below,
for the reason indicated:
A. Documents Released
------------------
_____ 1a. Installment Sale Contract b. Principal Balance
------
_____ 2. Other documents:_______________________
_______________________________________
_______________________________________
_______________________________________
B. Obligor's Name, Address & Zip Code:
----------------------------------
C. Receivable Number:
-----------------
D. Reason for Requesting Documents (check one)
-------------------------------
_____ 1. Receivable Paid in Full.
_____ 2. Receivable Repurchased Pursuant to the Purchase Agreement
and/or the Sale and Servicing Agreement.
_____ 3. Receivable Liquidated.
B-1
<PAGE>
_____ 4. Receivable in Foreclosure or Repossession Proceedings.
_____ 5. Receivable to be modified or extended.
If box 1, 2 or 3 above is checked, and if all or part
of Receivables File was previously released to us, please release
to us our previous receipt on file with you, as well as any
additional documents in your possession relating to the above
specified Receivable. If box 1,2 or 3 is checked, evidence of
receipt of payment by the Indenture Trustee is required prior to
release.
If box 4 or 5 above is checked, upon our return of all
of the above documents to you as Custodian, please acknowledge
your receipt by signing in the space indicated below, and
returning this form.
If box 5 above is checked, after giving effect to such
release, the aggregate Principal Balance of all Receivables
released in connection with modifications and extensions shall
not exceed $500,000. In addition, upon return of the Receivables
File, we are deemed to certify that the Receivables File as
returned contains the related Receivable as so modified and
extended.
If box 1, 2 or 3 above is checked, this request is only
valid if also executed by the Seller and the Indenture Trustee.
Documents released hereby in connection with a modification or
extension must be returned to the Custodian on the same Business Day of
release.
CATERPILLAR FINANCIAL
SERVICES CORPORATION,
as Servicer
By__________________________
Name:
Title:
Date:
[__________________________]
By__________________________
Name:
Title:
Date:
B-2
<PAGE>
Documents returned to Custodian:
_________________________________________
as Custodian
By____________________________
Name:
Title:
Date:
B-3
<PAGE>
Annex 1
Authorized Officers of Servicer
B-4
<PAGE>
EXHIBIT C
Transfer Certificate
--------------------
May [__], 1996
The First National Bank of Chicago,
as Custodian under the
Custodial Agreement (defined below)
One First National Plaza
Chicago, Illinois 60670-0126
Re: Custodial Agreement, dated as of May 1, 1996 (the "Custodial
Agreement"), by and among Caterpillar Financial Services
Corporation (the "Originator"), Caterpillar Financial
Services Corporation, as Servicer (the "Servicer"),
Caterpillar Financial Funding Corporation (the "Seller"),
Caterpillar Financial Asset Trust 1996-A (the "Trust"), The
First National Bank of Chicago, as Indenture Trustee (the
"Indenture Trustee") and The First National Bank of Chicago
as Custodian ("Custodian")
To whom it may concern:
Pursuant to Section 3.1 of the above-referenced Custodial
Agreement (capitalized terms used herein but not otherwise defined shall
have the same meanings assigned to such terms in the Custodial Agreement),
we hereby advise you of the Transfer by the undersigned to [the Seller][the
Trust][the Indenture Trustee] of the Receivables identified on the
Receivable Schedule[s] attached [hereto] [to the [Seller's Custodian
Certification [to the Trust's Custodian Certification] with respect to the
undersigned which we are delivering to you for cancellation]. You are
instructed to deliver to [the Seller][the Trust][the Indenture Trustee] a
[Seller's] [Trust's] [Trustee's] Custodian Certification acknowledging such
transfer of these Receivables.
Very truly yours,
[________________________________]
By________________________________
Name:
Title:
C-1
