<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 5, 1997
REGISTRATION NO. 333-24373
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
CATERPILLAR FINANCIAL ASSET TRUSTS
(Issuer of Securities)
CATERPILLAR FINANCIAL FUNDING CORPORATION
(Depositor of the Trusts described herein)
(Exact Name of Registrant as Specified in Its Articles of Incorporation)
<TABLE>
<S> <C>
NEVADA 88-0342613
(State or other jurisdiction (I.R.S. Employer
of Organization) Identification Number)
</TABLE>
---------------------
CATERPILLAR FINANCIAL FUNDING CORPORATION
GREENVIEW PLAZA
2950 EAST FLAMINGO ROAD, SUITE C-3B
LAS VEGAS, NEVADA 89121
(702) 735-2514
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
PAUL J. GAETO, ESQ.
CATERPILLAR FINANCIAL SERVICES CORPORATION
3322 WEST END AVENUE
NASHVILLE, TENNESSEE 37203-1071
(615) 386-5800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
MARK R. LEVIE, ESQ. C. THOMAS KUNZ, ESQ.
ROBERT A. VILLANI, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP 919 THIRD AVENUE
OLD FEDERAL RESERVE BANK BUILDING NEW YORK, NEW YORK 10022
400 SANSOME STREET
SAN FRANCISCO, CALIFORNIA 94111
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effecitve as determined by
market conditions.
If any of the securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
REGISTERED REGISTERED(2) AGGREGATE PRICE PER UNIT AGGREGATE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Asset-Backed Securities... $800,000,000 100%(1) $800,000,000(1) $242,425(2)
</TABLE>
(1) Estimated solely for purpose of calculating the registration fee.
(2) Registration fee was previously paid. In addition, $53,983,398 of unissued
Asset-Backed Securities previously registered under Registration Statement
No. 333-2988 are being carried forward. A registration fee of $18,615 was
previously paid with respect to such amount.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
PURSUANT TO RULE 429 OF THE GENERAL RULES AND REGULATIONS UNDER THE
SECURITIES ACT OF 1933, THE PROSPECTUS WHICH IS PART OF THIS REGISTRATION
STATEMENT IS A COMBINED PROSPECTUS WHICH ALSO RELATES TO $53,983,398 OF UNISSUED
ASSET-BACKED SECURITIES REGISTERED UNDER REGISTRATION STATEMENT NO. 333-2988
PREVIOUSLY FILED BY THE REGISTRANT. THIS REGISTRATION STATEMENT CONSTITUTES
POST-EFFECTIVE AMENDMENT NO. 2 TO REGISTRATION STATEMENT NO. 333-2988.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 5, 1997
FORM A--NOTES AND CERTIFICATES
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE AND WITHOUT DELIVERY OF A FINAL PROSPECTUS SUPPLEMENT AND ACCOMPANYING
PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS 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.
<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 199 )
$
CATERPILLAR FINANCIAL ASSET TRUST 199 -
$ CLASS A-1 % ASSET BACKED NOTES
$ CLASS A-2 % ASSET BACKED NOTES
$ CLASS A-3 % ASSET BACKED NOTES
$ % ASSET BACKED CERTIFICATES
CATERPILLAR FINANCIAL FUNDING CORPORATION, SELLER
CATERPILLAR FINANCIAL SERVICES CORPORATION, SERVICER
-----------------
Interest on the Class A-1 % Asset Backed Notes (the "A-1 NOTES"), the
Class A-2 % Asset Backed Notes (the "A-2 NOTES") and the Class A-3 % Asset
Backed Notes (the "A-3 NOTES"; together with the A-1 Notes and the A-2 Notes,
the "NOTES") and the % Asset Backed Certificates (the "CERTIFICATES";
together with the Notes, the "SECURITIES") issued by Caterpillar Financial Asset
Trust 199 - (the "TRUST" or the "ISSUER") will be payable monthly on or about
the th day of each month (each, a "DISTRIBUTION DATE") commencing ,
199 . Principal on the Securities will be payable on each Distribution Date;
PROVIDED, HOWEVER, that no principal payments in respect of (i) the A-2 Notes
will be made until the A-1 Notes have been paid in full and (ii) the A-3 Notes
and the Certificates will be made until the A-1 Notes and the A-2 Notes have
been paid in full. The final scheduled Distribution Date for the A-1 Notes will
be the Distribution Date, the final scheduled Distribution Date for
the A-2 Notes will be
(CONTINUED ON THE FOLLOWING PAGE)
------------------------
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH IN "RISK FACTORS" COMMENCING ON PAGE S-20 HEREIN AND ON PAGE 13 IN THE
PROSPECTUS.
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE ISSUER ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR
INTERESTS IN CATERPILLAR FINANCIAL FUNDING CORPORATION, CATERPILLAR
FINANCIAL SERVICES CORPORATION, CATERPILLAR INC. OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THE SECURITIES NOR THE RECEIVABLES
ARE ISSUED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT ISSUER(1)(2)
<S> <C> <C> <C>
Per A-1 Note.......................... % % %
Per A-2 Note.......................... % % %
Per A-3 Note.......................... % % %
Per Certificate....................... % % %
Total................................. $ $ $
</TABLE>
(1) Plus accrued interest, if any, from , 199_.
(2) Before deducting expenses, estimated to be $ .
------------------------
The Notes and the Certificates are offered by the Underwriter[s], subject to
prior sale, when, as and if issued to and accepted by [it] [them] and subject to
[its] [their] right to reject orders in whole or in part. It is expected that
delivery of the Notes will be made in book-entry form only through the Same Day
Funds Settlement System of The Depository Trust Company, or through Cedel Bank,
societe anonyme or the Euroclear System, and that delivery of the Certificates
will be made available in fully registered, certificated form in New York, New
York, in each case on or about , 199 (the "CLOSING DATE").
-------------------
UNDERWRITER[S] OF THE NOTES
[UNDERWRITER(S)]
UNDERWRITER[S] OF THE CERTIFICATES
[UNDERWRITER(S)]
------------
The date of this Prospectus Supplement is , 199 .
<PAGE>
(CONTINUED FROM PRECEDING PAGE)
the Distribution Date and the final scheduled Distribution Date for
the A-3 Notes will be the Distribution Date. The rights of
Certificateholders to receive distributions with respect to the Certificates
will be subordinated to the rights of the Noteholders to receive payments of
interest on and principal of the Notes. The final scheduled Distribution Date
for the Certificates will be the Distribution Date. The actual
payment in full of the A-1 Notes, the A-2 Notes, the A-3 Notes or the
Certificates could occur earlier than their respective final scheduled
Distribution Dates.
The assets of the Trust will include a pool of [fixed rate retail
installment sales contracts] [and] [finance leases] (the "RECEIVABLES") secured
by new and used machinery manufactured primarily by Caterpillar Inc. [and
Mitsubishi Caterpillar Forklift America Inc.], and certain monies due or
received thereunder on or after , 199 , which will be purchased by
the Trust from the Seller on or prior to the date of the issuance of the
Securities. The Seller will purchase the Receivables from Caterpillar Financial
Services Corporation concurrently with the purchase by the Trust of the
Receivables from the Seller. The Notes will be secured by the assets of the
Trust.
The A-3 Notes and the Certificates will be subject to prepayment in whole,
but not in part, on any Distribution Date on which the Servicer exercises its
option to purchase the Receivables when the Pool Balance is reduced to less than
10% of the Initial Pool Balance.
The Issuer, a newly formed limited-purpose Delaware business trust, will
generally be prohibited from incurring any indebtedness other than the Notes and
its assets will include the Receivables, the Collection Account, the Note
Distribution Account, the Certificate Distribution Account and the Reserve
Account, as described herein.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED
IN THE PROSPECTUS. PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE NOTES OR THE CERTIFICATES
MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS. TO THE EXTENT ANY STATEMENTS IN THIS PROSPECTUS
SUPPLEMENT CONFLICT WITH STATEMENTS IN THE PROSPECTUS, THE STATEMENTS IN THIS
PROSPECTUS SUPPLEMENT SHALL CONTROL.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES,
INCLUDING OVER-ALLOTMENT TRANSACTIONS, STABILIZING TRANSACTIONS, SYNDICATE
COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING" HEREIN.
Upon receipt of a request by an investor, or his or her representative,
within the period during which there is a prospectus delivery obligation, the
Underwriters will transmit or cause to be transmitted promptly, without charge
and in addition to any such delivery requirements, a paper copy of this
Prospectus Supplement and a Prospectus or this Prospectus Supplement and a
Prospectus encoded in an electronic format.
REPORTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS
Unless and until Definitive Notes are issued, periodic and annual unaudited
reports containing information concerning the Receivables will be prepared by
the Servicer and sent on behalf of the Trust only to Cede & Co. ("CEDE"), as
nominee of The Depository Trust Company ("DTC"), and the registered holder of
the Notes. Periodic and annual unaudited reports containing information
concerning the Receivables will be prepared by the Servicer and sent on behalf
of the Trust to the registered holders of the Certificates. See "Issuance of the
Securities--Definitive Securities" and "--Book-Entry Registration" and
"Description of the Transfer and Servicing Agreements--Reports to
Securityholders" in the accompanying Prospectus. Such reports will not
constitute financial statements that have been examined and reported upon by,
with an opinion expressed by, an independent or certified public accountant. The
Trust will file with the Securities and Exchange Commission (the "COMMISSION")
such periodic reports as are required under the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), and the rules and regulations thereunder and as
are otherwise agreed to by the Commission. Copies of such periodic reports may
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
S-2
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used in the summary are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
<TABLE>
<S> <C>
ISSUER....................... Caterpillar Financial Asset Trust 199 - (the "TRUST" or the
"ISSUER"), a Delaware business trust formed by the Seller
and the Owner Trustee pursuant to the Trust Agreement dated
as of , 199 (the "TRUST AGREEMENT") between the
Seller and the Owner Trustee, acting thereunder not in its
individual capacity but solely as Owner Trustee.
SELLER....................... Caterpillar Financial Funding Corporation (the "SELLER"), a
Nevada corporation and a wholly-owned subsidiary of
Caterpillar Financial Services Corporation. The principal
executive offices of the Seller are located at Greenview
Plaza, 2950 East Flamingo Road, Suite C-3B, Las Vegas,
Nevada 89121 and its telephone number is (702) 735-2514.
SERVICER..................... Caterpillar Financial Services Corporation (the "SERVICER"
or "CFSC"), a Delaware corporation and a wholly-owned
subsidiary of Caterpillar Inc.
INDENTURE TRUSTEE............ , as indenture trustee under the Indenture (the "INDENTURE
TRUSTEE").
OWNER TRUSTEE................ , as owner trustee under the Trust Agreement (the "OWNER
TRUSTEE").
THE NOTES.................... Class A-1 % Asset Backed Notes (the "A-1 NOTES") in the
aggregate principal amount of $ .
Class A-2 % Asset Backed Notes (the "A-2 NOTES") in the
aggregate principal amount of $ .
Class A-3 % Asset Backed Notes (the "A-3 NOTES";
together with the A-1 Notes and the A-2 Notes, the "NOTES")
in the aggregate principal amount of $ .
The Notes will be issued by the Trust pursuant to an
Indenture to be dated as of , 199 (the
"INDENTURE"), between the Issuer and the Indenture Trustee.
The Notes will be secured by the assets of the Trust.
The Notes will be available for purchase in book-entry form
only in minimum denominations of $1,000 and integral
multiples thereof. The Noteholders will not be entitled to
receive Definitive Notes except in the limited circumstances
described herein. See "Description of the Notes--General"
and "Issuance of the Securities--Definitive Securities" and
"--Book-Entry Registration" in the Prospectus.
THE CERTIFICATES............. % Asset Backed Certificates (the "CERTIFICATES"; together
with the Notes, the "SECURITIES") in the aggregate
principal amount of $ . The Seller will purchase
$ principal amount of the Certificates. The
Certificates will be available for purchase in minimum
denominations of $1,000 and integral multiples of $1,000 in
excess thereof.
The Certificates will be issued in fully registered,
certificated form ("DEFINITIVE CERTIFICATES") to
Certificateholders or their nominees. See
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
"Description of the Certificates--General" and "Issuance of
the Securities--Definitive Securities" in the Prospectus.
The Certificates will be issued pursuant to the Trust
Agreement. [Purchasers of Certificates and their assignees
must represent that the beneficial owners of such
Certificates are United States persons, and each must
provide a certification of non-foreign status under
penalties of perjury, and also must represent that their
purchase and holding of the Certificates satisfy the
restrictions set forth under "ERISA Considerations" below].
The rights of Certificateholders to receive distributions
with respect to the Certificates will be subordinated to the
rights of the Noteholders to receive interest on and
principal of the Notes.
THE TRUST.................... The Trust is a business trust established under the laws of
the State of Delaware pursuant to the Trust Agreement. The
activities of the Trust are limited by the terms of the
Trust Agreement to acquiring, owning and managing the
Receivables, issuing and making payments on the Notes and
the Certificates and other activities related thereto. The
Trust Property includes (i) the Receivables, (ii) all monies
(including accrued interest) due thereunder on or after the
Cut-off Date (as defined below), (iii) such amounts as from
time to time may be held in one or more accounts established
and maintained by the Servicer and the Seller pursuant to
the Sale and Servicing Agreement, as described below, (iv)
the security interests in the machinery financed by the
Receivables (the "FINANCED EQUIPMENT") and in certain other
cross-collateralized equipment, (v) the rights to proceeds
from claims on physical damage, credit life and disability
insurance policies, if any, covering Financed Equipment or
Obligors, as the case may be, (vi) any proceeds of
repossessed Financed Equipment (less any repossession
expenses), (vii) the rights of the Seller under the Purchase
Agreement, (viii) the interest of the Seller in any proceeds
from recourse to or other payments by Dealers with respect
to Receivables, (ix) interest earned on short-term
investments made by the Trust and (x) any proceeds of the
foregoing.
RECEIVABLES.................. The Receivables will consist of [fixed rate retail
installment sales contracts ("INSTALLMENT SALES CONTRACTS")]
[and] [finance leases ("LEASES")] secured by new and used
machinery manufactured primarily by Caterpillar including
rights to receive certain payments made with respect to such
[Installment Sales Contracts] [and Leases] (the
"RECEIVABLES"). On or prior to the Closing Date, the Seller
will purchase Receivables having an aggregate Principal
Balance of approximately $ (the "INITIAL POOL
BALANCE") as of , 199 (the "CUT-OFF DATE") from
CFSC pursuant to a Purchase Agreement to be dated as
of , 199 (the "PURCHASE AGREEMENT"), between CFSC
and the Seller, and the Seller will sell the Receivables to
the Trust pursuant to a Sale and Servicing Agreement to be
dated as of , 199 (the "SALE AND SERVICING
AGREEMENT") among the Seller, the Servicer and the Trust.
The Receivables arise from [loans] [and] [leases] originated
in connection with retail sales by dealers (the "DEALERS")
of Financed Equipment to retail purchasers (the "OBLIGORS")
and are either originated by CFSC, or acquired from such
Dealers by CFSC, in the ordinary course of CFSC's business.
The Receivables have been selected from the
</TABLE>
S-4
<PAGE>
<TABLE>
<S> <C>
[contracts] [leases] owned by CFSC based on the criteria
specified in the Purchase Agreement and described herein.
See "The Receivables Pool" herein. As of the Cut-off Date,
the weighted average annual percentage rate of interest (the
"APR") of the Receivables (based on their respective
Principal Balances (as defined herein)) was approximately
% (the "CUT-OFF DATE APR"), the weighted average remain-
ing maturity (i.e., for each Receivable, the period from but
excluding the Cut-off Date to and including such
Receivable's maturity date) of the Receivables was
approximately months and the weighted average original
maturity of the Receivables was approximately months. As
of the Cut-off Date, no Receivable had a scheduled maturity
later than the date which is months prior to
the Distribution Date.
The "POOL BALANCE" at any time will represent the aggregate
Principal Balance of the Receivables at the end of the
preceding Collection Period, after giving effect to 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 to all Realized Losses on
Liquidated Receivables during such Collection Period. The
"PRINCIPAL BALANCE" of a Receivable at any time means its
original principal balance, as reduced by principal payments
applied in accordance with the actuarial method, calculated
as of the Cut-off Date or as of the end of the preceding
Collection Period (as applicable). The Principal Balance of
an Over-Rate Receivable reflects the unamortized purchase
premium paid by CFSC to Dealers.
TERMS OF THE NOTES........... The principal terms of the Notes will be as described below:
A. INTEREST PAYMENTS........ The A-1 Notes will bear interest at the rate of % per
annum (the "A-1 NOTE RATE"), the A-2 Notes will bear
interest at the rate of % per annum (the "A-2 NOTE
RATE"), and the A-3 Notes will bear interest at the rate of
% per annum (the "A-3 NOTE RATE") (each calculated on
the basis of a 360-day year of twelve 30-day months).
Interest on the outstanding principal amount of the Notes
will accrue from and including the most recent Distribution
Date on which interest has been paid (or, in the case of the
initial Distribution Date, from and including the Closing
Date) to but excluding the following Distribution Date and
will be payable on the th day of each calendar month (or
if any such date is not a business day, on the next
succeeding business day) (each, a "DISTRIBUTION DATE")
commencing , 199 , to the holders of record of the
A-1 Notes (the "A-1 NOTEHOLDERS"), the holders of record of
the A-2 Notes (the "A-2 NOTEHOLDERS") and the holders of
record of the A-3 Notes (the "A-3 NOTEHOLDERS," together
with the A-1 Noteholders and the A-2 Noteholders, the
"NOTEHOLDERS") as of the related Record Date.
Interest payments on the Notes will be generally derived
from the Total Distribution Amount remaining after the
payment of the Servicing Fee (if CFSC or an affiliate is not
the Servicer) and the Administration Fee, and from amounts
on deposit in the Reserve Account. If the amount of interest
on the principal amount of the A-1 Notes, the A-2 Notes and
the A-3 Notes payable on any Distribution Date exceeds the
sum of such remaining portion of the Total Distribution
Amount and amounts on deposit in the Reserve Account, each
of the A-1 Noteholders, the
</TABLE>
S-5
<PAGE>
<TABLE>
<S> <C>
A-2 Noteholders and the A-3 Noteholders will receive their
ratable share (based upon the total amount of interest due
to the A-1 Noteholders, the A-2 Noteholders and the A-3
Noteholders) of the amount available to be distributed in
respect of interest on the A-1 Notes, the A-2 Notes and the
A-3 Notes.
With respect to any Distribution Date and the Notes, the
"RECORD DATE" is the calendar day immediately preceding each
Distribution Date (or, with respect to any Definitive Note,
the last calendar day of the month preceding the month in
which such Distribution Date occurs).
B. PRINCIPAL PAYMENTS....... Principal of each Class of the Notes will be payable on each
Distribution Date in an amount calculated as the applicable
percentage set forth herein of the Principal Distribution
Amount (as defined below) for such Distribution Date (to the
extent of funds available therefor as described herein).
On each Distribution Date before the Distribution Date on
which the A-1 Notes have been paid in full, principal of the
A-1 Notes will be payable in an amount equal to 100% of the
Principal Distribution Amount. On each Distribution Date on
and after the Distribution Date on which the A-1 Notes have
been paid in full, principal of the A-2 Notes will be
payable, until the A-2 Notes have been paid in full, in an
amount equal to 100% of the difference between (i) the
Principal Distribution Amount for such Distribution Date,
and (ii) any portion of the Principal Distribution Amount
applied on such Distribution Date to reduce the outstanding
principal amount of the A-1 Notes to zero. On each
Distribution Date on and after the Distribution Date on
which the A-1 Notes and the A-2 Notes have been paid in
full, principal of the A-3 Notes will be payable, until the
A-3 Notes have been paid in full, in an amount equal to the
A-3 Noteholders' Percentage of the difference between (i)
the Principal Distribution Amount for such Distribution
Date, and (ii) any portion of the Principal Distribution
Amount applied on such Distribution Date to reduce the
outstanding principal amount of the A-1 Notes or A-2 Notes
to zero.
In addition, on any Distribution Date on and after the
Distribution Date, any amounts on deposit in the
Reserve Account in excess of the Specified Reserve Account
Balance for such Distribution Date shall be paid as
principal of the A-2 Notes, until the A-2 Notes have been
paid in full, and then paid as principal of the A-3 Notes,
until the A-3 Notes have been paid in full. See "Description
of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Account" herein.
The outstanding principal amount, if any, of the A-1 Notes
will be payable in full on the Distribution Date
(the "A-1 NOTE FINAL SCHEDULED DISTRIBUTION DATE"), the
outstanding principal amount, if any, of the A-2 Notes will
be payable in full on the Distribution Date (the
"A-2 NOTE FINAL SCHEDULED DISTRIBUTION DATE") and the
outstanding principal amount, if any, of the A-3 Notes will
be payable in full on the Distribution Date (the
"A-3 NOTE FINAL SCHEDULED DISTRIBUTION DATE"), in each case
from funds available therefor
</TABLE>
S-6
<PAGE>
<TABLE>
<S> <C>
(including amounts on deposit in the Reserve Account). See
"Description of the Transfer and Servicing
Agreements--Reserve Account" herein.
C. OPTIONAL PREPAYMENT...... The A-3 Notes will be prepaid in whole, but not in part, at
the A-3 Note Prepayment Price (as defined herein) on any
Distribution Date after the A-1 Notes and the A-2 Notes have
been paid in full, if the Servicer exercises its option to
purchase the Receivables, which option may be exercised when
the Pool Balance has been reduced to 10% or less of the
Initial Pool Balance. See "Description of the Notes--The A-2
Notes and the A-3 Notes--OPTIONAL PREPAYMENT" herein and
"Description of the Notes--Principal and Interest on the
Notes" and "Description of the Transfer and Servicing
Agreements--Termination" in the Prospectus.
TERMS OF THE CERTIFICATES.... The principal terms of the Certificates will be as described
below:
A. PASS-THROUGH RATE........ % per annum, payable monthly at one-twelfth of such annual
rate.
B. INTEREST................. On each Distribution Date, the Owner Trustee shall
distribute pro rata to the holders of record of the
Certificates (the "CERTIFICATEHOLDERS") as of the related
Record Date distributions of interest in 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
payments of principal made to the Certificateholders on such
preceding Distribution Date; PROVIDED, HOWEVER, that with
respect to the initial Distribution Date, interest on the
outstanding Certificate Balance will accrue from and
including the Closing Date to but excluding the following
Distribution Date. Interest will be calculated on the basis
of a 360-day year of twelve 30-day months. Interest on the
Certificates will be generally derived from the Total
Distribution Amount after the payment of the Servicing Fee
(if CFSC or an affiliate is not the Servicer) , the
Administration Fee and distributions of principal and
interest in respect of the Notes payable on such
Distribution Date.
With respect to any Distribution Date and the Certificates,
the "RECORD DATE" is the last calendar day of the month
preceding the month in which such Distribution Date occurs.
C. PRINCIPAL................ Principal of the Certificates will be payable on each
Distribution Date on or after the Distribution Date on which
the A-1 Notes and the A-2 Notes have been paid in full, in
an amount generally equal to the Certificateholders'
Principal Distributable Amount for the Collection Period
preceding such Distribution Date, to the extent of funds
available therefor following payment of the Servicing Fee
(if CFSC or an affiliate is not the Servicer), the
Administration Fee and distributions of interest and
principal in respect of the Notes and interest in respect of
the Certificates. See "Description of the Transfer and
Servicing Agreements--Distributions" herein.
The rights of the Certificateholders to receive
distributions with respect to the Certificates on any
Distribution Date will be subordinated to the rights of the
Noteholders to receive payments of interest on and princi-
pal of the Notes on such Distribution Date. The
Certificateholders will not receive any distribution on any
Distribution Date until the full
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amount of interest on and principal required to be paid on
the Notes on such Distribution Date has been deposited in
the Note Distribution Account.
The outstanding principal amount, if any, of the
Certificates will be payable in full on the
Distribution Date (the "CERTIFICATE FINAL SCHEDULED
DISTRIBUTION DATE").
D. OPTIONAL PURCHASE........ On any Distribution Date on which the Servicer exercises its
option to purchase the Receivables, which option may be
exercised when the Pool Balance has been reduced to 10% or
less of the Initial Pool Balance, the Certificateholders
will receive an amount in respect of the Certificates equal
to the Certificate Balance together with accrued and unpaid
interest thereon, and the Certificates will be retired. See
"Description of the Certificates--Optional Purchase" herein
and "Description of the Certificates--Distributions of
Principal and Interest" and "Description of the Transfer and
Servicing Agreements-- Termination" in the Prospectus.
PRIORITY OF DISTRIBUTIONS.... As more fully described in "Description of the Transfer and
Servicing Agreements--Distributions" herein, distributions
of the Total Distribution Amount shall be made on each
Distribution Date 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, 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 A-1 Noteholders'
Principal Distributable Amount;
(v) to the Note Distribution Account, the A-2 Noteholders'
Principal Distributable Amount;
(vi) to the Note Distribution Account, the 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.
Notwithstanding the foregoing, if an Event of Default has
occurred and the maturity of the Notes has been accelerated,
Noteholders of each Class will be entitled to be paid
principal pro rata on the basis of the ratio which the
principal amount of a Noteholder's Note bears to the
aggregate principal amount of the Notes of all Classes, and
the Certificateholders will not be entitled to receive any
distributions of interest or principal until the Notes have
been paid in full.
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Funds will be withdrawn from amounts on deposit in the
Reserve Account to the extent that the Total Distribution
Amount (after the payment of the Servicing Fee (if CFSC or
an affiliate is not the Servicer) and the Administration
Fee) with respect to any Collection Period is less than the
Noteholders' Distributable Amount, and funds in the amount
of such deficiency will be deposited in the Note
Distribution Account. In addition, funds will be withdrawn
from amounts on deposit in the Reserve Account to the extent
that the portion of the Total Distribution Amount remaining
after the payment of the Servicing Fee (if CFSC or an
affiliate is not the Servicer) and the Administration Fee
and the deposit of the Noteholders' Distributable Amount in
the Note Distribution Account is less than the
Certificateholders' Distributable Amount, and funds in the
amount of such deficiency will be deposited in the
Certificate Distribution Account. Notwithstanding the
foregoing, if on any Distribution Date on which any Notes
are outstanding the amount on deposit in the Reserve Account
is less than % of the Pool Balance as of the end of the
preceding Collection Period, then funds will be withdrawn
from the Reserve Account only to the extent needed to pay
the interest due on the Notes and the Certificates and no
funds from the Reserve Account will be applied on such
Distribution Date to principal of the Notes or the
Certificates; PROVIDED, HOWEVER, that this restriction on
withdrawals shall be inapplicable if an Event of Default has
occurred which resulted in acceleration of the Notes.
"A-1 NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date until the
Distribution Date on which the outstanding principal amount
of the A-1 Notes has been reduced to zero, 100% of the
Principal Distribution Amount for such Distribution Date,
but such amount shall not be in excess of the outstanding
principal amount of the A-1 Notes.
"A-1 NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as
of the close of any Distribution Date, the excess, if any,
of (i) the sum of (A) the A-1 Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and (B) any
outstanding A-1 Noteholders' Principal Carryover Shortfall
as of the close of the preceding Distribution Date over (ii)
the amount in respect of principal that is actually deposit-
ed in the Note Distribution Account in respect of the A-1
Notes.
"A-1 NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of (i) the
A-1 Noteholders' Monthly Principal Distributable Amount for
such Distribution Date and (ii) the A-1 Noteholders'
Principal Carryover Shortfall as of the close of the
preceding Distribution Date; PROVIDED, HOWEVER, that the sum
of clauses (i) and (ii) above shall not exceed the
outstanding principal amount of the A-1 Notes, and on the
A-1 Note Final Scheduled Distribution Date, the 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 A-1 Notes to zero.
"A-2 NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date on or after the
Distribution Date on which an amount sufficient to reduce
the outstanding principal
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amount of the A-1 Notes to zero has been deposited in the
Note Distribution Account, 100% of the excess, if any, of
(i) the Principal Distribution Amount over (ii) the portion
of the Principal Distribution Amount, if any, applied to
reduce the outstanding principal amount of the A-1 Notes to
zero on such Distribution Date. In addition, on any
Distribution Date on or after the Distribution Date,
amounts on deposit in the Reserve Account in excess of the
Specified Reserve Account Balance for such Distribution Date
shall be paid as principal of the A-2 Notes to the extent
described under "--Reserve Account" below.
"A-2 NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as
of the close of any Distribution Date, the excess, if any,
of (i) the sum of (A) the A-2 Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and (B) any
outstanding A-2 Noteholders' Principal Carryover Shortfall
as of the close of the preceding Distribution Date over (ii)
the amount in respect of principal that is actually deposit-
ed in the Note Distribution Account in respect of the A-2
Notes.
"A-2 NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of (i) the
A-2 Noteholders' Monthly Principal Distributable Amount for
such Distribution Date and (ii) the A-2 Noteholders'
Principal Carryover Shortfall as of the close of the
preceding Distribution Date; PROVIDED, HOWEVER, that, until
an amount sufficient to reduce the outstanding principal
amount of the A-1 Notes to zero has been deposited in the
Note Distribution Account, the A-2 Noteholders' Principal
Distributable Amount shall be zero; PROVIDED, FURTHER, that
the sum of clauses (i) and (ii) shall not exceed the
outstanding principal amount of the A-2 Notes, and on the
A-2 Note Final Scheduled Distribution Date, the 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 A-2 Notes to zero.
"A-3 NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date on or after the
Distribution Date on which an amount sufficient to reduce
the outstanding principal amount of the A-1 Notes and the
A-2 Notes to zero has been deposited in the Note
Distribution Account, the A-3 Noteholders' Percentage of the
difference between the Principal Distribution Amount and the
portion thereof, if any, applied to reduce the outstanding
principal amount of the A-1 Notes and the A-2 Notes to zero
on such Distribution Date. In addition, on any Distribution
Date on or after the Distribution Date, amounts on
deposit in the Reserve Account in excess of the Specified
Reserve Account Balance for such Distribution Date shall be
paid as principal of the A-3 Notes to the extent described
under "--Reserve Account" below.
"A-3 NOTEHOLDERS' PERCENTAGE" means %; PROVIDED, HOWEVER,
that if the amount on deposit in the Reserve Account is less
than the lesser of (i) % of the Initial Pool Balance and
(ii) the sum of (x) the outstanding principal amount of the
Notes and (y) the Certificate Balance, then, with respect to
each Distribution Date thereafter, the A-3 Noteholders'
Percentage shall be 100%.
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"A-3 NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as
of the close of any Distribution Date, the excess, if any,
of (i) the sum of (A) the A-3 Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and (B) any
outstanding A-3 Noteholders' Principal Carryover Shortfall
as of the close of the preceding Distribution Date over (ii)
the amount in respect of principal that is actually deposit-
ed in the Note Distribution Account in respect of the A-3
Notes.
"A-3 NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of (i) the
A-3 Noteholders' Monthly Principal Distributable Amount for
such Distribution Date and (ii) the A-3 Noteholders'
Principal Carryover Shortfall as of the close of the
preceding Distribution Date; PROVIDED, HOWEVER, that, until
an amount sufficient to reduce the outstanding principal
amount of the A-1 Notes and the A-2 Notes to zero has been
deposited in the Note Distribution Account, the A-3
Noteholders' Principal Distributable Amount shall be zero;
PROVIDED, FURTHER, that the sum of clauses (i) and (ii)
shall not exceed the outstanding principal amount of the A-3
Notes, and on the A-3 Note Final Scheduled Distribution
Date, the A-3 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
A-3 Notes to zero.
"CERTIFICATE BALANCE" equals, on the Closing Date,
$ and, thereafter, equals $ , reduced by all
amounts allocable to principal previously distributed to
Certificateholders. The Certificate Balance shall also be
reduced on any Distribution Date by the excess, if any, of
(i) the sum of (A) the Certificate Balance and (B) the
outstanding principal amount of the Notes (in each case
after giving effect to amounts in respect of principal to be
deposited in the Certificate Distribution Account and the
Note Distribution Account on such Distribution Date), 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, but not
by more than the aggregate reductions in the Certificate
Balance set forth in the preceding sentence.
"CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the sum of (i) the
Certificateholders' Principal Distributable Amount and (ii)
the Certificateholders' Interest Distributable Amount.
"CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL" means,
with respect to any Distribution Date, the sum of (i) the
excess, if any, of (A) the sum of (1) the
Certificateholders' Monthly Interest Distributable Amount
for the preceding Distribution Date and (2) any outstanding
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Certificateholders' Interest Carryover Shortfall on such
preceding Distribution Date, over (B) the amount in respect
of interest that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date,
and (ii) interest on such excess, to the extent permitted by
law, at the Pass-Through Rate.
"CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of the
Certificateholders' Monthly Interest Distributable Amount
for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, an amount
equal to the aggregate interest accrued on the Certificates
at the Pass-Through Rate from and including the preceding
Distribution Date (or from and including the Closing Date in
the case of the initial Distribution Date) to but excluding
such Distribution Date (based on a 360-day year of twelve
30-day months).
"CERTIFICATEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date on or after the
Distribution Date on which the principal amounts of the A-1
Notes and the A-2 Notes are reduced to zero, the
Certificateholders' Percentage of the Principal Distribution
Amount (less the portion thereof, if any, applied on such
Distribution Date to reduce the principal amount of the A-1
Notes and the A-2 Notes to zero, which shall be deposited
into the Note Distribution Account) and, with respect to any
Distribution Date on or after the first Distribution Date on
which the outstanding principal amount of the A-3 Notes is
reduced to zero, 100% of the Principal Distribution Amount
(less the portion thereof required on the first such
Distribution Date to reduce the outstanding principal amount
of the Notes to zero, which shall be deposited into the Note
Distribution Account); PROVIDED, HOWEVER, that if as
described in the definition of "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 A-3
Noteholders' Percentage (if any A-3 Notes are outstanding).
"CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means,
as of the close of any Distribution Date, the sum of (i) the
excess, if any, of (A) the sum of (1) the
Certificateholders' Monthly Principal Distributable Amount
and (2) any outstanding Certificateholders' Principal
Carryover Shortfall from the preceding Distribution Date,
over (B) the amount in respect of principal that is actually
deposited in the Certificate Distribution Account and (ii)
the unreimbursed portion of the amount by which the
Certificate Balance has been reduced as described in the
second sentence of the definition of "Certificate Balance"
above.
"CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of (i) the
Certificateholders' Monthly Principal Distributable Amount
for such Distribution Date and (ii) the Certificateholders'
Principal Carryover Shortfall as of the
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close of the preceding Distribution Date; PROVIDED, HOWEVER,
that, until an amount sufficient to reduce the outstanding
principal amounts of the A-1 Notes and the A-2 Notes to zero
has been deposited in the Note Distribution Account, the
Certificateholders' Principal Distributable Amount shall be
zero; PROVIDED, FURTHER, that the sum of clauses (i) and
(ii) 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 Distribu-
tion Account on such Distribution Date and allocable to
principal) to reduce the Certificate Balance to zero.
"COLLECTION PERIOD" means, with respect to the first
Distribution Date, the calendar month ending on ,
199 , and with respect to each subsequent Distribution Date,
the preceding calendar month. See "Description of the
Transfer and Servicing Agreements--Distributions" herein.
"NOTEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of (i) the A-1 Noteholders'
Principal Distributable Amount, (ii) the A-2 Noteholders'
Principal Distributable Amount, (iii) the A-3 Noteholders'
Principal Distributable Amount and (iv) the Noteholders'
Interest Distributable Amount.
"NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with
respect to any Distribution Date, the sum of (i) the excess,
if any, of (A) the sum of (1) the Noteholders' Monthly
Interest Distributable Amount for the preceding Distribution
Date and (2) any outstanding Noteholders' Interest Carryover
Shortfall on such preceding Distribution Date, over (B) the
amount in respect of interest that is actually deposited in
the Note Distribution Account on such preceding Distribution
Date, and (ii) 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 applicable interest
rate or rates borne by such Notes from such preceding
Distribution Date through such current Distribution Date.
"NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the sum of the
Noteholders' Monthly Interest Distributable Amount for such
Distribution Date and 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 aggregate amount of interest accrued on the A-1 Notes,
the A-2 Notes and the A-3 Notes at their respective interest
rates from and including the preceding Distribution Date
(or, in the case of the initial Distribution Date, from and
including the Closing Date), to but excluding such
Distribution Date (each based on a 360-day year of twelve
30-day months).
"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
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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).
"REALIZED LOSSES" means, with respect to any Collection
Period, (i) the excess of the Principal Balance of the
Liquidated Receivables over Liquidation Proceeds for such
Collection Period to the extent allocable to principal and
(ii) amounts payable by Dealers with respect to Over-Rate
Receivables which are deemed uncollectible by the Servicer.
"TOTAL DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the sum of the aggregate collections
(including any Liquidation Proceeds, any Purchase Amounts
paid by the Seller and the Servicer and any amounts received
from Dealers with respect to Receivables) received in
respect of the Receivables during the related Collection
Period and Investment Earnings on the Trust Accounts during
such Collection Period. The Total Distribution Amount on any
Distribution Date shall exclude 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.
On each Distribution Date, all amounts on deposit in the
Note Distribution Account will be distributed to the
Noteholders, and all amounts on deposit in the Certificate
Distribution Account will be distributed to the
Certificateholders. See "Description of Transfer and
Servicing Agreements--Distributions" herein.
RESERVE ACCOUNT.............. The Seller will establish and maintain in the name of the
Indenture Trustee a reserve account (the "RESERVE ACCOUNT")
into which funds will be deposited from time to time as
described herein. Funds on deposit in the Reserve Account
will be available on each Distribution Date to cover
shortfalls in distributions of interest and principal on the
Notes and the Certificates to the extent described herein.
The Reserve Account will be created with an initial deposit
by the Seller of cash or Eligible Investments having a value
of at least $ . The amount initially deposited in
the Reserve Account is referred to as the "RESERVE ACCOUNT
INITIAL DEPOSIT." The Reserve Account Initial Deposit will
be augmented on each Distribution Date by the deposit
therein of the Total Distribution Amount remaining after
payment of the Servicing Fee and the Administration Fee and
the deposit in the Note Distribution Account and the
Certificate Distribution Account of amounts to be
distributed to the Noteholders and Certificateholders on
such Distribution Date.
Prior to the Distribution Date, amounts on deposit
in the Reserve Account (after giving effect to all
distributions to be made on such Distribution Date) in
excess of the Specified Reserve Account Balance for such
Distribution Date will be released to the Seller and,
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on and after the Distribution Date, such excess will
be released to the Note Distribution Account to be
distributed first to the A-2 Noteholders as a payment of
principal (until the A-2 Notes have been paid in full) and
then to the A-3 Noteholders as a payment of principal (until
the A-3 Notes have been paid in full). The " SPECIFIED
RESERVE ACCOUNT BALANCE" with respect to any Distribution
Date will be equal to the greater of (i) % of the Pool
Balance as of the close of business on the last day of the
preceding Collection Period and (ii) $ (or such
greater percentage or amount as may be set forth in the Sale
and Servicing Agreement); PROVIDED, HOWEVER, that (a) if
either Realized Losses or delinquencies exceed certain
levels, the Specified Reserve Account Balance may be higher
(as described herein under "Description of the Transfer and
Servicing Agreements--Reserve Account") and (b) in no event
will the Specified Reserve Account Balance exceed the sum of
the outstanding aggregate principal amount of the Notes and
the Certificate Balance. See "Description of the Transfer
and Servicing Agreements--Reserve Account" herein.
Funds will be withdrawn from amounts on deposit in the
Reserve Account to the extent that the Total Distribution
Amount (after the payment of the Servicing Fee (if CFSC or
an affiliate is not the Servicer) and the Administration
Fee) with respect to any Collection Period is less than the
Noteholders' Distributable Amount, and funds in the amount
of such deficiency will be deposited in the Note
Distribution Account. In addition, funds will be withdrawn
from amounts on deposit in the Reserve Account to the extent
that the portion of the Total Distribution Amount remaining
after the payment of the Servicing Fee (if CFSC or an
affiliate is not the Servicer) and the Administration Fee
and the deposit of the Noteholders' Distributable Amount in
the Note Distribution Account is less than the
Certificateholders' Distributable Amount, and funds in the
amount of such deficiency will be deposited in the
Certificate Distribution Account. Notwithstanding the
foregoing, if on any Distribution Date on which any Notes
are outstanding the amount on deposit in the Reserve Account
is less than % of the Pool Balance as of the end of the
preceding Collection Period, then funds will be withdrawn
from the Reserve Account only to the extent needed to pay
the interest due on the Notes and the Certificates, and no
funds from the Reserve Account will be applied on such
Distribution Date to principal of the Notes or the
Certificates; PROVIDED, HOWEVER, that this restriction on
withdrawals shall be inapplicable if an Event of Default has
occurred which resulted in acceleration of the Notes.
If the amount required to be withdrawn from the Reserve
Account to cover shortfalls in collections on the
Receivables on any Distribution Date exceeds the amount on
deposit in the Reserve Account on such date, a shortfall in
the amounts distributable to the Noteholders or
Certificateholders would result, which could, in turn,
increase the average life of the Notes or the Certificates,
as the case may be, or result in losses to Noteholders or
Certificateholders.
COLLECTION ACCOUNT........... The Servicer will be required to remit collections received
with respect to the Receivables during a Collection Period
on or before the business day preceding the related
Distribution Date to one or more accounts in
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the name of the Indenture Trustee (collectively, the
"COLLECTION ACCOUNT"), except upon the occurrence of certain
conditions described herein (in which case such remittances
will be required more frequently). See "Description of the
Transfer and Servicing Agreements--Payments on Receivables"
in the Prospectus. Pursuant to the Sale and Servicing
Agreement, the Servicer will have the revocable power to
instruct the Indenture Trustee to withdraw the Total
Distribution Amount on deposit in the Collection Account and
to apply such funds on each Distribution Date to the
following (in the priority indicated): (i) the Servicing Fee
for the prior Collection Period and any overdue Servicing
Fees to the Servicer (if CFSC or an affiliate is not the
Servicer), (ii) the Administration Fee for the prior
Collection Period and any overdue Administration Fees to the
Administrator, (iii) the Noteholders' Interest Distributable
Amount and the Noteholders' Principal Distributable Amount,
each into the Note Distribution Account, (iv) the
Certificateholders' Interest Distributable Amount and the
Certificateholders' Principal Distributable Amount, each
into the Certificate Distribution Account, (v) the Servicing
Fee for the prior Collection Period and any overdue
Servicing Fees to the Servicer (so long as CFSC or an
affiliate is the Servicer) and (vi) the remaining balance,
if any, to the Reserve Account as set forth above under
"--Priority of Distributions."
MATURITY AND PREPAYMENT
CONSIDERATIONS.............. All of the Receivables are prepayable at any time. Each
prepayment will shorten the weighted average remaining term
of the Receivables and the weighted average life of the
Securities. Prepayments of principal will be included in the
Principal Distribution Amount and will be payable first to
the A-1 Noteholders until the A-1 Notes have been paid in
full, and then will be payable to the A-2 Noteholders until
the A-2 Notes have been paid in full, and thereafter to the
A-3 Noteholders in accordance with the A-3 Noteholders'
Principal Distributable Amount and to the Certificateholders
in accordance with the Certificateholders' Principal
Distributable Amount, in that order as set forth herein. See
"Description of the Transfer and Servicing
Agreements--Distributions" herein.
The rate of prepayments on the Receivables may be influenced
by a variety of economic, financial, climatic and other
factors, and under certain circumstances relating to
breaches of representations, warranties or covenants, the
Seller is obligated to repurchase Receivables from the
Trust. A higher than anticipated rate of prepayments will
reduce the aggregate principal balance of the Receivables
more quickly than expected and thereby reduce anticipated
aggregate interest payments on the Securities. Any
reinvestment risks resulting from a faster or slower
incidence of prepayment of Receivables will be borne
entirely by the Noteholders and the Certificateholders as
set forth in the priority of distributions herein. Such
reinvestment risks include the risk that interest rates may
be lower at the time such holders received payments from the
Trust than interest rates would otherwise have been had such
prepayments not been made or had such prepayments been made
at a different time.
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Holders of Securities should consider, in the case of
Securities purchased at a discount, the risk that a slower
than anticipated rate of principal payments on the
Receivables could result in an actual yield that is less
than the anticipated yield and, in the case of any
Securities purchased at a premium, the risk that a faster
than anticipated rate of principal payments on the
Receivables could result in an actual yield that is less
than the anticipated yield.
SERVICING FEE................ The Servicer shall receive a fee for each Collection Period
equal to % per annum (the "SERVICING FEE RATE") of the
Pool Balance as of the first day of such Collection Period
(the "SERVICING FEE") (in accordance with the priority of
distributions set forth herein), plus any Servicer's Yield
for such Collection Period. The Servicer's Yield represents
amounts actually collected by the Servicer on account of
late fees, taxes, and other charges, as described herein.
All collections from an Obligor will be applied first to any
overdue scheduled payment, then to the current scheduled
payment and then to late fees, taxes, and other charges. The
Servicing Fee with respect to each Collection Period will
decline over the term of the Securities as the Pool Balance
decreases. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses"
herein and in the Prospectus.
CUSTODIAL AGREEMENT.......... , as custodian (the "CUSTODIAN"), will be responsible for
maintaining custody of the Installment Sales Contracts and
any related Dealer Agreements pursuant to a custodial
agreement, to be dated as of , 199 (the "CUSTODIAL
AGREEMENT"), among CFSC, the Seller, the Issuer and the
Indenture Trustee. See "Risk Factors--PERFECTION OF
INTERESTS IN RECEIVABLES AND IN FINANCED EQUIPMENT" and
"Certain Legal Aspects of the Receivables--Sale and Transfer
of Receivables" herein and in the Prospectus.
ADMINISTRATION AGREEMENT..... CFSC, in its capacity as administrator (the
"ADMINISTRATOR"), will enter into an agreement (the
"ADMINISTRATION AGREEMENT") with the Trust and the Indenture
Trustee. As compensation for the performance of the
Administrator's obligations under the Administration
Agreement and as reimbursement for its expenses related
thereto, the Administrator will be entitled to a monthly
administration fee in an amount equal to $ per month (the
"ADMINISTRATION FEE"). See "Description of the Transfer and
Servicing Agreements--Administration Agreement" in the
Prospectus.
[CLEARANCE AND SETTLEMENT.... Noteholders may elect to hold their Notes through any of DTC
(in the United States) or Cedel or Euroclear (in Europe).
Transfers within DTC, Cedel or Euroclear, as the case may
be, will be in accordance with the usual rules and operating
procedures of the relevant system. Cross-market transfers
between persons holding directly or indirectly through DTC,
on the one hand, and counterparties holding directly or
indirectly through Cedel or Euroclear, on the other, will be
effected in DTC through the relevant Depositaries of Cedel
or Euroclear. See "Issuance of the Securities--Book-Entry
Registration" in the Prospectus.]
CERTAIN LEGAL ASPECTS
OF THE RECEIVABLES.......... The transfer of ownership of the Receivables from CFSC to
the Seller and from the Seller to the Trust, and the
granting of a security interest
</TABLE>
S-17
<PAGE>
<TABLE>
<S> <C>
in the Receivables by the Trust to the Indenture Trustee,
will in each case be perfected by the Custodian, on behalf
of the applicable assignee, taking possession of the
[Installment Sales Contracts] [and] [Leases] and any related
Dealer Agreements (the "RECEIVABLES FILES") pursuant to the
Custodial Agreement. The Custodian will maintain possession
of the Receivables Files in a space leased by the Custodian
proximate to the principal executive office of the Seller.
CFSC will indicate on its computer records that the
Receivables have been sold to the Seller and by the Seller
to the Trust. Each Receivables File will contain the single
original related [Installment Sales Contract] [and] [Lease]
(as represented by CFSC in the Purchase Agreement). UCC
financing statements will not be filed to perfect these
transfers of ownership or such grant of a security interest,
and CFSC will not stamp the physical Receivables Files or
the [Installment Sales Contracts] [and] [Leases]. Although
steps will be taken to ensure that the Seller (an affiliate
of CFSC) does not obtain possession or control of the
[Installment Sales Contracts] [and] [Leases], should a court
find that the Seller did have possession or control of such
[Installment Sales Contracts] [and] [Leases], the interests
of the Trust and the Indenture Trustee in the Receivables
would in all likelihood be unperfected. See "Risk
Factors--PERFECTION OF INTERESTS IN RECEIVABLES AND IN
FINANCED EQUIPMENT" and "Certain Legal Aspects of the
Receivables--Sale and Transfer of the Receivables" herein
and in the Prospectus.
TAX STATUS................... In the opinion of Orrick, Herrington & Sutcliffe LLP
("SPECIAL TAX COUNSEL"), for federal income tax purposes the
Notes will be characterized as debt and the Trust will not
be characterized as an association (or publicly traded
partnership) taxable as a corporation. Each Noteholder, by
the acceptance of a Note, will agree to treat the Notes as
indebtedness, and each Certificateholder, by the acceptance
of a Certificate, will agree to treat the Trust as a
partnership in which the Certificateholders are partners.
Alternative characterizations of the Trust are possible, but
should not result in materially adverse tax consequences to
Noteholders or Certificateholders. See "Certain Federal
Income Tax Considerations" in the Prospectus.
STATE TAX CONSIDERATIONS..... In the opinion of Tuke Yopp & Sweeney ("TENNESSEE TAX
COUNSEL"), with respect to corporate Certificateholders and
Noteholders, the same tax characterizations should apply for
purposes of Tennessee income tax as for federal income tax
purposes. Non-corporate Certificateholders and Noteholders
who are residents of Tennessee will be subject to taxation
on income distributions with respect to the Certificates and
the Notes at the rate of six percent (6%). In the opinion of
Tennessee Tax Counsel, the Trust should not be subject to
taxation in Tennessee. See "Certain State Tax
Considerations" in the Prospectus for additional information
concerning the application of Tennessee tax laws to the
Trust and the Securities.
ERISA CONSIDERATIONS......... Subject to the considerations described in "ERISA
Considerations" herein and in the Prospectus, the Notes are
eligible for purchase with "plan assets" of any Plan (as
defined below) ("PLAN ASSETS"). A fiduciary or other person
contemplating purchasing the Notes on behalf of or
</TABLE>
S-18
<PAGE>
<TABLE>
<S> <C>
with Plan Assets of any employee benefit plan or other plan
or arrangement (including but not limited to an insurance
company general account) subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE") (collectively, "PLANS"),
should carefully review with its legal advisors whether the
purchase or holding of the Notes could give rise to a
transaction prohibited or not otherwise permissible under
ERISA or Section 4975 of the Code.
The Certificates may not be acquired by, on behalf of or
with the assets of any "benefit plan investor" (as defined
in U.S. Department of Labor ("DOL") Regulation Section
2510.3-101 (the "PLAN ASSET REGULATION")), except as
provided below. Generally, the term "benefit plan investor"
includes Plans, investors acting on behalf of or using the
assets of any Plan, and plans that are not generally subject
to the prohibited transaction rules of Title I of ERISA and
Section 4975 of the Code, such as "government plans" (as
defined in Section 3(32) of ERISA) and certain church plans
(as defined in Section 3(33) of ERISA). Under the Trust
Agreement each purchaser of Certificates will be deemed to
represent, warrant and covenant that either (a) it is
neither a benefit plan investor nor acquiring the
Certificates on behalf of or with assets of any benefit plan
investor or (b) it is an insurance company acting on behalf
of its general account and (i) on the date it acquires the
Certificates, less than 25% of the assets of such general
account constitute Plan Assets and (ii) if at any time
during any calendar quarter 25% or more of the assets of
such general account constitute Plan Assets and no exemption
or exception from the prohibited transaction rules applies
to the continued holding of the Certificates under Section
401(c) of ERISA and final regulations thereunder or an
exemption or regulation issued by the DOL under ERISA, then
such insurance company will dispose of all of the
Certificates then held in its general account by the end of
the next following calendar quarter.
[LEGAL INVESTMENT............ The A-1 Notes will be eligible securities for purchase by
money market funds under paragraph (a)(9) of Rule 2a-7 under
the Investment Company Act of 1940, as amended.]
RATINGS OF THE SECURITIES.... It is a condition to the issuance of the Securities that
each Class of the Notes be rated [in the highest investment
rating category] by [each of Standard & Poor's Ratings
Services ("S&P")] [and] [Moody's Investors Service, Inc.]
(["MOODY'S" and together with S&P, each a] [the] "RATING
AGENCY") and that the Certificates be rated at least " " by
[S&P] [and at least " " by Moody's]. See "Risk
Factors--RATINGS OF THE SECURITIES" herein and "Ratings" in
the Prospectus.
</TABLE>
S-19
<PAGE>
RISK FACTORS
Investors should consider, among other things, the matters discussed under
"Risk Factors" in the Prospectus and the following risk factors in connection
with the purchase of the Securities.
LIMITED LIQUIDITY. There is currently no secondary market for the
Securities. Each Underwriter currently intends to make a market in the
Securities for which it is an Underwriter, but is under no obligation to do so.
There can be no assurance that a secondary market will develop or, if a
secondary market does develop, that it will provide the Securityholders with
liquidity of investment or that it will continue for the life of the Securities.
PERFECTION OF INTERESTS IN RECEIVABLES AND IN FINANCED EQUIPMENT. The
transfer of ownership of the Receivables from CFSC to the Seller and from the
Seller to the Trust, and the granting of the security interest in the
Receivables by the Trust to the Indenture Trustee, will in each case be
perfected by the Custodian, on behalf of the applicable assignee, taking
possession of the [Installment Sales Contracts] [, Leases] and any related
Dealer Agreements (the "RECEIVABLES FILES") pursuant to the Custodial Agreement.
The Custodian will maintain possession of the Receivables Files in a space
leased by the Custodian proximate to the principal executive office of the
Seller. CFSC will indicate on its computer records that the Receivables have
been sold to the Seller. Each Receivables File will contain the single original
[Installment Sales Contract] [or] [Lease] related to a Receivable (as
represented by CFSC in the Purchase Agreement). UCC financing statements will
not be filed to perfect these transfers of ownership or such grant of a security
interest, and CFSC will not stamp the physical Receivables Files or the
[Installment Sales Contracts] [or] [the Leases]. Although steps will be taken to
ensure that the Seller (an affiliate of CFSC) does not obtain possession or
control of the [Installment Sales Contracts [or] [Leases], should a court find
that the Seller did have possession or control of such [Installment Sales
Contracts] [or][Leases], the interests of the Trust and the Indenture Trustee in
the Receivables would in all likelihood be unperfected, and distributions to
Securityholders may be adversely affected.
Should the related Indenture Trustee's security interest and/or the Trust's
ownership interest in the Receivables be found to be unperfected, such interests
may be inferior to the interests of (i) the Seller or CFSC, (ii) any creditors
of the Trust, the Seller or CFSC, or (iii) a subsequent purchaser of
Receivables, in the event the Trust, the Seller or CFSC fraudulently or
inadvertently sells a Receivable to such purchaser who had no notice of the
prior transfers thereof to such Indenture Trustee, the Trust or the Seller and
such purchaser takes possession of the related physical contract evidencing such
Receivable. As a result of such lack of perfection, the Seller, the Trust and
the holders of Securities may not be entitled to receive all or a portion of the
distributions relating to, or have any other rights with respect to, the
Receivables.
SUBORDINATION; LIMITED ASSETS. Distributions of interest and principal on
the Certificates will be subordinated in priority of payment to interest and
principal due on the Notes. Consequently, the Certificateholders will not
receive any distributions with respect to a Collection Period until the full
amount of interest on and principal of the Notes relating to such Collection
Period has been deposited in the Note Distribution Account. In addition, the
Certificateholders will not receive any distributions of principal until the
Distribution Date on which the principal amounts of the A-1 Notes and the A-2
Notes have been reduced to zero, and, in certain circumstances, will not receive
any distributions of principal until the Notes have been paid in full.
The Trust does not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the
Reserve Account. Holders of the Notes and the Certificates must rely for
repayment upon payments on the Receivables and, if and to the extent available,
amounts on deposit in the Reserve Account. Amounts to be deposited in the
Reserve Account are limited in amount and will be reduced as the Pool Balance is
reduced. In addition, funds in the Reserve Account will be available on each
Distribution Date to cover shortfalls in distributions of interest and principal
on the Notes prior to the application thereof to cover shortfalls on the
Certificates. If the Reserve Account is depleted, the Trust will depend solely
on current distributions on the Receivables to make payments on the Notes and
the Certificates.
S-20
<PAGE>
If an Event of Default under the Indenture occurs and the maturity of the
Notes is accelerated, the Indenture Trustee will have the right or be required
in certain circumstances to sell the Receivables to pay the principal of, and
accrued interest on, the Notes. There is no assurance that the proceeds of such
sale will be equal to or greater than the aggregate outstanding principal
balance of the Notes and the Certificates plus accrued interest. Because neither
interest nor principal is distributed to Certificateholders upon sale of the
Receivables following an Event of Default and acceleration of the Notes under
the Indenture until the Notes have been paid in full, the interest of
Noteholders and the Certificateholders may conflict, and the exercise by the
Indenture Trustee of its right to sell the Receivables or exercise other
remedies may cause the Certificateholders to suffer a loss of all or part of
their investment. See "Description of the Notes--The Indenture--EVENTS OF
DEFAULT; RIGHTS UPON EVENT OF DEFAULT" in the Prospectus.
In the event a Servicer Default occurs, the Indenture Trustee or the
Noteholders evidencing not less than 25% of the outstanding principal amount of
the Notes, as described under "Description of the Transfer and Servicing
Agreements--Rights Upon Servicer Default" in the Prospectus, may remove the
Servicer without the consent of the Owner Trustee or any of the
Certificateholders. The Owner Trustee or the Certificateholders will not have
the ability to remove the Servicer if a Servicer Default occurs until the Notes
have been paid in full. In addition, the Noteholders have the ability, with
certain specified exceptions, to waive defaults by the Servicer, including
defaults that could materially and adversely affect the Certificateholders. If
CFSC or an affiliate is no longer the Servicer, payment of the Servicing Fee
will be made prior to distributions to Noteholders and Certificateholders. See
"Description of the Transfer and Servicing Agreements--Waiver of Past Defaults"
in the Prospectus.
RATINGS OF THE SECURITIES. It is a condition to the issuance of the Notes
and the Certificates that each Class of the Notes be rated [in the highest
investment rating category] by [each of] [S&P] [and] [Moody's] and that the
Certificates be rated at least " " by [S&P] [and at least " " by]
[Moody's]. A rating is not a recommendation to purchase, hold or sell
securities, inasmuch as such rating does not comment as to market price or
suitability for a particular investor. The ratings of the Securities address the
likelihood of the timely payment of interest on and the ultimate payment of
principal of the Securities pursuant to their terms. There can be no assurance
that a rating will remain for any given period of time or that a rating will not
be lowered or withdrawn entirely by a Rating Agency if in its judgment
circumstances in the future so warrant.
FORMATION OF THE TRUST
THE TRUST
The Issuer, Caterpillar Financial Asset Trust 199 - , will be a business
trust formed under the laws of the State of Delaware pursuant to the Trust
Agreement for the transactions described in this Prospectus Supplement. After
its formation, the Trust will not engage in any activity other than (i)
acquiring, owning and managing the Receivables and the other assets of the Trust
and proceeds therefrom, (ii) issuing and making payments on the Notes, (iii)
issuing and making payments on Certificates and (iv) engaging in other
activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
The Trust will initially be capitalized with equity having an estimated
value of $ , excluding amounts deposited in the Reserve Account.
[Certificates with an original principal balance of $ will be sold to the
Seller, and the remaining] Certificates will be sold to third party investors
that are expected to be unaffiliated with the Seller, the Servicer or the Trust.
The proceeds from the initial sale of the Certificates, together with the
proceeds from the initial sale of the Notes, will be used by the Trust to
purchase the Receivables from the Seller pursuant to the Sale and Servicing
Agreement. The Servicer will initially service the Receivables pursuant to the
Sale and Servicing Agreement, and will be compensated for acting as the
Servicer. See "Description of the Transfer and Servicing Agreements--Servicing
Compensation and Payment of Expenses" herein and in the Prospectus. Each
Receivables File will contain the single original related [Installment Sales
Contract] [or] [Lease] (as represented by CFSC in the Purchase Agreement). The
Custodian will act as custodian for the Receivables Files for the Seller, the
Owner Trustee and the Indenture Trustee and will take possession of the
Receivables Files at a location leased by the Custodian proximate to
S-21
<PAGE>
the principal executive office of the Seller. CFSC will indicate on its computer
records that the Receivables have been sold to the Seller and by the Seller to
the Trust. UCC financing statements will not be filed to evidence these
transfers, and CFSC will not stamp the physical Receivables Files to reflect the
ultimate sale and assignment of the Receivables to the Trust. See "Risk
Factors--PERFECTION OF INTERESTS IN RECEIVABLES AND IN FINANCED EQUIPMENT"
herein and in the Prospectus and "Certain Legal Aspects of the Receivables--Sale
and Transfer of Receivables" herein and in the Prospectus and "Certain Legal
Aspects of the Receivables-- Security Interest in Equipment" in the Prospectus.
If the protections provided to Noteholders in the Trust by the subordination
of the Certificates and the protection provided to the holders of the Securities
by the availability of the funds in the Reserve Account are insufficient, the
Trust must rely solely on the payments from the Obligors on the Receivables, and
the proceeds from the repossession and sale of Financed Equipment and certain
other cross-collateralized equipment which secure defaulted Receivables. In such
event, certain factors, such as the Trust's not having first priority perfected
security interests in some of the Receivables or Financed Equipment as a result
of occurrences after the Closing Date, and the risk of fraud or negligence of
CFSC or (under certain circumstances) the related Dealer, may affect the Trust's
ability to realize on the collateral securing the Receivables, and thus the
proceeds to be distributed to Noteholders and to Certificateholders with respect
to the Notes and Certificates, respectively, may be reduced. See "Risk
Factors--PERFECTION OF INTERESTS IN RECEIVABLES AND IN FINANCED EQUIPMENT"
herein and in the Prospectus, and "Certain Legal Aspects of the Receivables" in
the Prospectus.
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Cut-off Date, as if the issuance and sale of the Notes and the Certificates
offered hereby had taken place on such date:
<TABLE>
<S> <C>
Class A-1 % Asset Backed Notes................................... $
Class A-2 % Asset Backed Notes....................................
Class A-3 % Asset Backed Notes....................................
% Asset Backed Certificates.......................................
-----------
Total............................................................... $
-----------
-----------
</TABLE>
THE OWNER TRUSTEE
[ ] is the Owner Trustee under the Trust Agreement.
[ ] is a [ ] and its principal
offices are located at [ ]. The Seller
shall pay the fees of the Owner Trustee and shall reimburse it for certain
liabilities and expenses. [In the ordinary course of its business, the Owner
Trustee and its affiliates have engaged and may in the future engage in
commercial banking or financial advisory transactions with CFSC and its
affiliates].
THE RECEIVABLES POOL
The pool of Receivables (the "RECEIVABLES POOL") will include the
Receivables purchased pursuant to the Purchase Agreement with an aggregate
Principal Balance of $ as of , 199 (the "CUT-OFF DATE").
The Receivables were selected from the entire U.S. [ISC] [Lease] Portfolio
(other than receivables previously sold to trusts under prior asset-backed
securitizations which CFFC continues to service which are otherwise included in
the U.S. ISC Portfolio) using several criteria, some of which are set forth in
the Prospectus under "The Receivables Pools," as well as that each Receivable
(i) has a stated maturity of not earlier than or later than
, (ii) has an annual percentage rate of interest (based on its
Principal Balance) ("APR") of at least % and (iii) is not more than days
past due as of the Cut-off Date. As of the Cut-off Date, no Obligor on any
Receivable was noted in the related records of the
S-22
<PAGE>
Servicer as being in default under the related [Installment Sales Contract] [or
Lease] or as being the subject of a bankruptcy proceeding. No selection
procedures believed by CFFC or the Seller to be adverse to the Noteholders or
the Certificateholders were used in selecting the Receivables.
The composition of the Receivables and the distribution of the Receivables
by APR, new and used equipment, equipment type, industry application, payment
frequency and remaining Principal Balance as of the Cut-off Date are set forth
in the following tables. Amounts and percentages are based on the Principal
Balance of the Receivables as of the Cut-off Date. The "PRINCIPAL BALANCE" of a
Receivable means its original principal balance, as reduced by principal
payments applied in accordance with the actuarial method. The Principal Balance
of an Over-Rate Receivable includes the unamortized purchase premium paid by
CFFC to Dealers. As of the Cut-off Date, the aggregate current Principal Balance
of the Receivables is the Initial Pool Balance.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE
AVERAGE APR ORIGINAL TERM REMAINING TERM
OF NUMBER OF (RANGE) (IN (RANGE) (IN AVERAGE
RECEIVABLES POOL BALANCE RECEIVABLES MONTHS) MONTHS) (1) PRINCIPAL BALANCE (RANGE)
- ------------- -------------- ----------- ------------- -------------- --------------------------------
<S> <C> <C> <C> <C> <C>
% $ ( - ) ( - ) $ ($ - $)
</TABLE>
- -------------------
(1) Based on scheduled payments and assuming no prepayments of the Receivables.
DISTRIBUTION BY APR OF THE RECEIVABLES
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
APR RANGE (1) RECEIVABLES BALANCE BALANCE
- --------------------------------------------------------------- ------------- -------------- -----------
<S> <C> <C> <C>
% - %.................................................... $ %
- .......................................................
- .......................................................
- .......................................................
- .......................................................
- .......................................................
- .......................................................
- .......................................................
- .......................................................
- .......................................................
% and over.................................................
----- -------------- -----------
Total........................................................ $ 100.00%
----- -------------- -----------
----- -------------- -----------
</TABLE>
- -------------------
(1) CFSC, in conjunction with Caterpillar and its subsidiaries, periodically
offers below market rate financing to Obligors under merchandising programs.
Caterpillar, at the outset of a subsidized transac-
tion, remits to CFSC an amount equal to the interest differential, which
amount is recognized as income over the term of the related contract. The
APR of any Receivable does not take into account, and the Trust does not
have an interest in, any of such amounts remitted to CFSC by Caterpillar
with respect to these Receivables.
DISTRIBUTION BY NEW AND USED FINANCED EQUIPMENT
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
RECEIVABLES BALANCE BALANCE
------------- -------------- -----------
<S> <C> <C> <C>
New Equipment (1).............................................. $ %
Used Equipment.................................................
----- -------------- -----------
Total........................................................ $ 100.00%
----- -------------- -----------
----- -------------- -----------
</TABLE>
S-23
<PAGE>
- -------------------
(1) Units not previously delivered or sold; rental units of less than 12 months
and 1,000 service meter hours; and units of the current or previous model
year and serial number.
DISTRIBUTION OF THE RECEIVABLES BY TYPE OF FINANCED EQUIPMENT
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
TYPE RECEIVABLES BALANCE BALANCE
- --------------------------------------------------------------- ------------- -------------- -----------
<S> <C> <C> <C>
[Lift Trucks................................................... $ %
Paving Equipment...............................................
Construction Equipment]........................................
----- -------------- -----------
Total........................................................ $ 100.00%
----- -------------- -----------
----- -------------- -----------
</TABLE>
DISTRIBUTION BY INDUSTRY APPLICATION OF FINANCED EQUIPMENT
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
INDUSTRY RECEIVABLES BALANCE BALANCE
- --------------------------------------------------------------- ------------- -------------- -----------
<S> <C> <C> <C>
[Agriculture, Forestry and Fishing............................. $ %
Mining.........................................................
Construction...................................................
Manufacturing..................................................
Transportation/Public Utilities................................
Wholesale Trade]...............................................
Other (1)......................................................
----- -------------- -----------
Total........................................................ $ 100.00%
----- -------------- -----------
----- -------------- -----------
</TABLE>
- -------------------
(1) Other includes retail, financial, insurance and real estate, services, and
public administration.
DISTRIBUTION OF THE RECEIVABLES BY PAYMENT FREQUENCY
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
TYPE RECEIVABLES BALANCE BALANCE
- --------------------------------------------------------------- ------------- -------------- -----------
<S> <C> <C> <C>
Monthly........................................................ $ %
Variable Frequency (1).........................................
----- -------------- -----------
Total........................................................ $ 100.00%
----- -------------- -----------
----- -------------- -----------
</TABLE>
- -------------------
(1) "VARIABLE FREQUENCY" Receivables have monthly payment schedules but permit
the Obligors thereon to
skip or reduce payments during certain specified months which are
predetermined at origination. The majority of skip or reduced payments take
place during months coinciding with the cash flow patterns of the related
Obligors. Although there can be no assurance that the experience on the
Variable Frequency Receivables will be comparable, CFSC has not identified
any cash flow pattern resulting from the existence of Variable Frequency
Receivables in the U.S. [ISC] [Lease] Portfolio. The Seller believes that
the pattern of principal payments on the Securities will not be materially
affected by the inclusion of Variable Frequency Receivables in the Trust.
See "The Receivables Pools--The Retail Equipment Financing
Business--INSTALLMENT SALES CONTRACTS--CONTRACT TERMS" in the Prospectus.
S-24
<PAGE>
DISTRIBUTION OF THE RECEIVABLES BY REMAINING PRINCIPAL BALANCE AS OF THE CUT-OFF
DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
REMAINING PRINCIPAL BALANCE RANGE RECEIVABLES BALANCE BALANCE
- --------------------------------------------------------------- ------------- -------------- -----------
<S> <C> <C> <C>
Up to $........................................................ $ %
$ -$..........................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
Over $.........................................................
----- -------------- -----------
Totals....................................................... $ 100.00%
----- -------------- -----------
----- -------------- -----------
</TABLE>
S-25
<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF AGGREGATE PRINCIPAL AGGREGATE
STATE (1) RECEIVABLES BALANCE PRINCIPAL BALANCE
- ------------------------------------------------------------- ------------- -------------------- -----------------
<S> <C> <C> <C>
............................................................. $ %
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
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----- -------------------- ------
Total...................................................... $ 100.00%
----- -------------------- ------
----- -------------------- ------
</TABLE>
- -------------------
(1) Based on billing addresses of Obligors.
S-26
<PAGE>
Unless otherwise specified herein, references herein to percentages of the
Receivables refer in each case to the approximate percentage of the Initial Pool
Balance, based on the Principal Balances of the Receivables as of the Cut-off
Date, and after giving effect to all payments received prior to the Cut-off
Date.
All of the Receivables were [Installment Sales Contracts] [Leases] % of
the Receivables were originated or arranged by , a Dealer in
, and in the aggregate % of the Receivables were originated or
arranged by the five largest Dealers. No other Dealer originated or arranged
more than % of the Receivables. % of the Receivables were originated or
arranged by [Carter Machinery Company, Inc., a Dealer in Salem, Virginia and the
only Dealer owned by Caterpillar].
No single Obligor accounted for more than % of the Receivables, and the
five largest Obligors accounted for approximately % of the Receivables.
Approximately % of the Receivables have related Financed Equipment
manufactured by Caterpillar, [approximately % of the Receivables have related
Financed Equipment manufactured by Mitsubishi Caterpillar Forklift America Inc.]
and the remaining approximately % of the Receivables have related Financed
Equipment manufactured by a variety of other sources.
At origination CFSC confirms the applicable loan-to-value ratios of its
receivables. Because of the depreciating nature of the Financed Equipment, and
in light of CFSC's credit loss experience set forth herein with respect to the
U.S. [ISC] [Lease] Portfolio, the Seller believes that statistical information
relating to original loan-to-value ratios of the Receivables is not material to
investors in the Securities.
Certain Receivables may be cross-collateralized, being secured by junior
liens on other items of equipment (which may or may not be Financed Equipment)
in addition to first priority liens on the related Financed Equipment, and
certain items of Financed Equipment may secure other receivables of CFSC on a
junior basis (which may or may not be Receivables). See "Certain Legal Aspects
of the Receivables--Cross-Collateralization" herein.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning CFSC's experience
pertaining to delinquencies, repossessions and net losses on the [entire United
States portfolio of installment sales contracts] [and/or] [entire United States
portfolio of financed leases] [as applicable,] serviced by CFSC (including
receivables sold which CFSC continues to service) [(the "U.S. ISC PORTFOLIO")]
[and the] ["U.S. LEASE PORTFOLIO", collectively, the "U.S. PORTFOLIO")].
Generally, when an account becomes 120 days delinquent, accrual of finance
income is suspended, the collateral is repossessed and the account is designated
for litigation.
[Delinquencies, repossessions and net losses on installment sales contracts
are affected by economic conditions generally.] [Insert Current Analysis of
Recent Historical Performance.]
Although the Seller believes that the composition of the Receivables in the
aggregate is representative of the [U.S. ISC Portfolio] [and the] [U.S. Lease
Portfolio] [, respectively], there can be no assurance that the delinquency,
repossession and net loss experience on the Receivables will be comparable to
that set forth below or that delinquencies, repossessions and net losses in the
future will be comparable to those in the past.
S-27
<PAGE>
DELINQUENCY EXPERIENCE FOR THE U.S. ISC PORTFOLIO(1)(2)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------------------------------------------------------------
199 199 199 199
------------------------ ------------------------ ------------------------ -----------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Portfolio.................. $ $ $
Unadjusted System Delinquency (3)
31-60 Days..................... $ $ $
over 60 Days................... $ $ $
Total Unadjusted System
Delinquencies.................. $ $ $
Total Unadjusted System
Delinquencies as a Percent of
the Gross Portfolio............. % % % % % % %
Adjusted Delinquency (4)
31-60 Days..................... $
over 60 Days................... $
Total Adjusted Delinquencies..... $
Total Adjusted Delinquencies as a
Percent of the Gross
Portfolio....................... % % %
<CAPTION>
AMOUNT
-----------
<S> <C>
Gross Portfolio.................. $
Unadjusted System Delinquency (3)
31-60 Days..................... $
over 60 Days................... $
Total Unadjusted System
Delinquencies.................. $
Total Unadjusted System
Delinquencies as a Percent of
the Gross Portfolio............. %
Adjusted Delinquency (4)
31-60 Days..................... $
over 60 Days................... $
Total Adjusted Delinquencies..... $
Total Adjusted Delinquencies as a
Percent of the Gross
Portfolio....................... %
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 199 [AT , 199 ] [AT , 199 ]
---------------------- ------------------------ ----------------------
NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
----------- --------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Gross Portfolio................................ $ $ $
Unadjusted System Delinquency (3)
31-60 Days................................... $ $ $
over 60 Days................................. $ $ $
Total Unadjusted System
Delinquencies................................. $ $ $
Total Unadjusted System
Delinquencies as a Percent of the
Gross Portfolio............................... % % % % % %
Adjusted Delinquency (4)
31-60 Days................................... $ $ $
over 60 Days................................. $ $ $
Total Adjusted Delinquencies................... $ $ $
Total Adjusted Delinquencies
as a Percent of the Gross Portfolio........... % % % % % %
</TABLE>
- ------------------------
(1) Amounts and percentages are based on the gross amount of all unpaid
installments of principal and unearned finance charges scheduled to be paid
on each contract.
(2) Delinquent contracts that have been modified in accordance with CFSC's
credit policies may not be considered to be "delinquent" for purposes of
this table. Such modifications include extensions, restructurings with skip
payments, refinancings, changes of installment due dates, reductions of
interest rates, and partial buyouts. See "The Receivables Pools--The Retail
Equipment Financing Business--EXTENSION/REVISION PROCEDURES" in the
Prospectus. In addition, a contract is no longer considered delinquent and
is no longer included in the U.S. [ISC] Portfolio upon the repossession of
its related financed equipment. See "The Receivables Pools--The Retail
Equipment Financing Business--REPOSSESSION/WRITEOFF PROCEDURES" in the
Prospectus.
(3) A monthly contract is deemed to be "31-60" or "over 60" days past due if
the amount due is not collected by the last day of the succeeding or next
succeeding month, respectively (I.E., a payment due any time in January is
not considered "31-60" days past due unless the amount due remains
uncollected on February 28).
(4) Adjustments result primarily from the application of payments made but not
allocated by CFSC to the amount then outstanding under delinquent
contracts. Increases or decreases in the contract number or dollar amount
of contracts in a particular delinquency category result from either the
removal of contracts from a particular delinquent status or the shifting of
contracts from one delinquency category to another as a result of the
adjustment process.
S-28
<PAGE>
CREDIT LOSS/REPOSSESSION EXPERIENCE FOR THE U.S. [ISC] [LEASE] PORTFOLIO(1)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, [ ]
---------------------------------------- -------------------
199 199 199 199 199 [199 (5) 199 (5)]
------ ------ ------ ------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Gross Portfolio Outstanding During the Period....... $ $ $ $ $ $ $
Repossessions as a Percent of Average Gross Portfolio
Outstanding (2)............................................ % % % % % % %
Net Losses as a Percent of Liquidations (3)(4).............. % % % % % % %
Net Losses as a Percent of Average Gross Portfolio
Outstanding (4)............................................ % % % % % % %
</TABLE>
- ------------------------
(1) Except as indicated, all amounts and percentages are based on the gross
amount of all unpaid installments of principal and unearned finance charges
scheduled to be paid on each contract.
[(2) Repossessions prior to the third quarter of 1993 represented all unpaid
principal and finance charges accrued but not collected for contracts
repossessed and terminated during the period, and subsequent to the third
quarter of 1993 represent contracts repossessed and either terminated or in
inventory.]
(3) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of cash payments and charge-offs.
(4) Net Losses are equal to the aggregate amount of principal and finance
charges accrued on all contracts which are determined to be uncollectible
plus repossession expenses less (i) in the case of repossessed (but not
liquidated) financed equipment, the estimated proceeds of liquidation of
such equipment, and (ii) in the case of liquidated financed equipment, the
actual proceeds of liquidation of such equipment. With respect to Financed
Equipment which is repossessed in one calendar year and sold in another,
the Net Loss figures for the year of repossession include CFSC's estimate
of loss after giving effect to its estimate of the liquidation proceeds,
and the Net Loss figures in the subsequent calendar year are increased to
reflect the amount by which actual liquidation proceeds are less than such
estimate or are decreased to reflect the amount by which actual liquidation
proceeds exceed such estimate. The Trust receives proceeds of liquidations
but will not have the benefit of subsequent amounts received from Obligors
or others (except for recourse payments from Dealers) with respect to a
contract after the related financed equipment is sold and the related
contract is terminated. The Net Loss figures above give effect to payments
by Dealers on a limited number of the contracts which provide for recourse
to the related Dealers. See "The Receivables Pools--The Retail Equipment
Financing Business--DEALER AGREEMENTS" in the Prospectus and "Certain Legal
Aspects of the Receivables--Dealer Recourse Receivables" herein.
[(5) Rates have been annualized.]
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment considerations with
respect to the Securities is set forth under "Weighted Average Life of the
Securities" in the Prospectus. The A-2 Noteholders will not receive any
principal payments until the A-1 Notes are paid in full, and the A-3 Noteholders
and the Certificateholders will not receive any principal payments until the A-2
Notes are paid in full. See "Description of the Notes--The A-2 Notes and the A-3
Notes--PAYMENTS OF PRINCIPAL" and "Description of the
Certificates--Distributions of Principal Payments" herein. In addition, on any
Distribution Date on and after the Distribution Date, the A-2
Noteholders until paid in full, and then the A-3 Noteholders until paid in full,
are entitled to receive amounts on deposit in the Reserve Account in excess of
the Specified Reserve Account Balance for such Distribution Date as an
accelerated payment of principal.
No principal payments on the Certificates will be made prior to the
Distribution Date on which the principal amounts of the A-1 Notes and the A-2
Notes have been reduced to zero, and, if on any Distribution Date the entire
Noteholders' Distributable Amount is not deposited in the Note Distribution
Account, no payments of principal (or interest) will be made on the Certificates
on such Distribution Date. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account" herein. If an Event of
Default has occurred and the maturity of the Notes has been accelerated the
Certificateholders will not be entitled to receive any distributions of interest
or principal until the Notes have been paid in full. In addition, no payments of
principal will be made on the Certificates until the Notes have been paid in
full if the amount on deposit in the Reserve Account is less than the lesser of
(i) % of the Initial Pool Balance and (ii) the sum of (x) the outstanding
principal amount of the Notes and (y) the Certificate Balance.
S-29
<PAGE>
As the rate of payment of principal of the Notes and the Certificates
depends primarily on the rate of payment (including prepayments) of the
aggregate Principal Balance of the Receivables, final payment of each Class of
the Notes and the final distribution in respect of the Certificates could occur
significantly earlier than their respective final scheduled Distribution Dates.
Securityholders will bear the risk of being able to reinvest principal payments
of the Securities at yields at least equal to the yield on their respective
Securities.
POOL FACTORS AND TRADING INFORMATION
Each of the "A-1 NOTE POOL FACTOR," the "A-2 NOTE POOL FACTOR" and the "A-3
NOTE POOL FACTOR" is a seven-digit decimal which the Servicer will compute each
month, indicating the remaining outstanding principal amount of the A-1 Notes,
the A-2 Notes or the A-3 Notes as of the related Distribution Date, as a
fraction of the initial outstanding principal balance of the A-1 Notes, the A-2
Notes or the A-3 Notes, as applicable. Each of the A-1 Note Pool Factor, the A-2
Note Pool Factor and the A-3 Note Pool Factor will be 1.0000000 as of the
Closing Date, and thereafter will decline to reflect reductions in the
outstanding principal amount of the A-1 Notes, the A-2 Notes or the A-3 Notes,
as the case may be. An A-1 Noteholder's portion of the aggregate outstanding
principal amount of the A-1 Notes is the product of (i) the original
denomination of the A-1 Noteholder's Note and (ii) the A-1 Note Pool Factor, an
A-2 Noteholder's portion of the aggregate outstanding principal amount of the
A-2 Notes is the product of (i) the original denomination of the A-2
Noteholder's Note and (ii) the A-2 Note Pool Factor and an A-3 Noteholder's
portion of the aggregate outstanding principal amount of the A-3 Notes is the
product of (i) the original denomination of the A-3 Noteholder's Note and (ii)
the A-3 Note Pool Factor.
The "CERTIFICATE POOL FACTOR" is a seven-digit decimal which the Servicer
will compute each month, indicating the remaining Certificate Balance as of the
Distribution Date, as a fraction of the initial Certificate Balance. The
Certificate Pool Factor will be 1.0000000 as of the Closing Date, and thereafter
will decline to reflect reductions in the outstanding principal amount of the
Certificates. A Certificateholder's portion of the Certificate Balance is the
product of (i) the original denomination of the Certificateholder's Certificate
and (ii) the Certificate Pool Factor.
Pursuant to the Indenture and the Trust Agreement, the Noteholders and
Certificateholders of record will receive monthly reports concerning the
payments received on the Receivables, the Pool Balance, the A-1 Note Pool
Factor, the A-2 Note Pool Factor, the A-3 Note Pool Factor and the Certificate
Pool Factor and various other items of information. Noteholders and
Certificateholders of record during any calendar year will be furnished
information for tax reporting purposes not later than the latest date permitted
by law. See "Description of the Transfer and Servicing Agreements--Reports to
Securityholders" in the Prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SOURCES OF CAPITAL AND LIQUIDITY
The Trust's primary sources of capital will be the net proceeds of the
offering of the Notes and the Certificates. See "Formation of the
Trust--Capitalization of the Trust" herein.
The Trust's primary sources of liquidity will be payments on the Receivables
and amounts on deposit in the Reserve Account. For a discussion of CFSC's
experience pertaining to delinquencies, repossessions and net losses, see "The
Receivables Pool--Delinquencies, Repossessions and Net Losses" and "Description
of the Transfer and Servicing Agreements--Reserve Account" herein.
RESULTS OF OPERATIONS
The Trust is newly formed and, accordingly, has no results of operations as
of the date of this Prospectus Supplement. Because the Trust does not have any
operating history, there has not been included in this Prospectus Supplement any
historical or pro forma ratio of earnings to fixed charges. The earnings on the
Receivables and other assets owned by the Trust, the interest costs of the Notes
and the related operating expenses will determine the Trust's results of
operations in the future. The income generated from the
S-30
<PAGE>
Trust's assets will be used to pay principal and interest on the Notes, related
operating costs and expenses of the Trust (to the extent not paid by the
Servicer) and distributions to the Certificateholders. The principal operating
expenses of the Trust are expected to be the Servicing Fee and the
Administration Fee.
USE OF PROCEEDS
The net proceeds from the sale of Securities will be applied to the purchase
of the Receivables from the Seller and to make the Seller's initial deposit to
the Reserve Account. The Seller will apply its net proceeds to the purchase of
the Receivables from CFSC.
THE SELLER, CATERPILLAR AND THE SERVICER
For a general discussion of the Seller, Caterpillar and the Servicer, see
"The Seller, Caterpillar and the Servicer" in the Prospectus.
CATERPILLAR INC.
Caterpillar reported profits of $ million on sales and revenues of
$ billion for the year ended December 31, 199 as compared with profits of
$ million on sales and revenues of $ billion for the year ended December 31,
199 . As used herein, the term "CATERPILLAR" means Caterpillar Inc. and its
consolidated subsidiary companies, unless the context otherwise requires.
CATERPILLAR FINANCIAL SERVICES CORPORATION
CFSC currently offers the following types of retail financing plans: (1)
non-tax (financing) leases; (2) installment sales contracts; (3) tax-oriented
leases; (4) customer loans; (5) dealer loans; and (6) governmental
lease-purchase contracts. CFSC also currently offers wholesale financing to
Caterpillar Dealers. At , 199 , the percentages of total value of
CFSC's portfolio represented by these financing plans were as follows: non-tax
(financing) leases, %; installment sales contracts, %; tax-oriented leases,
%; customer loans, %; wholesale financing, %; dealer loans, %; and
governmental lease-purchase contracts, %.
At , 199 , CFSC had full-time employees and serviced
accounts, including approximately $ billion in gross finance receivables.
In the United States, as of , 19 , there were independently
owned Dealers and one Dealer that is owned by Caterpillar.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. A copy of the
Indenture will be filed with the Commission following the issuance of the
Securities. The following, as well as other pertinent information included
elsewhere in this Prospectus Supplement and in the Prospectus, summarizes the
material terms of the Notes and the Indenture. The summary does not purport to
be complete and is qualified in its entirety by reference to the provisions of
the Notes and the Indenture. The following summary supplements, and to the
extent inconsistent therewith replaces, the description of the general terms and
provisions of the Notes of any given series and the related Indenture set forth
in the Prospectus, to which description reference is hereby made.
THE A-1 NOTES
PAYMENTS OF INTEREST. The A-1 Notes will constitute Fixed Rate Securities,
as such term is defined under "Certain Information Regarding the
Securities--Fixed Rate Securities" in the Prospectus. Interest on the principal
amount of the A-1 Notes will accrue at the rate of % per annum (the "A-1
NOTE RATE") (calculated on the basis of a 360-day year and twelve 30-days
months). Interest on the outstanding principal amount of the A-1 Notes will
accrue from and including the most recent Distribution Date on which interest
has been paid (or, in the case of the initial Distribution Date, from and
including the Closing Date) to but excluding the following Distribution Date and
will be payable to the A-1 Noteholders monthly on each Distribution Date
commencing , 199 . "DISTRIBUTION DATE" shall mean the th day of
each
S-31
<PAGE>
month or, if any such date is not a business day, on the next succeeding
business day. Interest accrued as of any Distribution Date but not paid on such
Distribution Date will be due on the next Distribution Date, together with
interest, to the extent permitted by law, on such amount at the A-1 Note Rate.
Interest payments on the A-1 Notes will be generally derived from the Total
Distribution Amount remaining after the payment of the Servicing Fee (if CFSC or
an affiliate is not the Servicer) and the Administration Fee, and from amounts
on deposit in the Reserve Account. See "Description of the Transfer and
Servicing Agreements--Distributions" and "--Reserve Account" herein. If the
amount of interest on the principal amount of the A-1 Notes, the A-2 Notes and
the A-3 Notes payable on any Distribution Date exceeds the sum of such remaining
portion of the Total Distribution Amount and the amounts on deposit in the
Reserve Account, the A-1 Noteholders will receive their ratable share (based
upon the total amount of interest due to the A-1 Noteholders, the A-2
Noteholders and the A-3 Noteholders) of the amount available to be distributed
in respect of interest on the A-1 Notes, the A-2 Notes and the A-3 Notes, and
each A-1 Noteholder will receive its ratable share (based on the principal
amount of its A-1 Note and the total amount distributable to the A-1
Noteholders) of such amount.
PAYMENTS OF PRINCIPAL. Principal payments will be made to the A-1
Noteholders on each Distribution Date in an amount generally equal to the
Principal Distribution Amount until the principal balance of the A-1 Notes is
reduced to zero. Principal payments on the A-1 Notes will generally be derived
from the Total Distribution Amount remaining after the payment of the Servicing
Fee (if CFSC or an affiliate is not the Servicer), the Administration Fee and
the Noteholders' Interest Distributable Amount, and from amounts on deposit in
the Reserve Account remaining after the payment of the Noteholders' Interest
Distributable Amount. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account" herein. Distributions with
respect to principal on the A-1 Notes will not be made until all interest due on
the Notes is paid in full. The outstanding principal amount, if any, of the A-1
Notes will be payable in full on the A-1 Note Final Scheduled Distribution Date
from available funds therefor (including amounts on deposit in the Reserve
Account).
THE A-2 NOTES AND THE A-3 NOTES
PAYMENTS OF INTEREST. The A-2 Notes and the A-3 Notes will constitute Fixed
Rate Securities, as such term is defined under "Certain Information Regarding
the Securities--Fixed Rate Securities" in the Prospectus. Interest on the
principal amount of the A-2 Notes will accrue at the rate of % per annum (the
"A-2 NOTE RATE"), and interest on the principal amount of the A-3 Notes will
accrue at the rate of % per annum (the "A-3 NOTE RATE") (in each case,
calculated on the basis of a 360-day year of twelve 30-day months). Interest on
the outstanding principal amount of the A-2 Notes and the A-3 Notes will in each
case accrue from and including the most recent Distribution Date on which
interest has been paid (or, in the case of the initial Distribution Date, from
and including the Closing Date), to but excluding the following Distribution
Date and will be payable to the A-2 Noteholders and the A-3 Noteholders monthly
on each Distribution Date commencing , 199 . Interest accrued on any
Class of Notes as of any Distribution Date but not paid on such Distribution
Date will be due on the next Distribution Date together with interest, to the
extent permitted by law, on such amount at the interest rate applicable to such
Class of Notes. Interest payments on the A-2 Notes and the A-3 Notes will
generally be derived from the Total Distribution Amount remaining after the
payment of the Servicing Fee (if CFSC or an affiliate is not the Servicer) and
the Administration Fee, and from amounts on deposit in the Reserve Account. See
"Description of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Account" herein. If the amount of interest on the principal amounts
of the A-1 Notes, the A-2 Notes and the A-3 Notes payable on any Distribution
Date exceeds the sum of such remaining portion of the Total Distribution Amount
and the amount on deposit in the Reserve Account, each of the A-2 Noteholders
and the A-3 Noteholders will receive their ratable share (based upon the total
amount of interest due to the A-1 Noteholders, the A-2 Noteholders and the A-3
Noteholders) of the amount available to be distributed in respect of interest on
the A-1 Notes, the A-2 Notes and the A-3 Notes, and each A-2 Noteholder and each
A-3 Noteholder will receive its ratable share (based on the principal amount of
its A-2 Note or its A-3 Note and the total amount distributable to the A-2
Noteholders or the A-3 Noteholders) of such amount.
S-32
<PAGE>
PAYMENTS OF PRINCIPAL. Principal payments will be made to the A-2
Noteholders on each Distribution Date on and after the Distribution Date on
which the A-1 Notes have been paid in full in an amount generally equal to 100%
of the difference between (i) the Principal Distribution Amount and (ii) the
portion, if any, of the Principal Distribution Amount paid in respect of the A-1
Notes on such Distribution Date. Principal payments will be made to the A-3
Noteholders on each Distribution Date on and after the Distribution Date on
which the A-1 Notes and the A-2 Notes have been paid in full in an amount
generally equal to the A-3 Noteholders' Percentage (which shall be 100% if on
any prior Distribution Date the amount on deposit in the Reserve Account is less
than the lesser of (i) % of the Initial Pool Balance and (ii) the sum of (x)
the outstanding principal amount of the Notes and (y) the Certificate Balance)
of the difference between (i) the Principal Distribution Amount and (ii) the
portion, if any, of the Principal Distribution Amount paid in respect of the A-1
Notes and the A-2 Notes on such Distribution Date. Principal payments on the A-2
Notes and the A-3 Notes will be generally derived from the Total Distribution
Amount remaining after the payment of the Servicing Fee (if CFSC or an affiliate
is not the Servicer), the Administration Fee and the Noteholders' Interest
Distributable Amount, and from amounts on deposit in the Reserve Account. In
addition, on any Distribution Date, on and after the Distribution
Date, amounts on deposit in the Reserve Account in excess of the Specified
Reserve Account Balance for such Distribution Date will be released from the
Reserve Account and will be distributed first to the A-2 Noteholders as a
payment of principal (until the A-2 Notes have been paid in full), and then to
the A-3 Noteholders as a payment of principal (until the A-3 Notes have been
paid in full). See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account" herein. The outstanding
principal amount, if any, of the A-2 Notes will be payable in full on the A-2
Note Final Scheduled Distribution Date from available funds therefor (including
any amounts on deposit in the Reserve Account), and the outstanding principal
amount, if any, of the A-3 Notes will be payable in full on the A-3 Note Final
Scheduled Distribution Date from available funds therefor (including any amounts
on deposit in the Reserve Account).
OPTIONAL PREPAYMENT. The A-3 Notes will be prepaid in whole, but not in
part, at the A-3 Note Prepayment Price on any Distribution Date after the A-1
Notes and the A-2 Notes have been paid in full, if the Servicer exercises its
option to purchase the Receivables for a purchase price equal to the sum of the
A-3 Note Prepayment Price and the Certificate Prepayment Price, which option may
be exercised when the Pool Balance has been reduced to 10% or less of the
Initial Pool Balance. The prepayment price (the "A-3 NOTE PREPAYMENT PRICE") for
the A-3 Notes will be equal to the unpaid principal amount of the A-3 Notes,
plus accrued but unpaid interest thereon at the A-3 Note Rate plus, to the
extent permitted by law, interest on any past due interest at the A-3 Note Rate.
See "Description of the Transfer and Servicing Agreements-- Termination" in the
Prospectus.
THE INDENTURE TRUSTEE. is the Indenture Trustee under the
Indenture. is and its corporate trust offices are
located at . [In the ordinary course of its business, the Indenture
Trustee and its affiliates have engaged and may in the future engage in
commercial banking or financial advisory transactions with CFSC and its
affiliates.]
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Trust Agreement will be filed with the Commission
following the issuance of the Securities. The following, as well as other
pertinent information included elsewhere in this Prospectus Supplement and in
the Prospectus, summarizes the material terms of the Certificates and the Trust
Agreement. However, this summary does not purport to be complete and is
qualified in its entirety by reference to the provisions of the Certificates and
the Trust Agreement. The following summary supplements, and to the extent
inconsistent therewith replaces, the description of the general terms and
provisions of the Certificates of any given series and the related Trust
Agreement set forth in the Prospectus, to which description reference is hereby
made. will be the Owner Trustee under the Trust Agreement.
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<PAGE>
[Purchasers of Certificates and their assignees will be required to
represent that the beneficial owners of such Certificates are United States
persons, and each must provide a certification of non-foreign status under
penalties of perjury, and also must represent that such beneficial owners are
not a Plan and are not purchasing the Certificates on behalf of or with Plan
Assets of a Plan. See "Certain Federal Income Tax Considerations--Tax
Consequences to Holders of the Certificates--TAX CONSEQUENCES TO FOREIGN
CERTIFICATEHOLDERS" in the Prospectus and "ERISA Considerations" herein and in
the Prospectus.]
DISTRIBUTIONS OF INTEREST INCOME
The Certificates will constitute Fixed Rate Securities, as such term is
defined in the Prospectus under "Certain Information Regarding the
Securities--Fixed Rate Securities." Certificateholders will be entitled to
distributions of interest on each Distribution Date in an amount equal to
one-twelfth of the product of (a) % per annum (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 initial Distribution Date, interest
on the outstanding Certificate Balance will accrue from and including the
Closing Date to but excluding the following Distribution Date. Interest will be
calculated on the basis of a 360-day year of twelve 30-day months. Interest
distributions due for any Distribution Date but not distributed on such
Distribution Date will be due on the next Distribution Date and such past due
amount will be increased, to the extent permitted by law, by an amount equal to
interest on such amount at the Pass-Through Rate. Interest distributions with
respect to the Certificates will be funded from the portion of the Total
Distribution Amount and the amounts on deposit in the Reserve Account remaining
after the distribution of the Servicing Fee (if CFSC or an affiliate is not the
Servicer), the Administration Fee and the Noteholders' Distributable Amount. If
the interest payable on the Certificates on any Distribution Date exceeds such
remaining portion of the Total Distribution Amount and the amounts on deposit in
the Reserve Account, each Certificateholder will receive its pro rata share of
the amount available based on the portion of the Certificate Balance represented
by its Certificates. Notwithstanding the foregoing, if an Event of Default has
occurred and the maturity of the Notes has been accelerated the
Certificateholders will not be entitled to receive any distributions of interest
or principal until the Notes have been paid in full. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account"
herein.
DISTRIBUTIONS OF PRINCIPAL PAYMENTS
Certificateholders will be entitled to distributions on each Distribution
Date in an amount generally equal to the Certificateholders' Percentage of (or,
following the payment in full of the Notes, all of) the Principal Distribution
Amount (defined below). Distributions with respect to principal payments will be
funded from the portion of the Total Distribution Amount remaining after the
distribution of the Servicing Fee (if CFSC or an affiliate is not the Servicer),
the Administration Fee, the Noteholders' Distributable Amount and the
Certificateholders' Interest Distributable Amount, and from the amounts on
deposit in the Reserve Account remaining after the payment of the Noteholders'
Distributable Amount and the Certificateholders' Interest Distributable Amount.
See "Description of the Transfer and Servicing Agreements-- Distributions" and
"--Reserve Account" herein. Until the principal balances of the A-1 Notes and
the A-2 Notes are reduced to zero, the Certificateholders' Percentage will be
zero. Thereafter, the Certificateholder's Percentage will be %; PROVIDED,
HOWEVER, if the amount on deposit in the Reserve Account is less than the lesser
of (i) % of the Initial Pool Balance and (ii) the sum of the aggregate
outstanding principal amount of the Notes and the Certificate Balance on any
Distribution Date, then, with respect to each Distribution Date thereafter, the
Certificateholders' Percentage will be 0% and Certificateholders will not
receive any distributions of principal until the Notes have been paid in full.
Notwithstanding the foregoing, if an Event of Default has occurred and the
maturity of the Notes has been accelerated the Certificateholders will not be
entitled to receive any distributions of interest or principal until the Notes
have been paid in full.
See "Description of the Transfer and Servicing Agreements--Distributions"
herein for definitions of the terms set forth in the preceding paragraph.
OPTIONAL PURCHASE
If the Servicer exercises its option to purchase the Receivables, which
option may be exercised when the Pool Balance has been reduced to 10% or less of
the Initial Pool Balance, as described in the Prospectus
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under "Description of the Transfer and Servicing Agreements--Termination,"
Certificateholders will receive an amount equal to the Certificate Balance
together with accrued interest at the Pass-Through Rate (the "CERTIFICATE
PREPAYMENT PRICE"), which distribution shall effect early retirement of the
Certificates, plus, to the extent permitted by law, interest on any past due
interest at the Pass-Through Rate.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following, as well as other information included elsewhere in this
Prospectus Supplement and in the Prospectus, summarizes the material terms of
the Sale and Servicing Agreement, the Purchase Agreement, the Administration
Agreement, and the Trust Agreement (collectively, the "TRANSFER AND SERVICING
AGREEMENTS," forms of which have been filed as exhibits to the Registration
Statement). Copies of the Transfer and Servicing Agreements will be filed with
the Commission following the issuance of the Securities. The following summary
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the provisions of the Transfer and Servicing Agreements. The
following summary supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Transfer
and Servicing Agreements set forth under the heading "Description of the
Transfer and Servicing Agreements" in the Prospectus, to which description
reference is hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information with respect to the conveyances on the Closing Date of
the Receivables from CFSC to the Seller pursuant to the Purchase Agreement and
from the Seller to the Trust pursuant to the Sale and Servicing Agreement is set
forth under "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables" in the Prospectus. Under certain circumstances
relating to breaches of representations and warranties, CFSC will be required to
repurchase Receivables from the Trust. See "Weighted Average Life of the
Securities" and "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables" in the Prospectus.
ACCOUNTS
In addition to the Trust Accounts referred to in the Prospectus under
"Description of the Transfer and Servicing Agreements--Accounts," the Seller
will establish and maintain the Reserve Account in the name of the Indenture
Trustee on behalf of the Noteholders and the Certificateholders. See "--Reserve
Account" herein.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicing Fee Rate with respect to the Servicing Fee to be paid to the
Servicer with respect to each Collection Period will be % per annum of the
Pool Balance as of the first day of such Collection Period. The Servicing Fee
(together with any portion of the Servicing Fee that remains unpaid from prior
Distribution Dates) will be paid solely to the extent of the Total Distribution
Amount. If CFSC or an affiliate is no longer the Servicer, the Servicing Fee
will be paid prior to the distribution of any portion of the Total Distribution
Amount to the Administrator and the Noteholders or the Certificateholders, and
except under certain circumstances, deposits into the Collection Account shall
be made net of such amounts. The Servicer shall also be entitled to any
Servicer's Yield, and deposits into the Collection Account shall be made net of
such amounts. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" and "--Net Deposits"
in the Prospectus.
DISTRIBUTIONS
DEPOSITS TO COLLECTION ACCOUNT. By the business day prior to a
Distribution Date (each, a "DETERMINATION DATE"), the Servicer will provide the
Indenture Trustee with certain information with respect to the related
Collection Period, including the amount of aggregate collections on the
Receivables and the aggregate Purchase Amount of Receivables required to be
repurchased by the Seller or required to be purchased by the Servicer.
Unless the Servicer has been making deposits of collections throughout the
related Collection Period, on or before the business day preceding each
Distribution Date the Servicer will cause the Total Distribution Amount to be
deposited into the Collection Account.
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The "TOTAL DISTRIBUTION AMOUNT" for a Distribution Date shall be the sum of
the aggregate collections (including any Liquidation Proceeds, any Purchase
Amounts paid by the Seller and the Servicer and any amounts received from
Dealers with respect to Receivables) received in respect of the Receivables
during the related Collection Period and Investment Earnings on the Trust
Accounts during such Collection Period. The Total Distribution Amount on any
Distribution Date shall exclude 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.
"LIQUIDATED RECEIVABLES" means defaulted Receivables in respect of which the
Financed Equipment has been sold or otherwise disposed of, and "LIQUIDATION
PROCEEDS" means all proceeds relating to the Liquidated Receivables (including
proceeds of sale of the Financed Equipment), net of expenses incurred by the
Servicer in connection with such liquidation and any amounts required by law to
be remitted to the Obligor on such Liquidated Receivables.
The "PRINCIPAL DISTRIBUTION AMOUNT" for a Distribution Date shall be 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).
DEPOSITS TO THE DISTRIBUTION ACCOUNTS. Prior to each Distribution Date, the
Servicer shall instruct the Indenture Trustee to make deposits and distributions
for receipt by the Servicer or Administrator or for deposit in the applicable
Trust Account on the following Distribution Date.
Distributions of the Total Distribution Amount shall be made 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, 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 A-1 Noteholders' Principal
Distributable Amount;
(v) to the Note Distribution Account, the A-2 Noteholders' Principal
Distributable Amount;
(vi) to the Note Distribution Account, the 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.
Notwithstanding the foregoing, if an Event of Default has occurred and the
maturity of the Notes has been accelerated Noteholders of each Class will be
entitled to be paid principal pro rata on the basis of the ratio which the
principal amount of a Noteholder's Note bears to the aggregate principal amount
of the Notes of all Classes, and the Certificateholders will not be entitled to
receive any distributions of interest or principal until the Notes have been
paid in full.
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Funds will be withdrawn from amounts on deposit in the Reserve Account to
the extent that the Total Distribution Amount (after the payment of the
Servicing Fee (if CFSC or an affiliate is not the Servicer) and the
Administration Fee) with respect to any Collection Period is less than the
Noteholders' Distributable Amount, and funds in the amount of such deficiency
will be deposited in the Note Distribution Account. In addition, funds will be
withdrawn from amounts on deposit in the Reserve Account to the extent that the
portion of the Total Distribution Amount remaining after the payment of the
Servicing Fee (if CFSC or an affiliate is not the Servicer) and the
Administration Fee and the deposit of the Noteholders' Distributable Amount in
the Note Distribution Account is less than the Certificateholders' Distributable
Amount, and funds in the amount of such deficiency will be deposited in the
Certificate Distribution Account. Notwithstanding the foregoing, if on any
Distribution Date on which any Notes are outstanding the amount on deposit in
the Reserve Account is less than % of the Pool Balance as of the end of the
preceding Collection Period, then funds will be withdrawn from the Reserve
Account only to the extent needed to pay the interest due on the Notes and the
Certificates and no funds from the Reserve Account will be applied on such
Distribution Date to principal of the Notes or the Certificates; PROVIDED,
HOWEVER, that this restriction on withdrawals shall be inapplicable if an Event
of Default has occurred which resulted in acceleration of the Notes.
"A-1 NOTE FINAL SCHEDULED DISTRIBUTION DATE" means the
Distribution Date.
"A-1 NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date until the Distribution Date on which the
outstanding principal amount of the A-1 Notes has been reduced to zero, 100% of
the Principal Distribution Amount for such Distribution Date, but such amount
shall not be in excess of the outstanding principal amount of the A-1 Notes.
"A-1 NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of
any Distribution Date, the excess, if any, of (i) the sum of (A) the A-1
Noteholders' Monthly Principal Distributable Amount for such Distribution Date
and (B) any outstanding A-1 Noteholders' Principal Carryover Shortfall as of the
close of the preceding Distribution Date over (ii) the amount in respect of
principal that is actually deposited in the Note Distribution Account in respect
of the A-1 Notes.
"A-1 NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the A-1 Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and (ii) the A-1 Noteholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; PROVIDED, HOWEVER, that the sum of clauses (i) and (ii) above shall not
exceed the outstanding principal amount of the A-1 Notes, and on the A-1 Note
Final Scheduled Distribution Date, the 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 A-1 Notes to zero.
"A-2 NOTE FINAL SCHEDULED DISTRIBUTION DATE" means the
Distribution Date.
"A-2 NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date on or after the Distribution Date on which an
amount sufficient to reduce the outstanding principal amount of the A-1 Notes to
zero has been deposited in the Note Distribution Account, 100% of the excess, if
any, of the Principal Distribution Amount over (ii) the portion of the Principal
Distribution Amount, if any, applied to reduce the outstanding principal amount
of the A-1 Notes to zero on such Distribution Date. In addition, on any
Distribution Date on or after the Distribution Date, amounts on
deposit in the Reserve Account in excess of the Specified Reserve Account
Balance for such Distribution Date shall be paid as principal of the A-2 Notes
to the extent described under "--Reserve Account" below.
"A-2 NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of
any Distribution Date, the excess, if any, of (i) the sum of (A) the A-2
Noteholders' Monthly Principal Distributable Amount for such Distribution Date
and (B) any outstanding A-2 Noteholders' Principal Carryover Shortfall as of the
close of the preceding Distribution Date over (ii) the amount in respect of
principal that is actually deposited in the Note Distribution Account in respect
of the A-2 Notes.
"A-2 NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the A-2 Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and (ii) the A-2 Noteholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date;
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PROVIDED, HOWEVER, that, until an amount sufficient to reduce the outstanding
principal amount of the A-1 Notes to zero has been deposited in the Note
Distribution Account, the A-2 Noteholders' Principal Distributable Amount shall
be zero; PROVIDED, FURTHER, that the sum of clauses (i) and (ii) shall not
exceed the outstanding principal amount of the A-2 Notes, and on the A-2 Note
Final Scheduled Distribution Date, the 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 A-2 Notes to zero.
"A-3 NOTE FINAL SCHEDULED DISTRIBUTION DATE" means the
Distribution Date.
"A-3 NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date on or after the Distribution Date on which an
amount sufficient to reduce the outstanding principal amount of the A-1 Notes
and the A-2 Notes to zero has been deposited in the Note Distribution Account,
the A-3 Noteholders' Percentage of the difference between the Principal
Distribution Amount and the portion thereof, if any, applied to reduce the
outstanding principal amount of the A-1 Notes and the A-2 Notes to zero on such
Distribution Date. In addition, on any Distribution Date on or after the
Distribution Date, amounts on deposit in the Reserve Account in
excess of the Specified Reserve Account Balance for such Distribution Date shall
be paid as principal of the A-3 Notes to the extent described under "--Reserve
Account" below.
"A-3 NOTEHOLDERS' PERCENTAGE" means %; PROVIDED, HOWEVER, that if the
amount on deposit in the Reserve Account is less than the lesser of (i) % of
the Initial Pool Balance and (ii) the sum of (x) the outstanding principal
amount of the Notes and (y) the Certificate Balance, then, with respect to each
Distribution Date thereafter, the A-3 Noteholders' Percentage shall be 100%.
"A-3 NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of
any Distribution Date, the excess, if any, of (i) the sum of (A) the A-3
Noteholders' Monthly Principal Distributable Amount for such Distribution Date
and (B) any outstanding A-3 Noteholders' Principal Carryover Shortfall as of the
close of the preceding Distribution Date over (ii) the amount in respect of
principal that is actually deposited in the Note Distribution Account in respect
of the A-3 Notes.
"A-3 NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the A-3 Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and (ii) the A-3 Noteholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; PROVIDED, HOWEVER, that, until an amount sufficient to reduce the
outstanding principal amount of the A-1 Notes and the A-2 Notes to zero has been
deposited in the Note Distribution Account, the A-3 Noteholders' Principal
Distributable Amount shall be zero; PROVIDED, FURTHER, that the sum of clauses
(i) and (ii) shall not exceed the outstanding principal amount of the A-3 Notes,
and on the A-3 Note Final Scheduled Distribution Date, the A-3 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 A-3 Notes to zero.
"APR" means, with respect to any Receivable, the annual percentage rate of
interest represented by such Receivable, based on its Principal Balance. The APR
of any subsidized Receivable does not take into account any amounts paid to CFSC
by Caterpillar with respect thereto at its origination.
"CERTIFICATE BALANCE" equals, on the Closing Date, $ and,
thereafter, equals $ , reduced by all amounts allocable to principal
previously distributed to Certificateholders. The Certificate Balance shall also
be reduced on any Distribution Date by the excess, if any, of (i) the sum of (A)
the Certificate Balance and (B) the outstanding principal amount of the Notes
(in each case after giving effect to amounts in respect of principal to be
deposited in the Certificate Distribution Account and the Note Distribution
Account on such Distribution Date), 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, but not by more than the aggregate reductions in
the Certificate Balance set forth in the preceding sentence.
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"CERTIFICATE FINAL SCHEDULED DISTRIBUTION DATE" means the
Distribution Date.
"CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the Certificateholders' Principal
Distributable Amount and (ii) the Certificateholders' Interest Distributable
Amount.
"CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with respect to
any Distribution Date, the sum of (i) the excess, if any, of (A) the sum of (1)
the Certificateholders' Monthly Interest Distributable Amount for the preceding
Distribution Date and (2) any outstanding Certificateholders' Interest Carryover
Shortfall on such preceding Distribution Date, over (B) the amount in respect of
interest that is actually deposited in the Certificate Distribution Account on
such preceding Distribution Date, plus (ii) interest on such excess, to the
extent permitted by law, at the Pass-Through Rate.
"CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, an amount equal to the aggregate interest
accrued on the Certificates at the Pass-Through Rate from and including the
preceding Distribution Date (or from and including the Closing Date in the case
of the initial Distribution Date) to but excluding such Distribution Date (based
on a 360-day year of twelve 30-day months).
"CERTIFICATEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date on or after the Distribution Date on which the
principal amounts of the A-1 Notes and the A-2 Notes are reduced to zero, the
Certificateholders' Percentage of the Principal Distribution Amount (less the
portion thereof, if any, applied on such Distribution Date to reduce the
principal amounts of the A-1 Notes and the A-2 Notes to zero, which shall be
deposited into the Note Distribution Account) and, with respect to any
Distribution Date on or after the first Distribution Date on which the
outstanding principal amount of the A-3 Notes is reduced to zero, 100% of the
Principal Distribution Amount (less the portion thereof required on the first
such Distribution Date to reduce the outstanding principal amount of the Notes
to zero, which shall be deposited into the Note Distribution Account); PROVIDED,
HOWEVER, that if as described in the definition of "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 A-3 Noteholders'
Percentage (if any A-3 Notes are outstanding).
"CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the close
of any Distribution Date, the sum of (i) the excess, if any, of (A) the sum of
(1) the Certificateholders' Monthly Principal Distributable Amount and (2) any
outstanding Certificateholders' Principal Carryover Shortfall from the preceding
Distribution Date, over (B) the amount in respect of principal that is actually
deposited in the Certificate Distribution Account and (ii) the unreimbursed
portion of the amount by which the Certificate Balance has been reduced as
described in the second sentence of the definition of "Certificate Balance"
above.
"CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of (i) the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and (ii) the Certificateholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; PROVIDED, HOWEVER, that, until an amount sufficient to reduce the
outstanding principal amounts of the A-1 Notes and the A-2 Notes to zero has
been deposited in the Note Distribution Account, the Certificateholders'
Principal Distributable Amount shall be zero; PROVIDED, FURTHER, that the sum of
clauses (i) and (ii) 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.
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"CUT-OFF DATE APR" is %, which is the weighted average APR of the
Receivables as of the Cut-off Date.
"INITIAL POOL BALANCE" means $ , which is the sum of the Principal
Balances of each Receivable as of the Cut-off Date.
"NOTEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date, the sum of (i) the A-1 Noteholders' Principal Distributable Amount, (ii)
the A-2 Noteholders' Principal Distributable Amount, (iii) the A-3 Noteholders'
Principal Distributable Amount and (iv) the Noteholders' Interest Distributable
Amount.
"NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the sum of (i) the excess, if any, of (A) the sum of (1) the
Noteholders' Monthly Interest Distributable Amount for the preceding
Distribution Date and (2) any outstanding Noteholders' Interest Carryover
Shortfall on such preceding Distribution Date, over (B) the amount in respect of
interest that is actually deposited in the Note Distribution Account on such
preceding Distribution Date, and (ii) 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 applicable interest rate or rates borne by such Notes
from such preceding Distribution Date through such current Distribution Date.
"NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for such Distribution Date and 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 aggregate amount of interest
accrued on the A-1 Notes, the A-2 Notes and the A-3 Notes at their respective
interest rates from and including the preceding Distribution Date (or, in the
case of the initial Distribution Date, from and including the Closing Date) to
but excluding such Distribution Date based on a 360-day year of twelve 30-day
months).
"PASS-THROUGH RATE" means % per annum.
"POOL BALANCE" means, at any time, the aggregate Principal Balance of the
Receivables at the end of the preceding Collection Period, after giving effect
to 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 to
all Realized Losses on Liquidated Receivables during such Collection Period.
"REALIZED LOSSES" means, with respect to any Collection Period, (i) the
excess of the Principal Balance of the Liquidated Receivables over Liquidation
Proceeds for such Collection Period to the extent allocable to principal and
(ii) amounts payable by Dealers with respect to Over-Rate Receivables which are
deemed uncollectible by the Servicer.
On each Distribution Date, all amounts on deposit in the Note Distribution
Account will be distributed to the Noteholders, and all amounts on deposit in
the Certificate Distribution Account will be distributed to the
Certificateholders.
RESERVE ACCOUNT
The rights of the Certificateholders to receive distributions with respect
to the Receivables generally will be subordinated to the rights of the
Noteholders in the event of defaults and delinquencies on the Receivables, as
provided in the Indenture, the Trust Agreement and the Sale and Servicing
Agreement. The protection afforded to the Noteholders through subordination will
be effected by the preferential right of the Noteholders to receive both current
distributions with respect to the Receivables and withdrawals from the Reserve
Account. The Reserve Account will be created with an initial deposit by the
Seller on the Closing Date of at least $ (the "RESERVE ACCOUNT INITIAL
DEPOSIT") and will be augmented on each Distribution Date by the deposit therein
of the Total Distribution Amount remaining after the payment of the Servicing
Fee (in the priority described herein), the Administration Fee, the deposit of
the Noteholders'
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Interest Distributable Amount and the Noteholders' Principal Distributable
Amount in the Note Distribution Account, and the deposit of the
Certificateholders' Distributable Amount in the Certificate Distribution
Account, in each case as described above under "--Distributions." Amounts on
deposit in the Reserve Account will be released on each Distribution Date to the
Seller or to the A-2 Noteholders and/or the A-3 Noteholders on account of their
respective principal amounts, as described herein, to the extent that the amount
on deposit in the Reserve Account (after giving effect to withdrawals made on
such Distribution Date) exceeds the Specified Reserve Account Balance on such
Distribution Date.
"SPECIFIED RESERVE ACCOUNT BALANCE," with respect to any Distribution Date,
will be equal to the greater of (a) % of the Pool Balance as of the close of
business on the last day of the preceding Collection Period and (b) $
(or such greater percentage or amount as may be set forth in the Sale and
Servicing Agreement); PROVIDED, HOWEVER, that the amount in clause (a) with
respect to a Distribution Date (referred to herein as the "CURRENT DISTRIBUTION
DATE") shall be equal to the amount calculated for such clause (a) for the
Distribution Date immediately preceding such Current Distribution Date if any of
the following events occur: (i) 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 % of the Initial Pool
Balance; (ii) the sum of (x) 12 times the Realized Losses realized during the
Collection Period immediately preceding such Current Distribution Date plus (y)
the aggregate Principal Balance as of the last day of the Collection Period
immediately preceding such Current Distribution Date of all Receivables which
have not yet been liquidated as to which the Financed Equipment securing such
Receivables has been repossessed exceeds the amount equal to % of the Pool
Balance at the beginning of such Collection Period; or (iii) 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 Current Distribution
Date exceeds an amount equal to % of the Pool Balance as of the end of such
Collection Period; PROVIDED, FURTHER, that the Specified Reserve Account Balance
shall not exceed the sum of the outstanding aggregate principal amount of the
Notes and the Certificate Balance, and that upon payment of all the interest and
principal due on the Notes and the Certificates, the Specified Reserve Account
Balance shall be zero.
If the amount on deposit in the Reserve Account prior to the
Distribution Date (or following the payment of the Notes in full)
is greater than the Specified Reserve Account Balance for such Distribution
Date, the Servicer shall instruct the Indenture Trustee to distribute the amount
of the excess to the Seller; PROVIDED, HOWEVER, 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 the outstanding principal amount of the Notes and 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 the
Sale and Servicing Agreement. On any Distribution Date on and after the
Distribution Date, if the amount on deposit in the Reserve Account
(after giving effect to all deposits or withdrawals therefrom on such
Distribution Date, other than withdrawals described in this sentence) is greater
than the Specified Reserve Account Balance for such Distribution Date, the
Servicer shall instruct the Indenture Trustee to deposit all of the amount of
the excess in the Note Distribution Account for distribution to the A-2
Noteholders as a payment of principal on such Distribution Date (until the A-2
Notes have been paid in full) and then to the A-3 Noteholders as a payment of
principal (until the A-3 Notes have been paid in full). Upon the Certificate
Final Scheduled Distribution Date or the date of the optional purchase of the
Receivables by the Servicer (but only after payment of all interest and
principal of the Notes and Certificates), the Servicer shall instruct the
Indenture Trustee to distribute the Reserve Account balance to the Seller. Upon
any distribution to the Seller of amounts from the Reserve Account, neither the
Noteholders nor the Certificateholders will have any rights in, or claims to,
such amounts.
Funds will be withdrawn from the amounts on deposit in the Reserve Account
to the extent that the Total Distribution Amount (after the payment of the
Servicing Fee (if CFSC or an affiliate is not the Servicer) and the
Administration Fee) with respect to any Collection Period is less than the
Noteholders' Distributable Amount, and funds in the amount of such deficiency
will be deposited in the Note Distribution Account. In addition, funds will be
withdrawn from amounts on deposit in the Reserve Account to the extent that the
portion of the Total Distribution Amount remaining after the payment of the
Servicing Fee (if CFSC
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or an affiliate is not the Servicer) and the Administration Fee and the deposit
of the Noteholders' Distributable Amount in the Note Distribution Account is
less than the Certificateholders' Distributable Amount, and funds in the amount
of such deficiency will be deposited in the Certificate Distribution Account.
Notwithstanding the foregoing, if on any Distribution Date on which any Notes
are outstanding the amount on deposit in the Reserve Account is less than %
of the Pool Balance as of the end of the preceding Collection Period, then funds
will be withdrawn from the Reserve Account only to the extent needed to pay the
interest due on the Notes and the Certificates, and no funds from the Reserve
Account will be applied on such Distribution Date to principal of the Notes or
the Certificates.
If on any Distribution Date the entire Noteholders' Distributable Amount for
such Distribution Date (after giving effect to any amounts withdrawn from the
Reserve Account) is not deposited in the Note Distribution Account, the
Certificateholders will not receive any distributions.
The availability of funds in the Reserve Account is intended to enhance the
likelihood of receipt by the Noteholders and Certificateholders of the full
amount of principal and interest due them and to decrease the likelihood that
the Noteholders and Certificateholders will experience losses. In addition, the
subordination of the Certificates to the Notes is intended to provide the
Noteholders with these same protections. However, because in certain
circumstances the Reserve Account could be depleted and/or the aggregate amount
of Realized Losses could exceed the Certificate Balance, these protections are
limited.
NET DEPOSITS
As an administrative convenience, the Servicer will be permitted to make the
deposit of collections and Purchase Amounts required to be remitted by the
Servicer for or with respect to each Collection Period net of distributions to
be made to the Servicer (including any Servicer's Yield and the Servicing Fee to
the extent of amounts available for the payment thereof) with respect to such
Collection Period; provided, that if the Servicer is required to remit
collections daily, deposits of such amounts may only be made net of the
Servicer's Yield and may not be made net of the Servicing Fee. See "Description
of the Transfer and Servicing Agreements--Net Deposits" in the Prospectus. The
Servicer, however, will account to the Indenture Trustee, the Owner Trustee, the
Noteholders and the Certificateholders as if the Servicing Fees were distributed
individually.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SALE AND TRANSFER OF RECEIVABLES
The transfer of ownership of the Receivables from CFSC to the Seller and
from the Seller to the Trust, and the granting of the security interest in the
Receivables by the Trust to the Indenture Trustee, will in each case be
perfected by the Custodian, on behalf of the applicable assignee, taking
possession of the [Installment Sales Contracts] [and] [the Leases] and any
related Dealer Agreements pursuant to the Custodial Agreement. The Custodian
will maintain possession of the Receivables Files in a space leased by the
Custodian proximate to the principal executive office of the Seller. CFSC will
indicate on its computer records that the Receivables have been sold to the
Seller and by the Seller to the Trust. Each Receivables File will contain the
single original related [Installment Sales Contract] [or] [Lease] (as
represented by CFSC in the Purchase Agreement). UCC financing statements will
not be filed to perfect these transfers of ownership or such grant of a security
interest in the Receivables, and CFSC will not stamp the physical Receivables
Files or the [Installment Sales Contracts] [or] [the Lease]. See "Risk
Factors--PERFECTION OF INTERESTS IN RECEIVABLES AND IN FINANCED EQUIPMENT"
herein and in the Prospectus. Although steps will be taken to ensure that the
Seller does not obtain possession or control of the [Installment Sales
Contracts] [or] [Leases], should a court find that the Seller did have
possession or control of such [Installment Sales Contracts] [or] [Leases], the
interests of the Trust and the Indenture Trustee in the Receivables would in all
likelihood be unperfected.
DEALER RECOURSE RECEIVABLES
The terms of a limited number of Receivables provide that CFSC has recourse
to the related Dealer for all or a portion of the losses CFSC may incur.
However, in the event of a Dealer's bankruptcy, a bankruptcy trustee, a creditor
or the Dealer as debtor in possession might attempt to characterize recourse
sales of
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<PAGE>
Receivables to CFSC as loans to the Dealer from CFSC secured by the Receivables;
such an attempt, if successful, could result in payment delays or losses on the
affected Receivables. This right of recourse has been assigned to the Seller,
the Trust and the Indenture Trustee.
Under certain circumstances CFSC may acquire Receivables from Dealers at
prices in excess of their stated principal balances ("OVER-RATE RECEIVABLES").
This premium represents the present value of a portion of the interest due under
the related [Installment Sales Contract] [or] [Lease]. Upon prepayment in full
of an Over-Rate Receivable, the principal balance due from the Obligor on any
such Receivable will be less than such Receivable's Principal Balance, which is
CFSC's, the Seller's and the Trust's investment in such Receivable. Each related
Dealer Agreement provides that the related Dealer shall pay to CFSC the amount
of such shortfall upon such a prepayment. Pursuant to the Purchase Agreement,
CFSC will assign to the Seller its right to such payment from the Dealer, and
pursuant to the Sale and Servicing Agreement the Seller will assign such right
to the Trust. Pursuant to the Indenture, the Trust will grant a security
interest in such right to the Indenture Trustee. Were each such Over-Rate
Receivable to prepay in full, the Seller believes that the aggregate amount of
such shortfall would not have a material adverse effect on Securityholders
[given the amount on deposit in the Reserve Account].
CROSS-COLLATERALIZATION
Because CFSC on occasion cross-collateralizes its installment sales
contracts (whether at origination or pursuant to an adjustment to such
installment sales contract) with a particular Obligor with other equipment of
such Obligor financed by CFSC, it is possible that (i) an item of Financed
Equipment may secure more than one contract with such Obligor, and each of those
contracts may not be included in the Trust as a Receivable and (ii) a Receivable
may be secured by a first priority lien on the related Financed Equipment and a
lien on financed equipment unencumbered or related to contracts with such
Obligor not included in the Trust. In any event, the aggregate principal amount
of CFSC's cross-collateralized installment sales contracts with respect to any
one Obligor, whether or not all are included in the Trust as Receivables, will
not, at the time of origination of any such cross-collateralized contracts,
exceed the aggregate current appraised value of all the financed equipment
serving as security for such contracts, and the Trust will either have a first
priority lien in the related Financed Equipment or CFSC may be required to
repurchase the related Receivable under certain circumstances. See "Description
of Transfer and Servicing Agreements-- Sale and Assignment of the Receivables"
in the Prospectus.
Pursuant to the Purchase Agreement, CFSC, as holder of a junior lien on an
item of Financed Equipment, will agree not to exercise its right to foreclose
upon such junior lien until (i) the related Receivable has been paid in full or
(ii) the related first priority lien on the Financed Equipment has been
foreclosed upon or released. Therefore, there is no risk to the Trust that CFSC,
as junior lienholder, would foreclose upon Financed Equipment, possibly
resulting in a substitution of the related Obligor.
The Trust shall have the right to foreclose upon all liens, junior or
otherwise, that it holds with respect to any Receivable, whether on the related
Financed Equipment or on equipment the first priority lien on which has not been
assigned to the Trust. If the Trust forecloses on a junior lien on any equipment
in which it does not have a first priority lien, such foreclosure would be
subject to the senior liens not held by the Trust. In addition, any junior liens
held by the Trust may be eliminated should any more senior liens not held by the
Trust foreclose upon the related equipment.
CFSC does not maintain statistical data with respect to the portion of each
retail [installment sales contract] [or lease] secured by related Financed
Equipment and the portion of such contract secured by the cross- collateralized
liens. [However, because the existence of such cross-collateralized liens will
not place the Trust in a different credit position than that of CFSC should CFSC
retain the Receivables, and in light of CFSC's credit loss experience with
respect to the U.S. [ISC] [Lease] Portfolio, the Seller believes that such
statistical data with respect to the cross-collateralization of the Receivables
is not material to investors in the Securities.]
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<PAGE>
[LEGAL INVESTMENT
The A-1 Notes will be eligible securities for purchase by money market funds
under paragraph (a)(9) of Rule 2a-7 under the Investment Company Act of 1940, as
amended.]
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code impose certain requirements on employee benefit
plans and certain other plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and certain collective investment funds or
insurance company general or separate accounts in which such plans, accounts or
arrangements are invested, that are subject to the fiduciary responsibility and
prohibited transaction provisions of ERISA and/ or Section 4975 of the Code
(collectively, "PLANS"), and on persons who are fiduciaries with respect to
Plans, in connection with the investment of assets that are treated as "plan
assets" of any Plan for purposes of applying Title I of ERISA and Section 4975
of the Code ("PLAN ASSETS"). ERISA generally imposes on Plan fiduciaries certain
general fiduciary requirements, including those of investment prudence and
diversification and the requirement that a Plan's investments be made in
accordance with the documents governing the Plan. Generally, any person who has
discretionary authority or control respecting the management or disposition of
Plan Assets, and any person who provides investment advice with respect to such
assets for a fee, is a fiduciary with respect to such Plan Assets.
THE NOTES
Subject to the considerations described below, the Notes are eligible for
purchase with Plan Assets of any Plan.
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons ("PARTIES IN INTEREST" under ERISA and
"DISQUALIFIED PERSONS" under the Code) who have certain specified relationships
to a Plan or its Plan Assets, unless a statutory or administrative exemption is
available. Parties in Interest or Disqualified Persons that participate in a
prohibited transaction may be subject to a penalty imposed under ERISA and/or an
excise tax imposed pursuant to Section 4975 of the Code, unless a statutory or
administrative exemption is available. These prohibited transactions generally
are set forth in Section 406 of ERISA and Section 4975 of the Code.
Any fiduciary or other Plan investor considering whether to purchase the
Notes with Plan Assets of any Plan should determine whether such purchase is
consistent with its fiduciary duties and whether such purchase would constitute
or result in a non-exempt prohibited transaction under ERISA and/or Section 4975
of the Code because any of the Seller, the Servicer, the Indenture Trustee, the
Owner Trustee, any Certificateholder or any other parties may be deemed to be
benefiting from the issuance of the Notes and are Parties in Interest or
Disqualifed Persons with respect to the investing Plan. In particular, the Notes
may not be purchased with Plan Assets of any Plan if any of the Seller, the
Servicer, the Indenture Trustee, the Owner Trustee, any Certificateholder or any
of their respective affiliates (a) has investment or administrative discretion
with respect to the Plan Assets used to effect such purchase; (b) has authority
or responsibility to give, or regularly gives, investment advice with respect to
such Plan Assets, for a fee and pursuant to an agreement or understanding that
such advice (1) will serve as a primary basis for investment decisions with
respect to such Plan Assets, and (2) will be based on the particular investment
needs of such Plan; or (c) is an employer maintaining or contributing to such
Plan. Each purchaser of the Notes will be deemed to have represented and
warranted that its purchase of the Notes or any interest therein does not
violate the foregoing limitations.
Any such fiduciary or other Plan investor should also consult with its
counsel regarding the applicability of the fiduciary responsibility and
prohibited transaction provisions of ERISA and Section 4975 of the Code to such
investment and the availability of any prohibited transaction exemption, E.G.,
U.S. Department of Labor (the "DOL") Prohibited Transaction Exemptions 96-23
(Class Exemption for Plan Asset Transactions Determined by In-House Investment
Managers), 95-60 (Class Exemption for Certain Transactions Involving Insurance
Company General Accounts), 91-38 (Class Exemption for Certain Transactions
Involving Bank
S-44
<PAGE>
Collective Investment Funds), 90-1 (Class Exemption for Certain Transactions
Involving Insurance Company Pooled Separate Accounts) and 84-14 (Class Exemption
for Plan Asset Transactions Determined by Independent Qualified Professional
Asset Managers). A purchaser of the Notes should be aware, however, that even if
the conditions specified in one or more of the above exemptions are met, the
scope of the relief provided by the exemption might not cover all acts which
might be construed as prohibited transactions. In addition, investors other than
Plan investors should be aware that a prohibited transaction could be deemed to
occur if any holder of the Certificates or any of its affiliates is or becomes a
Party in Interest or a Disqualified Person with respect to any Plan that
purchases and holds the Notes without being covered by one or more of the above
exemptions.
In addition, under Section 2510.3-101 of the regulations of the DOL (the
"PLAN ASSET REGULATION"), the purchase with Plan Assets of equity interests in
the Trust could, in certain circumstances, cause the Receivables and other
assets of the Trust to be deemed Plan Assets of the investing Plan which, in
turn, would subject the Trust and its assets to the fiduciary responsibility
provisions of ERISA and the prohibited transaction provisions of ERISA and
Section 4975 of the Code. Nevertheless, because the Notes (a) should be treated
as indebtedness under local law and debt, rather than equity, for tax purposes
(see "Certain Federal Income Tax Considerations--Tax Consequences to Holders of
the Notes--TREATMENT OF THE NOTES AS INDEBTEDNESS" in the Prospectus), and (b)
should not be deemed to have any "substantial equity features," purchases of the
Notes with Plan Assets should not be treated as equity investments and,
therefore, the Receivables and other assets included as assets of the Trust
should not be deemed to be Plan Assets of the investing Plans. Those conclusions
are based, in part, upon the traditional debt features of the Notes, including
the reasonable expectation of purchasers of Notes that the Notes (which are
highly rated by the Rating Agencies) will be repaid when due, as well as the
absence of conversion rights, warrants and other typical equity features. Before
purchasing the Notes, a fiduciary or other Plan investor should itself confirm
that the Notes constitute indebtedness, and have no substantial equity features,
for purposes of the Plan Asset Regulation.
THE CERTIFICATES
BECAUSE PURCHASES OF THE CERTIFICATES ARE EQUITY INVESTMENTS, THE
CERTIFICATES MAY NOT BE PURCHASED BY, OR ON BEHALF OF OR WITH PLAN ASSETS OF ANY
PLAN, OR WITH ASSETS THAT ARE TREATED AS ASSETS OF ANY "BENEFIT PLAN INVESTOR"
UNDER THE PLAN ASSET REGULATION, AND EACH PURCHASER OF THE CERTIFICATES WILL BE
DEEMED TO REPRESENT AND WARRANT THAT IT IS NEITHER A PLAN NOR PURCHASING THE
CERTIFICATES ON BEHALF OF OR WITH PLAN ASSETS OF ANY BENEFIT PLAN INVESTOR, IN
EACH CASE EXCEPT AS PROVIDED BELOW.
Under the Trust Agreement each purchaser of Certificates will be deemed to
represent, warrant and covenant that either (a) it is not a Plan and is not
acquiring the Certificates on behalf of or with Plan Assets of any benefit plan
investor or (b) it is an insurance company acting on behalf of its general
account, and (i) on the date it acquires the Certificates, less than 25% of the
assets of such general account constitute Plan Assets and (ii) if at any time
during any calander quarter after the initial acquisition of the Certificates,
25% or more of the assets of such general account constitute Plan Assets and no
exemption or exception from the prohibited transaction rules applies to the
continued holding of the Certificates under Section 401(c) of ERISA and final
regulations thereunder or an exemption or regulation issued by the DOL under
ERISA, then such insurance company will dispose of all of the Certificates then
held in its general account by the end of the next following calendar quarter.
Generally, the term "benefit plan investor" includes Plans, investors acting on
behalf of or using the assets of any Plan, and plans that are generally not
subject to the prohibited transaction rules of Title I of ERISA and Section 4975
of the Code, such as "governmental plans" (as defined in Section 3(32) of ERISA)
and certain church plans (as defined in Section 3(33) of ERISA). Pursuant to an
exception to the "equity interest" rule set forth in the Plan Asset Regulation,
assuming the accuracy of the representations, warranties and covenants so made
by purchasers of the Certificates, the Receivables and other assets of the Trust
should not be deemed to constitute Plan Assets as the result of purchases of the
Certificates by insurance company general account investors.
Insurance company general account investors should also note that the Small
Business Job Protection Act of 1996 added new Section 401(c) of ERISA relating
to the status of the assets of insurance company
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<PAGE>
general accounts under ERISA and Section 4975 of the Code. Pursuant to Section
401(c), the DOL is required to issue final regulations (the "GENERAL ACCOUNT
REGULATIONS") not later than December 31, 1997 with respect to insurance
policies issued on or before December 31, 1998 that are supported by an
insurer's general account. The General Account Regulations are to provide
guidance on which assets held by the insurer in its general account constitute
Plan Assets. The assets of a general account that support insurance policies
(other than "guaranteed benefit policies") within the meaning of Section 401(b)
(2) of ERISA) (i) issued to Plans after December 31, 1998, or (ii) issued to
Plans on or before December 31, 1998 for which the insurance company does not
comply with the General Account Regulations, may be treated as Plan Assets.
However, except in the case of avoidance of the General Account Regulations and
actions brought by the Secretary of Labor relating to certain breaches of
fiduciary duties which also constitute breaches of state or federal criminal
law, until the date which is 18 months after the General Account Regulations
become final, no liability under the fiduciary responsibility and prohibited
transaction provisions of ERISA and Section 4975 of the Code may result on the
basis of a claim that the assets of the general account of an insurance company
constitute Plan Assets of any such Plan. The Plan Assets status of insurance
company separate accounts is unaffected by new Section 401(c) of ERISA and
separate account assets continue to be treated as Plan Assets of any Plan
invested in an separate account.
If (i) 25% or more of the Certificates constitute Plan Assets of benefit
plan investors, (ii) the assets of a general account invested in the
Certificates are treated as Plan Assets and (iii) the protections of Section
401(c) of ERISA become unavailable, certain violations of the prohibited
transaction rules may be deemed to occur as a result of the operation of the
Trust. Insurance companies contemplating the investment of general account
assets in the Certificates should consult with their own counsel concerning the
potential applicability of the Plan Asset Regulation, the impact of Section
401(c) of ERISA, including the status of assets of the general account and its
ability to continue to hold the Certificates after the date which is 18 months
after the General Account Regulations become final.
For further information see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "NOTE UNDERWRITING AGREEMENT"), the Seller has agreed to cause the Trust to
sell to the underwriter[s] named below (the "NOTE UNDERWRITER[S]"), and [each
of] the Note Underwriter[s] has [severally] agreed to purchase, the principal
amount of Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT
NOTE UNDERWRITER[S] OF A-1 NOTES OF A-2 NOTES OF A-3 NOTES
---------------- ---------------- ----------------
<S> <C> <C> <C>
---------------- ---------------- ----------------
Total.................................. $ $ $
---------------- ---------------- ----------------
---------------- ---------------- ----------------
</TABLE>
In the Note Underwriting Agreement, the [several] Note Underwriter[s] [have]
[has] agreed, subject to the terms and conditions therein, to purchase all the
Notes offered hereby if any of such Notes are purchased. The Seller has been
advised by the Note Underwriter[s] that [it] [they] propose[s] initially to
offer the A-1 Notes, the A-2 Notes and the A-3 Notes to the public at the prices
set forth herein, and to certain dealers at such prices less a concession not in
excess of % per A-1 Note, % per A-2 Note and % per A-3 Note. The Note
Underwriter[s] may allow and such dealers may reallow a concession not in excess
of % per A-1 Note, % per A-2 Note and % per A-3 Note to certain other
dealers. After the initial public offering, such prices and such concessions may
be changed.
Subject to the terms and conditions set forth in an underwriting agreement
(the "CERTIFICATE UNDERWRITING AGREEMENT" and, together with the Note
Underwriting Agreement, the "UNDERWRITING AGREEMENTS"), the Seller has agreed to
cause the Trust to sell to (the "CERTIFICATE UNDERWRITER[S]" and,
together with the Note Underwriter[s], the "UNDERWRITER[S]"), and the
Certificate Underwriter[s] [have] [has] agreed to purchase, the entire principal
amount of the Certificates.
In the Certificate Underwriting Agreement, the Certificate Underwriter[s]
[have] [has] agreed, subject to the terms and conditions therein, to purchase
all of the Certificates offered hereby if any of such
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Certificates are purchased. The Seller has been advised by the Certificate
Underwriter[s] that [it][they] propose[s] to initially offer the Certificates to
the public at the price set forth herein, and to certain dealers at such price
less a concession not in excess of % per Certificate. The Certificate
Underwriter[s] may allow and such dealers may reallow a concession not in excess
of % per Certificate to certain other dealers. After the initial public
offering, such prices and such concessions may be changed.
Until the distribution of the Securities is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriter[s]
and certain selling group members to bid for and purchase the Securities. As an
exception to these rules, [ ], on behalf of the Underwriter[s],
[is][are] permitted to engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the Securities in accordance with Regulation M under the Exchange Act.
Over-allotment transactions involve syndicate sales in excess of the
offering size, which create syndicate short positions. Stabilizing transactions
permit bids to purchase the Securities so long as the stabilizing bids do not
exceed a specified maximum. Syndicate covering transactions involve purchases of
the Securities in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit [ ] to
reclaim a selling concession from a syndicate member when the Securities
originally sold by such syndicate member are purchased in a syndicate covering
transaction.
Such over-allotment transactions, stabilizing transactions, syndicate
covering transactions and penalty bids may cause the prices of the Securities to
be higher than they would otherwise be in the absence of such transactions.
Neither the Issuer nor [any of] the Underwriter[s] make[s] any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Securities. In addition, neither
the Issuer nor [any of] the Underwriter[s] represent[s] that [ ] will
engage in any such transactions or that such transactions, once commenced, will
not be discontinued without notice.
The Underwriting Agreements provide that the Seller and CFSC will indemnify
the Underwriters against certain civil liabilities, including liabilities under
the Securities Act, or contribute to payments the [several] Underwriter[s] may
be required to make in respect thereof. [The Underwriter[s] [has][have] agreed
to reimburse the Seller for certain expenses of the issuance and distribution of
the Notes and Certificates.]
The Indenture Trustee and the Owner Trustee (on behalf of the Trust) may,
from time to time, invest the funds in the Trust Accounts in Eligible
Investments acquired from the Underwriters.
The closings of the sale of the Notes and Certificates are conditioned on
the closing of the sale of each other.
LEGAL OPINIONS
Certain legal matters relating to the Notes and the Certificates will be
passed upon for the Trust, the Seller and the Servicer by Orrick, Herrington &
Sutcliffe LLP, San Francisco, California, and by , and for
the Underwriter[s] by . Certain federal income tax and
other matters will be passed upon for the Trust and the Seller by Orrick,
Herrington & Sutcliffe LLP. Certain Tennessee state tax matters will be passed
upon for the Trust and the Seller by Tuke Yopp & Sweeney, Nashville, Tennessee.
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<PAGE>
[ANNEX I]
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Caterpillar
Financial Asset Trust 199 - Class A-1 % Asset Backed Notes, Class A-2 %
Asset Backed Notes and Class A-3 % Asset Backed Notes (collectively, the
"GLOBAL SECURITIES") will be available only in book-entry form. Investors in the
Global Securities may hold such Global Securities through any of The Depository
Trust Company ("DTC"), Cedel Bank, societe anonyme ("CEDEL") or the Euroclear
System ("EUROCLEAR"). The Global Securities will be tradeable as home market
instruments in both the European and U.S. domestic markets. Initial settlement
and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with conventional
eurobond practice (I.E., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Notes will be effected on a delivery against payment basis
through the respective Depositaries of Cedel and Euroclear (in such capacity)
and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
TRADING BETWEEN CEDEL AND/OR EUROCLEAR PARTICIPANTS. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
TRADING BETWEEN DTC SELLER AND CEDEL OR EUROCLEAR PURCHASER. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear
A-1
<PAGE>
Participant, the purchaser will send instructions to Cedel or Euroclear through
a Cedel Participant or Euroclear Participant at least one business day prior to
settlement. Cedel or Euroclear will instruct the respective Depositary to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date, calculated on the basis of a year of 360
days, in each case for the actual number of days occurring in the period for
which such interest is payable. Payment will then be made by the respective
Depositary to the DTC Participant's account against delivery of the Global
Securities. After settlement has been completed, the Global Securities will be
credited to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The securities credit will appear the next day (European
time) and the cash debit will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (I.E., the trade fails), the Cedel or Euroclear cash debit
will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available to
the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-position
funds and allow that credit line to be drawn upon to finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Cedel Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
TRADING BETWEEN CEDEL OR EUROCLEAR SELLER AND DTC PURCHASER. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, Cedel or Euroclear
will instruct the respective Depositary, as appropriate, to deliver the bonds to
the DTC Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date, calculated on the basis of a year of 360
days, in each case for the actual number of days occurring in the period for
which such interest is payable. The payment will then be reflected in the
account of the Cedel Participant or Euroclear Participant the following day, and
receipt of the cash proceeds in the Cedel Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York). Should the Cedel
Participant or Euroclear Participant have a line of credit with its respective
clearing system and elect to be in debit in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
charges incurred over the one-day period. If settlement is not completed on the
intended value date (I.E., the trade fails), receipt of the cash proceeds in the
Cedel Participant's or Euroclear Participant's account would instead be valued
as of the actual settlement date.
A-2
<PAGE>
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action was taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of Notes that
are non-U.S. Persons can obtain a complete exemption from the withholding tax by
filing a signed Form W-8 (Certificate of Foreign Status). If the information
shown on Form W-8 changes, a new Form W-8 must be filed within 30 days of such
change.
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001). Non-U.S. Persons that are Noteholders residing in a country that
has a tax treaty with the United States can obtain an exemption or reduced tax
rate (depending on the treaty terms) by filing Form 1001 (Ownership, Exemption
or Reduced Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer alternatively
files Form W-8. Form 1001 may be filed by the Noteholder or his agent.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The holder of a Global
Security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
The term "U.S. PERSON" means (i) a citizen or resident of the United States,
(ii) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof or (iii) an estate, the income of
which is includible in gross income for United States tax purposes, regardless
of its source, or any trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States fiduciaries have the authority to control all substantial
decisions of the trust. This summary does not deal with all aspects of U.S.
federal income tax withholding that may be relevant to foreign holders of the
Global Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the Global
Securities.
A-3
<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus
Supplement and defined herein and the pages on which the definitions of such
terms may be found herein. Certain defined terms used in this Prospectus
Supplement are defined in the Prospectus. See "Index of Terms" in the
Prospectus.
<TABLE>
<S> <C>
A-1 Note Final Scheduled Distribution Date..................................... S-6, S-37
A-1 Note Pool Factor........................................................... S-30
A-1 Note Rate.................................................................. S-5, S-31
A-1 Noteholders................................................................ S-5
A-1 Noteholders' Monthly Principal Distributable Amount........................ S-9, S-37
A-1 Noteholders' Principal Carryover Shortfall................................. S-9, S-37
A-1 Noteholders' Principal Distributable Amount................................ S-9, S-37
A-1 Notes...................................................................... S-1, S-3
A-2 Note Final Scheduled Distribution Date..................................... S-6, S-37
A-2 Note Pool Factor........................................................... S-30
A-2 Note Rate.................................................................. S-5, S-32
A-2 Noteholders................................................................ S-5
A-2 Noteholders' Monthly Principal Distributable Amount........................ S-9, S-37
A-2 Noteholders' Principal Carryover Shortfall................................. S-10, S-37
A-2 Noteholders' Principal Distributable Amount................................ S-10, S-37
A-2 Notes...................................................................... S-1, S-3
A-3 Note Final Scheduled Distribution Date..................................... S-6, S-38
A-3 Note Pool Factor........................................................... S-30
A-3 Note Prepayment Price...................................................... S-33
A-3 Note Rate.................................................................. S-5, S-32
A-3 Noteholders................................................................ S-5
A-3 Noteholders' Monthly Principal Distributable Amount........................ S-10, S-38
A-3 Noteholders' Percentage.................................................... S-10, S-38
A-3 Noteholders' Principal Carryover Shortfall................................. S-11, S-38
A-3 Noteholders' Principal Distributable Amount................................ S-11, S-38
A-3 Notes...................................................................... S-1, S-3
Administration Agreement....................................................... S-17
Administration Fee............................................................. S-17
Administrator.................................................................. S-17
S-5, S-22,
APR............................................................................ S-38
Caterpillar.................................................................... S-31
Cede........................................................................... S-2
Cedel.......................................................................... A-1
Certificate Balance............................................................ S-11, S-38
Certificate Final Scheduled Distribution Date.................................. S-8, S-38
Certificate Pool Factor........................................................ S-30
Certificate Prepayment Price................................................... S-35
Certificate Underwriter........................................................ S-46
Certificate Underwriting Agreement............................................. S-46
Certificateholders............................................................. S-7
Certificateholders' Distributable Amount....................................... S-11, S-39
Certificateholders' Interest Carryover Shortfall............................... S-11, S-39
Certificateholders' Interest Distributable Amount.............................. S-12, S-39
Certificateholders' Monthly Interest Distributable Amount...................... S-12, S-39
Certificateholders' Monthly Principal Distributable Amount..................... S-12, S-39
Certificateholders' Percentage................................................. S-12, S-39
Certificateholders' Principal Carryover Shortfall.............................. S-12, S-39
Certificateholders' Principal Distributable Amount............................. S-12, S-39
</TABLE>
A-4
<PAGE>
<TABLE>
<S> <C>
Certificates................................................................... S-1, S-3
CFSC........................................................................... S-3
Closing Date................................................................... S-1
Code........................................................................... S-18
Collection Account............................................................. S-15
Collection Period.............................................................. S-13
Commission..................................................................... S-2
Current Distribution Date...................................................... S-41
Custodial Agreement............................................................ S-17
Custodian...................................................................... S-17
Cut-off Date................................................................... S-4, S-22
Cut-off Date APR............................................................... S-5, S-40
Dealers........................................................................ S-4
Definitive Certificates........................................................ S-3
Determination Date............................................................. S-35
Disqualified Persons........................................................... S-44
S-1, S-5,
Distribution Date.............................................................. S-31
DOL............................................................................ S-44
DTC............................................................................ S-2, A-1
ERISA.......................................................................... S-18, S-44
Euroclear...................................................................... A-1
Exchange Act................................................................... S-2
Financed Equipment............................................................. S-4
General Account Regulations.................................................... S-45
Global Securities.............................................................. A-1
Indenture...................................................................... S-3
Indenture Trustee.............................................................. S-3
Initial Pool Balance........................................................... S-4, S-40
Installment Sales Contracts.................................................... S-4
Issuer......................................................................... S-1, S-3
Lease.......................................................................... S-4
Liquidated Receivables......................................................... S-36
Liquidation Proceeds........................................................... S-36
Moody's........................................................................ S-19
Note Underwriters.............................................................. S-46
Note Underwriting Agreement.................................................... S-46
Noteholders.................................................................... S-5
Noteholders' Distributable Amount.............................................. S-13, S-40
Noteholders' Interest Carryover Shortfall...................................... S-13, S-40
Noteholders' Interest Distributable Amount..................................... S-13, S-40
Noteholders' Monthly Interest Distributable Amount............................. S-13, S-40
Notes.......................................................................... S-1, S-3
Obligors....................................................................... S-4
Over-Rate Receivables.......................................................... S-43
Owner Trustee.................................................................. S-3
Parties in Interest............................................................ S-44
Pass-Through Rate.............................................................. S-34, S-40
Plan Asset Regulation.......................................................... S-44
Plan Assets.................................................................... S-18, S-44
Plans.......................................................................... S-18, S-44
Pool Balance................................................................... S-5, S-40
Principal Balance.............................................................. S-5, S-23
Principal Distribution Amount.................................................. S-13, S-36
</TABLE>
A-5
<PAGE>
<TABLE>
<S> <C>
Purchase Agreement............................................................. S-4
Rating Agency.................................................................. S-19
Realized Losses................................................................ S-14, S-40
Receivables.................................................................... S-2, S-4
Receivables Files.............................................................. S-18, S-20
Receivables Pool............................................................... S-22
Record Date.................................................................... S-6, S-7
Reserve Account................................................................ S-14
Reserve Account Initial Deposit................................................ S-14, S-40
S&P............................................................................ S-19
Sale and Servicing Agreement................................................... S-4
Securities..................................................................... S-1, S-3
Seller......................................................................... S-3
Servicer....................................................................... S-3
Servicing Fee.................................................................. S-17
Servicing Fee Rate............................................................. S-17
Special Tax Counsel............................................................ S-18
Specified Reserve Account Balance.............................................. S-15, S-41
Tennessee Tax Counsel.......................................................... S-18
Total Distribution Amount...................................................... S-14, S-35
Transfer and Servicing Agreements.............................................. S-35
Trust.......................................................................... S-1, S-3
Trust Agreement................................................................ S-3
[U.S. ISC Portfolio............................................................ S-27]
[U.S. Lease Portfolio.......................................................... S-27]
[U.S. Portfolio................................................................ S-27]
U.S. Person.................................................................... A-3
Underwriters................................................................... S-46
Underwriting Agreements........................................................ S-46
Variable Frequency............................................................. S-24
</TABLE>
A-6
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR IN THE ACCOMPANYING
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER, THE SERVICER OR THE
UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, NOR ANY SALE MADE HEREUNDER OR
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE SELLER OR THE RECEIVABLES SINCE THE DATE
HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Reports to Noteholders and Certificateholders......... S-2
Summary of Terms...................................... S-3
Risk Factors.......................................... S-20
Formation of the Trust................................ S-21
The Receivables Pool.................................. S-22
Weighted Average Life of the Securities............... S-29
Pool Factors and Trading Information.................. S-30
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. S-30
Use of Proceeds....................................... S-31
The Seller, Caterpillar and the Servicer.............. S-31
Description of the Notes.............................. S-31
Description of the Certificates....................... S-33
Description of the Transfer and Servicing
Agreements........................................... S-35
Certain Legal Aspects of the Receivables.............. S-42
[Legal Investment..................................... S-44]
ERISA Considerations.................................. S-44
Underwriting.......................................... S-46
Legal Opinions........................................ S-47
[Annex I -- Global Clearance, Settlement and Tax
Documentation Procedures............................. A-1]
Index of Terms........................................ A-4
<CAPTION>
PROSPECTUS
<S> <C>
Reports to Noteholders and Certificateholders......... 3
Available Information................................. 3
Incorporation of Certain Documents by Reference....... 3
Summary of Terms...................................... 4
Risk Factors.......................................... 13
The Trusts............................................ 18
The Trust Property.................................... 19
The Receivables Pools................................. 20
Weighted Average Life of the Securities............... 24
Pool Factors and Trading Information.................. 26
Use of Proceeds....................................... 26
The Seller, Caterpillar and the Servicer.............. 26
Description of the Notes.............................. 28
Description of the Certificates....................... 33
Certain Information Regarding the Securities.......... 35
Issuance of the Securities............................ 36
Description of the Transfer and Servicing
Agreements........................................... 39
Certain Legal Aspects of the Receivables.............. 49
Certain Federal Income Tax Considerations............. 53
Certain State Tax Considerations...................... 60
ERISA Considerations.................................. 61
Plan of Distribution.................................. 61
Ratings............................................... 62
Legal Opinions........................................ 62
Index of Terms........................................ 63
</TABLE>
UNTIL , 199 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS
SUPPLEMENT), ALL DEALERS EFFECTING TRANSACTIONS IN THE SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS SUPPLEMENT AND A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
CATERPILLAR
FINANCIAL ASSET
TRUST 199 -
$
CLASS A-1 %
ASSET BACKED NOTES
$
CLASS A-2 %
ASSET BACKED NOTES
$
CLASS A-3 %
ASSET BACKED NOTES
$
% ASSET BACKED CERTIFICATES
CATERPILLAR FINANCIAL
FUNDING CORPORATION
SELLER
CATERPILLAR FINANCIAL
SERVICES CORPORATION
SERVICER
-----------------
PROSPECTUS SUPPLEMENT
-----------------
[UNDERWRITERS]
, 199
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 5, 1997
FORM B--SENIOR NOTES AND JUNIOR NOTES
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE AND WITHOUT DELIVERY OF A FINAL PROSPECTUS SUPPLEMENT AND ACCOMPANYING
PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS 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.
<PAGE>
PROSPECTUS SUPPLEMENT FILED PURSUANT TO RULE 424(b)(5)
(TO PROSPECTUS DATED , 199 ) REGISTRATION NO. 333-02988
$
CATERPILLAR FINANCIAL ASSET TRUST 199 -
<TABLE>
<C> <S> <C>
$ CLASS A-1 % ASSET BACKED NOTES
$ CLASS A-2 % ASSET BACKED NOTES
$ CLASS A-3 % ASSET BACKED NOTES
$ CLASS B % ASSET BACKED NOTES
</TABLE>
CATERPILLAR FINANCIAL FUNDING CORPORATION, SELLER
CATERPILLAR FINANCIAL SERVICES CORPORATION, SERVICER
-----------------
Interest on the Class A-1 % Asset Backed Notes (the "CLASS A-1 NOTES"),
the Class A-2 % Asset Backed Notes (the "CLASS A-2 NOTES") and the Class A-3
% Asset Backed Notes (the "CLASS A-3 NOTES"; together with the Class A-1
Notes and the Class A-2 Notes, the "CLASS A NOTES") and the Class B % Asset
Backed Notes (the "CLASS B NOTES"; together with the Class A Notes, the "NOTES")
issued by Caterpillar Financial Asset Trust 199 - (the "TRUST" or the "ISSUER")
will be payable monthly on or about the th day of each month (each, a
"DISTRIBUTION DATE") commencing , 199 . The Trust will also issue
$ % Asset Backed Certificates (the "CERTIFICATES"), but the
Certificates are not offered hereby. Principal on the Notes will be payable on
each Distribution Date; PROVIDED, HOWEVER, that no principal payments in respect
of (i) the Class A-2 Notes will be made until the Class A-1 Notes have been paid
in full, (ii) the Class A-3 Notes will be made until the Class A-2 Notes have
been paid in full and (iii) the Class B Notes will be made until the Class A-3
Notes have been paid in full. The final scheduled Distribution Date for the
Class A-1 Notes will be the Distribution Date, the final scheduled
Distribution Date for the Class A-2 Notes
(CONTINUED ON THE FOLLOWING PAGE)
------------------------
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH IN "RISK FACTORS" COMMENCING ON PAGE S-20 HEREIN AND ON PAGE 13 IN THE
PROSPECTUS.
THE NOTES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN CATERPILLAR FINANCIAL FUNDING CORPORATION,
CATERPILLAR FINANCIAL SERVICES CORPORATION, CATERPILLAR INC. OR ANY OF
THEIR RESPECTIVE AFFILIATES. NEITHER THE SECURITIES NOR THE
RECEIVABLES ARE ISSUED OR GUARANTEED BY ANY GOVERNMENTAL
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT ISSUER(1)(2)
<S> <C> <C> <C>
Per Class A-1 Note.................... % % %
Per Class A-2 Note.................... % % %
Per Class A-3 Note.................... % % %
Per Class B Note...................... % % %
Total................................. $ $ $
</TABLE>
(1) Plus accrued interest, if any, from , 199_.
(2) Before deducting expenses, estimated to be $ .
------------------------
The Notes are offered by the Underwriter[s], subject to prior sale, when, as
and if issued to and accepted by [them] [its] and subject to [their] [its] right
to reject orders in whole or in part. It is expected that delivery of the Notes
will be made in book-entry form only through the Same Day Funds Settlement
System of The Depository Trust Company, or through Cedel Bank, societe anonyme
or the Euroclear System, on or about , 199 (the "CLOSING DATE").
-------------------
UNDERWRITER[S] OF THE CLASS A NOTES
[UNDERWRITER(S)]
UNDERWRITER[S] OF THE CLASS B NOTES
[UNDERWRITER(S)]
------------
The date of this Prospectus Supplement is , .
<PAGE>
(CONTINUED FROM PRECEDING PAGE)
will be the Distribution Date and the final scheduled Distribution
Date for the Class A-3 Notes will be the Distribution Date. The
final scheduled Distribution Date for the Class B Notes will be the
Distribution Date. The actual payment in full of any Class of the
Class A Notes or the Class B Notes could occur earlier than their respective
final scheduled Distribution Dates. The rights of Class B Noteholders to receive
distributions with respect to the Class B Notes will be subordinated to the
rights of the Class A Noteholders to receive payments of interest on and
principal of the Class A Notes to the extent described herein.
The Certificates will bear interest at a rate of % per annum. The rights
of the Certificateholders to receive distributions in the respect to the
Certificates will be subordinated to the right of the Noteholders to receive
payments of interest and principal on the Notes to the extent described herein.
The assets of the Trust will include a pool of [fixed rate retail
installment sales contracts] [and] [finance leases] (the "RECEIVABLES") secured
by new and used machinery manufactured primarily by Caterpillar Inc. [and
Mitsubishi Caterpillar Forklift America Inc.], and certain monies due or
received thereunder on or after , 199 , which will be purchased by
the Trust from the Seller on or prior to the date of the issuance of the Notes.
The Seller will purchase the Receivables from Caterpillar Financial Services
Corporation concurrently with the purchase by the Trust of the Receivables from
the Seller. The Notes will be secured by the assets of the Trust.
The Class A-3 Notes and the Class B Notes will be subject to prepayment in
whole, but not in part, on any Distribution Date on which the Servicer exercises
its option to purchase the Receivables when the Pool Balance is reduced to less
than 10% of the Initial Pool Balance.
The Issuer, a newly formed limited-purpose Delaware business trust, will
generally be prohibited from incurring any indebtedness other than the Notes and
its assets will include the Receivables, the Collection Account, the Class A
Note Distribution Account, the Class B Note Distribution Account and the Reserve
Account, as described herein.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE NOTES. ADDITIONAL INFORMATION IS CONTAINED IN THE PROSPECTUS.
PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS IN FULL. SALES OF THE NOTES MAY NOT BE CONSUMMATED UNLESS THE
PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. TO
THE EXTENT ANY STATEMENTS IN THIS PROSPECTUS SUPPLEMENT CONFLICT WITH STATEMENTS
IN THE PROSPECTUS, THE STATEMENTS IN THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVER-ALLOTMENT TRANSACTIONS, STABILIZING TRANSACTIONS, SYNDICATE COVERING
TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING" HEREIN.
Upon receipt of a request by an investor, or his or her representative,
within the period during which there is a prospectus delivery obligation, the
Underwriters will transmit or cause to be transmitted promptly, without charge
and in addition to any such delivery requirements, a paper copy of this
Prospectus Supplement and a Prospectus or this Prospectus Supplement and a
Prospectus encoded in an electronic format.
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes are issued, periodic and annual unaudited
reports containing information concerning the Receivables will be prepared by
the Servicer and sent on behalf of the Trust only to Cede & Co. ("CEDE"), as
nominee of The Depository Trust Company ("DTC"), and the registered holder of
the Notes. See " Issuance of the Securities--Definitive Securities" and
"--Book-Entry Registration" and "Description of the Transfer and Servicing
Agreements--Reports to Securityholders" in the accompanying Prospectus. Such
reports will not constitute financial statements that have been examined and
reported upon by, with an opinion expressed by, an independent or certified
public accountant. The Trust will file with the Securities and Exchange
Commission (the "COMMISSION") such periodic reports as are required under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the rules
and regulations thereunder and as are otherwise agreed to by the Commission.
Copies of such periodic reports may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
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SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used in the summary are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
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ISSUER....................... Caterpillar Financial Asset Trust 199 - (the "TRUST" or the
"ISSUER"), a Delaware business trust formed by the Seller
and the Owner Trustee pursuant to the Trust Agreement dated
as of , 199 (the "TRUST AGREEMENT") between the
Seller and the Owner Trustee, acting thereunder not in its
individual capacity but solely as Owner Trustee.
SELLER....................... Caterpillar Financial Funding Corporation (the "SELLER"), a
Nevada corporation and a wholly-owned subsidiary of
Caterpillar Financial Services Corporation. The principal
executive offices of the Seller are located at Greenview
Plaza, 2950 East Flamingo Road, Suite C-3B, Las Vegas,
Nevada 89121 and its telephone number is (702) 735-2514.
SERVICER..................... Caterpillar Financial Services Corporation (the "SERVICER"
or "CFSC"), a Delaware corporation and a wholly-owned
subsidiary of Caterpillar Inc.
INDENTURE TRUSTEE............ , as indenture trustee under the Indenture (the "INDENTURE
TRUSTEE").
OWNER TRUSTEE................ , as owner trustee under the Trust Agreement (the "OWNER
TRUSTEE").
THE NOTES.................... Class A-1 % Asset Backed Notes (the "CLASS A-1 NOTES")
in the aggregate principal amount of $ .
Class A-2 % Asset Backed Notes (the "CLASS A-2 NOTES")
in the aggregate principal amount of $ .
Class A-3 % Asset Backed Notes (the "CLASS A-3 NOTES";
together with the Class A-1 Notes and the Class A-2 Notes,
the "CLASS A NOTES") in the aggregate principal amount of
$ .
Class B % Asset Backed Notes (the "CLASS B NOTES";
together with the Class A Notes, the "NOTES") in aggregate
principal amount of $ .
The rights of Class B Noteholders to receive distributions
with respect to the Class B Notes will be subordinated to
the rights of the Class A Noteholders to receive
distributions with respect to the Class A Notes to the
extent described herein.
The Notes will be issued by the Trust pursuant to an
Indenture to be dated as of , 199 (the
"INDENTURE"), between the Issuer and the Indenture Trustee.
The Notes will be secured by the assets of the Trust.
The Notes will be available for purchase in book-entry form
only in minimum denominations of $1,000 and integral
multiples thereof. The Noteholders will not be entitled to
receive Definitive Notes except in the limited circumstances
described herein. See "Description of the Notes--General"
and "Issuance of the Securities--Definitive Securities" and
"--Book-Entry Registration" in the Prospectus.
THE TRUST.................... The Trust is a business trust established under the laws of
the State of Delaware pursuant to the Trust Agreement. The
activities of the Trust are limited by the terms of the
Trust Agreement to acquiring, owning
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and managing the Receivables, issuing and making payments on
the Notes and the Certificates and other activities related
thereto. The Trust Property includes (i) the Receivables,
(ii) all monies (including accrued interest) due thereunder
on or after the Cut-off Date (as defined below), (iii) such
amounts as from time to time may be held in one or more
accounts established and maintained by the Servicer and the
Seller pursuant to the Sale and Servicing Agreement, as
described below, (iv) the security interests in the
machinery financed by the Receivables (the "FINANCED
EQUIPMENT") and in certain other cross-collateralized
equipment, (v) the rights to proceeds from claims on
physical damage, credit life and disability insurance
policies, if any, covering Financed Equipment or Obligors,
as the case may be, (vi) any proceeds of repossessed
Financed Equipment (less any repossession expenses), (vii)
the rights of the Seller under the Purchase Agreement,
(viii) the interest of the Seller in any proceeds from
recourse to or other payments by Dealers with respect to
Receivables, (ix) interest earned on short-term investments
made by the Trust and (x) any proceeds of the foregoing.
In addition to the Notes, the Trust will also issue %
Asset Backed Certificates (the "CERTIFICATES") in the
aggregate principal amount of $ . The Seller will
initially purchase the entire principal amount of the
Certificates. The Certificates represent fractional
undivided interests in the Trust and will be issued pursuant
to the Trust Agreement. The Certificates are not offered
hereby.
RECEIVABLES.................. The Receivables will consist of [fixed rate retail
installment sales contracts ("INSTALLMENT SALES CONTRACTS")]
[and] [finance leases ("LEASES")] secured by new and used
machinery manufactured primarily by Caterpillar including
rights to receive certain payments made with respect to such
[Installment Sales Contracts] [and] [Leases] (the
"RECEIVABLES"). On or prior to the Closing Date, the Seller
will purchase Receivables having an aggregate Principal
Balance of approximately $ (the "INITIAL POOL
BALANCE") as of , 199 (the "CUT-OFF DATE") from
CFSC pursuant to a Purchase Agreement to be dated as
of , 199 (the "PURCHASE AGREEMENT"), between CFSC
and the Seller, and the Seller will sell the Receivables to
the Trust pursuant to a Sale and Servicing Agreement to be
dated as of , 199 (the "SALE AND SERVICING
AGREEMENT") among the Seller, the Servicer and the Trust.
The Receivables arise from [loans] [and] [leases] originated
in connection with retail sales by dealers (the "DEALERS")
of Financed Equipment to retail purchasers (the "OBLIGORS")
and are either originated by CFSC, or acquired from such
Dealers by CFSC, in the ordinary course of CFSC's business.
The Receivables have been selected from the [contracts]
[leases] owned by CFSC based on the criteria specified in
the Purchase Agreement and described herein. See "The
Receivables Pool" herein. As of the Cut-off Date, the
weighted average annual percentage rate of interest (the
"APR") of the Receivables (based on their respective
Principal Balances (as defined herein)) was approximately
% (the "CUT-OFF DATE APR"), the weighted average remain-
ing maturity (i.e., for each Receivable, the period from but
excluding the Cut-off Date to and including such
Receivable's maturity date) of
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the Receivables was approximately months and the weighted
average original maturity of the Receivables was
approximately months. As of the Cut-off Date, no
Receivable had a scheduled maturity later than the date
which is months prior to the Distribution
Date.
The "POOL BALANCE" at any time will represent the aggregate
Principal Balance of the Receivables at the end of the
preceding Collection Period, after giving effect to 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 to all Realized Losses on
Liquidated Receivables during such Collection Period. The
"PRINCIPAL BALANCE" of a Receivable at any time means its
original principal balance, as reduced by principal payments
applied in accordance with the actuarial method, calculated
as of the Cut-off Date or as of the end of the preceding
Collection Period (as applicable). The Principal Balance of
an Over-Rate Receivable reflects the unamortized purchase
premium paid by CFSC to Dealers.
TERMS OF THE NOTES........... The principal terms of the Notes will be as described below:
A. INTEREST PAYMENTS........ The Class A-1 Notes will bear interest at the rate of %
per annum (the "CLASS A-1 NOTE RATE"), the Class A-2 Notes
will bear interest at the rate of % per annum (the
"CLASS A-2 NOTE RATE"), the Class A-3 Notes will bear
interest at the rate of % per annum (the "CLASS A-3 NOTE
RATE") and the Class B Notes will bear interest at the rate
of % per annum (the "CLASS B NOTE RATE") (in each case
calculated on the basis of a 360-day year of twelve 30-day
months). Interest on the outstanding principal amount of the
Notes will accrue from and including the most recent
Distribution Date on which interest has been paid (or, in
the case of the initial Distribution Date, from and
including the Closing Date) to but excluding the following
Distribution Date and will be payable on the th day of
each calendar month (or if any such date is not a business
day, on the next succeeding business day) (each, a
"DISTRIBUTION DATE") commencing , 199 , to the
holders of record of the Class A-1 Notes (the "CLASS A-1
NOTEHOLDERS"), the holders of record of the Class A-2 Notes
(the "CLASS A-2 NOTEHOLDERS"), the holders of record of the
Class A-3 Notes (the "CLASS A-3 NOTEHOLDERS"; together with
the Class A-1 Noteholders and the Class A-2 Noteholders, the
"CLASS A NOTEHOLDERS") as of the related Record Date.
Interest on the Class B Notes will not be paid on any
Distribution Date until interest payments on the Class A
Notes have been paid in full. Subject to the foregoing,
interest on the Class B Notes will be paid on each
Distribution Date to the holders of record of the Class B
Notes (the "CLASS B NOTEHOLDERS"; together with the Class A
Noteholders, the "NOTEHOLDERS") as of the Record Date for
such Distribution Date.
Interest payments on the Notes will be generally derived
from the Total Distribution Amount remaining after the
payment of the Servicing Fee (if CFSC or an affiliate is not
the Servicer) and the Administration Fee, and in the case of
the Class B Notes, after the payments of interest on the
Class A Notes, and in each case from amounts on deposit in
the Reserve Account. If the amount of interest on the
principal amount of the Class A-1 Notes, the Class A-2 Notes
and the Class A-3 Notes payable on any Distribution Date
exceeds the sum of such remaining
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portion of the Total Distribution Amount and amounts on
deposit in the Reserve Account, each of the Class A-1
Noteholders, the Class A-2 Noteholders and the Class A-3
Noteholders will receive their ratable share (based upon the
total amount of interest due to the Class A-1 Noteholders,
the Class A-2 Noteholders and the Class A-3 Noteholders) of
the amount available to be distributed in respect of
interest on the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes.
With respect to any Distribution Date and the Notes, the
"RECORD DATE" is the calendar day immediately preceding each
Distribution Date (or, with respect to any Definitive Note,
the last calendar day of the month preceding the month in
which such Distribution Date occurs).
Interest on the Certificates will only be paid on any
Distribution Date generally to the extent funds are
available following payment of the Servicing Fee (if CFSC or
an affiliate is not the Servicer), the Administration Fee
and distributions in respect of the Notes from the Collec-
tion Account and the Reserve Account.
B. PRINCIPAL PAYMENTS....... Principal on the Notes will be payable on each Distribution
Date in an amount equal to Principal Distribution Amount (as
defined below) for such Distribution Date (to the extent of
funds available therefor as described herein).
On each Distribution Date before the Distribution Date on
which the Class A-1 Notes have been paid in full, principal
of the Class A-1 Notes will be payable in an amount equal to
the Principal Distribution Amount. On each Distribution Date
on and after the Distribution Date on which the Class A-1
Notes have been paid in full, principal of the Class A-2
Notes will be payable, until the Class A-2 Notes have been
paid in full, in an amount equal to the difference between
(i) the Principal Distribution Amount for such Distribution
Date, and (ii) any portion of the Principal Distribution
Amount applied on such Distribution Date to reduce the
outstanding principal amount of the Class A-1 Notes to zero.
On each Distribution Date on and after the Distribution Date
on which the Class A-1 Notes and the Class A-2 Notes have
been paid in full, principal of the Class A-3 Notes will be
payable, until the Class A-3 Notes have been paid in full,
in an amount equal to the difference between (i) the
Principal Distribution Amount for such Distribution Date,
and (ii) any portion of the Principal Distribution Amount
applied on such Distribution Date to reduce the outstanding
principal amount of the Class A-1 Notes and/or Class A-2
Notes to zero.
On each Distribution Date on and after the Distribution Date
on which the Class A Notes have been paid in full, principal
of the Class B Notes will be payable, until the Class B
Notes have been paid in full, in an amount equal to the
difference between (i) the Principal Distribution Amount for
such Distribution Date, and (ii) any portion of the Princi-
pal Distribution Date to reduce the outstanding principal
amount of the Class A Notes to zero.
In addition, on any Distribution Date on and after the
Distribution Date, any amounts on deposit in the
Reserve Account in excess of the Specified Reserve Account
Balance for such Distribution Date shall be paid as
principal of the Class A-2 Notes, until the Class A-2
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Notes have been paid in full, then paid as principal of the
Class A-3 Notes, until the Class A-3 Notes have been paid in
full, and then paid as principal on the Class B Notes, until
the Class B Noteholders have been paid in full. See
"Description of the Transfer and Servicing Agree-
ments--Distributions" and "--Reserve Account" herein.
No principal will be paid with respect to Certificates until
the Notes have been paid in full.
The outstanding principal amount, if any, of the Class A-1
Notes will be payable in full on the Distribution
Date (the "CLASS A-1 NOTE FINAL SCHEDULED DISTRIBUTION
DATE"), the outstanding principal amount, if any, of the
Class A-2 Notes will be payable in full on the
Distribution Date (the "CLASS A-2 NOTE FINAL SCHEDULED
DISTRIBUTION DATE"), the outstanding principal amount, if
any, of the Class A-3 Notes will be payable in full on the
Distribution Date (the "CLASS A-3 NOTE FINAL
SCHEDULED DISTRIBUTION DATE") and the outstanding principal
amount, if any, of the Class B Notes will be payable in full
on the Distribution Date (THE "CLASS B NOTE FINAL
SCHEDULED DISTRIBUTION DATE"), in each case from funds
available therefor (including amounts on deposit in the
Reserve Account). See "Description of the Transfer and
Servicing Agreements--Reserve Account" herein.
C. OPTIONAL PREPAYMENT...... The Class A-3 Notes and the Class B Notes will be prepaid in
whole, but not in part, at the Class A-3 Note Prepayment
Price and the Class B Note Prepayment Price, respectively,
on any Distribution Date after the Class A-1 Notes and the
Class A-2 Notes have been paid in full, if the Servicer
exercises its option to purchase the Receivables, which
option may be exercised when the Pool Balance has been
reduced to 10% or less of the Initial Pool Balance. The
prepayment price for the Class A-3 Notes (the "CLASS A-3
NOTE PREPAYMENT PRICE") will equal the unpaid principal
balance of the Class A-3 Notes plus accrued interest
thereon. The prepayment price for the Class B Notes (the
"CLASS B PREPAYMENT PRICE") will equal the unpaid principal
balance of the Class B Notes, plus accrued and unpaid
interest thereon. See "Description of the Notes--The Class
A-2 Notes the Class A-3 Note and the Class B Notes--OPTIONAL
PREPAYMENT" herein and "Description of the Notes--Principal
and Interest on the Notes" and "Description of the Transfer
and Servicing Agreements--Termination" in the Prospectus.
TERMS OF THE CERTIFICATES.... On the Closing Date, the Trust will issue Certificates in an
aggregate principal amount of $ . The Seller will
initially purchase the entire principal amount of the
Certificates. The Certificates will bear interest at the
rate of % per annum (the "Certificate Rate"). The rights
of the Certificateholders to receive distributions with
respect to the Certificates will be subordinated to the
rights of the Noteholders to receive distributions with
respect to the Notes to the extent described herein. See
"Description of the Certificates" in this Prospectus Supple-
ment.
PRIORITY OF DISTRIBUTIONS.... As more fully described in "Description of the Transfer and
Servicing Agreements--Distributions" herein, distributions
of the Total Distribution Amount shall be made on each
Distribution Date in the following order of priority:
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(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, the Administration Fee and all
unpaid Administration Fees from prior Collection Periods;
(iii) to the Class A Note Distribution Account, the Class A
Noteholders' Interest Distributable Amount;
(iv) to the Class B Note Distribution Account, the Class B
Noteholders' Interest Distributable Amount;
(v) to the Class A Note Distribution Account, the Class A-1
Noteholders' Principal Distributable Amount;
(vi) to the Class A Note Distribution Account, the Class A-2
Noteholders' Principal Distributable Amount;
(vii) to the Class A Note Distribution Account, the Class
A-3 Noteholders' Principal Distributable Amount;
(viii) to the Class B Note Distribution Account, the Class B
Noteholders' Principal Distributable Amount;
(ix) to the Certificate Distribution Account, the
Certificateholders' Interest Distributable Amount;
(x) to the Certificate Distribution Account, the
Certificateholders' Principal Distributable Amount;
(xi) to the Servicer (if CFSC or an affiliate is the
Servicer), the Servicing Fee and all unpaid Servicing Fees
from prior Collection Periods; and
(xii) to the Reserve Account, the remaining Total
Distribution Amount.
Notwithstanding the foregoing, if an Event of Default has
occurred and the maturity of the Notes has been accelerated,
the Class A Noteholders of each Class of Class A Notes will
be entitled to be paid principal pro rata on the basis of
the ratio of which the principal amount of a Class A
Noteholder's Class A Note bears to the aggregate principal
amount of the Class A Notes, and the Class B Noteholders
will not be entitled to receive any distributions of
interest or principal until the Class A Notes have been paid
in full.
Funds will be withdrawn from amounts on deposit in the
Reserve Account to the extent that the Total Distribution
Amount (after the payment of the Servicing Fee (if CFSC or
an affiliate is not the Servicer) and the Administration
Fee) with respect to any Collection Period is less than the
Class A Noteholders' Distributable Amount, and funds in the
amount of such deficiency will be deposited in the Class A
Note Distribution Account. In addition, funds will be
withdrawn from amounts on deposit in the Reserve Account to
the extent that the portion of the Total Distribution Amount
remaining after the payment of the Servicing Fee (if CFSC or
an affiliate is not the Servicer) and the Administration Fee
and the deposit of the Class A Noteholders' Distributable
Amount in the Class A Note Distribution Account is less than
the Class B Noteholders' Distributable Amount, and funds in
the amount of such deficiency will be deposited in the Class
B Note Distribution Account. Notwithstanding the foregoing,
if on any Distribution Date on which any Class A Notes are
outstanding the amount on deposit in the Reserve Account is
less than % of the Pool Balance as of the end of the
preceding Collection Period, then funds will be
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withdrawn from the Reserve Account only to the extent needed
to pay the interest due on the Notes, and no funds from the
Reserve Account will be applied on such Distribution Date to
principal of the Notes PROVIDED, HOWEVER, that this
restriction on withdrawals shall be inapplicable if an Event
of Default has occurred which resulted in acceleration of
the Notes.
"CERTIFICATE BALANCE" equals, on the Closing Date. $
and, thereafter, equals $ , reduced by all amounts
allocable to principal previously distributed to
Certificateholders. The Certificate Balance shall also be
reduced on any Distribution Date by the excess, if any, of
(i) the sum of (A) the Certificate Balance and (B) the
outstanding principal amount of the Notes (in each case
after giving effect to amounts in respect of principal to be
deposited in the Certificate Distribution Account, the Class
A Note Distribution Account and the Class B Note
Distribution Account on such Distribution Date), 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, but not by more than the
aggregate reductions in the Certificate Balance set forth in
the preceding sentence.
"CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the sum of (i) the
Certificateholders' Principal Distributable Amount and (ii)
the Certificateholders' Interest Distributable Amount.
"CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL" means,
with respect to any Distribution Date, the sum of (i) the
excess, if any, of (A) the sum of (1) the
Certificateholders' Monthly Interest Distributable Amount
for the preceding Distribution Date and (2) any outstanding
Certificateholders' Interest Carryover Shortfall on such
preceding Distribution Date, over (B) the amount in respect
of interest that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date,
and (ii) interest on such excess, to the extent permitted by
law, at the Pass-Through Rate.
"CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of the
Certificateholders' Monthly Interest Distributable Amount
for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, an amount
equal to the aggregate interest accrued on the Certificates
at the Pass-Through Rate from and including the preceding
Distribution Date (or from and including the Closing Date in
the case of the initial Distribution Date) to but excluding
such Distribution Date (based on a 360-day year of twelve
30-day months).
"CERTIFICATEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date on or after the
Distribution Date on which the principal amounts of the
Class A Notes and the Class B Notes are reduced to zero, the
Principal Distribution Amount (less the
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portion thereof, if any, applied on such Distribution Date
to reduce the principal amount of the Class A Notes and the
Class B Notes to zero, which shall be deposited into the
Class A Note Distribution Account and/or the Class B Note
Distribution Account).
"CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means,
as of the close of any Distribution Date, the sum of (i) the
excess, if any, of (A) the sum of (1) the
Certificateholders' Monthly Principal Distributable Amount
and (2) any outstanding Certificateholders' Principal
Carryover Shortfall from the preceding Distribution Date,
over (B) the amount in respect of principal that is actually
deposited in the Certificate Distribution Account and (ii)
the unreimbursed portion of the amount by which the
Certificate Balance has been reduced as described in the
second sentence of the definition of "Certificate Balance"
above.
"CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of (i) the
Certificateholders' Monthly Principal Distributable Amount
for such Distribution Date and (ii) the Certificateholders'
Principal Carryover Shortfall as of the close of the
preceding Distribution Date; PROVIDED, HOWEVER, that, until
an amount sufficient to reduce the outstanding principal
amounts of the Class A Notes and the Class B Notes to zero
has been deposited in the Class A Distribution Account
and/or the Class B Note Distribution Account, the
Certificateholders' Principal Distributable Amount shall be
zero; PROVIDED, FURTHER, that the sum of clauses (i) and
(ii) shall not exceed the Certificate Balance, and on the
final scheduled Distribution Date with respect to the
Certificates, 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.
"CLASS A NOTE DISTRIBUTION ACCOUNT" shall mean a Note
Distribution Account established for the benefit of the
Class A Noteholders.
"CLASS A NOTEHOLDERS' DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the sum of (i) the Class
A-1 Noteholders' Principal Distributable Amount, (ii) the
Class A-2 Noteholders' Principal Distributable Amount, (iii)
the Class A-3 Noteholders' Principal Distributable Amount
and (iv) the Class A Noteholders' Interest Distributable
Amount.
"CLASS A NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means,
with respect to any Distribution Date, the sum of (i) the
excess, if any, of (A) the sum of (1) the Class A
Noteholders' Monthly Interest Distributable Amount for the
preceding Distribution Date and (2) any outstanding Class A
Noteholders' Interest Carryover Shortfall on such preceding
Distribution Date, over (B) the amount in respect of
interest that is actually deposited in the Class A Note
Distribution Account on such preceding Distribution Date,
and (ii) interest on the amount of interest due but not paid
to Class A Noteholders on the preceding Distribution Date,
to the extent permitted by law, at the applicable interest
rate or rates borne by such Class A Notes from such
preceding Distribution Date through such current
Distribution Date.
"CLASS A NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of the Class
A Noteholders'
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Monthly Interest Distributable Amount for such Distribution
Date and the Class A Noteholders' Interest Carryover
Shortfall for such Distribution Date.
"CLASS A NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, an amount
equal to the aggregate amount of interest accrued on the
Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
at their respective interest rates from and including the
preceding Distribution Date (or, in the case of the initial
Distribution Date, from and including the Closing Date), to
but excluding such Distribution Date (based on a 360-day
year of twelve 30-day months).
"CLASS A-1 NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE
AMOUNT" means, with respect to any Distribution Date until
the Distribution Date on which the outstanding principal
amount of the Class A-1 Notes has been reduced to zero, the
Principal Distribution Amount for such Distribution Date,
but such amount shall not be in excess of the outstanding
principal amount of the Class A-1 Notes.
"CLASS A-1 NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL"
means, as of the close of any Distribution Date, the excess,
if any, of (i) the sum of (A) the Class A-1 Noteholders'
Monthly Principal Distributable Amount for such Distribution
Date and (B) any outstanding Class A-1 Noteholders'
Principal Carryover Shortfall as of the close of the pre-
ceding Distribution Date over (ii) the amount in respect of
principal that is actually deposited in the Class A Note
Distribution Account in respect of the Class A-1 Notes.
"CLASS A-1 NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, the sum of (i)
the Class A-1 Noteholders' Monthly Principal Distributable
Amount for such Distribution Date and (ii) the Class A-1
Noteholders' Principal Carryover Shortfall as of the close
of the preceding Distribution Date; PROVIDED, HOWEVER, that
the sum of clauses (i) and (ii) above shall not exceed the
outstanding principal amount of the Class A-1 Notes, and on
the Class A-1 Note 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 Class A 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-2 NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE
AMOUNT" means, with respect to any Distribution Date on or
after the Distribution Date on which an amount sufficient to
reduce the outstanding principal amount of the Class A-1
Notes to zero has been deposited in the Class A Note
Distribution Account, the excess, if any, of (i) the
Principal Distribution Amount over (ii) the portion of the
Principal Distribution Amount, if any, applied to reduce the
outstanding principal amount of the Class A-1 Notes to zero
on such Distribution Date. In addition, on any Distribution
Date on or after the Distribution Date, amounts on
deposit in the Reserve Account in excess of the Specified
Reserve Account Balance for such Distribution Date shall be
paid as principal of the Class A-2 Notes to the extent
described under "--Reserve Account" below.
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"CLASS A-2 NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL"
means, as of the close of any Distribution Date, the excess,
if any, of (i) the sum of (A) the Class A-2 Noteholders'
Monthly Principal Distributable Amount for such Distribution
Date and (B) any outstanding Class A-2 Noteholders'
Principal Carryover Shortfall as of the close of the pre-
ceding Distribution Date over (ii) the amount in respect of
principal that is actually deposited in the Class A Note
Distribution Account in respect of the Class A-2 Notes.
"CLASS A-2 NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, the sum of (i)
the Class A-2 Noteholders' Monthly Principal Distributable
Amount for such Distribution Date and (ii) the Class A-2
Noteholders' Principal Carryover Shortfall as of the close
of the preceding Distribution Date; PROVIDED, HOWEVER, that,
until an amount sufficient to reduce the outstanding
principal amount of the Class A-1 Notes to zero has been
deposited in the Class A Note Distribution Account, the
Class A-2 Noteholders' Principal Distributable Amount shall
be zero; PROVIDED, FURTHER, that the sum of clauses (i) and
(ii) shall not exceed the outstanding principal amount of
the Class A-2 Notes, and on the Class A-2 Note 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 Class A 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-3 NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE
AMOUNT" means, with respect to any Distribution Date on or
after the Distribution Date on which an amount sufficient to
reduce the outstanding principal amount of the Class A-1
Notes and the Class A-2 Notes to zero has been deposited in
the Class A Note Distribution Account, the excess, if any,
of (i) the Principal Distribution Amount over (ii) the
portion of the Principal Distribution Amount, if any,
applied to reduce the outstanding principal amount of the
Class A-1 Notes and the Class A-2 Notes to zero on such
Distribution Date. In addition, on any Distribution Date on
or after the Distribution Date, amounts on deposit
in the Reserve Account in excess of the Specified Reserve
Account Balance for such Distribution Date shall be paid as
principal of the Class A-3 Notes to the extent described
under "-- Reserve Account" below.
"CLASS A-3 NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL"
means, as of the close of any Distribution Date, the excess,
if any, of (i) the sum of (A) the Class A-3 Noteholders'
Monthly Principal Distributable Amount for such Distribution
Date and (B) any outstanding Class A-3 Noteholders'
Principal Carryover Shortfall as of the close of the pre-
ceding Distribution Date over (ii) the amount in respect of
principal that is actually deposited in the Class A Note
Distribution Account in respect of the Class A-3 Notes.
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"CLASS A-3 NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, the sum of (i)
the Class A-3 Noteholders' Monthly Principal Distributable
Amount for such Distribution Date and (ii) the Class A-3
Noteholders' Principal Carryover Shortfall as of the close
of the preceding Distribution Date; PROVIDED, HOWEVER, that,
until an amount sufficient to reduce the outstanding
principal amount of the Class A-1 Notes and the Class A-2
Notes to zero has been deposited in the Class A Note
Distribution Account, the Class A-3 Noteholders' Principal
Distributable Amount shall be zero; PROVIDED, FURTHER, that
the sum of clauses (i) and (ii) shall not exceed the
outstanding principal amount of the Class A-3 Notes, and on
the Class A-3 Note Final Scheduled Distribution Date, the
Class A-3 Noteholders' Principal Distributable Amount will
include the amount necessary (after giving effect to the
other amounts to be deposited in the Class A 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 B DISTRIBUTION ACCOUNT" shall mean a Note
Distribution Account established for the benefit of the
Class B Noteholders.
"CLASS B NOTEHOLDERS' DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the sum of (i) the Class B
Noteholders' Principal Distributable Amount and (ii) the
Class B Noteholders' Interest Distributable Amount.
"CLASS B NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means,
with respect to any Distribution Date, the sum of (i) the
excess, if any, of (A) the sum of (1) the Class B
Noteholders' Monthly Interest Distributable Amount for the
preceding Distribution Date and (2) any outstanding Class B
Noteholders' Interest Carryover Shortfall on such preceding
Distribution Date, over (B) the amount in respect of
interest that is actually deposited in the Class B Note
Distribution Account on such preceding Distribution Date,
and (ii) interest on such excess, to the extent permitted by
law, at the Class B Note Rate.
"CLASS B NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of the Class
B Noteholders' Monthly Interest Distributable Amount for
such Distribution Date and the Class B Noteholders' Interest
Carryover Shortfall for such Distribution Date.
"CLASS B NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, an amount
equal to the aggregate interest accrued on the Class B Notes
at the Class B Note Rate from and including the preceding
Distribution Date (or from and including the Closing Date in
the case of the initial Distribution Date) to but excluding
such Distribution Date (based on a 360-day year of twelve
30-day months).
"CLASS B NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE
AMOUNT" means, with respect to any Distribution Date on or
after the Distribution Date on which the principal amount of
the Class A Notes are reduced to zero, the excess, if any,
of (i) the Principal Distribution Amount over (ii) the
portion of the Principal Distribution Amount, if any,
applied on such Distribution Date to reduce the principal
amount
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of the Class A Notes to zero on such Distribution Date. In
addition, on any Distribution Date on or after the
Distribution Date, amounts on deposit in the Reserve Account
in excess of the Specified Reserve Account Balance for such
Distribution Date shall be paid as principal of the Class B
Notes to the extent under "--Reserve Account" below.
"CLASS B NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means,
as of the close of any Distribution Date, the excess, if
any, of (i) the sum of (A) the Class B Noteholders' Monthly
Principal Distributable Amount for such Distribution Date
and (B) any outstanding Class B Noteholders' Principal
Carryover Shortfall from the preceding Distribution Date as
of the close of the preceding Distribution Date, over (ii)
the amount in respect of principal that is actually
deposited in the Class B Note Distribution Account.
"CLASS B NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of (i) the
Class B Noteholders' Monthly Principal Distributable Amount
for such Distribution Date and (ii) the Class B Noteholders'
Principal Carryover Shortfall as of the close of the
preceding Distribution Date; PROVIDED, HOWEVER, that, until
an amount sufficient to reduce the outstanding principal
amounts of the Class A Notes to zero has been deposited in
the Class A Note Distribution Account, the Class B
Noteholders' Principal Distributable Amount shall be zero;
PROVIDED, FURTHER, that the sum of clauses (i) and (ii)
shall not exceed the outstanding principal amount of the
Class B Notes, and on the Class B Note Final Scheduled
Distribution Date, the Class B Noteholders' Principal
Distributable Amount will include the amount necessary
(after giving effect to the other amounts to be deposited in
the Class B Note Distribution Account on such Distribution
Date and allocable to principal) to reduce the outstanding
principal amount of the Class B Notes to zero.
"COLLECTION PERIOD" means, with respect to the first
Distribution Date, the calendar month ending on ,
199 , and with respect to each subsequent Distribution Date,
the preceding calendar month. See "Description of the
Transfer and Servicing Agreements--Distributions" herein.
"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).
"REALIZED LOSSES" means, with respect to any Collection
Period, (i) the excess of the Principal Balance of the
Liquidated Receivables over
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Liquidation Proceeds for such Collection Period to the
extent allocable to principal and (ii) amounts payable by
Dealers with respect to Over-Rate Receivables which are
deemed uncollectible by the Servicer.
"TOTAL DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the sum of the aggregate collections
(including any Liquidation Proceeds, any Purchase Amounts
paid by the Seller and the Servicer and any amounts received
from Dealers with respect to Receivables) received in
respect of the Receivables during the related Collection
Period and Investment Earnings on the Trust Accounts during
such Collection Period. The Total Distribution Amount on any
Distribution Date shall exclude 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.
On each Distribution Date, all amounts on deposit in the
Class A Note Distribution Account will be distributed to the
Class A Noteholders, and all amounts on deposit in the Class
B Note Distribution Account will be distributed to the Class
B Noteholders. See "Description of the Transfer and
Servicing Agreements--Distributions" herein.
RESERVE ACCOUNT.............. The Seller will establish and maintain in the name of the
Indenture Trustee a reserve account (the "RESERVE ACCOUNT")
into which funds will be deposited from time to time as
described herein. Funds on deposit in the Reserve Account
will be available on each Distribution Date to cover
shortfalls in distributions of interest and principal on the
Notes to the extent described herein. The Reserve Account
will be created with an initial deposit by the Seller of
cash or Eligible Investments having a value of at least
$ . The amount initially deposited in the Reserve
Account is referred to as the "RESERVE ACCOUNT INITIAL
DEPOSIT." The Reserve Account Initial Deposit will be
augmented on each Distribution Date by the deposit therein
of the Total Distribution Amount remaining after payment of
the Servicing Fee and the Administration Fee and the deposit
in the Note Distribution Account and the Certificate
Distribution Account of amounts to be distributed to the
Noteholders and Certificateholders on such Distribution
Date.
Prior to the Distribution Date, amounts on deposit
in the Reserve Account (after giving effect to all
distributions to be made on such Distribution Date) in
excess of the Specified Reserve Account Balance for such
Distribution Date will be released to the Seller and, on and
after the Distribution Date, such excess will be re-
leased to the Class A Note Distribution Account to be
distributed first to the Class A-2 Noteholders as a payment
of principal (until the Class A-2 Notes have been paid in
full), then to the Class A-3 Noteholders as a payment of
principal (until the Class A-3 Notes have been paid in
full), and then such excess will be released to the Class B
Note Distribution Account to be distributed to the Class B
Noteholders as a payment of principal (until the Class B
Notes have been paid in full). The "SPECIFIED RESERVE
ACCOUNT BALANCE" with respect to any Distribution
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Date will be equal to the greater of (i) % of the Pool
Balance as of the close of business on the last day of the
preceding Collection Period and (ii) $ (or such
greater percentage or amount as may be set forth in the Sale
and Servicing Agreement); PROVIDED, HOWEVER, that (a) if
either Realized Losses or delinquencies exceed certain
levels, the Specified Reserve Account Balance may be higher
(as described herein under "Description of the Transfer and
Servicing Agreements--Reserve Account") and (b) in no event
will the Specified Reserve Account Balance exceed the
outstanding aggregate principal amount of the Notes. See
"Description of the Transfer and Servicing Agreements--
Reserve Account" herein.
Funds will be withdrawn from amounts on deposit in the
Reserve Account to the extent that the Total Distribution
Amount remaining after the payment of the Servicing Fee (if
CFSC or an affiliate is not the Servicer) and the
Administration Fee and the deposit of the Class B
Noteholders' Interest Distributable Amount in the Class B
Note Distribution Account with respect to any Collection
Period is less than the Class A Noteholders' Distributable
Amount, and funds in the amount of such deficiency will be
deposited in the Class A Note Distribution Account. In
addition, funds will be withdrawn from amounts on deposit in
the Reserve Account to the extent that the portion of the
Total Distribution Amount remaining after the payment of the
Servicing Fee (if CFSC or an affiliate is not the Servicer)
and the Administration Fee and the deposit of the Class A
Noteholders' Distributable Amount in the Class A Note
Distribution Account with respect to any Collection Period
is less than the Class B Noteholders' Distributable Amount,
and funds in the amount of such deficiency will be deposited
in the Class B Note Distribution Account. Notwithstanding
the foregoing, if on any Distribution Date on which any
Class A Notes are outstanding the amount on deposit in the
Reserve Account is less than % of the Pool Balance as of
the end of the preceding Collection Period, then funds will
be withdrawn from the Reserve Account only to the extent
needed to pay the interest due on the Notes, and no funds
from the Reserve Account will be applied on such
Distribution Date to principal of the Notes; PROVIDED,
HOWEVER, that this restriction on withdrawals shall be
inapplicable if an Event of Default has occurred which
resulted in acceleration of the Notes.
If the amount required to be withdrawn from the Reserve
Account to cover shortfalls in collections on the
Receivables on any Distribution Date exceeds the amount on
deposit in the Reserve Account on such date, a shortfall in
the amounts distributable to the Noteholders would result,
which could, in turn, increase the average life of the
Notes, or result in losses to Noteholders.
COLLECTION ACCOUNT........... The Servicer will be required to remit collections received
with respect to the Receivables during a Collection Period
on or before the business day preceding the related
Distribution Date to one or more accounts in the name of the
Indenture Trustee (collectively, the "COLLECTION ACCOUNT"),
except upon the occurrence of certain conditions described
herein (in which case such remittances will be required more
frequently). See "Description of the Transfer and Servicing
Agreements--Payments on Receivables" in the Prospectus.
Pursuant to the Sale and
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Servicing Agreement, the Servicer will have the revocable
power to instruct the Indenture Trustee to withdraw the
Total Distribution Amount on deposit in the Collection
Account and to apply such funds on each Distribution Date to
the priority set forth above under "--Priority of
Distributions."
MATURITY AND PREPAYMENT
CONSIDERATIONS.............. All of the Receivables are prepayable at any time. Each
prepayment will shorten the weighted average remaining term
of the Receivables and the weighted average life of the
Securities. Prepayments of principal will be included in the
Principal Distribution Amount and will be payable first to
the Class A-1 Noteholders until the Class A-1 Notes have
been paid in full, then will be payable to the Class A-2
Noteholders until the Class A-2 Notes have been paid in
full, then to the Class A-3 Noteholders until the Class A-3
Noteholders have been paid in full, and then to the Class B
Noteholders until the Class B Notes have been paid in full.
See "Description of the Transfer and Servicing Agree-
ments--Distributions" herein.
The rate of prepayments on the Receivables may be influenced
by a variety of economic, financial, climatic and other
factors, and under certain circumstances relating to
breaches of representations, warranties or covenants, the
Seller is obligated to repurchase Receivables from the
Trust. A higher than anticipated rate of prepayments will
reduce the aggregate principal balance of the Receivables
more quickly than expected and thereby reduce anticipated
aggregate interest payments on the Securities. Any
reinvestment risks resulting from a faster or slower
incidence of prepayment of Receivables will be borne
entirely by the Noteholders as set forth in the priority of
distributions herein. Such reinvestment risks include the
risk that interest rates may be lower at the time such
holders received payments from the Trust than interest rates
would otherwise have been had such prepayments not been made
or had such prepayments been made at a different time.
Holders of Notes should consider, in the case of Notes
purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Receivables
could result in an actual yield that is less than the
anticipated yield and, in the case of any Notes purchased at
a premium, the risk that a faster than anticipated rate of
principal payments on the Receivables could result in an
actual yield that is less than the anticipated yield.
SERVICING FEE................ The Servicer shall receive a fee for each Collection Period
equal to % per annum (the "SERVICING FEE RATE") of the
Pool Balance as of the first day of such Collection Period
(the "SERVICING FEE") (in accordance with the priority of
distributions set forth herein), plus any Servicer's Yield
for such Collection Period. The Servicer's Yield represents
amounts actually collected by the Servicer on account of
late fees, taxes, and other charges, as described herein.
All collections from an Obligor will be applied first to any
overdue scheduled payment, then to the current scheduled
payment and then to late fees, taxes, and other charges. The
Servicing Fee with respect to each Collection Period will
decline over the term of the Notes as the Pool Balance
decreases. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses"
herein and in the Prospectus.
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CUSTODIAL AGREEMENT.......... , as custodian (the "CUSTODIAN"), will be responsible for
maintaining custody of the Installment Sales Contracts and
any related Dealer Agreements pursuant to a custodial
agreement, to be dated as of , 199 (the "CUSTODIAL
AGREEMENT"), among CFSC, the Seller, the Issuer and the
Indenture Trustee. See "Risk Factors--PERFECTION OF
INTERESTS IN RECEIVABLES AND IN FINANCED EQUIPMENT" and
"Certain Legal Aspects of the Receivables--Sale and Transfer
of Receivables" herein and in the Prospectus.
ADMINISTRATION AGREEMENT..... CFSC, in its capacity as administrator (the
"ADMINISTRATOR"), will enter into an agreement (the
"ADMINISTRATION AGREEMENT") with the Trust and the Indenture
Trustee. As compensation for the performance of the
Administrator's obligations under the Administration
Agreement and as reimbursement for its expenses related
thereto, the Administrator will be entitled to a monthly
administration fee in an amount equal to $ per month (the
"ADMINISTRATION FEE"). See "Description of the Transfer and
Servicing Agreements--Administration Agreement" in the
Prospectus.
[CLEARANCE AND SETTLEMENT.... Noteholders may elect to hold their Notes through any of DTC
(in the United States) or Cedel or Euroclear (in Europe).
Transfers within DTC, Cedel or Euroclear, as the case may
be, will be in accordance with the usual rules and operating
procedures of the relevant system. Cross-market transfers
between persons holding directly or indirectly through DTC,
on the one hand, and counterparties holding directly or
indirectly through Cedel or Euroclear, on the other, will be
effected in DTC through the relevant Depositaries of Cedel
or Euroclear. See "Issuance of the Securities--Book-Entry
Registration" in the Prospectus.]
CERTAIN LEGAL ASPECTS
OF THE RECEIVABLES.......... The transfer of ownership of the Receivables from CFSC to
the Seller and from the Seller to the Trust, and the
granting of a security interest in the Receivables by the
Trust to the Indenture Trustee, will in each case be
perfected by the Custodian, on behalf of the applicable
assignee, taking possession of the [Installment Sales
Contracts] [and] [Leases] and any related Dealer Agreements
(the "RECEIVABLES FILES") pursuant to the Custodial
Agreement. The Custodian will maintain possession of the
Receivables Files in a space leased by the Custodian
proximate to the principal executive office of the Seller.
CFSC will indicate on its computer records that the
Receivables have been sold to the Seller and by the Seller
to the Trust. Each Receivables File will contain the single
original related [Installment Sales Contract] [and Lease]
(as represented by CFSC in the Purchase Agreement). UCC
financing statements will not be filed to perfect these
transfers of ownership or such grant of a security interest,
and CFSC will not stamp the physical Receivables Files or
the [Installment Sales Contracts] [and] [Leases]. Although
steps will be taken to ensure that the Seller (an affiliate
of CFSC) does not obtain possession or control of the
[Installment Sales Contracts] [and] [Leases], should a court
find that the Seller did have possession or control of such
[Installment Sales Contracts] [and] [Leases], the interests
of the Trust and the Indenture Trustee in the Receivables
would in all likelihood be unperfected. See
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"Risk Factors--PERFECTION OF INTERESTS IN RECEIVABLES AND IN
FINANCED EQUIPMENT" and "Certain Legal Aspects of the
Receivables--Sale and Transfer of the Receivables" herein
and in the Prospectus.
TAX STATUS................... In the opinion of Orrick, Herrington & Sutcliffe LLP
("SPECIAL TAX COUNSEL"), for federal income tax purposes the
Notes will be characterized as debt and the Trust will not
be characterized as an association (or publicly traded
partnership) taxable as a corporation. Each Noteholder, by
the acceptance of a Note, will agree to treat the Notes as
indebtedness. Alternative characterizations of the Trust are
possible, but should not result in materially adverse tax
consequences to Noteholders. See "Certain Federal Income Tax
Considerations" in the Prospectus.
STATE TAX CONSIDERATIONS..... In the opinion of Tuke Yopp & Sweeney ("TENNESSEE TAX
COUNSEL"), with respect to corporate Noteholders, the same
tax characterizations should apply for purposes of Tennessee
income tax as for federal income tax purposes. Non-corporate
Noteholders who are residents of Tennessee will be subject
to taxation on income distributions with respect to the
Notes at the rate of six percent (6%). In the opinion of
Tennessee Tax Counsel, the Trust should not be subject to
taxation in Tennessee. See "Certain State Tax
Considerations" in the Prospectus for additional information
concerning the application of Tennessee tax laws to the
Trust and the Securities.
ERISA CONSIDERATIONS......... Subject to the considerations described in "ERISA
Considerations" herein and in the Prospectus, the Notes are
eligible for purchase with "plan assets" of any Plan (as
defined below) ("PLAN ASSETS"). A fiduciary or other person
contemplating purchasing the Notes on behalf of or with Plan
Assets of any employee benefit plan or other plan or
arrangement (including but not limited to an insurance
company general account) subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE") (collectively, "PLANS"),
should carefully review with its legal advisors whether the
purchase or holding of the Notes could give rise to a
transaction prohibited or not otherwise permissible under
ERISA or Section 4975 of the Code.
[LEGAL INVESTMENT............ The Class A-1 Notes will be eligible securities for purchase
by money market funds under paragraph (a)(9) of Rule 2a-7
under the Investment Company Act of 1940, as amended.]
RATINGS OF THE NOTES......... It is a condition to the issuance of the Securities that the
Class A Notes be rated [in the highest investment rating
category] by [each of Standard & Poor's Ratings Services
("S&P")] [and] [Moody's Investors Service, Inc.] (["MOODY'S"
and together with S&P, each a] [the] "RATING AGENCY") and
that the Class B Notes be rated at least " " by [S&P] [and
at least " " by Moody's]. See "Risk Factors--RATINGS OF THE
NOTES" herein and "Ratings" in the Prospectus.
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RISK FACTORS
Investors should consider, among other things, the matters discussed under
"Risk Factors" in the Prospectus and the following risk factors in connection
with the purchase of the Notes.
LIMITED LIQUIDITY. There is currently no secondary market for the Notes.
Each Underwriter currently intends to make a market in the Notes for which it is
an Underwriter, but is under no obligation to do so. There can be no assurance
that a secondary market will develop or, if a secondary market does develop,
that it will provide the Noteholders with liquidity of investment or that it
will continue for the life of the Notes.
PERFECTION OF INTERESTS IN RECEIVABLES AND IN FINANCED EQUIPMENT. The
transfer of ownership of the Receivables from CFSC to the Seller and from the
Seller to the Trust, and the granting of the security interest in the
Receivables by the Trust to the Indenture Trustee, will in each case be
perfected by the Custodian, on behalf of the applicable assignee, taking
possession of the [Installment Sales Contracts] [or] [the Leases] and any
related Dealer Agreements (the "RECEIVABLES FILES") pursuant to the Custodial
Agreement. The Custodian will maintain possession of the Receivables Files in a
space leased by the Custodian proximate to the principal executive office of
CFFC. CFSC will indicate on its computer records that the Receivables have been
sold to the Seller. Each Receivables File will contain the single original
[Installment Sales Contract] [or] [Lease] related to a Receivable (as
represented by CFSC in the Purchase Agreement). UCC financing statements will
not be filed to perfect these transfers of ownership or such grant of a security
interest, and CFSC will not stamp the physical Receivables Files or the
[Installment Sales Contracts] [or] [the Leases]. Although steps will be taken to
ensure that the Seller (an affiliate of CFSC) does not obtain possession or
control of the [Installment Sales Contracts [or] [Leases], should a court find
that the Seller did have possession or control of such [Installment Sales
Contracts] [or][Leases], the interests of the Trust and the Indenture Trustee in
the Receivables would in all likelihood be unperfected, and distributions to
Noteholders may be adversely affected.
Should the related Indenture Trustee's security interest and/or the Trust's
ownership interest in the Receivables be found to be unperfected, such interests
may be inferior to the interests of (i) the Seller or CFSC, (ii) any creditors
of the Trust, the Seller or CFSC, or (iii) a subsequent purchaser of
Receivables, in the event the Trust, the Seller or CFSC fraudulently or
inadvertently sells a Receivable to such purchaser who had no notice of the
prior transfers thereof to such Indenture Trustee, the Trust or the Seller and
such purchaser takes possession of the related physical contract evidencing such
Receivable. As a result of such lack of perfection, the Seller, the Trust and
the holders of Securities may not be entitled to receive all or a portion of the
distributions relating to, or have any other rights with respect to, the
Receivables.
SUBORDINATION; LIMITED ASSETS. Distributions of interest on the Class B
Notes will be subordinated in priority of payment to interest on the Class A
Notes. In addition, the Class B Noteholders will not receive any distributions
of principal until the Class A Notes have been paid in full.
The Trust does not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the
Reserve Account. Holders of the Notes must rely for repayment upon payments on
the Receivables and, if and to the extent available, amounts on deposit in the
Reserve Account. Amounts to be deposited in the Reserve Account and the
overcollateralization represented by the Certificates are limited in amount and
the Specified Reserve Account Balance will be reduced as the Pool Balance is
reduced. In addition, funds in the Reserve Account will be available on each
Distribution Date to cover shortfalls in distributions of interest and principal
on the Class A Notes prior to the application thereof to cover shortfalls on the
Class B Notes. If the Reserve Account is depleted, the Trust will depend solely
on current distributions on the Receivables to make payments on the Notes.
If an Event of Default under the Indenture occurs and the maturity of the
Notes is accelerated, the Indenture Trustee will have the right or be required
in certain circumstances to sell the Receivables to pay the principal of, and
accrued interest on, the Notes[, and the Class B Noteholders will not have any
right to direct or to consent to any actions by any Indenture Trustee until the
Class A Notes have been paid in full.] There is no assurance that the proceeds
of such sale will be equal to or greater than the aggregate outstanding
principal balance of the Notes plus accrued interest. Because neither interest
nor principal is
S-20
<PAGE>
distributed to Class B Noteholders upon sale of the Receivables following an
Event of Default and acceleration of the Notes under the Indenture until the
Class A Notes have been paid in full, the interest of Class B Noteholders and
the Class A Noteholders may conflict, and the exercise by the Indenture Trustee
of its right to sell the Receivables or exercise other remedies may cause the
Class B Noteholders to suffer a loss of all or part of their investment. See
"Description of the Notes--The Indenture--EVENTS OF DEFAULT; RIGHTS UPON EVENT
OF DEFAULT" herein and in the Prospectus.
In the event a Servicer Default occurs, the Indenture Trustee or the [Class
A] Noteholders evidencing not less than 25% of the outstanding principal amount
of the [Class A] Notes, as described under "Description of the Transfer and
Servicing Agreements--Rights Upon Servicer Default" herein and in the
Prospectus, may remove the Servicer without the consent of the related Indenture
Trustee [or any of the Class B Noteholders]. [The related Indenture Trustee or
the Class B Noteholders will not have the ability to remove the Servicer if a
Servicer Default occurs until the Class A Notes have been paid in full. In
addition, the Class A Noteholders have the ability, with certain specified
exceptions, to waive defaults by the Servicer, including defaults that could
materially and adversely affect the Class B Noteholders.] If CFSC or an
affiliate is no longer the Servicer, payment of the Servicing Fee will be made
prior to distributions to Class A Noteholders and Class B Noteholders. See
"Description of the Transfer and Servicing Agreements--Waiver of Past Defaults"
herein and in the Prospectus.
RATINGS OF THE NOTES. It is a condition to the issuance of the Notes and
the Certificates of the Class A Notes be rated [in the highest investment rating
category] by [each of] [S&P] [and] [Moody's] and that the Class B Notes be rated
at least " " by [S&P] [and at least " " by] [Moody's]. A rating is not
a recommendation to purchase, hold or sell securities, inasmuch as such rating
does not comment as to market price or suitability for a particular investor.
The ratings of the Notes address the likelihood of the timely payment of
interest on and the ultimate payment of principal of the Notes pursuant to their
terms. There can be no assurance that a rating will remain for any given period
of time or that a rating will not be lowered or withdrawn entirely by a Rating
Agency if in its judgment circumstances in the future so warrant.
FORMATION OF THE TRUST
THE TRUST
The Issuer, Caterpillar Financial Asset Trust 199 - , will be a business
trust formed under the laws of the State of Delaware pursuant to the Trust
Agreement for the transactions described in this Prospectus Supplement. After
its formation, the Trust will not engage in any activity other than (i)
acquiring, owning and managing the Receivables and the other assets of the Trust
and proceeds therefrom, (ii) issuing and making payments on the Notes, (iii)
issuing and making payments on Certificates and (iv) engaging in other
activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
[The Trust will initially be capitalized with equity having an estimated
value of $ , excluding amounts deposited in the Reserve Account.
Certificates with an original principal balance of $ will be sold to the
Seller. The proceeds from the initial sale of the Certificates, together with
the proceeds from the initial sale of the Notes, will be used by the Trust to
purchase the Receivables from the Seller pursuant to the Sale and Servicing
Agreement. The Servicer will initially service the Receivables pursuant to the
Sale and Servicing Agreement, and will be compensated for acting as the
Servicer. See "Description of the Transfer and Servicing Agreements--Servicing
Compensation and Payment of Expenses" herein and in the Prospectus. Each
Receivables File will contain the single original related [Installment Sales
Contract] [or] [Lease] (as represented by CFSC in the Purchase Agreement). The
Custodian will act as custodian for the Receivables Files for the Seller, the
Owner Trustee and the Indenture Trustee and will take possession of the
Receivables Files at a location leased by the Custodian proximate to the
principal executive office of the Seller, and CFSC will indicate on its computer
records that the Receivables have been sold to the Seller and by the Seller to
the Trust. UCC financing statements will not be filed to evidence these
transfers, and CFSC will not stamp the physical Receivables Files to reflect the
sale and assignment of the Receivables to the Trust. See "Risk
Factors--PERFECTION OF INTERESTS IN RECEIVABLES AND IN FINANCED EQUIPMENT"
herein and in the
S-21
<PAGE>
Prospectus and "Certain Legal Aspects of the Receivables--Sale and Transfer of
Receivables" herein and in the Prospectus and "Certain Legal Aspects of the
Receivables--Security Interest in Equipment" in the Prospectus.
If the protections provided to Class A Noteholders in the Trust by the
subordination of the Class B Notes and the Certificates, the protection provided
to the Class B Noteholders in the Trust by the subordination of the
Certificates, and the protection provided to the holders of the Notes by the
availability of the funds in the Reserve Account are insufficient, the Trust
must rely solely on the payments from the Obligors on the Receivables, and the
proceeds from the repossession and sale of Financed Equipment and certain other
cross-collateralized equipment which secure defaulted Receivables. In such
event, certain factors, such as the Trust's not having first priority perfected
security interests in some of the Receivables or Financed Equipment as a result
of occurrences after the Closing Date, and the risk of fraud or negligence of
CFSC or (under certain circumstances) the related Dealer, may affect the Trust's
ability to realize on the collateral securing the Receivables, and thus the
proceeds to be distributed to Noteholders with respect to the Notes may be
reduced. See "Risk Factors--PERFECTION OF INTERESTS IN RECEIVABLES AND IN
FINANCED EQUIPMENT" herein and in the Prospectus, and "Certain Legal Aspects of
the Receivables" in the Prospectus.
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Cut-off Date, as if the issuance and sale of the Notes and the Certificates
offered hereby had taken place on such date:
<TABLE>
<S> <C>
Class A-1 % Asset Backed Notes................................... $
Class A-2 % Asset Backed Notes....................................
Class A-3 % Asset Backed Notes....................................
Class B % Asset Backed Notes......................................
% Asset Backed Certificates........................................
-----------
Total............................................................... $
-----------
-----------
</TABLE>
THE OWNER TRUSTEE
[ ] is the Owner Trustee under the Trust Agreement.
[ ] is a [ ] and its principal
offices are located at [ ]. The Seller
shall pay the fees of the Owner Trustee and shall reimburse it for certain
liabilities and expenses. [In the ordinary course of its business, the Owner
Trustee and its affiliates have engaged and may in the future engage in
commercial banking or financial advisory transactions with CFSC and its
affiliates].
THE RECEIVABLES POOL
The pool of Receivables (the "RECEIVABLES POOL") will include the
Receivables purchased pursuant to the Purchase Agreement with an aggregate
Principal Balance of $ as of , 199 (the "CUT-OFF DATE").
The Receivables were selected from the entire U.S. [ISC] [Lease] Portfolio
(other than receivables previously sold to trusts under prior asset-backed
securitizations which CFSC continues to service which are otherwise included in
the U.S. ISC Portfolio) using several criteria, some of which are set forth in
the Prospectus under "The Receivables Pools," as well as that each Receivable
(i) has a stated maturity of not earlier than or later than
, (ii) has an annual percentage rate of interest (based on its
Principal Balance) ("APR") of at least % and (iii) is not more than days
past due as of the Cut-off Date. As of the Cut-off Date, no Obligor on any
Receivable was noted in the related records of the Servicer as being in default
under the related [Installment Sales Contract] [or] [Lease] or as being the
subject of a bankruptcy proceeding. No selection procedures believed by CFSC or
the Seller to be adverse to the Noteholders were used in selecting the
Receivables.
The composition of the Receivables and the distribution of the Receivables
by APR, new and used equipment, equipment type, industry application, payment
frequency and remaining Principal Balance as of
S-22
<PAGE>
the Cut-off Date are set forth in the following tables. Amounts and percentages
are based on the Principal Balance of the Receivables as of the Cut-off Date.
The "PRINCIPAL BALANCE" of a Receivable means its original principal balance, as
reduced by principal payments applied in accordance with the actuarial method.
The Principal Balance of an Over-Rate Receivable includes the unamortized
purchase premium paid by CFSC to Dealers. As of the Cut-off Date, the aggregate
current Principal Balance of the Receivables is the Initial Pool Balance.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE
AVERAGE APR ORIGINAL TERM REMAINING TERM
OF NUMBER OF (RANGE) (IN (RANGE) (IN AVERAGE
RECEIVABLES POOL BALANCE RECEIVABLES MONTHS) MONTHS) (1) PRINCIPAL BALANCE (RANGE)
- ------------- -------------- ----------- ------------- -------------- --------------------------------
<S> <C> <C> <C> <C> <C>
% $ ( -- ) ( -- ) $ ($ -$ )
</TABLE>
- -------------------
(1) Based on scheduled payments and assuming no prepayments of the Receivables.
DISTRIBUTION BY APR OF THE RECEIVABLES
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
APR RANGE (1) RECEIVABLES BALANCE BALANCE
- --------------------------------------------------------------- ------------- -------------- -----------
<S> <C> <C> <C>
% - %.................................................... $ %
- .......................................................
- .......................................................
- .......................................................
- .......................................................
- .......................................................
- .......................................................
- .......................................................
- .......................................................
- .......................................................
and over...................................................
----- -------------- -----------
Total........................................................ $ 100.00%
----- -------------- -----------
----- -------------- -----------
</TABLE>
- -------------------
(1) CFSC, in conjunction with Caterpillar and its subsidiaries, periodically
offers below market rate financing to Obligors under merchandising programs.
Caterpillar, at the outset of a subsidized transaction, remits to CFSC an
amount equal to the interest differential, which amount is recognized as
income over the term of the related contract. The APR of any Receivable does
not take into account, and the Trust does not have an interest in, any of
such amounts remitted to CFSC by Caterpillar with respect to these
Receivables.
DISTRIBUTION BY NEW AND USED FINANCED EQUIPMENT
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
RECEIVABLES BALANCE BALANCE
------------- -------------- -----------
<S> <C> <C> <C>
New Equipment (1).............................................. $ %
Used Equipment.................................................
----- -------------- -----------
Total........................................................ $ 100.00%
----- -------------- -----------
----- -------------- -----------
</TABLE>
- -------------------
(1) Units not previously delivered or sold; rental units of less than 12 months
and 1,000 service meter hours; and units of the current or previous model
year and serial number.
S-23
<PAGE>
DISTRIBUTION OF THE RECEIVABLES BY TYPE OF FINANCED EQUIPMENT
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
TYPE RECEIVABLES BALANCE BALANCE
- --------------------------------------------------------------- ------------- -------------- -----------
<S> <C> <C> <C>
[Lift Trucks................................................... $ %
Paving Equipment...............................................
Construction Equipment]........................................
----- -------------- -----------
Total........................................................ $ 100.00%
----- -------------- -----------
----- -------------- -----------
</TABLE>
DISTRIBUTION BY INDUSTRY APPLICATION OF FINANCED EQUIPMENT
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
INDUSTRY RECEIVABLES BALANCE BALANCE
- --------------------------------------------------------------- ------------- -------------- -----------
<S> <C> <C> <C>
[Agriculture, Forestry and Fishing............................. $ %
Mining.........................................................
Construction...................................................
Manufacturing..................................................
Transportation/Public Utilities................................
Wholesale Trade]...............................................
Other (1)......................................................
----- -------------- -----------
Total........................................................ $ 100.00%
----- -------------- -----------
----- -------------- -----------
</TABLE>
- -------------------
(1) Other includes retail, financial, insurance and real estate, services, and
public administration.
DISTRIBUTION OF THE RECEIVABLES BY PAYMENT FREQUENCY
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
TYPE RECEIVABLES BALANCE BALANCE
- --------------------------------------------------------------- ------------- -------------- -----------
<S> <C> <C> <C>
Monthly........................................................ $ %
Variable Frequency (1).........................................
----- -------------- -----------
Total........................................................ $ 100.00%
----- -------------- -----------
----- -------------- -----------
</TABLE>
- -------------------
(1) "VARIABLE FREQUENCY" Receivables have monthly payment schedules but permit
the Obligors thereon to skip or reduce payments during certain specified
months which are predetermined at origination. The majority of skip or
reduced payments take place during months coinciding with the cash flow
patterns of the related Obligors. Although there can be no assurance that
the experience on the Variable Frequency Receivables will be comparable,
CFSC has not identified any cash flow pattern resulting from the existence
of Variable Frequency Receivables in the U.S. [ISC] [Lease] Portfolio. The
Seller believes that the pattern of principal payments on the Notes will not
be materially affected by the inclusion of Variable Frequency Receivables in
the Trust. See "The Receivables Pools--The Retail Equipment Financing
Business--INSTALLMENT SALES CONTRACTS--CONTRACT TERMS" in the Prospectus.
S-24
<PAGE>
DISTRIBUTION OF THE RECEIVABLES BY REMAINING PRINCIPAL BALANCE AS OF THE CUT-OFF
DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
REMAINING PRINCIPAL BALANCE RANGE RECEIVABLES BALANCE BALANCE
- --------------------------------------------------------------- ------------- -------------- -----------
<S> <C> <C> <C>
Up to $........................................................ -- $ %
$ -$ ..................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
Over $.........................................................
----- -------------- -----------
Totals....................................................... $ 100.00%
----- -------------- -----------
----- -------------- -----------
</TABLE>
S-25
<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF AGGREGATE PRINCIPAL AGGREGATE
STATE (1) RECEIVABLES BALANCE PRINCIPAL BALANCE
- ------------------------------------------------------------- ------------- -------------------- -----------------
<S> <C> <C> <C>
............................................................. $ %
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
----- -------------------- ------
Total...................................................... $ 100.00%
----- -------------------- ------
----- -------------------- ------
</TABLE>
- -------------------
(1) Based on billing addresses of Obligors.
S-26
<PAGE>
Unless otherwise specified herein, references herein to percentages of the
Receivables refer in each case to the approximate percentage of the Initial Pool
Balance, based on the Principal Balances of the Receivables as of the Cut-off
Date, and after giving effect to all payments received prior to the Cut-off
Date.
All of the Receivables were [Installment Sales Contracts] [Leases]. % of
the Receivables were originated or arranged by , a Dealer in
, and in the aggregate % of the Receivables were originated or
arranged by the five largest Dealers. No other Dealer originated or arranged
more than % of the Receivables. % of the Receivables were originated or
arranged by [Carter Machinery Company, Inc., a Dealer in Salem, Virginia and the
only Dealer owned by Caterpillar].
No single Obligor accounted for more than % of the Receivables, and the
five largest Obligors accounted for approximately % of the Receivables.
Approximately % of the Receivables have related Financed Equipment
manufactured by Caterpillar, [approximately % of the Receivables have related
Financed Equipment manufactured by Mitsubishi Caterpillar Forklift America Inc.]
and the remaining approximately % of the Receivables have related Financed
Equipment manufactured by a variety of other sources.
At origination CFSC confirms the applicable loan-to-value ratios of its
receivables. Because of the depreciating nature of the Financed Equipment, and
in light of CFSC's credit loss experience set forth herein with respect to the
U.S. [ISC] [Lease] Portfolio, the Seller believes that statistical information
relating to original loan-to-value ratios of the Receivables is not material to
investors in the Notes.
Certain Receivables may be cross-collateralized, being secured by junior
liens on other items of equipment (which may or may not be Financed Equipment)
in addition to first priority liens on the related Financed Equipment, and
certain items of Financed Equipment may secure other receivables of CFSC on a
junior basis (which may or may not be Receivables). See "Certain Legal Aspects
of the Receivables--Cross-Collateralization" herein.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning CFSC's experience
pertaining to delinquencies, repossessions and net losses on the [entire United
States portfolio of installment sales contracts] [and/or] [entire United States
portfolio of financed leases] [as applicable,] serviced by CFSC (including
receivables sold which CFSC continues to service) [(the "U.S. ISC PORTFOLIO")]
[and the] ["U.S. LEASE PORTFOLIO", collectively, the "U.S. PORTFOLIO")].
Generally, when an account becomes 120 days delinquent, accrual of finance
income is suspended, the collateral is repossessed and the account is designated
for litigation.
[Delinquencies, repossessions and net losses on installment sales contracts
are affected by economic conditions generally.] [Insert Current Analysis of
Recent Historical Performance.]
Although the Seller believes that the composition of the Receivables in the
aggregate is representative of the [U.S. ISC Portfolio] [and the] [U.S. Lease
Portfolio] [, respectively], there can be no assurance that the delinquency,
repossession and net loss experience on the Receivables will be comparable to
that set forth below or that delinquencies, repossessions and net losses in the
future will be comparable to those in the past.
S-27
<PAGE>
DELINQUENCY EXPERIENCE FOR THE U.S. ISC PORTFOLIO(1)(2)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------------------------------------------------------------
199 199 199 199
------------------------ ------------------------ ------------------------ -----------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Portfolio.................. $ $ $
Unadjusted System Delinquency (3)
31-60 Days..................... $ $ $
over 60 Days................... $ $ $
Total Unadjusted System
Delinquencies.................. $ $ $
Total Unadjusted System
Delinquencies as a Percent of
the Gross Portfolio............. % % % % % % %
Adjusted Delinquency (4)
31-60 Days..................... $
over 60 Days................... $
Total Adjusted Delinquencies..... $
Total Adjusted Delinquencies as a
Percent of the Gross
Portfolio....................... % % %
<CAPTION>
AMOUNT
-----------
<S> <C>
Gross Portfolio.................. $
Unadjusted System Delinquency (3)
31-60 Days..................... $
over 60 Days................... $
Total Unadjusted System
Delinquencies.................. $
Total Unadjusted System
Delinquencies as a Percent of
the Gross Portfolio............. %
Adjusted Delinquency (4)
31-60 Days..................... $
over 60 Days................... $
Total Adjusted Delinquencies..... $
Total Adjusted Delinquencies as a
Percent of the Gross
Portfolio....................... %
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 199 [AT 199 ] [AT 199 ]
---------------------- ------------------------ ----------------------
NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
----------- --------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Gross Portfolio................................ $ $ $
Unadjusted System Delinquency (3)
31-60 Days................................... $ $ $
over 60 Days................................. $ $ $
Total Unadjusted System
Delinquencies................................. $ $ $
Total Unadjusted System
Delinquencies as a Percent of the
Gross Portfolio............................... % % % % % %
Adjusted Delinquency (4)
31-60 Days................................... $ $ $
over 60 Days................................. $ $ $
Total Adjusted Delinquencies................... $ $ $
Total Adjusted Delinquencies
as a Percent of the Gross Portfolio........... % % % % % %
</TABLE>
- ------------------------
(1) Amounts and percentages are based on the gross amount of all unpaid
installments of principal and unearned finance charges scheduled to be paid
on each contract.
(2) Delinquent contracts that have been modified in accordance with CFSC's
credit policies may not be considered to be "delinquent" for purposes of
this table. Such modifications include extensions, restructurings with skip
payments, refinancings, changes of installment due dates, reductions of
interest rates, and partial buyouts. See "The Receivables Pools--The Retail
Equipment Financing Business--EXTENSION/REVISION PROCEDURES" in the
Prospectus. In addition, a contract is no longer considered delinquent and
is no longer included in the U.S. [ISC] Portfolio upon the repossession of
its related financed equipment. See "The Receivables Pools--The Retail
Equipment Financing Business--REPOSSESSION/WRITEOFF PROCEDURES" in the
Prospectus.
(3) A monthly contract is deemed to be "31-60" or "over 60" days past due if
the amount due is not collected by the last day of the succeeding or next
succeeding month, respectively (I.E., a payment due any time in January is
not considered "31-60" days past due unless the amount due remains
uncollected on February 28).
(4) Adjustments result primarily from the application of payments made but not
allocated by CFSC to the amount then outstanding under delinquent
contracts. Increases or decreases in the contract number or dollar amount
of contracts in a particular delinquency category result from either the
removal of contracts from a particular delinquent status or the shifting of
contracts from one delinquency category to another as a result of the
adjustment process.
S-28
<PAGE>
CREDIT LOSS/REPOSSESSION EXPERIENCE FOR THE U.S. [ISC] [LEASE] PORTFOLIO(1)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
[
YEAR ENDED DECEMBER 31, ]
---------------------------------------- -------------------
199 199 199 199 199 [199 (5) 199 (5)]
------ ------ ------ ------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Gross Portfolio Outstanding During the Period....... $ $ $ $ $ $ $
Repossessions as a Percent of Average Gross Portfolio
Outstanding (2)............................................ % % % % % % %
Net Losses as a Percent of Liquidations (3)(4).............. % % % % % % %
Net Losses as a Percent of Average Gross Portfolio
Outstanding (4)............................................ % % % % % % %
</TABLE>
- ------------------------
(1) Except as indicated, all amounts and percentages are based on the gross
amount of all unpaid installments of principal and unearned finance charges
scheduled to be paid on each contract.
[(2)Repossessions prior to the third quarter of 1993 represented all unpaid
principal and finance charges accrued but not collected for contracts
repossessed and terminated during the period, and subsequent to the third
quarter of 1993 represent contracts repossessed and either terminated or in
inventory.]
(3) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of cash payments and charge-offs.
(4) Net Losses are equal to the aggregate amount of principal and finance
charges accrued on all contracts which are determined to be uncollectible
plus repossession expenses less (i) in the case of repossessed (but not
liquidated) financed equipment, the estimated proceeds of liquidation of
such equipment, and (ii) in the case of liquidated financed equipment, the
actual proceeds of liquidation of such equipment. With respect to Financed
Equipment which is repossessed in one calendar year and sold in another,
the Net Loss figures for the year of repossession include CFSC's estimate
of loss after giving effect to its estimate of the liquidation proceeds,
and the Net Loss figures in the subsequent calendar year are increased to
reflect the amount by which actual liquidation proceeds are less than such
estimate or are decreased to reflect the amount by which actual liquidation
proceeds exceed such estimate. The Trust receives proceeds of liquidations
but will not have the benefit of subsequent amounts received from Obligors
or others (except for recourse payments from Dealers) with respect to a
contract after the related financed equipment is sold and the related
contract is terminated. The Net Loss figures above give effect to payments
by Dealers on a limited number of the contracts which provide for recourse
to the related Dealers. See "The Receivables Pools--The Retail Equipment
Financing Business--DEALER AGREEMENTS" in the Prospectus and "Certain Legal
Aspects of the Receivables--Dealer Recourse Receivables" herein.
[(5) Rates have been annualized.]
WEIGHTED AVERAGE LIFE OF THE NOTES
Information regarding certain maturity and prepayment considerations with
respect to the Securities is set forth under "Weighted Average Life of the
Securities" in the Prospectus. The Class A-2 Noteholders will not receive any
principal payments until the Class A-1 Notes are paid in full, the Class A-3
Noteholders will not receive any principal payments until the Class A-2 Notes
are paid in full and the Class B Noteholders will not receive any principal
payments until the Class A-3 Notes are paid in full. See "Description of the
Notes-- The Class A-2 Notes, the Class A-3 Notes and the Class B Notes--PAYMENTS
OF PRINCIPAL" herein. In addition, on any Distribution Date on and after the
Distribution Date, the Class A-2 Noteholders until paid in full,
then the Class A-3 Noteholders until paid in full, and then the Class B
Noteholders until paid in full, are entitled to receive amounts on deposit in
the Reserve Account in excess of the Specified Reserve Account Balance for such
Distribution Date as an accelerated payment of principal.
No principal payments on the Class B Notes will be made prior to the
Distribution Date on which the principal amounts of the Class A Notes have been
reduced to zero, See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account" herein. If an Event of
Default has occurred and the maturity of the Class A Notes has been accelerated,
the Class B Noteholders will not be entitled to receive any distributions of
interest or principal until the Class A Notes have been paid in full.
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As the rate of payment of principal of the Notes depends primarily on the
rate of payment (including prepayments) of the aggregate Principal Balance of
the Receivables, final payment of each Class of the Notes could occur
significantly earlier than their respective final scheduled Distribution Dates.
Noteholders will bear the risk of being able to reinvest principal payments of
the Notes at yields at least equal to the yield on their respective Notes.
POOL FACTORS AND TRADING INFORMATION
Each of the "CLASS A-1 NOTE POOL FACTOR," the "CLASS A-2 NOTE POOL FACTOR"
and the "CLASS A-3 NOTE POOL FACTOR" is a seven-digit decimal which the Servicer
will compute each month, indicating the remaining outstanding principal amount
of the Class A-1 Notes, the Class A-2 Notes or the Class A-3 Notes as of the
related Distribution Date, as a fraction of the initial outstanding principal
balance of the Class A-1 Notes, the Class A-2 Notes or the Class A-3 Notes, as
applicable. Each of the Class A-1 Note Pool Factor, the Class A-2 Note Pool
Factor and the Class A-3 Note Pool Factor will be 1.0000000 as of the Closing
Date, and thereafter will decline to reflect reductions in the outstanding
principal amount of the Class A-1 Notes, the Class A-2 Notes or the Class A-3
Notes, as the case may be. A Class A-1 Noteholder's portion of the aggregate
outstanding principal amount of the Class A-1 Notes is the product of (i) the
original denomination of the Class A-1 Noteholder's Note and (ii) the Class A-1
Note Pool Factor, a Class A-2 Noteholder's portion of the aggregate outstanding
principal amount of the Class A-2 Notes is the product of (i) the original
denomination of the Class A-2 Noteholder's Note and (ii) the Class A-2 Note Pool
Factor and a Class A-3 Noteholder's portion of the aggregate outstanding
principal amount of the Class A-3 Notes is the product of (i) the original
denomination of the Class A-3 Noteholder's Note and (ii) the Class A-3 Note Pool
Factor.
The "CLASS B NOTE POOL FACTOR" is a seven-digit decimal which the Servicer
will compute each month, indicating the remaining outstanding principal amount
of the Class B Notes as of the related Distribution Date, as a fraction of the
initial outstanding principal amount of the Class B Notes. The Class B Note Pool
Factor will be 1.0000000 as of the Closing Date, and thereafter will decline to
reflect reductions in the outstanding principal amount of the Class B Notes. A
Class B Noteholder's portion of the outstanding principal amount of the Class B
Notes is the product of (i) the original denomination of the Class B
Noteholder's Certificate and (ii) the Class B Note Pool Factor.
Pursuant to the Indenture, the Noteholders of record will receive monthly
reports concerning the payments received on the Receivables, the Pool Balance,
the Class A-1 Note Pool Factor, the Class A-2 Note Pool Factor, the Class A-3
Note Pool Factor and the Class B Note Pool Factor and various other items of
information. Noteholders of record during any calendar year will be furnished
information for tax reporting purposes not later than the latest date permitted
by law. See "Description of the Transfer and Servicing Agreements--Reports to
Securityholders" in the Prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SOURCES OF CAPITAL AND LIQUIDITY
The Trust's primary sources of capital will be the net proceeds of the
offering of the Notes. See "Formation of the Trust--Capitalization of the Trust"
herein.
The Trust's primary sources of liquidity will be payments on the Receivables
and amounts on deposit in the Reserve Account. For a discussion of CFSC's
experience pertaining to delinquencies, repossessions and net losses. See "The
Receivables Pool--Delinquencies, Repossessions and Net Losses" and "Description
of the Transfer and Servicing Agreements--Reserve Account" herein.
RESULTS OF OPERATIONS
The Trust is newly formed and, accordingly, has no results of operations as
of the date of this Prospectus Supplement. Because the Trust does not have any
operating history, there has not been included in this Prospectus Supplement any
historical or pro forma ratio of earnings to fixed charges. The earnings on the
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Receivables and other assets owned by the Trust, the interest costs of the Notes
and the related operating expenses will determine the Trust's results of
operations in the future. The income generated from the Trust's assets will be
used to pay principal and interest on the Notes, related operating costs and
expenses of the Trust (to the extent not paid by the Servicer) and distributions
to the Certificateholders. The principal operating expenses of the Trust are
expected to be the Servicing Fee and the Administration Fee.
USE OF PROCEEDS
The net proceeds from the sale of Notes and the Certificates will be applied
to the purchase of the Receivables from the Seller and to make the Seller's
initial deposit to the Reserve Account. The Seller will apply its net proceeds
to the purchase of the Receivables from CFSC.
THE SELLER, CATERPILLAR AND THE SERVICER
For a general discussion of the Seller, Caterpillar and the Servicer, see
"The Seller, Caterpillar and the Servicer" in the Prospectus.
CATERPILLAR INC.
Caterpillar reported profits of $ million on sales and revenues of
$ billion for the year ended December 31, 199 as compared with profits of
$ million on sales and revenues of $ billion for the year ended December 31,
199 . As used herein, the term "CATERPILLAR" means Caterpillar Inc. and its
consolidated subsidiary companies, unless the context otherwise requires.
CATERPILLAR FINANCIAL SERVICES CORPORATION
CFSC currently offers the following types of retail financing plans: (1)
non-tax (financing) leases; (2) installment sales contracts; (3) tax-oriented
leases; (4) customer loans; (5) dealer loans; and (6) governmental
lease-purchase contracts. CFSC also currently offers wholesale financing to
Caterpillar Dealers. At , 199 , the percentages of total value of
CFSC's portfolio represented by these financing plans were as follows: non-tax
(financing) leases, %; installment sales contracts, %; tax-oriented leases,
%; customer loans, %; wholesale financing, %; dealer loans, %; and
governmental lease-purchase contracts, %.
At , 199 , CFSC had full-time employees and serviced
accounts, including approximately $ billion in gross finance receivables.
In the United States, as of , 19 , there were independently owned
Dealers and one Dealer that is owned by Caterpillar.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. A copy of the
Indenture will be filed with the Commission following the issuance of the
Securities. The following, as well as other pertinent information included
elsewhere in this Prospectus Supplement and in the Prospectus, summarizes the
material terms of the Notes and the Indenture. The summary does not purport to
be complete and is qualified in its entirety by reference to the provisions of
the Notes and the Indenture. The following summary supplements, and to the
extent inconsistent therewith replaces, the description of the general terms and
provisions of the Notes of any given series and the related Indenture set forth
in the Prospectus, to which description reference is hereby made.
THE CLASS A-1 NOTES
PAYMENTS OF INTEREST. The Class A-1 Notes will constitute Fixed Rate
Securities, as such term is defined under "Certain Information Regarding the
Securities--Fixed Rate Securities" in the Prospectus. Interest on the principal
amount of the Class A-1 Notes will accrue at the rate of % per annum (the
"CLASS A-1 NOTE RATE") (calculated on the basis of a 360-day year of twelve
30-day months). Interest on the outstanding principal amount of the Class A-1
Notes will accrue from and including the most recent Distribution Date on which
interest has been paid (or, in the case of the initial Distribution Date, from
and including the Closing
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Date) to but excluding the following Distribution Date and will be payable to
the Class A-1 Noteholders monthly on each Distribution Date commencing
, 199 . "DISTRIBUTION DATE" shall mean the th day of each month or,
if any such date is not a business day, on the next succeeding business day.
Interest accrued as of any Distribution Date but not paid on such Distribution
Date will be due on the next Distribution Date, together with interest, to the
extent permitted by law, on such amount at the Class A-1 Note Rate. Interest
payments on the Class A-1 Notes will be generally derived from the Total
Distribution Amount remaining after the payment of the Servicing Fee (if CFSC or
an affiliate is not the Servicer) and the Administration Fee, and from amounts
on deposit in the Reserve Account. See "Description of the Transfer and
Servicing Agreements--Distributions" and "--Reserve Account" herein. If the
amount of interest on the principal amount of the Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes payable on any Distribution Date exceeds the sum
of such remaining portion of the Total Distribution Amount and the amounts on
deposit in the Reserve Account, the Class A-1 Noteholders will receive their
ratable share (based upon the total amount of interest due to the Class A-1
Noteholders, the Class A-2 Noteholders and the Class A-3 Noteholders) of the
amount available to be distributed in respect of interest on the Class A-1
Notes, the Class A-2 Notes and the Class A-3 Notes, and each Class A-1
Noteholder will receive its ratable share (based on the principal amount of its
Class A-1 Note and the total amount distributable to the Class A-1 Noteholders)
of such amount.
PAYMENTS OF PRINCIPAL. Principal payments will be made to the Class A-1
Noteholders on each Distribution Date in an amount generally equal to the
Principal Distribution Amount until the principal balance of the Class A-1 Notes
is reduced to zero. Principal payments on the Class A-1 Notes will generally be
derived from the Total Distribution Amount remaining after the payment of the
Servicing Fee (if CFSC or an affiliate is not the Servicer), the Administration
Fee and the Noteholders' Interest Distributable Amount, and from amounts on
deposit in the Reserve Account remaining after the payment of the Noteholders'
Interest Distributable Amount. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account" herein. Distributions with
respect to principal on the Class A-1 Notes will not be made until all interest
due on the Notes is paid in full. The outstanding principal amount, if any, of
the Class A-1 Notes will be payable in full on the Class A-1 Note Final
Scheduled Distribution Date from available funds therefor (including amounts on
deposit in the Reserve Account).
THE CLASS A-2 NOTES, THE CLASS A-3 NOTES AND CLASS B NOTES
PAYMENTS OF INTEREST. The Class A-2 Notes, the Class A-3 Notes and the
Class B Notes will constitute Fixed Rate Securities, as such term is defined
under "Certain Information Regarding the Securities--Fixed Rate Securities" in
the Prospectus. Interest on the principal amount of the Class A-2 Notes will
accrue at the rate of % per annum (the "CLASS A-2 NOTE RATE"), interest on
the principal amount of the Class A-3 Notes will accrue at the rate of % per
annum (the "CLASS A-3 NOTE RATE"), and interest on the principal amount of the
Class B Notes will accrue at the rate of % per annum (the "CLASS B NOTE
RATE") (in each case, calculated on the basis of a 360-day year of twelve 30-day
months). Interest on the outstanding principal amount of the Class A-2 Notes,
the Class A-3 Notes and the Class B Notes will in each case accrue from and
including the most recent Distribution Date on which interest has been paid (or,
in the case of the initial Distribution Date, from and including the Closing
Date), to but excluding the following Distribution Date and will be payable to
the Class A-2 Noteholders, the Class A-3 Noteholders, and the Class B Notes
monthly on each Distribution Date commencing , 199 . Interest accrued
on any Class of Notes as of any Distribution Date but not paid on such
Distribution Date will be due on the next Distribution Date together with
interest, to the extent permitted by law, on such amount at the interest rate
applicable to such Class of Notes. Interest on the Class B Notes will not be
paid on any Distribution Date until interest payments on the Class A Notes have
been paid in full. Interest payments on the Class A-2 Notes, the Class A-3
Notes, and the Class B Notes will generally be derived from the Total
Distribution Amount remaining after the payment of the Servicing Fee (if CFSC or
an affiliate is not the Servicer) and the Administration Fee and, in the case of
the Class B Notes, payments of the Class A Noteholders' Interest Distributable
Amount, and in each case from amounts on deposit in the Reserve Account. See
"Description of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Account" herein. If the amount of interest on the principal amounts
of the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
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payable on any Distribution Date exceeds the sum of such remaining portion of
the Total Distribution Amount and the amount on deposit in the Reserve Account,
each of the Class A-2 Noteholders and the Class A-3 Noteholders will receive
their ratable share (based upon the total amount of interest due to the Class
A-1 Noteholders, the Class A-2 Noteholders and the Class A-3 Noteholders) of the
amount available to be distributed in respect of interest on the Class A-1
Notes, the Class A-2 Notes and the Class A-3 Notes, and each Class A-2
Noteholder and each Class A-3 Noteholder will receive its ratable share (based
on the principal amount of its Class A-2 Note or its Class A-3 Note and the
total amount distributable to the Class A-2 Noteholders or the Class A-3
Noteholders) of such amount. In such event, the Class B Noteholders will not
receive any payments of interest on such Distribution Date.
In addition, if an Event of Default has occurred and the maturities of the
Notes have been accelerated, the Class B Noteholders will not be entitled to any
payment of interest or principal until the Class A Notes have been paid in full.
PAYMENTS OF PRINCIPAL. Principal payments will be made to the Class A-2
Noteholders on each Distribution Date on and after the Distribution Date on
which the Class A-1 Notes have been paid in full in an amount equal to the
difference between (i) the Principal Distribution Amount and (ii) the portion,
if any, of the Principal Distribution Amount paid in respect of the Class A-1
Notes on such Distribution Date. Principal payments will be made to the Class
A-3 Noteholders on each Distribution Date on and after the Distribution Date on
which the Class A-1 Notes and the Class A-2 Notes have been paid in full in an
amount equal to the difference between (i) the Principal Distribution Amount and
(ii) the portion, if any, of the Principal Distribution Amount paid in respect
of the Class A-1 Notes and the Class A-2 Notes on such Distribution Date.
Principal payments on the Class A-2 Notes and the Class A-3 Notes will be
generally derived from the Total Distribution Amount remaining after the payment
of the Servicing Fee (if CFSC or an affiliate is not the Servicer), the
Administration Fee and the Noteholders' Interest Distributable Amount, and from
amounts on deposit in the Reserve Account. Principal payments will be made to
the Class B Noteholders on each Distribution Date on or after the Distribution
Date on which the Class A Notes are paid in full in an amount equal to the
difference between (i) the Principal Distribution Amount and (ii) the portion,
if any, of the Principal Distribution Amount paid in respect to the Class A
Notes on such Distribution Date. Principal payments on the Class B Notes will be
generally derived from the Total Distribution Amount remaining after the payment
of the Servicing Fee (if CFSC or an Affiliate is not the Servicer), the
Administration Fee, the Class B Noteholders' Interest Distributable Amount and
the Class A Noteholders Distributable Amount, and from amounts on deposit in the
Reserve Account. The Class B Noteholders will not receive any principal payments
until the Class A Noteholders have been paid in full.
In addition, on any Distribution Date, on and after the
Distribution Date, amounts on deposit in the Reserve Account in excess of the
Specified Reserve Account Balance for such Distribution Date will be released
from the Reserve Account and will be distributed first to the Class A-2
Noteholders as a payment of principal (until the Class A-2 Notes have been paid
in full), then to the Class A-3 Noteholders as a payment of principal (until the
Class A-3 Notes have been paid in full) and then to the Class B Notes as a
payment of principal (until the Class B Notes have been paid in full). See
"Description of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Account" herein.
The outstanding principal amount, if any, of the Class A-2 Notes will be
payable in full on the Class A-2 Note Final Scheduled Distribution Date from
available funds therefor (including any amounts on deposit in the Reserve
Account), the outstanding principal amount, if any, of the Class A-3 Notes will
be payable in full on the Class A-3 Note Final Scheduled Distribution Date from
available funds therefor and the outstanding principal amount, if any, of the
Class B Notes will be payable in full on the Class B Note Final Scheduled
Distribution Date from available funds therefore (including in each case any
amounts on deposit in the Reserve Account).
In addition, if an Event of Default has occurred and the maturites of the
Notes have been accelerated, the Class A Noteholders of each Class of Class A
Notes will be entitled to be paid principal pro rata on the
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basis of the ratio of which the principal amount of a Class A Noteholder's Class
A Note bears the aggregate principal amount of the Class A Notes, and the Class
B Noteholders will not be entitled to receive any distributions of interest or
principal until the Class A Notes have been paid in full.
OPTIONAL PREPAYMENT. The Class A-3 Notes and the Class B Notes will be
prepaid in whole, but not in part, at the Class A-3 Note Prepayment Price and
the Class B Prepayment Price, respectively, on any Distribution Date after the
Class A-1 Notes and the Class A-2 Notes have been paid in full, if the Servicer
exercises its option to purchase the Receivables for a purchase price equal to
the sum of the Class A-3 Note Prepayment Price and the Class B Prepayment Price,
which option may be exercised when the Pool Balance has been reduced to 10% or
less of the Initial Pool Balance. The prepayment price (the "CLASS A-3 NOTE
PREPAYMENT PRICE") for the Class A-3 Notes will be equal to the unpaid principal
amount of the Class A-3 Notes, plus accrued but unpaid interest thereon at the
Class A-3 Note Rate plus, to the extent permitted by law, interest on any past
due interest at the Class A-3 Note Rate. The prepayment price (the "CLASS B
PREPAYMENT PRICE") for the Class B Notes will be equal to the unpaid principal
amount of the Class B Notes, plus accrued but unpaid interest thereon at the
Class B Note Rate plus, to the extent permitted by law, interest on any past due
interest at the Class B Note Rate. See "Description of the Transfer and
Servicing Agreements--Termination" in the Prospectus.
THE INDENTURE TRUSTEE. is the Indenture Trustee under the
Indenture. is and its corporate trust offices are
located at . [In the ordinary course of its business, the Indenture
Trustee and its affiliates have engaged and may in the future engage in
commercial banking or financial advisory transactions with CFSC and its
affiliates.]
THE INDENTURE
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. Pursuant to the Trust
Indenture Act of 1939, as amended, the Indenture Trustee may be deemed to have a
conflict of interest and be required to resign as trustee for either the Class A
Notes or the Class B Notes if a default occurs under the Indenture. In these
circumstances, the Indenture will provide for a successor trustee to be
appointed for one or both of the Class A Notes and Class B Notes, in order that
there be separate trustees for each of the Class A Notes and the Class B Notes.
So long as any amounts remain unpaid with respect to the Class A Notes, only the
indenture trustee for the Class A Noteholders will have the right to exercise
remedies under the Indenture (but the Class B Noteholders will be entitled to
their share of any proceeds of enforcement, subject to the subordination of the
Class B Notes to the Class A Notes as described herein[, and only the Class A
Noteholders will have the right to direct or consent to any action to be taken,
including sale of the Receivables, until the Class A Notes are paid in full.]
Upon repayment of the Class A Notes in full, all rights to exercise remedies
under the Indenture will transfer to the trustee for the Class B Notes. Any
resignation of the original Indenture Trustee as described above with respect to
any class of Notes will become effective only upon the appointment of a
successor trustee for such class of Notes and such successor's acceptance of
such appointment.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Trust Agreement. The Seller
will initially purchase the entire principal amount of the Certificates. The
Certificates will bear interest at the rate of % per annum (the "CERTIFICATE
RATE").
Distributions of interest and principal on the Certificates will be
subordinate in priority of payment to interest and principal due on the Notes to
the extent described herein. Funds on deposit in the Reserve Account will not be
available to cover scheduled payments with respect to the Certificates.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following, as well as other information included elsewhere in this
Prospectus Supplement and in the Prospectus, summarizes the material terms of
the Sale and Servicing Agreement, the Purchase Agreement, the Administration
Agreement, and the Trust Agreement (collectively, the "TRANSFER AND SERVICING
AGREEMENTS," forms of which have been filed as exhibits to the Registration
Statement). Copies of the Transfer and
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Servicing Agreements will be filed with the Commission following the issuance of
the Securities. The following summary does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the provisions of the
Transfer and Servicing Agreements. The following summary supplements, and to the
extent inconsistent therewith replaces, the description of the general terms and
provisions of the Transfer and Servicing Agreements set forth under the heading
"Description of the Transfer and Servicing Agreements" in the Prospectus, to
which description reference is hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information with respect to the conveyances on the Closing Date of
the Receivables from CFSC to the Seller pursuant to the Purchase Agreement and
from the Seller to the Trust pursuant to the Sale and Servicing Agreement is set
forth under "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables" in the Prospectus. Under certain circumstances
relating to breaches of representations and warranties, CFSC will be required to
repurchase Receivables from the Trust. See "Weighted Average Life of the Notes"
herein and "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables" in the Prospectus.
ACCOUNTS
In addition to the Trust Accounts referred to in the Prospectus under
"Description of the Transfer and Servicing Agreements--Accounts," the Seller
will establish and maintain the Reserve Account in the name of the Indenture
Trustee on behalf of the Noteholders and the Certificateholders. See "--Reserve
Account" herein.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicing Fee Rate with respect to the Servicing Fee to be paid to the
Servicer with respect to each Collection Period will be % per annum of the
Pool Balance as of the first day of such Collection Period. The Servicing Fee
(together with any portion of the Servicing Fee that remains unpaid from prior
Distribution Dates) will be paid solely to the extent of the Total Distribution
Amount. If CFSC or an affiliate is no longer the Servicer, the Servicing Fee
will be paid prior to the distribution of any portion of the Total Distribution
Amount to the Administrator and the Class A Noteholders or the Class B
Noteholders, and except under certain circumstances, deposits into the
Collection Account shall be made net of such amounts. The Servicer shall also be
entitled to any Servicer's Yield, and deposits into the Collection Account shall
be made net of such amounts. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" and "--Net Deposits"
in the Prospectus.
RIGHTS UPON SERVICER DEFAULT
In the event a Servicer Default occurs, the Indenture Trustee or the [Class
A] Noteholders evidencing not less than 25% of the outstanding principal amount
of the [Class A] Notes may remove the Servicer without the consent of the Owner
Trustee [or any of the Class B Noteholders]. [The related Owner Trustee or the
Class B Noteholders will not have the ability to remove the Servicer if a
Servicer Default occurs until the Class A Notes have been paid in full.]
WAIVER OF PAST DEFAULTS
In the event a Servicer Default occurs, the [Class A] Noteholders evidencing
more than 50% of the outstanding principal amount of the [Class A] Notes may,
with certain specified exceptions, waive any Servicer Defaults[, without the
consent of the Owner Trustee or any of the Class B Noteholders]. [The related
Owner Trustee or the Class B Noteholders will not have the right to determine
whether any Servicer Default should be waived until the Class A Notes have been
paid in full.]
DISTRIBUTIONS
DEPOSITS TO COLLECTION ACCOUNT. By the business day prior to a
Distribution Date (each, a "DETERMINATION DATE"), the Servicer will provide the
Indenture Trustee with certain information with respect to the related
Collection Period, including the amount of aggregate collections on the
Receivables and the aggregate Purchase Amount of Receivables required to be
repurchased by the Seller or required to be purchased by the Servicer.
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Unless the Servicer has been making deposits of collections throughout the
related Collection Period, on or before the business day preceding each
Distribution Date the Servicer will cause the Total Distribution Amount to be
deposited into the Collection Account.
The "TOTAL DISTRIBUTION AMOUNT" for a Distribution Date shall be the sum of
the aggregate collections (including any Liquidation Proceeds, any Purchase
Amounts paid by the Seller and the Servicer and any amounts received from
Dealers with respect to Receivables) received in respect of the Receivables
during the related Collection Period and Investment Earnings on the Trust
Accounts during such Collection Period. The Total Distribution Amount on any
Distribution Date shall exclude 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.
"LIQUIDATED RECEIVABLES" means defaulted Receivables in respect of which the
Financed Equipment has been sold or otherwise disposed of, and "LIQUIDATION
PROCEEDS" means all proceeds relating to the Liquidated Receivables (including
proceeds of sale of the Financed Equipment), net of expenses incurred by the
Servicer in connection with such liquidation and any amounts required by law to
be remitted to the Obligor on such Liquidated Receivables.
The "PRINCIPAL DISTRIBUTION AMOUNT" for a Distribution Date shall be 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).
DEPOSITS TO THE DISTRIBUTION ACCOUNTS. Prior to each Distribution Date, the
Servicer shall instruct the Indenture Trustee to make deposits and distributions
for receipt by the Servicer or Administrator or for deposit in the applicable
Trust Account on the following Distribution Date.
Distributions of the Total Distribution Amount shall be made 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, the Administration Fee and all unpaid
Administration Fees from prior Collection Periods;
(iii) to the Class A Note Distribution Account, the Class A Noteholders'
Interest Distributable Amount;
(iv) to the Class B Note Distribution Account, the Class B Noteholders'
Interest Distributable Amount;
(v) to the Class A Note Distribution Account, the Class A-1 Noteholders'
Principal Distributable Amount;
(vi) to the Class A Note Distribution Account, the Class A-2
Noteholders' Principal Distributable Amount;
(vii) to the Class A Note Distribution Account, the Class A-3
Noteholders' Principal Distributable Amount;
(viii) to the Class B Note Distribution Account, the Class B Noteholders'
Principal Distributable Amount;
(ix) to the Certificate Distribution Account, the Certificateholders'
Interest Distributable Amount;
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(x) to the Certificate Distribution Account, the Certificateholders'
Principal Distributable Amount;
(xi) to the Servicer (if CFSC or an affiliate is the Servicer), the
Servicing Fee and all unpaid Servicing Fees from prior Collection Periods;
and
(xii) to the Reserve Account, the remaining Total Distribution Amount.
Notwithstanding the foregoing, if an Event of Default has occurred and the
maturity of the Notes has been accelerated the Class A Noteholders will be
entitled to be paid principal pro rata on the basis of the ratio which the
principal amount of a Class A Noteholder's Note bears to the aggregate principal
amount of the Class A Notes of all Classes and the Class B Noteholders and the
Certificateholders will not be entitled to receive any distributions of interest
or principal until the Class A Notes have been paid in full.
Funds will be withdrawn from amounts on deposit in the Reserve Account to
the extent that the Total Distribution Amount (after the payment of the
Servicing Fee (if CFSC or an affiliate is not the Servicer) and the
Administration Fee) and the deposit of the Class B Noteholders' Interest
Distributable Amount in the Class B Note Distribution Account with respect to
any Collection Period is less than the Class A Noteholders' Distributable
Amount, and funds in the amount of such deficiency will be deposited in the
Class A Note Distribution Account. In addition, funds will be withdrawn from
amounts on deposit in the Reserve Account to the extent that the portion of the
Total Distribution Amount remaining after the payment of the Servicing Fee (if
CFSC or an affiliate is not the Servicer) and the Administration Fee and the
deposit of the Class A Noteholders' Distributable Amount in the Class A Note
Distribution Account is less than the Class B Noteholders' Distributable Amount,
and funds in the amount of such deficiency will be deposited in the Class B Note
Distribution Account. Notwithstanding the foregoing, if on any Distribution Date
on which any Class A Notes are outstanding the amount on deposit in the Reserve
Account is less than % of the Pool Balance as of the end of the preceding
Collection Period, then funds will be withdrawn from the Reserve Account only to
the extent needed to pay the interest due on the Notes and no funds from the
Reserve Account will be applied on such Distribution Date to principal of the
Notes; PROVIDED, HOWEVER, that this restriction on withdrawals shall be
inapplicable if an Event of Default has occurred which resulted in acceleration
of the Notes.
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"APR" means, with respect to any Receivable, the annual percentage rate of
interest represented by such Receivable, based on its Principal Balance. The APR
of any subsidized Receivable does not take into account any amounts paid to CFSC
by Caterpillar with respect thereto at its origination.
"CERTIFICATE BALANCE" equals, on the Closing Date, $ and,
thereafter, equals $ , reduced by all amounts allocable to principal
previously distributed to Certificateholders. The Certificate Balance shall also
be reduced on any Distribution Date by the excess, if any, of (i) the sum of (A)
the Certificate Balance and (B) the outstanding principal amount of the Notes
(in each case after giving effect to amounts in respect of principal to be
deposited in the Certificate Distribution Account, the Class A Note Distribution
Account and the Class B Note Distribution Account on such Distribution Date),
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, but not by more than
the aggregate reductions in the Certificate Balance set forth in the preceding
sentence.
"CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the Certificateholders' Principal
Distributable Amount and (ii) the Certificateholders' Interest Distributable
Amount.
"CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with respect to
any Distribution Date, the sum of (i) the excess, if any, of (A) the sum of (1)
the Certificateholders' Monthly Interest Distributable Amount for the preceding
Distribution Date and (2) any outstanding Certificateholders' Interest Carryover
Shortfall on such preceding Distribution Date, over (B) the amount in respect of
interest that is actually deposited in the Certificate Distribution Account on
such preceding Distribution Date, and (ii) interest on such excess, to the
extent permitted by law, at the Certificate Rate.
"CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, an amount equal to the aggregate interest
accrued on the Certificates at the Certificate Rate from and including the
preceding Distribution Date (or from and including the Closing Date in the case
of the initial Distribution Date) to but excluding such Distribution Date (based
on a 360-day year of twelve 30-day months).
"CERTIFICATEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date on or after the Distribution Date on which the
principal amounts of the Class A Notes and Class B Notes are reduced to zero,
the Principal Distribution Amount (less the portion thereof, if any, applied on
such Distribution Date to reduce the principal amount of the Notes to zero,
which shall be deposited into the Class A Note Distribution Account and/or the
Class B Note Distribution Account).
"CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the close
of any Distribution Date, the sum of (i) the excess, if any, of (A) the sum of
(1) the Certificateholders' Monthly Principal Distributable Amount and (2) any
outstanding Certificateholders' Principal Carryover Shortfall from the preceding
Distribution Date, over (B) the amount in respect of principal that is actually
deposited in the Certificate Distribution Account and (ii) the unreimbursed
portion of the amount by which the Certificate Balance has been reduced as
described in the second sentence of the definition of "Certificate Balance"
above.
"CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of (i) the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and (ii) the Certificateholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; PROVIDED, HOWEVER, that, until an amount sufficient to reduce the
outstanding principal amounts of the Notes to zero has been deposited into the
Class A Note Distribution Account and/or the Class B Note Distribution Account,
the Certificateholders' Principal Distributable Amount shall be zero; PROVIDED,
FURTHER, that the sum of clauses (i) and (ii) shall not exceed the Certificate
Balance, and on the Certificate Final
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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.
"CLASS A NOTE DISTRIBUTION ACCOUNT" shall mean a Note Distribution Account
established for the benefit of the Class A Noteholders.
"CLASS A NOTEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the Class A-1 Noteholders' Principal
Distributable Amount, (ii) the Class A-2 Noteholders' Principal Distributable
Amount, (iii) the Class A-3 Noteholders' Principal Distributable Amount and (iv)
the Class A Noteholders' Interest Distributable Amount.
"CLASS A NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with respect to
any Distribution Date, the sum of (i) the excess, if any, of (A) the sum of (1)
the Class A Noteholders' Monthly Interest Distributable Amount for the preceding
Distribution Date and (2) any outstanding Class A Noteholders' Interest
Carryover Shortfall on such preceding Distribution Date, over (B) the amount in
respect of interest that is actually deposited in the Class A Note Distribution
Account on such preceding Distribution Date, and (ii) interest on the amount of
interest due but not paid to Class A Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the applicable interest rate or rates
borne by such Class A Notes from such preceding Distribution Date through such
current Distribution Date.
"CLASS A NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of the Class A Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Class A Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"CLASS A NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, an amount equal to the aggregate amount of
interest accrued on the Class A-1 Notes, the Class A-2 Notes and the Class A-3
Notes at their respective interest rates from and including the preceding
Distribution Date (or, in the case of the initial Distribution Date, from and
including the Closing Date), to but excluding such Distribution Date (based on a
360-day year of twelve 30-day months).
"CLASS A-1 NOTE FINAL SCHEDULED DISTRIBUTION DATE" means the
Distribution Date.
"CLASS A-1 NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date until the Distribution Date on which the
outstanding principal amount of the Class A-1 Notes has been reduced to zero,
the Principal Distribution Amount for such Distribution Date, but such amount
shall not be in excess of the outstanding principal amount of the Class A-1
Notes.
"CLASS A-1 NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the
close of any Distribution Date, the excess, if any, of (i) the sum of (A) the
Class A-1 Noteholders' Monthly Principal Distributable Amount for such
Distribution Date and (B) any outstanding Class A-1 Noteholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date over (ii)
the amount in respect of principal that is actually deposited in the Class A
Note Distribution Account in respect of the Class A-1 Notes.
"CLASS A-1 NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class A-1 Noteholders' Monthly
Principal Distributable Amount for such Distribution Date and (ii) the Class A-1
Noteholders' Principal Carryover Shortfall as of the close of the preceding
Distribution Date; PROVIDED, HOWEVER, that the sum of clauses (i) and (ii) above
shall not exceed the outstanding principal amount of the Class A-1 Notes, and on
the Class A-1 Note 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 Class A 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-2 NOTE FINAL SCHEDULED DISTRIBUTION DATE" means the
Distribution Date.
"CLASS A-2 NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date on or after the Distribution Date on which an
amount sufficient to reduce the outstanding
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principal amount of the Class A-1 Notes to zero has been deposited in the Class
A Note Distribution Account, the excess, if any, of (i) the Principal
Distribution Amount over (ii) the portion of the Principal Distribution Amount,
if any, applied to reduce the outstanding principal amount of the Class A-1
Notes to zero on such Distribution Date. In addition, on any Distribution Date
on or after the Distribution Date, amounts on deposit in the Reserve
Account in excess of the Specified Reserve Account Balance for such Distribution
Date shall be paid as principal of the Class A-2 Notes to the extent described
under "--Reserve Account" below.
"CLASS A-2 NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the
close of any Distribution Date, the excess, if any, of (i) the sum of (A) the
Class A-2 Noteholders' Monthly Principal Distributable Amount for such
Distribution Date and (B) any outstanding Class A-2 Noteholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date over (ii)
the amount in respect of principal that is actually deposited in the Class A
Note Distribution Account in respect of the Class A-2 Notes.
"CLASS A-2 NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class A-2 Noteholders' Monthly
Principal Distributable Amount for such Distribution Date and (ii) the Class A-2
Noteholders' Principal Carryover Shortfall as of the close of the preceding
Distribution Date; PROVIDED, HOWEVER, that, until an amount sufficient to reduce
the outstanding principal amount of the Class A-1 Notes to zero has been
deposited in the Class A Note Distribution Account, the Class A-2 Noteholders'
Principal Distributable Amount shall be zero; PROVIDED, FURTHER, that the sum of
clauses (i) and (ii) shall not exceed the outstanding principal amount of the
Class A-2 Notes, and on the Class A-2 Note 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 Class A 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-3 NOTE FINAL SCHEDULED DISTRIBUTION DATE" means the
Distribution Date.
"CLASS A-3 NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date on or after the Distribution Date on which an
amount sufficient to reduce the outstanding principal amount of the Class A-1
Notes and the Class A-2 Notes to zero has been deposited in the Class A Note
Distribution Account, the excess, if any, of (i) the Principal Distribution
Amount over (ii) the portion of the Principal Distribution Amount, if any,
applied to reduce the outstanding principal amount of the Class A-1 Notes and
the Class A-2 Notes to zero on such Distribution Date. In addition, on any
Distribution Date on or after the Distribution Date, amounts on
deposit in the Reserve Account in excess of the Specified Reserve Account
Balance for such Distribution Date shall be paid as principal of the Class A-3
Notes to the extent described under "--Reserve Account" below.
"CLASS A-3 NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the
close of any Distribution Date, the excess, if any, of (i) the sum of (A) the
Class A-3 Noteholders' Monthly Principal Distributable Amount for such
Distribution Date and (B) any outstanding Class A-3 Noteholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date over (ii)
the amount in respect of principal that is actually deposited in the Class A
Note Distribution Account in respect of the Class A-3 Notes.
"CLASS A-3 NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class A-3 Noteholders' Monthly
Principal Distributable Amount for such Distribution Date and (ii) the Class A-3
Noteholders' Principal Carryover Shortfall as of the close of the preceding
Distribution Date; PROVIDED, HOWEVER, that, until an amount sufficient to reduce
the outstanding principal amount of the Class A-1 Notes and the Class A-2 Notes
to zero has been deposited in the Class A Note Distribution Account, the Class
A-3 Noteholders' Principal Distributable Amount shall be zero; PROVIDED,
FURTHER, that the sum of clauses (i) and (ii) shall not exceed the outstanding
principal amount of the Class A-3 Notes, and on the Class A-3 Note Final
Scheduled Distribution Date, the Class A-3 Noteholders' Principal Distributable
Amount will include the amount necessary (after giving effect to the other
amounts to be deposited in the Class A 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.
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"CLASS B NOTE DISTRIBUTION ACCOUNT" SHALL MEAN A NOTE DISTRIBUTION ACCOUNT
ESTABLISHED FOR THE BENEFIT OF THE CLASS B NOTEHOLDERS.
"CLASS B NOTE FINAL SCHEDULED DISTRIBUTION DATE" means the
Distribution Date.
"CLASS B NOTEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the Class B Noteholders' Principal
Distributable Amount and (ii) the Class B Noteholders' Interest Distributable
Amount.
"CLASS B NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with respect to
any Distribution Date, the sum of (i) the excess, if any, of (A) the sum of (1)
the Class B Noteholders' Monthly Interest Distributable Amount for the preceding
Distribution Date and (2) any outstanding Class B Noteholders' Interest
Carryover Shortfall on such preceding Distribution Date, over (B) the amount in
respect of interest that is actually deposited in the Class B Note Distribution
Account on such preceding Distribution Date, and (ii) interest on such excess,
to the extent permitted by law, at the Class B Note Rate.
"CLASS B NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of the Class B Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Class B Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"CLASS B NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, an amount equal to the aggregate interest
accrued on the Class B Note at the Class B Note Rate from and including the
preceding Distribution Date (or from and including the Closing Date in the case
of the initial Distribution Date) to but excluding such Distribution Date (based
on a 360-day year of twelve 30-day months).
"CLASS B NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date on or after the Distribution Date on which the
principal amounts of the Class A Notes are reduced to zero, the excess, if any,
of (i) the Principal Distribution Amount over (ii) the portion of the Principal
Distribution Amount, if any, applied on such Distribution Date to reduce the
principal amounts of the Class A Notes to zero. In addition, on any Distribution
Date on and after the Distribution Date, amounts on deposit in the
Reserve Account in excess of the Specified Reserve Account Balance for such
Distribution Date shall be paid as principal of the Class B Notes to the extent
described under "--Reserve Account" below.
"CLASS B NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the close
of any Distribution Date, the excess, if any, of (i) the sum of (A) the Class B
Noteholders' Monthly Principal Distributable Amount and (B) any outstanding
Class B Noteholders' Principal Carryover Shortfall from the preceding
Distribution Date, over (ii) the amount in respect of principal that is actually
deposited in the Class B Note Distribution Account.
"CLASS B NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of (i) the Class B Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and (ii) the Class B
Noteholders' Principal Carryover Shortfall as of the close of the preceding
Distribution Date; PROVIDED, HOWEVER, that, until an amount sufficient to reduce
the outstanding principal amounts of the Class A Notes to zero has been
deposited in the Class A Note Distribution Account, the Class B Noteholders'
Principal Distributable Amount shall be zero; PROVIDED, FURTHER, that the sum of
clauses (i) and (ii) shall not exceed the outstanding principal amount of the
Class B Notes, and on the Class B Note Final Scheduled Distribution Date, the
Class B Noteholders' Principal Distributable Amount will include the amount
necessary (after giving effect to the other amounts to be deposited in the Class
B Note Distribution Account on such Distribution Date and allocable to
principal) to reduce the outstanding principal amount of the Class B Notes to
zero.
"COLLECTION PERIOD" means, with respect to the first Distribution Date, the
calendar month ending on , 199 , and with respect to each subsequent
Distribution Date, the preceding calendar month.
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"NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the Class A Noteholders Interest Distributable
Amount for such Distribution Date and (ii) the Class B Noteholders Interest
Distributable Amount for such Distribution Date.
"CUT-OFF DATE APR" is %, which is the weighted average APR of the
Receivables as of the Cut-off Date.
"INITIAL POOL BALANCE" means $ , which is the sum of the Principal
Balances of each Receivable as of the Cut-off Date.
"POOL BALANCE" means, at any time, the aggregate Principal Balance of the
Receivables at the end of the preceding Collection Period, after giving effect
to 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 to
all Realized Losses on Liquidated Receivables during such Collection Period.
"REALIZED LOSSES" means, with respect to any Collection Period, (i) the
excess of the Principal Balance of the Liquidated Receivables over Liquidation
Proceeds for such Collection Period to the extent allocable to principal and
(ii) amounts payable by Dealers with respect to Over-Rate Receivables which are
deemed uncollectible by the Servicer.
On each Distribution Date, all amounts on deposit in the Class A Note
Distribution Account will be distributed to the Class A Noteholders, all amounts
on deposit in the Class B Note Distribution Account will be distributed to the
Class B Noteholders and all amounts on deposit in the Certificate Distribution
Account will be distributed to the Certificateholders.
RESERVE ACCOUNT
The rights of the Class B Noteholders to receive distributions with respect
to the Receivables generally will be subordinated to the rights of the Class A
Noteholders in the event of defaults and delinquencies on the Receivables, as
provided in the Indenture, the Trust Agreement and the Sale and Servicing
Agreement. The protection afforded to the Class A Noteholders through
subordination will be effected by the preferential right of the Class A
Noteholders to receive both current distributions with respect to the
Receivables and withdrawals from the Reserve Account. The Reserve Account will
be created with an initial deposit by the Seller on the Closing Date of at least
$ (the "RESERVE ACCOUNT INITIAL DEPOSIT") and will be augmented on each
Distribution Date by the deposit therein of the Total Distribution Amount
remaining after the payment of the Servicing Fee (in the priority described
herein), the Administration Fee, the deposit of the Class A Noteholders'
Interest Distributable Amount and the Class A Noteholders' Principal
Distributable Amount in the Class A Note Distribution Account, the deposit of
the Class B Noteholders' Distributable Amount in the Class B Distribution
Account and the deposit of the Certificateholders' Distributable Amount into the
Certificate Distribution Account in each case as described above under
"--Distributions." Amounts on deposit in the Reserve Account will be released on
each Distribution Date to the Seller or to the Class A-2 Noteholders, the Class
A-3 Noteholders and/or the Class B Noteholders on account of their respective
principal amounts, as described herein, to the extent that the amount on deposit
in the Reserve Account (after giving effect to withdrawals made on such
Distribution Date) exceeds the Specified Reserve Account Balance on such
Distribution Date.
"SPECIFIED RESERVE ACCOUNT BALANCE," with respect to any Distribution Date,
will be equal to the greater of (a) % of the Pool Balance as of the close of
business on the last day of the preceding Collection Period and (b) $
(or such greater percentage or amount as may be set forth in the Sale and
Servicing Agreement); PROVIDED, HOWEVER, that the amount in clause (a) with
respect to a Distribution Date (referred to herein as the "CURRENT DISTRIBUTION
DATE") shall be equal to the amount calculated for such clause (a) for the
Distribution Date immediately preceding such Current Distribution Date if any of
the following events occur: (i) 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 % of the Initial Pool
Balance; (ii) the sum of (x) 12 times the Realized Losses realized during the
Collection Period immediately preceding such Current Distribution Date plus (y)
the aggregate Principal Balance as of the last day of the Collection Period
immediately preceding such Current Distribution Date of all Receivables which
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have not yet been liquidated as to which the Financed Equipment securing such
Receivables has been repossessed exceeds the amount equal to % of the Pool
Balance at the beginning of such Collection Period; or (iii) 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 Current Distribution
Date exceeds an amount equal to % of the Pool Balance as of the end of such
Collection Period; PROVIDED, FURTHER, that the Specified Reserve Account Balance
shall not exceed the sum of the outstanding aggregate principal amount of the
Notes, and that upon payment of all the interest and principal due on the Notes,
the Specified Reserve Account Balance shall be zero.
If the amount on deposit in the Reserve Account prior to the
Distribution Date (or following the payment of the Notes in full)
is greater than the Specified Reserve Account Balance for such Distribution
Date, the Servicer shall instruct the Indenture Trustee to distribute the amount
of the excess to the Seller; PROVIDED, HOWEVER, that if, after giving effect to
all payments made on the Notes on such Distribution Date, the Pool Balance as of
the end of the preceding Collection Period is less than the sum of the
outstanding principal amount of the Notes, such excess amount shall not be
distributed to the Seller and shall be retained in the Reserve Account available
for application in accordance with the Sale and Servicing Agreement. On any
Distribution Date on and after the Distribution Date, if the amount
on deposit in the Reserve Account (after giving effect to all deposits or
withdrawals therefrom on such Distribution Date, other than withdrawals
described in this sentence) is greater than the Specified Reserve Account
Balance for such Distribution Date, the Servicer shall instruct the Indenture
Trustee to deposit all of the amount of the excess in the Class A Note
Distribution Account for distribution to the Class A-2 Noteholders as a payment
of principal on such Distribution Date (until the Class A-2 Notes have been paid
in full), and then to the Class A-3 Noteholders as a payment of principal (until
the Class A-3 Notes have been paid in full), and then the Servicer shall
instruct the Indenture Trustee to deposit all or the amount of the excess in the
Class B Distribution Account for distribution to the Class B Noteholders as
payment of principal (until the Class B Notes have been paid in full). Upon the
Class B Final Scheduled Distribution Date or the date of the optional purchase
of the Receivables by the Servicer (but only after payment of all interest and
principal of the Notes and Certificates), the Servicer shall instruct the
Indenture Trustee to distribute the Reserve Account balance to the Seller. Upon
any distribution to the Seller of amounts from the Reserve Account, the
Noteholders will not have any rights in, or claims to, such amounts.
Funds will be withdrawn from the amounts on deposit in the Reserve Account
to the extent that the Total Distribution Amount (after the payment of the
Servicing Fee (if CFSC or an affiliate is not the Servicer) and the
Administration Fee and the Class B Noteholders Monthly Interest Distributable
Amount) with respect to any Collection Period is less than the Class A
Noteholders' Distributable Amount, and funds in the amount of such deficiency
will be deposited in the Class A Note Distribution Account. In addition, funds
will be withdrawn from amounts on deposit in the Reserve Account to the extent
that the portion of the Total Distribution Amount remaining after the payment of
the Servicing Fee (if CFSC or an affiliate is not the Servicer) and the
Administration Fee and the deposit of the Class A Noteholders' Distributable
Amount in the Class A Note Distribution Account is less than the Class B Note
Distributable Amount, and funds in the amount of such deficiency will be
deposited in the Class B Note Distribution Account. Notwithstanding the
foregoing, if on any Distribution Date on which any Notes are outstanding the
amount on deposit in the Reserve Account is less than % of the Pool Balance
as of the end of the preceding Collection Period, then funds will be withdrawn
from the Reserve Account only to the extent needed to pay the interest due on
the Notes, and no funds from the Reserve Account will be applied on such
Distribution Date to principal of the Notes.
If on any Distribution Date the entire Class A Noteholders' Interest
Distributable Amount for such Distribution Date (after giving effect to any
amounts withdrawn from the Reserve Account) is not deposited in the Class A Note
Distribution Account, the Class B Noteholders will not receive any distributions
on account of interest. The Class B Noteholders will not receive any principal
payments until the Class A Noteholders have been paid in full.
The availability of funds in the Reserve Account and the
overcollateralization provided by the Certificates is intended to enhance the
likelihood of receipt by the Noteholders of the full amount of principal and
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interest due them and to decrease the likelihood that the Noteholders will
experience losses. In addition, the subordination of the Class B Notes to the
Class A Notes is intended to provide the Class A Noteholders with these same
protections. However, because in certain circumstances the Reserve Account could
be depleted and/or the aggregate amount of Realized Losses could exceed the
outstanding principal amount of the Class B Notes and the overcollateralization
provided by the Certificates, these protections are limited.
NET DEPOSITS
As an administrative convenience, the Servicer will be permitted to make the
deposit of collections and Purchase Amounts required to be remitted by the
Servicer for or with respect to each Collection Period net of distributions to
be made to the Servicer (including any Servicer's Yield and the Servicing Fee to
the extent of amounts available for the payment thereof) with respect to such
Collection Period; provided, that if the Servicer is required to remit
collections daily, deposits of such amounts may only be made net of the
Servicer's Yield and may not be made net of the Servicing Fee. See "Description
of the Transfer and Servicing Agreements--Net Deposits" in the Prospectus. The
Servicer, however, will account to the Indenture Trustee, the Owner Trustee, the
Noteholders and the Certificateholders as if the Servicing Fees were distributed
individually.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SALE AND TRANSFER OF RECEIVABLES
The transfer of ownership of the Receivables from CFSC to the Seller and
from the Seller to the Trust, and the granting of the security interest in the
Receivables by the Trust to the Indenture Trustee, will in each case be
perfected by the Custodian, on behalf of the applicable assignee, taking
possession of the [Installment Sales Contracts] [and] [the Leases] and any
related Dealer Agreements pursuant to the Custodial Agreement. The Custodian
will maintain possession of the Receivables Files in a space leased by the
Custodian proximate to the principal executive office of the Seller. CFSC will
indicate on its computer records that the Receivables have been sold to the
Seller and by the Seller to the Trust. Each Receivables File will contain the
single original related [Installment Sales Contract] [or] [Lease] (as
represented by CFSC in the Purchase Agreement). UCC financing statements will
not be filed to perfect these transfers of ownership or such grant of a security
interest in the Receivables, and CFSC will not stamp the physical Receivables
Files or the [Installment Sales Contracts] [or] [the Lease]. See "Risk
Factors--PERFECTION OF INTERESTS IN RECEIVABLES AND IN FINANCED EQUIPMENT"
herein and in the Prospectus. Although steps will be taken to ensure that the
Seller (an affiliate of CFSC) does not obtain possession or control of the
[Installment Sales Contracts] [or] [Leases], should a court find that the Seller
did have possession or control of such [Installment Sales Contracts] [or]
[Leases], the interests of the Trust and the Indenture Trustee in the
Receivables would in all likelihood be unperfected.
DEALER RECOURSE RECEIVABLES
The terms of a limited number of Receivables provide that CFSC has recourse
to the related Dealer for all or a portion of the losses CFSC may incur.
However, in the event of a Dealer's bankruptcy, a bankruptcy trustee, a creditor
or the Dealer as debtor in possession might attempt to characterize recourse
sales of Receivables to CFSC as loans to the Dealer from CFSC secured by the
Receivables; such an attempt, if successful, could result in payment delays or
losses on the affected Receivables. This right of recourse has been assigned to
the Seller, the Trust and the Indenture Trustee.
Under certain circumstances CFSC may acquire Receivables from Dealers at
prices in excess of their stated principal balances ("OVER-RATE RECEIVABLES").
This premium represents the present value of a portion of the interest due under
the related [Installment Sales Contract] [or] [Lease]. Upon prepayment in full
of an Over-Rate Receivable, the principal balance due from the Obligor on any
such Receivable will be less than such Receivable's Principal Balance, which is
CFSC's, the Seller's and the Trust's investment in such Receivable. Each related
Dealer Agreement provides that the related Dealer shall pay to CFSC the amount
of such shortfall upon such a prepayment. Pursuant to the Purchase Agreement,
CFSC will assign to the Seller its right to such payment from the Dealer, and
pursuant to the Sale and Servicing Agreement the Seller will assign such right
to the Trust. Pursuant to the Indenture, the Trust will grant a security
interest in
S-44
<PAGE>
such right to the Indenture Trustee. Were each such Over-Rate Receivable to
prepay in full, the Seller believes that the aggregate amount of such shortfall
would not have a material adverse effect on Securityholders [given the amount on
deposit in the Reserve Account].
CROSS-COLLATERALIZATION
Because CFSC on occasion cross-collateralizes its installment sales
contracts (whether at origination or pursuant to an adjustment to such
installment sales contract) with a particular Obligor with other equipment of
such Obligor financed by CFSC, it is possible that (i) an item of Financed
Equipment may secure more than one contract with such Obligor, and each of those
contracts may not be included in the Trust as a Receivable and (ii) a Receivable
may be secured by a first priority lien on the related Financed Equipment and a
lien on financed equipment unencumbered or related to contracts with such
Obligor not included in the Trust. In any event, the aggregate principal amount
of CFSC's cross-collateralized installment sales contracts with respect to any
one Obligor, whether or not all are included in the Trust as Receivables, will
not, at the time of origination of any such cross-collateralized contracts,
exceed the aggregate current appraised value of all the financed equipment
serving as security for such contracts, and the Trust will either have a first
priority lien in the related Financed Equipment or CFSC may be required to
repurchase the related Receivable under certain circumstances. See "Description
of Transfer and Servicing Agreements-- Sale and Assignment of the Receivables"
in the Prospectus.
Pursuant to the Purchase Agreement, CFSC, as holder of a junior lien on an
item of Financed Equipment, will agree not to exercise its right to foreclose
upon such junior lien until (i) the related Receivable has been paid in full or
(ii) the related first priority lien on the Financed Equipment has been
foreclosed upon or released. Therefore, there is no risk to the Trust that CFSC,
as junior lienholder, would foreclose upon Financed Equipment, possibly
resulting in a substitution of the related Obligor.
The Trust shall have the right to foreclose upon all liens, junior or
otherwise, that it holds with respect to any Receivable, whether on the related
Financed Equipment or on equipment the first priority lien on which has not been
assigned to the Trust. If the Trust forecloses on a junior lien on any equipment
in which it does not have a first priority lien, such foreclosure would be
subject to the senior liens not held by the Trust. In addition, any junior liens
held by the Trust may be eliminated should any more senior liens not held by the
Trust foreclose upon the related equipment.
CFSC does not maintain statistical data with respect to the portion of each
retail [installment sales] [contract] [or lease] secured by related Financed
Equipment and the portion of such contract secured by the cross- collateralized
liens. [However, because the existence of such cross-collateralized liens will
not place the Trust in a different credit position than that of CFSC should CFSC
retain the Receivables, and in light of CFSC's credit loss experience with
respect to the U.S. [ISC] [Lease] Portfolio, the Seller believes that such
statistical data with respect to the cross-collateralization of the Receivables
is not material to investors in the Securities.]
[LEGAL INVESTMENT
The Class A-1 Notes will be eligible securities for purchase by money market
funds under paragraph (a)(9) of Rule 2a-7 under the Investment Company Act of
1940, as amended.]
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code impose certain requirements on employee benefit
plans and certain other plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and certain collective investment funds or
insurance company general or separate accounts in which such plans, accounts or
arrangements are invested, that are subject to the fiduciary responsibility and
prohibited transaction provisions of ERISA and/ or Section 4975 of the Code
(collectively, "PLANS"), and on persons who are fiduciaries with respect to
Plans, in connection with the investment of assets that are treated as "plan
assets" of any Plan for purposes of applying Title I of ERISA and Section 4975
of the Code ("PLAN ASSETS"). ERISA generally imposes on Plan
S-45
<PAGE>
fiduciaries certain general fiduciary requirements, including those of
investment prudence and diversification and the requirement that a Plan's
investments be made in accordance with the documents governing the Plan.
Generally, any person who has discretionary authority or control respecting the
management or disposition of Plan Assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary with respect to
such Plan Assets.
Subject to the considerations described below, the Notes are eligible for
purchase with Plan Assets of any Plan.
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons ("PARTIES IN INTEREST" under ERISA and
"DISQUALIFIED PERSONS" under the Code) who have certain specified relationships
to a Plan or its Plan Assets, unless a statutory or administrative exemption is
available. Parties in Interest or Disqualified Persons that participate in a
prohibited transaction may be subject to a penalty imposed under ERISA and/or an
excise tax imposed pursuant to Section 4975 of the Code, unless a statutory or
administrative exemption is available. These prohibited transactions generally
are set forth in Section 406 of ERISA and Section 4975 of the Code.
Any fiduciary or other Plan investor considering whether to purchase the
Notes with Plan Assets of any Plan should determine whether such purchase is
consistent with its fiduciary duties and whether such purchase would constitute
or result in a non-exempt prohibited transaction under ERISA and/or Section 4975
of the Code because any of the Seller, the Servicer, the Indenture Trustee, the
Owner Trustee, any Certificateholder or any other parties may be deemed to be
benefiting from the issuance of the Notes and are Parties in Interest or
Disqualified Persons with respect to the investing Plan. In particular, the
Notes may not be purchased with Plan Assets of any Plan if any of the Seller,
the Servicer, the Indenture Trustee, the Owner Trustee, any Certificateholder or
any of their respective affiliates (a) has investment or administrative
discretion with respect to the Plan Assets used to effect such purchase; (b) has
authority or responsibility to give, or regularly gives, investment advice with
respect to such Plan Assets, for a fee and pursuant to an agreement or
understanding that such advice (1) will serve as a primary basis for investment
decisions with respect to such Plan Assets, and (2) will be based on the
particular investment needs of such Plan; or (c) is an employer maintaining or
contributing to such Plan. Each purchaser of the Notes will be deemed to have
represented and warranted that its purchase of the Notes or any interest therein
does not violate the foregoing limitations.
Any such fiduciary or other Plan investor should also consult with its
counsel regarding the applicability of the fiduciary responsibility and
prohibited transaction provisions of ERISA and Section 4975 of the Code to such
investment and the availability of any prohibited transaction exemption, E.G.,
U.S. Department of Labor (the "DOL") Prohibited Transaction Exemptions 96-23
(Class Exemption for Plan Asset Transactions Determined by In-House Investment
Managers), 95-60 (Class Exemption for Certain Transactions Involving Insurance
Company General Accounts), 91-38 (Class Exemption for Certain Transactions
Involving Bank Collective Investment Funds), 90-1 (Class Exemption for Certain
Transactions Involving Insurance Company Pooled Separate Accounts) and 84-14
(Class Exemption for Plan Asset Transactions Determined by Independent Qualified
Professional Asset Managers). A purchaser of the Notes should be aware, however,
that even if the conditions specified in one or more of the above exemptions are
met, the scope of the relief provided by the exemption might not cover all acts
which might be construed as prohibited transactions. In addition, investors
other than Plan investors should be aware that a prohibited transaction could be
deemed to occur if any holder of the Certificates or any of its respective
affiliates is or becomes a Party in Interest or a Disqualified Person with
respect to any Plan that purchases and holds the Notes without being covered by
one or more of the above exemptions.
In addition, under Section 2510.3-101 of the regulations of the DOL (the
"PLAN ASSET REGULATION"), the purchase with Plan Assets of equity interests in
the Trust could, in certain circumstances, cause the Receivables and other
assets of the Trust to be deemed Plan Assets of the investing Plan which, in
turn, would subject the Trust and its assets to the fiduciary responsibility
provisions of ERISA and the prohibited transaction provisions of ERISA and
Section 4975 of the Code. Nevertheless, because the Notes (a) should be treated
as indebtedness under local law and debt, rather than equity, for tax purposes
(see "Certain
S-46
<PAGE>
Federal Income Tax Considerations--Tax Consequences to Holders of the
Notes--TREATMENT OF THE NOTES AS INDEBTEDNESS" in the Prospectus), and (b)
should not be deemed to have any "substantial equity features," purchases of the
Notes with Plan Assets should not be treated as equity investments and,
therefore, the Receivables and other assets included as assets of the Trust
should not be deemed to be Plan Assets of the investing Plans. Those conclusions
are based, in part, upon the traditional debt features of the Notes, including
the reasonable expectation of purchasers of Notes that the Notes (which are
highly rated by the Rating Agencies) will be repaid when due, as well as the
absence of conversion rights, warrants and other typical equity features. Before
purchasing the Notes, a fiduciary or other Plan investor should itself confirm
that the Notes constitute indebtedness, and have no substantial equity features,
for purposes of the Plan Asset Regulation.
For further information see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "UNDERWRITING AGREEMENT"), the Seller has agreed to cause the Trust to sell
to the underwriter[s] named below (the "UNDERWRITERS"), and [each of] the
Underwriter[s] has [severally] agreed to purchase, the principal amount of Notes
set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT
OF CLASS A-1 OF CLASS A-2 OF CLASS A-3 PRINCIPAL AMOUNT
UNDERWRITER[S] NOTES NOTES NOTES OF CLASS B NOTES
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
---------------- ---------------- ---------------- ----------------
Total............... $ $ $ $
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
</TABLE>
In the Underwriting Agreement, the [several] Underwriter[s] [has] [have]
agreed, subject to the terms and conditions therein, to purchase all the Notes
offered hereby if any of such Notes are purchased. The Seller has been advised
by the Underwriter[s] that [it] [they] propose initially to offer the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the Class B Notes to the
public at the prices set forth herein, and to certain dealers at such prices
less a concession not in excess of % per Class A-1 Note, % per Class A-2
Note, % per Class A-3 Note, and % per Class B Notes. The Underwriter[s]
[has] [have] may allow and such dealers may reallow a concession not in excess
of % per Class A-1 Note, % per Class A-2 Note, % per Class A-3 Note and
% per Class B Note to certain other dealers. After the initial public
offering, such prices and such concessions may be changed.
Until the distribution of the Securities is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriter[s]
and certain selling group members to bid for and purchase the securities. As an
exception to these rules, [ ], [on behalf of the Underwriters,] [is]
[are] are permitted to engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the Notes in accordance with Regulation M under the Exchange Act.
Over-allotment transactions involve syndicate sales in excess of the
offering size, which create syndicate short position. Stabilizing transactions
permit bids to purchase the Notes so long as the stabilizing bids do not exceed
a specified maximum. Syndicate covering transactions involve purchases of the
Notes in the open market after the distribution has been completed in order to
cover syndicate short positions. Penalty bids permit [ ] to reclaim a
selling concession from a syndicate member when the Notes originally sold by
such syndicate member are purchased in a syndicate covering transaction.
Such over-allotment transactions, stabilizing transactions, syndicate
covering transactions and penalty bids may cause the prices of the Notes to be
higher than they would otherwise be in the absence of such transactions. Neither
the Issuer nor [any of] the Underwriter[s] make[s] any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the
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<PAGE>
Notes. In addition, neither the Issuer nor [any of] the Underwriter[s]
represent[s] that [ ] will engage in any such transactions or that such
transactions, once commenced, will not be discontinued without notice.
The Underwriting Agreements provide that the Seller and CFSC will indemnify
the Underwriter[s] against certain civil liabilities, including liabilities
under the Securities Act, or contribute to payments the [several] Underwriter[s]
may be required to make in respect thereof. [The Underwriter[s] [has][have]
agreed to reimburse the Seller for certain expenses of the issuance and
distribution of the Notes]
The Indenture Trustee and the Owner Trustee (on behalf of the Trust) may,
from time to time, invest the funds in the Trust Accounts in Eligible
Investments acquired from the Underwriter[s].
The closings of the sale of the Notes and Certificates are conditioned on
the closing of the sale of each other.
LEGAL OPINIONS
Certain legal matters relating to the Notes and the Certificates will be
passed upon for the Trust, the Seller and the Servicer by Orrick, Herrington &
Sutcliffe LLP, San Francisco, California, and by , and for
the Underwriter[s] by . Certain federal income tax and
other matters will be passed upon for the Trust and the Seller by Orrick,
Herrington & Sutcliffe LLP. Certain Tennessee state tax matters will be passed
upon for the Trust and the Seller by Tuke Yopp & Sweeney, Nashville, Tennessee.
S-48
<PAGE>
[ANNEX I]
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Caterpillar
Financial Asset Trust 199 -- Class A-1 % Asset Backed Notes, Class A-2 %
Asset Backed Notes, Class A-3 % Asset Backed Notes and the Class B Notes
(collectively, the "GLOBAL SECURITIES") will be available only in book-entry
form. Investors in the Global Securities may hold such Global Securities through
any of The Depository Trust Company ("DTC"), Cedel Bank, societe anonyme
("CEDEL") or the Euroclear System ("EUROCLEAR"). The Global Securities will be
tradeable as home market instruments in both the European and U.S. domestic
markets. Initial settlement and all secondary trades will settle in same-day
funds.
Secondary market trading between investors holding Global Securities through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with conventional
eurobond practice (I.E., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Notes will be effected on a delivery against payment basis
through the respective Depositaries of Cedel and Euroclear (in such capacity)
and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
TRADING BETWEEN CEDEL AND/OR EUROCLEAR PARTICIPANTS. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
TRADING BETWEEN DTC SELLER AND CEDEL OR EUROCLEAR PURCHASER. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or
A-1
<PAGE>
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depositary to receive the Global
Securities against payment. Payment will include interest accrued on the Global
Securities from and including the last coupon payment date to and excluding the
settlement date, calculated on the basis of a year of 360 days, in each case for
the actual number of days occurring in the period for which such interest is
payable. Payment will then be made by the respective Depositary to the DTC
Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel Participant's or Euroclear Participant's account.
The securities credit will appear the next day (European time) and the cash
debit will be back-valued to, and the interest on the Global Securities will
accrue from, the value date (which would be the preceding day when settlement
occurred in New York). If settlement is not completed on the intended value date
(I.E., the trade fails), the Cedel or Euroclear cash debit will be valued
instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available to
the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-position
funds and allow that credit line to be drawn upon to finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Cedel Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
TRADING BETWEEN CEDEL OR EUROCLEAR SELLER AND DTC PURCHASER. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, Cedel or Euroclear
will instruct the respective Depositary, as appropriate, to deliver the bonds to
the DTC Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date, calculated on the basis of a year of 360
days, in each case for the actual number of days occurring in the period for
which such interest is payable. The payment will then be reflected in the
account of the Cedel Participant or Euroclear Participant the following day, and
receipt of the cash proceeds in the Cedel Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York). Should the Cedel
Participant or Euroclear Participant have a line of credit with its respective
clearing system and elect to be in debit in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
charges incurred over the one-day period. If settlement is not completed on the
intended value date (I.E., the trade fails), receipt of the cash proceeds in the
Cedel Participant's or Euroclear Participant's account would instead be valued
as of the actual settlement date.
A-2
<PAGE>
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action was taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of Notes that
are non-U.S. Persons can obtain a complete exemption from the withholding tax by
filing a signed Form W-8 (Certificate of Foreign Status). If the information
shown on Form W-8 changes, a new Form W-8 must be filed within 30 days of such
change.
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001). Non-U.S. Persons that are Noteholders residing in a country that
has a tax treaty with the United States can obtain an exemption or reduced tax
rate (depending on the treaty terms) by filing Form 1001 (Ownership, Exemption
or Reduced Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer alternatively
files Form W-8. Form 1001 may be filed by the Noteholder or his agent.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The holder of a Global
Security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
The term "U.S. PERSON" means (i) a citizen or resident of the United States,
(ii) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof or (iii) an estate, the income of
which is includible in gross income for United States tax purposes, regardless
of its source, or any trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States fiduciaries have the authority to control all substantial
decisions of the trust. This summary does not deal with all aspects of U.S.
federal income tax withholding that may be relevant to foreign holders of the
Global Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the Global
Securities.
A-3
<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus
Supplement and defined herein and the pages on which the definitions of such
terms may be found herein. Certain defined terms used in this Prospectus
Supplement are defined in the Prospectus. See "Index of Terms" in the
Prospectus.
<TABLE>
<S> <C>
Administration Agreement....................................................... S-18
Administration Fee............................................................. S-18
Administrator.................................................................. S-18
S-4, S-22,
APR............................................................................ S-38
Caterpillar.................................................................... S-31
Cede........................................................................... S-2
Cedel.......................................................................... A-1
Certificate Balance............................................................ S-9, S-38
Certificate Rate............................................................... S-7, S-34
Certificateholders' Distributable Amount....................................... S-9, S-38
Certificateholders' Interest Carryover Shortfall............................... S-9, S-38
Certificateholders' Interest Distributable Amount.............................. S-9, S-38
Certificateholders' Monthly Interest Distributable Amount...................... S-9, S-38
Certificateholders' Monthly Principal Distributable Amount..................... S-10, S-38
Certificateholders' Principal Carryover Shortfall.............................. S-10, S-38
Certificateholders' Principal Distributable Amount............................. S-10, S-38
Certificates................................................................... S-1, S-4
CFSC........................................................................... S-3
Class A Note Distribution Account.............................................. S-10, S-39
Class A Noteholders............................................................ S-5
Class A Noteholders' Distributable Amount...................................... S-10, S-39
Class A Noteholders' Interest Carryover Shortfall.............................. S-10, S-39
Class A Noteholders' Interest Distributable Amount............................. S-11, S-39
Class A Noteholders' Monthly Interest Distributable Amount..................... S-11, S-39
Class A Notes.................................................................. S-1, S3
Class A-1 Note Final Scheduled Distribution Date............................... S-6, S-39
Class A-1 Note Pool Factor..................................................... S-30
Class A-1 Note Rate............................................................ S-5, S-31
Class A-1 Noteholders.......................................................... S-5
Class A-1 Noteholders' Monthly Principal Distributable Amount.................. S-11, S-38
Class A-1 Noteholders' Principal Carryover Shortfall........................... S-11, S-38
Class A-1 Noteholders' Principal Distributable Amount.......................... S-11, S-39
Class A-1 Notes................................................................ S-1, S-3
Class A-2 Note Final Scheduled Distribution Date............................... S-6, S-39
Class A-2 Note Pool Factor..................................................... S-30
Class A-2 Note Rate............................................................ S-5, S-32
Class A-2 Noteholders.......................................................... S-5
Class A-2 Noteholders' Monthly Principal Distributable Amount.................. S-11, S-39
Class A-2 Noteholders' Principal Carryover Shortfall........................... S-12, S-40
Class A-2 Noteholders' Principal Distributable Amount.......................... S-12, S-40
Class A-2 Notes................................................................ S-1, S-3
Class A-3 Note Final Scheduled Distribution Date............................... S-6, S-40
Class A-3 Note Pool Factor..................................................... S-30
Class A-3 Note Prepayment Price................................................ S-7, S-34
Class A-3 Note Rate............................................................ S-5, S-32
Class A-3 Noteholders.......................................................... S-5
Class A-3 Noteholders' Monthly Principal Distributable Amount.................. S-12, S-40
Class A-3 Noteholders' Principal Carryover Shortfall........................... S-12, S-40
</TABLE>
A-4
<PAGE>
<TABLE>
<S> <C>
Class A-3 Noteholders' Principal Distributable Amount.......................... S-13, S-40
Class A-3 Notes................................................................ S-1, S-3
Class B Distribution Account................................................... S-13
Class B Note Distribution Account.............................................. S-41
Class B Note Final Scheduled Distribution Date................................. S-41
Class B Note Pool Factor....................................................... S-30
Class B Note Rate.............................................................. S-5, S-32
Class B Noteholders............................................................ S-5
Class B Noteholders' Distributable Amount...................................... S-13, S-41
Class B Noteholders' Interest Carryover Shortfall.............................. S-13, S-41
Class B Noteholders' Interest Distributable Amount............................. S-13, S-41
Class B Noteholders' Monthly Interest Distributable Amount..................... S-13, S-41
Class B Noteholders' Monthly Principal Distributable Amount.................... S-13, S-41
Class B Noteholders' Principal Carryover Shortfall............................. S-14, S-41
Class B Noteholders' Principal Distributable Amount............................ S-14, S-41
Class B Notes.................................................................. S-1, S-3
Class B Prepayment Price....................................................... S-7, S-34
Class B Redemption Price....................................................... S-7, S-35
Closing Date................................................................... S-1
Code........................................................................... S-19
Collection Account............................................................. S-16
Collection Period.............................................................. S-14, S-41
Commission..................................................................... S-2
Current Distribution Date...................................................... S-42
Custodial Agreement............................................................ S-18
Custodian...................................................................... S-18
Cut-off Date................................................................... S-4, S-22
Cut-off Date APR............................................................... S-5, S-42
Dealers........................................................................ S-4
Determination Date............................................................. S-35
Disqualified Persons........................................................... S-46
S-1, S-5,
Distribution Date.............................................................. S-32
DOL............................................................................ S-46
DTC............................................................................ S-2, A-1
ERISA.......................................................................... S-19, S-46
Euroclear...................................................................... A-1
Exchange Act................................................................... S-2
Financed Equipment............................................................. S-4
Global Securities.............................................................. A-1
Indenture...................................................................... S-3
Indenture Trustee.............................................................. S-3
Initial Pool Balance........................................................... S-4, S-42
Installment Sales Contracts.................................................... S-4
Issuer......................................................................... S-1, S-3
Leases......................................................................... S-4
Liquidated Receivables......................................................... S-36
Liquidation Proceeds........................................................... S-36
Moody's........................................................................ S-19
Noteholders.................................................................... S-5
Noteholders' Interest Distributable Amount..................................... S-41
Notes.......................................................................... S-1
Obligors....................................................................... S-4
Over-Rate Receivables.......................................................... S-44
</TABLE>
A-5
<PAGE>
<TABLE>
<S> <C>
Owner Trustee.................................................................. S-3
Parties in Interest............................................................ S-46
Plan Asset Regulation.......................................................... S-46
Plan Assets.................................................................... S-19, S-46
Plans.......................................................................... S-19, S-45
Pool Balance................................................................... S-5, S-42
Principal Balance.............................................................. S-5, S-23
Principal Distribution Amount.................................................. S-14, S-36
Purchase Agreement............................................................. S-4
Rating Agency.................................................................. S-19
Realized Losses................................................................ S-14, S-42
Receivables.................................................................... S-2, S-4
Receivables Files.............................................................. S-18, S-20
Receivables Pool............................................................... S-22
Record Date.................................................................... S-6
Reserve Account................................................................ S-15
Reserve Account Initial Deposit................................................ S-15, S-42
S&P............................................................................ S-19
Sale and Servicing Agreement................................................... S-4
Seller......................................................................... S-3
Servicer....................................................................... S-3
Servicing Fee.................................................................. S-17
Servicing Fee Rate............................................................. S-17
Special Tax Counsel............................................................ S-19
Specified Reserve Account Balance.............................................. S-15, S-42
Tennessee Tax Counsel.......................................................... S-19
Total Distribution Amount...................................................... S-15, S-36
Transfer and Servicing Agreements.............................................. S-34
Trust.......................................................................... S-1, S-3
Trust Agreement................................................................ S-3
U.S. ISC Portfolio............................................................. S-27
U.S. Lease Portfolio........................................................... S-27
U.S. Person.................................................................... A-3
U.S. Portfolio................................................................. S-27
Underwriters................................................................... S-47
Underwriting Agreements........................................................ S-47
Variable Frequency............................................................. S-24
</TABLE>
A-6
<PAGE>
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- -------------------------------------------
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR IN THE ACCOMPANYING
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER, THE SERVICER OR THE
UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, NOR ANY SALE MADE HEREUNDER OR
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE SELLER OR THE RECEIVABLES SINCE THE DATE
HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Reports to Noteholders................................ S-2
Summary of Terms...................................... S-3
Risk Factors.......................................... S-20
Formation of the Trust................................ S-21
The Receivables Pool.................................. S-22
Weighted Average Life of the Notes.................... S-29
Pool Factors and Trading Information.................. S-30
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. S-30
Use of Proceeds....................................... S-31
The Seller, Caterpillar and the Servicer.............. S-31
Description of the Notes.............................. S-31
Description of the Certificates....................... S-34
Description of the Transfer and Servicing
Agreements........................................... S-34
Certain Legal Aspects of the Receivables.............. S-44
Legal Investment...................................... S-45
ERISA Considerations.................................. S-45
Underwriting.......................................... S-47
Legal Opinions........................................ S-48
Annex I -- Global Clearance, Settlement and Tax
Documentation Procedures............................. A-1
Index of Terms........................................ A-4
<CAPTION>
PROSPECTUS
<S> <C>
Reports to Noteholders and Certificateholders......... 3
Available Information................................. 3
Incorporation of Certain Documents by Reference....... 3
Summary of Terms...................................... 4
Risk Factors.......................................... 13
The Trusts............................................ 18
The Trust Property.................................... 19
The Receivables Pools................................. 20
Weighted Average Life of the Securities............... 24
Pool Factors and Trading Information.................. 26
Use of Proceeds....................................... 26
The Seller, Caterpillar and the Servicer.............. 26
Description of the Notes.............................. 28
Description of the Certificates....................... 33
Certain Information Regarding the Securities.......... 35
Issuance of the Securities............................ 36
Description of the Transfer and Servicing
Agreements........................................... 39
Certain Legal Aspects of the Receivables.............. 49
Certain Federal Income Tax Considerations............. 53
Certain State Tax Considerations...................... 60
ERISA Considerations.................................. 61
Plan of Distribution.................................. 62
Ratings............................................... 62
Legal Opinions........................................ 62
Index of Terms........................................ 63
</TABLE>
UNTIL , 199 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS
SUPPLEMENT), ALL DEALERS EFFECTING TRANSACTIONS IN THE SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS SUPPLEMENT AND A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
CATERPILLAR
FINANCIAL ASSET
TRUST 199 -
$
CLASS A-1 %
ASSET BACKED NOTES
$
CLASS A-2 %
ASSET BACKED NOTES
$
CLASS A-3 %
ASSET BACKED NOTES
$
CLASS B %
ASSET BACKED NOTES
CATERPILLAR FINANCIAL
FUNDING CORPORATION
SELLER
CATERPILLAR FINANCIAL
SERVICES CORPORATION
SERVICER
-----------------
PROSPECTUS SUPPLEMENT
-----------------
[UNDERWRITERS]
, 199
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS 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.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 5, 1997
PROSPECTUS
CATERPILLAR FINANCIAL ASSET TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
CATERPILLAR FINANCIAL FUNDING CORPORATION, SELLER
CATERPILLAR FINANCIAL SERVICES CORPORATION, SERVICER
--------------
The Asset Backed Notes (the "NOTES") and the Asset Backed Certificates (the
"CERTIFICATES" and, together with the Notes, the "SECURITIES") described herein
may be sold from time to time in one or more series (each, a "SERIES"), in
amounts, at prices and on terms to be determined at the time of sale and to be
set forth in a supplement to this Prospectus (a "PROSPECTUS SUPPLEMENT"). Each
Series of Securities, which will include one or more classes of Notes and may
include one or more classes of Certificates (each, a "CLASS"), will be issued by
a limited purpose Delaware business trust to be formed with respect to such
Series (each, a "TRUST"). Each Trust will be formed pursuant to a Trust
Agreement to be entered into between Caterpillar Financial Funding Corporation,
as seller (the "SELLER"), and the owner trustee specified in the related
Prospectus Supplement (the "OWNER TRUSTEE"). The Notes of each Series will be
issued and secured pursuant to an Indenture between a Trust and the indenture
trustee specified in the related Prospectus Supplement (the "INDENTURE TRUSTEE")
and will represent indebtedness of the related Trust. The Certificates of each
Series, if any, will represent fractional undivided beneficial equity interests
in the related Trust. The property of each Trust will include a pool of retail
installment sales contracts and/or equipment finance lease contracts, including
the rights to receive certain payments made with respect to such contracts
(collectively, the "RECEIVABLES") secured by new and/or used machinery
manufactured primarily by Caterpillar Inc. or its affiliate Mitsubishi
Caterpillar Forklift America Inc. (the "FINANCED EQUIPMENT"), certain monies due
or received thereunder on and after the applicable Cut-off Date set forth in the
related Prospectus Supplement, security interests in such Financed Equipment and
certain other property, all as described herein and in the related Prospectus
Supplement. In addition, if so specified in the related Prospectus Supplement,
the property of a Trust will include monies on deposit in a trust account (the
"PRE-FUNDING ACCOUNT") to be established in the name of the Indenture Trustee on
behalf of the related Securityholders, which will be used to purchase additional
Receivables (the "SUBSEQUENT RECEIVABLES") from the Seller from time to time
during the Funding Period specified in the related Prospectus Supplement.
Except as otherwise provided in the related Prospectus Supplement, each
Class of Securities of any Series will represent the right to receive a
specified amount of payments of principal and interest on the related
Receivables, at the rates, on the dates, on the terms and in the manner
described herein and in the related Prospectus Supplement. The right of each
Class of Securities to receive payments may be senior or
(CONTINUED ON FOLLOWING PAGE)
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH IN "RISK FACTORS" COMMENCING ON PAGE 13 HEREIN AND IN THE RELATED
PROSPECTUS SUPPLEMENT.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Retain this Prospectus for future reference. This Prospectus may not be used
to consummate sales of Securities offered hereby unless accompanied by a
Prospectus Supplement.
-------------------
The date of this Prospectus is , 1997
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
subordinate to the rights of one or more of the other Classes of such Series to
the extent described herein and in the related Prospectus Supplement. A Series
may include one or more Classes of Notes and may include Certificates which
differ as to the timing and priority of payments, allocations of losses,
interest rate or amount of distributions in respect of principal or interest or
both. A Series may also include one or more Classes of Notes or Certificates
entitled to distributions in respect of principal, with disproportionate,
nominal or no interest distributions, or to distributions in respect of
interest, with disproportionate, nominal or no principal distributions. The rate
of payment in respect of principal of the Notes and distributions in respect of
the Certificate Balance (as defined herein) of the Certificates of any Class
will depend on the priority of payment of such Class and the rate and timing of
payments (including prepayments, defaults, liquidations and repurchases of
Receivables) on the related Receivables. A rate of payment on the related
Receivables lower or higher than that anticipated may affect the weighted
average life of each Class of Securities in the manner described herein and in
the related Prospectus Supplement.
The Notes of a given Series will represent obligations of, and the
Certificates of such Series will represent undivided beneficial equity interests
in, the related Trust only and will not represent obligations of or interests
in, and will not be guaranteed or insured by, Caterpillar Financial Funding
Corporation, Caterpillar Financial Services Corporation, Caterpillar Inc. or any
of their respective affiliates. Prospective investors should consider the
factors set forth under "Risk Factors" herein and in the related Prospectus
Supplement.
Each Series of Notes or Class offered hereby will be rated in one of the
four highest rating categories by at least one nationally recognized statistical
rating organization.
2
<PAGE>
REPORTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS
Unless and until Definitive Notes or Definitive Certificates are issued,
periodic and annual unaudited reports containing information concerning the
Receivables of the related Trust will be prepared by the Servicer and sent on
behalf of such Trust to Cede & Co. ("CEDE"), as nominee of The Depository Trust
Company ("DTC") and registered holder of the related Securities. To the extent
specified in the related Prospectus Supplement, such periodic and annual
unaudited reports will also be sent on behalf of any such Trust to any
registered holders of the Securities. See "Issuance of the
Securities--Book-Entry Registration" and "Description of the Transfer and
Servicing Agreements--Reports to Securityholders" herein. Such reports will not
constitute financial statements that have been examined and reported upon by,
with an opinion expressed by, an independent public accountant or certified
public accountant. Each Trust will file with the Securities and Exchange
Commission (the "COMMISSION") such periodic reports as are required under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (the "EXCHANGE ACT") or as are otherwise agreed to by
the Commission. Copies of such periodic reports may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
AVAILABLE INFORMATION
The Seller, as originator of each Trust, has filed with the Commission a
Registration Statement (together with all amendments and exhibits thereto,
referred to herein as the "REGISTRATION STATEMENT") under the Securities Act of
1933, as amended, and the rules and regulations of the Commission thereunder
(the "SECURITIES ACT"), with respect to the Securities offered pursuant to this
Prospectus. For further information, reference is made to the Registration
Statement which may be inspected and copied, at prescribed rates, at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; at the Commission's Midwest Regional Office at 500 West
Madison Street, Chicago, Illinois 60661-2511; and at the Commission's Northeast
Regional Office at 7 World Trade Center, 13th Floor, New York, New York 10048.
In addition, the Commission maintains a public access site on the Internet
through the World Wide Web at which site reports, information statements and
other information, including all electronic filings, regarding the Seller and
each Trust may be viewed. The Internet address of such World Wide Web site is
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed with the Commission by the Seller, as originator of any
Trust, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Prospectus and prior to the termination of any offering of the
Securities made by this Prospectus shall be deemed to be incorporated by
reference in this Prospectus and to be a part of this Prospectus from the date
of the filing of such documents.
The Servicer on behalf of any Trust will provide without charge to each
person to whom this Prospectus is delivered, on the written or oral request of
such person, a copy of any or all of the documents referred to above that have
been or may be incorporated by reference in this Prospectus, other than exhibits
to such documents unless such exhibits are specifically requested. Such written
or oral requests should be directed to the Servicer at: Caterpillar Financial
Services Corporation, 3322 West End Avenue, Nashville, Tennessee 37203-1071,
Attention: Treasurer (Telephone: (615) 386-5800).
3
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus, and by reference to
the information with respect to the Securities of any Series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in the summary
are defined elsewhere in the Prospectus on the pages indicated in the "Index of
Terms."
<TABLE>
<S> <C>
Issuer............................ With respect to each Series of Securities, the Delaware
business trust formed by the Seller and the Owner
Trustee specified in the related Prospectus Supplement
pursuant to a Trust Agreement (as amended and
supplemented from time to time, a "TRUST AGREEMENT")
between the Seller and such Owner Trustee, acting
thereunder not in its individual capacity but solely as
Owner Trustee for such trust (the "TRUST" or the
"ISSUER").
Seller............................ Caterpillar Financial Funding Corporation (the
"SELLER"), a Nevada corporation and a wholly-owned
subsidiary of Caterpillar Financial Services
Corporation. The principal executive offices of the
Seller are located at Greenview Plaza, 2950 East
Flamingo Road, Suite C-3B, Las Vegas, Nevada 89121 and
its telephone number is (702)735-2514.
Servicer.......................... Caterpillar Financial Services Corporation (the
"SERVICER" or "CFSC"), a Delaware corporation and a
wholly-owned subsidiary of Caterpillar Inc.
Indenture Trustee................. With respect to each Series of Securities, the Indenture
Trustee specified in the related Prospectus Supplement.
Owner Trustee..................... With respect to each Series of Securities, the Owner
Trustee specified in the related Prospectus Supplement.
The Notes......................... Each Series of Securities will include one or more
Classes of Notes, which will be issued pursuant to an
indenture between the related Trust and Indenture
Trustee (as amended and supplemented from time to time,
an "INDENTURE").
Unless otherwise specified in the related Prospectus
Supplement, Notes will be available for purchase in
denominations of $1,000 and integral multiples thereof
and will be available in book-entry form only. Unless
otherwise specified in the related Prospectus
Supplement, holders of Notes ("NOTEHOLDERS") will be
able to receive Definitive Notes only under the limited
circumstances described herein or in the related
Prospectus Supplement. See "Issuance of the
Securities--Definitive Securities."
Unless otherwise specified in the related Prospectus
Supplement, each Class of Notes will have a stated
principal amount specified in the related Prospectus
Supplement and will bear interest at a rate or at rates
(with respect to each Class of Notes, the "INTEREST
RATE") specified in the related Prospectus Supplement.
Each Class of Notes may have a different Interest Rate,
which may be a fixed, variable or adjustable Interest
Rate, or any combination of the foregoing. The related
Prospectus Supplement will specify the Interest Rate for
each Class of Notes, or the method for determining the
Interest Rate.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
With respect to a Series that includes two or more
Classes of Notes, each Class may differ as to the timing
and priority of payments, seniority, allocations of
losses, Interest Rate or amount of or method of
determining payments of principal or interest as
described in the related Prospectus Supplement. Pay-
ments of principal or interest in respect of any such
Class or Classes may or may not be made upon the
occurrence of specified events or on the basis of
collections from designated portions of the Receivables
in the related Trust. In addition, a Series may include
one or more Classes of Notes ("STRIP NOTES") entitled to
(i) principal payments with disproportionate, nominal or
no interest payments or (ii) interest payments with
disproportionate, nominal or no principal payments.
If the Servicer exercises its option to purchase the
Receivables of a Trust in the manner and on the
respective terms and conditions described under
"Description of the Transfer and Servicing
Agreements--Termination," the related outstanding Notes
will be prepaid on the terms specified in the related
Prospectus Supplement. In addition, if the related
Prospectus Supplement provides that the property of a
Trust will include a Pre-Funding Account, the
outstanding Notes may be subject to partial prepayment
on or immediately following the end of the related
Funding Period (as such term is defined in the related
Prospectus Supplement, the "FUNDING PERIOD") in an
amount and manner specified in the related Prospectus
Supplement. In the event of a partial prepayment, the
Noteholders may, but will not necessarily, be entitled
to receive a prepayment premium from the related Trust,
in the amount and to the extent provided in the related
Prospectus Supplement.
The Certificates.................. Each Series of Securities may include one or more
Classes of Certificates, which, if issued, will be
issued pursuant to a Trust Agreement.
The Prospectus Supplement related to each Series will
specify whether the related Certificates, if any, will
be issued in fully registered, certificated form to
holders of Certificates ("CERTIFICATEHOLDERS" and,
together with the Noteholders, "SECURITYHOLDERS") or
their nominee, or if such Certificates will be avail-
able in book-entry form only. See "Issuance of the
Securities-- Definitive Securities" and "--Book-Entry
Registration" herein.
Unless otherwise specified in the related Prospectus
Supplement, each Class of Certificates, if any, will
have a stated Certificate Balance specified in the
related Prospectus Supplement (the "CERTIFICATE
BALANCE") and will accrue interest on such Certificate
Balance at the rate (with respect to each Class of
Certificates, the "PASS-THROUGH RATE") specified in the
related Prospectus Supplement. Each Class of
Certificates may have a different Pass-Through Rate,
which may be a fixed, variable or adjustable
Pass-Through Rate, or any combination of the foregoing.
The related Prospectus Supplement will specify the
Pass-Through Rate for each Class of Certificates or the
method for determining the Pass-Through Rate.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
With respect to a Series that includes two or more
Classes of Certificates, each Class may differ as to
timing and priority of distributions, seniority,
allocations of losses, Pass-Through Rates or amount of
or method of determining distributions in respect of
principal or interest. Distributions of principal or
interest in respect of any such Class or Classes may or
may not be made upon the occurrence of specified events
or on the basis of collections from designated portions
of the Receivables in the related Trust. In addition, a
Series may include one or more Classes of Certificates
("STRIP CERTIFICATES") entitled to (i) distributions in
respect of principal with disproportionate, nominal or
no interest distributions or (ii) distributions in
respect of interest with disproportionate, nominal or no
principal distributions.
To the extent specified in the related Prospectus
Supplement, distributions in respect of the Certificates
may be subordinated in priority of payment to payments
on the Notes.
If the Servicer exercises its option to purchase the
Receivables of a Trust, in the manner and on the
respective terms and conditions described under
"Description of the Transfer and Servicing
Agreements--Termination" herein, the related
Certificateholders will receive as a prepayment an
amount in respect of the Certificates as specified in
the related Prospectus Supplement. In addition, if the
related Prospectus Supplement provides that the property
of a Trust will include a Pre-Funding Account, Certifi-
cateholders may receive a partial prepayment of
principal on or immediately following the end of the
Funding Period in an amount and manner specified in the
related Prospectus Supplement. In the event of such
partial prepayment, such Certificateholders may, but
will not necessarily, be entitled to receive a
prepayment premium from such Trust, in the amount and to
the extent provided in the related Prospectus
Supplement.
The Trust Property................ The property of each Trust will include a pool of
Receivables which may consist of (i) fixed or variable
rate retail installment sales contracts (each, an
"INSTALLMENT SALES CONTRACT") and/or equipment finance
lease contracts (each, a "LEASE") secured by new and/or
used machinery manufactured primarily by Caterpillar
Inc. ("CATERPILLAR") or its affiliate Mitsubishi
Caterpillar Forklift America Inc. (the "FINANCED
EQUIPMENT"), including rights to receive certain
payments made with respect to such contracts
(collectively, the "RECEIVABLES") and all monies
(including accrued interest) due or received thereunder
on or after the applicable Cut-off Date and (ii)
security interests in the Financed Equipment and in
certain other cross-collateralized equipment. With
respect to each Trust as to which the related Trust
Property includes both Installment Sales Contracts and
Leases, the related Prospectus Supplement will set forth
the percentages of the related Receivables constituting
Installment Sales Contracts and Leases. CFSC and the
Seller will represent that all Leases are "net leases"
and contain provisions which unconditionally obligate
each Obligor thereunder to make all payments scheduled
under its Lease without any right of setoff. No Lease
contract requires any additional performance obligations
by CFSC.
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The property of each Trust will also include (i) amounts
on deposit in certain trust accounts, including a
related Collection Account, any Reserve Account, any
Pre-Funding Account and any other account identified in
the related Prospectus Supplement, and the proceeds
thereof, (ii) the rights to proceeds from claims on
physical damage, credit life, liability, and disability
insurance policies, if any, covering Financed Equipment
or Obligors, as the case may be, (iii) any proceeds of
repossessed Financed Equipment, (iv) the rights of the
Seller under the related Purchase Agreement (as defined
below), (v) the interest of the Seller in any proceeds
from recourse to Dealers on such Receivables, (vi) the
interest earned on short-term investments made by such
Trust and (vii) any proceeds of the foregoing. On or
prior to the Closing Date specified in the Prospectus
Supplement with respect to a Trust, the Seller will
purchase Receivables from CFSC pursuant to a Purchase
Agreement (the "PURCHASE AGREEMENT"), between CFSC and
the Seller, and the Seller will sell the Receivables to
the related Trust pursuant to a Sale and Servicing
Agreement (the "SALE AND SERVICING AGREEMENT") among the
Seller, the Servicer and such Trust. Such Receivables
(the "INITIAL RECEIVABLES") shall have an aggregate
principal balance specified in the related Prospectus
Supplement as of a date specified therein (such date,
the "INITIAL CUT-OFF DATE").
If and to the extent provided in the related Prospectus
Supplement, the Seller will be obligated to sell, and
the related Trust will be obligated to purchase (subject
to the availability of Receivables, and to the
satisfaction of certain conditions described in the
related Sale and Servicing Agreement), the Subsequent
Receivables from time to time during the Funding Period
specified in the related Prospectus Supplement, which
Subsequent Receivables will have an aggregate principal
balance as of the date determined therein (each, a
"SUBSEQUENT CUT-OFF DATE", and together with the Initial
Cut-off Date, a "CUT-OFF DATE") not in excess of the
amount on deposit in the Pre-Funding Account (the
"PRE-FUNDED AMOUNT") on the related Closing Date. If the
related Prospectus Supplement so provides for a
Pre-Funding Account, the funds on deposit in such
Pre-Funding Account on the related Closing Date will not
exceed 25% of the related Trust Property, and the
related Pre-Funding Period shall not exceed three months
from the related Closing Date.
The Receivables will arise from loans and/or leases
originated in connection with retail sales and leases by
dealers (the "DEALERS") of Financed Equipment to retail
purchasers (the "OBLIGORS") and will be either
originated by CFSC, or acquired from such Dealers by
CFSC, in the ordinary course of its business. The
Receivables sold to a Trust will be selected from the
portfolio of installment sales contracts and finance
leases owned by CFSC based on the criteria specified in
the related Purchase Agreement and described herein and
in the related Prospectus Supplement.
Credit and Cash Flow Enhancement.. If and to the extent provided in the related Prospectus
Supplement, credit enhancement with respect to a Trust
or any Class or
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Classes of Securities may include any one or more of the
following: subordination of one or more Classes of
Securities to other Classes of Securities, Reserve
Accounts, over-collateralization, letters of credit,
credit or liquidity facilities, surety bonds, guaran-
teed investment contracts, swaps or other interest rate
protection agreements, repurchase obligations, other
agreements with respect to third party payments or other
support, cash deposits or other arrangements. Any form
of credit enhancement may have certain limitations and
exclusions from coverage thereunder, which will be
described in the related Prospectus Supplement, and may
be replaced with another form of credit enhancement,
provided that the Rating Agencies confirm in writing
that such substitution will not result in a reduction or
withdrawal of the rating of any Class of Securities. See
"Description of the Transfer and Servicing
Agreements--Credit and Cash Flow Enhancement" herein.
Reserve Account................... Unless otherwise specified in the related Prospectus
Supplement, a Reserve Account will be established and
maintained by the Seller for each Trust in the name of
the Indenture Trustee with an initial deposit, if any,
by the Seller of cash or certain investments having a
value equal to the amount specified in the related Pro-
spectus Supplement. To the extent specified in the
related Prospectus Supplement, funds in the Reserve
Account will thereafter be supplemented by the deposit
of amounts remaining on any Distribution Date after
making all other distributions required on such date
and, if applicable, any amounts deposited from time to
time from the Pre-Funding Account in connection with the
purchase of Subsequent Receivables. Amounts in the
Reserve Account may be available to cover shortfalls in
amounts due to the holders of those Classes of
Securities specified in the related Prospectus
Supplement in the manner and under the circumstances
specified therein. The related Prospectus Supplement
will also specify to whom and the manner and
circumstances under which amounts on deposit in the
Reserve Account (after giving effect to all other
required distributions to be made by the related Trust)
in excess of the "SPECIFIED RESERVE ACCOUNT BALANCE" (as
defined in the related Prospectus Supplement) will be
distributed.
Principal and Interest Funding If the Distribution Dates for a Series or Class occur
Accounts.......................... less frequently than monthly, collections or other
amounts (or the portion thereof) allocable to such
Series or Class may be deposited on a monthly basis in
one or more trust accounts established for the benefit
of Securityholders and used to make interest payments
and principal payments to Securityholders of such Series
or Class on a following Distribution Date.
Pre-Funding Account............... If so specified in the related Prospectus Supplement,
the related Trust Property may include monies on deposit
in a trust account (the "PRE-FUNDING ACCOUNT") to be
established by the Seller in the name of the Indenture
Trustee on behalf of the related Securityholders, which
monies will be used to purchase Subsequent Receivables
from the Seller from time to time during the Funding
Period specified in the related Prospectus Supplement.
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The amount that may be initially deposited into a
Pre-Funding Account, and the length of a Pre-Funding
Period, shall be limited as described herein.
Transfer and Servicing With respect to each Trust, pursuant to a Purchase
Agreements........................ Agreement, the Seller will purchase Receivables from
CFSC and, pursuant to the Sale and Servicing Agreement,
the Seller will sell the related Receivables, together
with its rights under the Purchase Agreement, to such
Trust. In addition, the Servicer will agree with such
Trust to be responsible for servicing, managing and
making collections on the Receivables. The rights and
benefits of the Seller under the Purchase Agreement and
of such Trust under the Sale and Servicing Agreement
will be assigned to the related Indenture Trustee as
collateral for the Notes. The obligations of the Seller
and the Servicer under such Transfer and Servicing
Agreements include those specified below. With respect
to each Trust, unless the related Prospectus Supplement
provides for the filing of Uniform Commercial Code
("UCC") financing statements to perfect the interests
described herein, a custodian (the "CUSTODIAN") will be
responsible for maintaining custody of the related
Receivables Files (as defined herein) pursuant to a
Custodial Agreement (the "CUSTODIAL AGREEMENT") among
CFSC, the Seller, the Issuer, the Indenture Trustee and
such Custodian. See "Risk Factors--Perfection of
Interests in Receivables and in Financed Equipment"
herein.
Unless otherwise specified in the related Prospectus
Supplement, the Seller will be obligated to repurchase
any Receivable if (i) the interest of the related Trust
therein is materially adversely affected by a breach of
any representation or warranty made by the Seller or
CFSC with respect to such Receivable (other than cer-
tain specified representations and warranties) and (ii)
such breach has not been cured within the time period
specified herein following the discovery by or notice to
the Seller of the breach. See "Description of Transfer
and Servicing Agreements--Sale and Assignment of
Receivables" herein. If such breach arises from a
representation or warranty made by CFSC in the Purchase
Agreement, CFSC will be obligated to repurchase such
Receivable from the Seller pursuant to the related
Purchase Agreement contemporaneously with the Seller's
repurchase from such Trust. The obligation of the Seller
to repurchase any Receivable with respect to which CFSC
has breached a representation or warranty is subject to
CFSC's repurchase of such Receivable.
Consistent with its normal servicing procedures, the
Servicer may, in its discretion, arrange with the
Obligor on a Receivable to extend or modify its payment
schedule; provided, however, that unless otherwise
specified in the related Prospectus Supplement, no such
modifications may reduce the underlying APR or Princi-
pal Balance of such Receivable, reduce the aggregate
amount of scheduled payments or the amount of any
scheduled payment due under such Receivable, release or
modify CFSC's security interest in the Financed
Equipment securing such Receivable or otherwise amend or
modify such Receivable in a manner that
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would have a material adverse effect on the interests of
the related Securityholders. To the extent provided in
the related Prospectus Supplement, some of such
extensions may not be permitted or may result in the
Servicer's repurchasing such Receivable.
Unless otherwise specified in the related Prospectus
Supplement, the Servicer shall receive a servicing fee
for each Collection Period (the "SERVICING FEE"), which
Servicing Fee shall equal (a) a fixed percentage per
annum to be specified in the related Prospectus
Supplement (the "SERVICING FEE RATE") of the Pool Bal-
ance as of the first day of such Collection Period, plus
(b) any late fees, extension fees, property and sales
taxes (with respect to Leases) and other administrative
fees or similar charges allowed by applicable law with
respect to such Receivables (collectively, the
"SERVICER'S YIELD"). With respect to each Trust, the
Servicing Fee for each Collection Period will decline
over the term of the related Securities as the aggregate
principal balance of the related Receivables decreases.
See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of
Expenses" herein and in the related Prospectus
Supplement.
Administration Agreement.......... With respect to each Trust, CFSC, in its capacity as
administrator (the "ADMINISTRATOR"), will enter into an
agreement (an "ADMINISTRATION AGREEMENT") with such
Trust and the related Indenture Trustee pursuant to
which the Administrator will agree, to the extent
provided in such Administration Agreement, to provide
the notices and to perform certain other administrative
obligations required by the related Indenture. As
compensation for the performance of the Administrator's
obligations under its Administration Agreement and as
reimbursement for its expenses related thereto, the
Administrator will be entitled to a monthly admin-
istration fee in an amount to be set forth in the
related Prospectus Supplement (the "ADMINISTRATION
FEE").
Certain Legal Aspects of the With respect to any Trust, unless the related Prospectus
Receivables; Repurchase Supplement provides that such interests will be
Obligations....................... perfected by filing UCC financing statements, the
transfer of ownership of the Receivables of any Trust
from CFSC to the Seller and from the Seller to such
Trust, and the granting of the security interest in such
Receivables by such Trust to the related Indenture
Trustee, will, in each case, be perfected by the related
Custodian, on behalf of the applicable assignee, taking
possession of the Installment Sales Contracts and/or
Leases and any related Dealer Agreements (the
"RECEIVABLES FILES"). The related Custodian will
maintain possession of such Receivables Files in a space
leased by such Custodian, which space may, if so
specified in the related Prospectus Supplement, be
proximate to the principal executive offices of the
Seller. Although steps will be taken to ensure that the
Seller does not obtain possession or control of any
Receivables Files, should a court find that the Seller
did have possession or control of such Receivables
Files, the interests of such Trust and the related
Indenture Trustee in such Receivables may be unperfected
under certain circumstances, and distributions to
Securityholders may be adversely affected. Unless the
related Prospectus Supplement otherwise specifies, UCC
financing statements will not be filed to perfect such
transfers of ownership or such grant of a security
interest.
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If UCC financing statements are filed to perfect such
transfers of ownership or such grants of security
interests, to facilitate servicing and reduce
administrative costs, the Receivables Files will be
retained by the Servicer and will not be physically
segregated from other similar documents that are in the
Servicer's possession or otherwise stamped or marked to
reflect the transfer to the related Trust so long as
CFSC is servicing the Receivables. However, UCC
financing statements will be filed reflecting the sale
and assignment of the Receivables by CFSC to the Seller,
and by the Seller to the related Trust, and the
Servicer's accounting records and computer files will be
marked to reflect such sales and assignments. Because
the Receivables Files will remain in the Servicer's
possession and will not be stamped or otherwise marked
to reflect the assignment to the Indenture Trustee, if a
subsequent purchaser were able to take physical
possession of the Receivables Files without knowledge of
such assignment, the Indenture Trustee's interest in the
Receivables could be defeated. In such event,
distributions to Securityholders may be adversely
affected. See "Risk Factors--Perfection of Interests in
Receivables and in Financed Equipment" herein.
With respect to each Series of Securities, in connection
with the sale of the Receivables to the related Trust,
security interests in the Financed Equipment and certain
other cross-collateralized equipment securing the
Receivables will be assigned by CFSC to the Seller and
by the Seller to such Trust. Unless otherwise specified
in the related Prospectus Supplement, the Seller will be
obligated to repurchase any Receivable sold to the
related Trust (subject to CFSC's repurchase thereof) in
the event it is determined that a first perfected
security interest in the name of CFSC in the Financed
Equipment securing such Receivable did not exist as of
the related Closing Date or, if applicable, any related
Subsequent Closing Date, if (i) such breach shall
materially adversely affect the interest of such Trust
in such Receivable and (ii) such failure or breach shall
not have been cured by the last day of the second (or,
if the Seller elects, the first) month following the
discovery by or notice to the Seller of such breach, and
CFSC will be obligated to repurchase such Receivable
from the Seller contemporaneously with the Seller's
repurchase from such Trust. To the extent the security
interest of CFSC in the related Financed Equipment is
perfected, subject to the exceptions set forth in the
following sentence, such Trust will have a prior claim
over subsequent purchasers of such Financed Equipment
and holders of subsequently perfected security
interests. However, as against liens for repairs
("MECHANICS' LIENS") on an item of Financed Equipment or
for taxes unpaid by an Obligor under a Receivable, or
through fraud or negligence of CFSC or (in certain
circumstances) the related Dealer, such Trust could lose
the priority of its security interest or its security
interest in the related Financed Equipment. Neither the
Seller nor the Servicer will have any obligation to
repurchase a Receivable if liens for repairs or taxes
unpaid by an Obligor result in such Trust losing the
priority of its security interest or its security
interest in such Financed Equipment after the related
Closing Date or, if applicable, any related Subsequent
Closing Date. Federal and state consumer protection laws
impose requirements upon creditors in
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connection with extensions of credit and collections
relating to retail installment sales contracts and
leases, and certain of these laws make an assignee of
such a contract liable to the obligor thereon for any
violation by the lender. Unless otherwise specified in
the related Prospectus Supplement, under certain circum-
stances the Seller will be obligated to repurchase any
Receivable (subject to CFSC's repurchase thereof) which
fails to comply with such requirements, and CFSC will be
obligated to repurchase such Receivable from the Seller
contemporaneously with the Seller's repurchase from such
Trust.
Tax Status........................ Upon the issuance of each Series of Securities, unless
otherwise specified in the related Prospectus
Supplement, Orrick, Herrington & Sutcliffe LLP, as
special tax counsel to the related Trust, will deliver
its opinion to the effect that, for federal income tax
purposes: (i) the Notes of such Series will be
characterized as debt and (ii) such Trust will not be
characterized as an association (or a publicly traded
partnership) taxable as a corporation. Each Noteholder,
by the acceptance of a Note of a given Series, will
agree to treat such Note as indebtedness, and each
Certificateholder, by the acceptance of a Certificate of
a given Series, will agree to treat the related Trust as
a partnership in which the related Certificateholders
are partners for federal income purposes. Alternative
characterizations of such Trust and such Certificates
are possible, but should not result in materially
adverse tax consequences to Certificateholders. See
"Certain Federal Income Tax Considerations" for
additional information concerning the application of
federal tax laws.
Upon the issuance of each Series of Securities, unless
otherwise specified in the related Prospectus
Supplement, Tuke Yopp & Sweeney, as Tennessee tax
counsel to the related Trust ("TENNESSEE TAX COUNSEL"),
will deliver its opinion that, with respect to corporate
Certificateholders and Noteholders, the same tax char-
acterizations should apply for purposes of Tennessee
income tax as for federal income tax purposes.
Non-corporate Certificateholders and Noteholders who are
residents of Tennessee will be subject to taxation on
income distributions with respect to the Certificates
and the Notes of a given Series at the rate of six
percent (6%). In the opinion of Tennessee Tax Counsel,
the related Trust should not be subject to taxation in
Tennessee. See "Certain State Tax Considerations" herein
for additional information concerning the application of
Tennessee tax laws to any Trust and the related
Securities.
ERISA Considerations.............. A fiduciary of any employee benefit plan or other plan
or arrangement subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended
(the "CODE"), should carefully review with its legal
advisors whether the purchase or holding of any Class of
Securities could give rise to a transaction prohibited
or not otherwise permissible under ERISA or the Code.
See "ERISA Considerations" herein and in the related
Prospectus Supplement.
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RISK FACTORS
Investors should consider, among other things, the matters discussed under
"Risk Factors" in the Prospectus Supplement and the following risk factors in
connection with the purchase of the Securities of any Series.
PERFECTION OF INTERESTS IN RECEIVABLES AND IN FINANCED EQUIPMENT. With
respect to any Trust, unless the related Prospectus Supplement provides that
such interests will be perfected by filing Uniform Commercial Code ("UCC")
financing statements, the transfer of ownership of the Receivables from CFSC to
the Seller and from the Seller to such Trust, and the granting of the security
interest in the related Receivables by such Trust to the related Indenture
Trustee, will in each case be perfected by the Custodian, on behalf of the
applicable assignee, taking possession of the Installment Sales Contracts and/or
Leases and any related Dealer Agreements (the "RECEIVABLES FILES") pursuant to
the related Custodial Agreement. The related Custodian will maintain possession
of such Receivables Files in a space leased by the Custodian which may, if so
specified in the related Prospectus Supplement, be proximate to the principal
executive offices of the Seller. Although steps will be taken to ensure that the
Seller does not obtain possession or control of the Receivables Files, should a
court find that the Seller did have possession or control of such Receivables
Files, the interests of the related Trust and the related Indenture Trustee in
such Receivables may be unperfected under certain circumstances, and
distributions to Securityholders may be adversely affected. Unless the related
Prospectus Supplement otherwise specifies, UCC financing statements will not be
filed to perfect these transfers of ownership or such grant of a security
interest.
Should the related Indenture Trustee's security interest and/or the related
Trust's or the Seller's ownership interest in the Receivables be found to be
unperfected, such interests may potentially be inferior to the interests of (i)
the Seller or CFSC, (ii) any creditors of such Trust, the Seller or CFSC, or
(iii) in the event such Trust, the Seller or CFSC fraudulently or inadvertently
sells a Receivable to a purchaser who had no notice of the prior transfers
thereof to such Indenture Trustee, such Trust or the Seller and such purchaser
takes possession of all of the originals of the related installment sales
contract or lease evidencing such Receivable, such purchaser. As a result of
such lack of perfection, the Seller, such Trust and the related Securityholders
may not be entitled to receive all or a portion of the distributions relating
to, or have any other rights with respect to, such Receivables.
If UCC financing statements are filed to perfect such transfers of ownership
or grants of security interests, to facilitate servicing and reduce
administrative costs, the Receivables Files will be retained by the Servicer and
will not be physically segregated from other similar documents that are in the
Servicer's possession or otherwise stamped or marked to reflect the transfer to
the related Trust so long as CFSC is servicing the Receivables. However, UCC
financing statements will be filed reflecting the sale and assignment of the
Receivables by CFSC to the Seller, and by the Seller to the Trust, and the
Servicer's accounting records and computer files will be marked to reflect such
sales and assignments. Because the Receivables Files will remain in the
Servicer's possession and will not be stamped or otherwise marked to reflect the
assignment to the Indenture Trustee, if a subsequent purchaser were able to take
physical possession of the Receivables Files without knowledge of such
assignment, the Indenture Trustee's interest in the Receivables could be
defeated. In such event, distributions to Securityholders may be adversely
affected.
In connection with the sale of the Receivables of any Trust, CFSC's security
interests in Financed Equipment, together with security interests in certain
other cross-collateralized equipment securing the Receivables, will be assigned
by CFSC to the Seller and by the Seller to such Trust. The Seller will be
obligated to repurchase any Receivable sold to any Trust (subject to CFSC's
repurchase thereof) in the event it is determined that a first perfected
security interest in the name of CFSC in the Financed Equipment securing such
Receivable did not exist as of the related Closing Date or, if applicable, any
related Subsequent Closing Date if (i) such breach shall materially adversely
affect the interest of such Trust in such Receivable and (ii) such failure or
breach shall not have been cured by the last day of the second (or, if the
Seller elects, the first) month following the discovery by or notice to the
Seller of such breach, and CFSC will be obligated to repurchase such Receivable
from the Seller contemporaneously with the Seller's repurchase from such Trust.
If there is any Financed Equipment as to which CFSC failed to perfect its
security interest, CFSC's
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security interest, and the security interests of the Seller and the related
Trust, would be subordinate to, among others, subsequent purchasers of the
Financed Equipment and holders of perfected security interests with respect
thereto. To the extent the security interest of CFSC in the related Financed
Equipment is perfected, subject to the exceptions set forth in the following
sentence, the related Trust will have a prior claim over subsequent purchasers
from the Obligor of such Financed Equipment and holders of subsequently
perfected security interests granted by Obligors. However, as against Mechanics'
Liens or liens for taxes unpaid by an Obligor under a Receivable, or in the
event of fraud or negligence of CFSC or (in certain circumstances) the related
Dealer, such Trust could lose the priority of its security interest or its
security interest in such Financed Equipment following the pledge of the related
Receivable. Neither the Seller nor the Servicer will have any obligation to
repurchase a Receivable if any of the occurrences described in the foregoing
sentence (other than fraud or negligence of CFSC) result in such Trust's losing
the priority of its security interest or its security interest in such Financed
Equipment after the related Closing Date or, if applicable, any Subsequent
Closing Date.
COMPLIANCE WITH LENDING LAWS. Federal and state consumer protection laws
impose requirements upon creditors in connection with extensions of credit and
in respect of collections on retail installment sales contracts and leases, and
certain of these laws make an assignee of such a contract liable to the obligor
thereon for any violation by the lender. Unless otherwise specified in the
related Prospectus Supplement, under certain circumstances the Seller will be
obligated to repurchase any Receivable (subject to CFSC's repurchase thereof)
which fails to comply with such requirements, and CFSC will be obligated to
repurchase such Receivable from the Seller contemporaneously with the Seller's
repurchase from the related Trust.
SUBSTANTIVE CONSOLIDATION OF CFSC AND THE SELLER. The Seller has taken and
will take steps in structuring the transactions contemplated hereby and in any
related Prospectus Supplement that are intended to ensure that a voluntary or
involuntary petition for relief by or against CFSC under the United States
Bankruptcy Code or similar applicable state laws ("INSOLVENCY LAWS") will not
result in the substantive consolidation of the assets and liabilities of the
Seller with those of CFSC. These steps will include the creation of the Seller
as a separate, limited-purpose entity pursuant to Articles of Incorporation
containing (i) certain limitations (including restrictions on the nature of the
Seller's business and a restriction on the Seller's ability to commence a
voluntary case or proceeding under any Insolvency Law without the prior
unanimous affirmative vote of all its directors) and (ii) a requirement that at
least one of the Seller's directors be independent of CFSC and its affiliates.
However, there can be no assurance that the activities of the Seller would not
result in a court's concluding that the assets and liabilities of the Seller
should be substantively consolidated with those of CFSC in a proceeding under
any Insolvency Law.
TRUE SALE RISKS. With respect to any Trust, CFSC will warrant to the Seller
in the related Purchase Agreement that the sale of the related Receivables by it
to the Seller is an absolute sale of such Receivables to the Seller. In
addition, CFSC and the Seller will treat the transactions described herein and
in the related Prospectus Supplement as a sale of such Receivables to the
Seller, and the Seller has taken and will take all actions that are required to
perfect the Seller's ownership interest in such Receivables by the Seller taking
possession of the related Receivables Files through a custodian (unless the
related Prospectus Supplement provides that such interests will be perfected by
filing UCC financing statements). Notwithstanding the foregoing, if CFSC were to
become a debtor in a bankruptcy case, and a creditor or trustee-in-bankruptcy of
CFSC or CFSC itself were to take the position that the sale of Receivables to
the Seller should be recharacterized as a pledge of such Receivables to secure a
borrowing of CFSC, then delays in payments of collections of Receivables to the
Seller could occur or, should the court rule in favor of any such trustee,
debtor or creditor, reductions in the amount of such payments, or a reduction in
the amount of Receivables securing such a borrowing, could result. If the
transactions contemplated herein and in the related Prospectus Supplement are
treated as a sale, the related Receivables would not be part of CFSC's
bankruptcy estate and would not be available to CFSC's creditors.
The U.S. Court of Appeals for the Tenth Circuit issued an opinion in OCTAGON
GAS SYSTEMS, INC. V. RIMMER (IN RE MERIDIAN RESERVE, INC.) (decided May 27,
1993) in which it concluded (noting that its position is in contrast to that
taken by another court) that "accounts" (as defined under the UCC) sold by the
debtor
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prior to the filing for bankruptcy remain property of the debtor's bankruptcy
estate. Although the Receivables relating to any Series are likely to be viewed
as "chattel paper," as defined under the UCC, rather than as accounts, the
rationale behind the OCTAGON ruling could be applied to chattel paper. The
circumstances under which the OCTAGON ruling would apply are not fully known,
and the extent to which the OCTAGON decision will be followed by other courts or
outside of the Tenth Circuit, if at all, is not certain. If the holding in the
OCTAGON case were applied in a CFSC bankruptcy, however, even if the transfers
of Receivables to the Seller and to a Trust were treated as sales, the
Receivables could be considered part of CFSC's bankruptcy estate and would be
subject to claims of certain creditors and delays and reductions in payments to
the Seller and holders of the related Securities, or a reduction in the amount
of Receivables supporting such Securities, could result. The Seller will warrant
in each Sale and Servicing Agreement that the sale of the Receivables to the
related Trust is an absolute sale of such Receivables to such Trust. For a
further discussion of certain consequences of characterization of the
transaction as a sale or a pledge, see "Certain Legal Aspects of the
Receivables--Bankruptcy" herein.
RISK OF COMMINGLING. With respect to each Trust, unless the related
Prospectus Supplement provides for more frequent deposits (as described below),
then for so long as CFSC is the Servicer and provided that (i) there exists no
Servicer Default (as defined herein) and (ii) each other condition to making
monthly or less frequent deposits as may be specified by the Rating Agencies and
described in the related Prospectus Supplement is satisfied, the Servicer will
not be required to deposit payments on the related Receivables (from whatever
source) and all proceeds of such Receivables collected during each Collection
Period into the related Collection Account until on or before the business day
preceding each related Distribution Date. If the related Prospectus Supplement
so provides, or if the above described conditions are not met, the Servicer will
deposit all such amounts collected during each Collection Period into the
related Collection Account within two business days of receipt and
identification thereof. Normally, collections are identified within one day of
receipt. The Servicer will also deposit any Purchase Amounts (as defined herein)
when due. Pending deposit into such Collection Account, the Servicer will be
under no obligation to segregate collections from its funds and such collections
may be invested by the Servicer at its own risk, for its own benefit and without
being subject to any investment restrictions and will not be segregated from the
funds of the Servicer. If the Servicer were unable to remit such funds, or if
the Servicer became insolvent, the holders of Securities might incur a loss with
respect to collections not deposited in the Collection Account. To the extent
set forth in the related Prospectus Supplement, the Servicer may, in order to
satisfy the requirements for monthly remittances described above, obtain a
letter of credit or other security for the benefit of the related Trust to
secure timely remittances of collections on the related Receivables and payment
of the aggregate Purchase Amount with respect to Receivables purchased by the
Servicer.
SERVICER DEFAULT. Unless otherwise provided in the related Prospectus
Supplement, in the event a Servicer Default occurs, the related Indenture
Trustee or Noteholders of the related Series evidencing not less than 25% of the
outstanding principal amount of the Notes with respect to such Series (without
the consent of the related Indenture Trustee), as described under "Description
of the Transfer and Servicing Agreements--Rights Upon Servicer Default" herein,
may remove the Servicer without the consent of the related Owner Trustee or any
of the related Certificateholders. Neither the related Owner Trustee nor the
related Certificateholders will have the ability to remove the Servicer if a
Servicer Default occurs. In addition, Noteholders of such Series evidencing not
less than a majority of the outstanding principal amount of the related Notes
will have the ability (without the consent of the related Indenture Trustee),
with certain specified exceptions, to waive defaults by the Servicer, including
defaults that could materially adversely affect the Certificateholders. See
"Description of the Transfer and Servicing Agreements--Waiver of Past Defaults"
herein.
TRUSTS' RELATIONSHIP TO THE SELLER AND CFSC; FINANCIAL CONDITION OF
CATERPILLAR INC. None of the Seller, CFSC or Caterpillar will generally be
obligated to make any payments in respect of the Notes, the Certificates, if
any, or the Receivables of a given Trust. However, if CFSC were to cease acting
as Servicer, delays in processing payments on the Receivables of the related
Trust and information in respect thereof could occur and result in delays in
payments and distribution of reports to the Noteholders and the
Certificateholders of
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such Trust. In addition, under certain circumstances the Servicer may be
required to purchase Receivables, and therefore if CFSC were to cease acting as
Servicer, delays in repurchases and consequently the receipt by such Trust of
funds respecting such Receivables could result.
In connection with the sale of Receivables by CFSC to the Seller, CFSC will
make representations and warranties with respect to the characteristics of such
Receivables. In certain circumstances, CFSC and the Seller will be required to
repurchase Receivables with respect to which such representations and warranties
have been breached. See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables."
If the related Prospectus Supplement provides for a Pre-Funding Account, the
Seller will be required to sell to the related Trust Subsequent Receivables in
an amount up to the amount then on deposit in the Pre-Funding Account (the
"PRE-FUNDED AMOUNT"). The ability of the Seller to convey Subsequent Receivables
on Subsequent Closing Dates will be completely dependent on the generation of
additional receivables by CFSC. The ability of CFSC to generate receivables in
turn will depend on the sales of equipment manufactured or distributed by
Caterpillar and/or Mitsubishi Caterpillar Forklift America Inc., as applicable.
If, during the related Funding Period, Caterpillar were temporarily or
permanently no longer manufacturing or distributing equipment, the rate of sales
of equipment manufactured or distributed by Caterpillar would decrease,
adversely affecting the ability of the Seller to sell Subsequent Receivables to
the related Trust. The use of incentive programs (e.g., manufacturer's rebate
programs) may also affect retail sales. There can be no assurance, therefore,
that CFSC will continue to generate receivables at the same rate as in prior
years or that Subsequent Receivables will be generated in an amount up to the
original Pre-Funded Amount. If the related Prospectus Supplement provides for a
Pre-Funding Account, the funds on deposit in such Pre-Funding Account on the
related Closing Date will not exceed 25% of the related Trust Property, and the
related Pre-Funding Period shall not exceed three months from the related
Closing Date.
For additional information regarding Caterpillar and CFSC, see "The Seller,
Caterpillar and the Servicer" herein and in the related Prospectus Supplement.
Caterpillar and CFSC are subject to the information requirements of the Exchange
Act and in accordance therewith file reports and other information with the
Commission. Copies of such periodic reports may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
SUBORDINATION OF SECURITIES. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on the Securities
of any Class of a Series may be subordinated in priority of payment to interest
and principal due on one or more other Classes of Securities of such Series. For
such Series, the related Securityholders will not receive any distributions with
respect to a Distribution Date until the full amount of interest on and/or
principal of the related senior Securities for such Distribution Date has been
deposited in the related Note Distribution Account or Certificate Distribution
Account.
LIMITED ASSETS. No Trust will have, nor will any Trust be permitted or
expected to have, any significant assets or sources of funds other than the
related Receivables and, to the extent set forth in the related Prospectus
Supplement, the Trust Accounts. The Notes of a Series will represent obligations
solely of, and the Certificates of such Series will represent undivided
beneficial equity interests solely in, the related Trust, and neither the Notes
nor the Certificates of any such Series will be insured or guaranteed by
Caterpillar, CFSC, the Seller, the Servicer, the related Owner Trustee, the
related Indenture Trustee or any other person or entity. Consequently, holders
of the Securities of a Series must rely for repayment upon payments received by
the Servicer relating to the related Receivables and, if and to the extent
available, amounts on deposit in the Reserve Account (if any), the Pre-Funding
Account (if any) and any other credit enhancement, all as specified in the
related Prospectus Supplement. Amounts to be deposited in any Reserve Account
with respect to any Trust will be limited in amount, and the amount required to
be on deposit in such Reserve Account will be reduced as the Pool Balance is
reduced. In addition, funds in any such Reserve Account will be available on
each Distribution Date to cover shortfalls in distributions of interest and
principal on the related Securities. If such Reserve Account is depleted, the
related Trust will depend solely on current payments on its Receivables to make
payments on the related Securities. Although each Trust will covenant to sell
the Receivables if directed to do so by the related Indenture Trustee in
accordance with the
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related Indenture following an acceleration of the related Notes upon an Event
of Default, there is no assurance that the market value of such Receivables will
at any time be equal to or greater than the aggregate principal amount of such
outstanding Notes. Therefore, upon an Event of Default with respect to the Notes
of any Series, there can be no assurance that sufficient funds will be available
to repay the related Noteholders, particularly any junior Noteholders, in full.
In addition, the amount of principal required to be distributed to Noteholders
under each Indenture will generally be limited to amounts available therefor in
the related Note Distribution Account, and the failure to pay principal on the
Notes of any Series may not result in the occurrence of an Event of Default
until the Final Scheduled Distribution Date of such Notes. To the extent
specified in the related Prospectus Supplement, the Securities of any Class of
any Series may be subordinated to one or more other Classes of Securities of
such Series, and any such Class may not be entitled to exercise any or all of
its rights under the circumstances described herein. See "--SUBORDINATION OF
SECURITIES" herein.
MATURITY AND PREPAYMENT CONSIDERATIONS. All the Receivables relating to
Installment Sales Contracts will be prepayable at any time by their terms.
Although the Receivables relating to Leases are generally not optionally
prepayable by their terms, Lessees generally are permitted to prepay a Lease
upon payment of the aggregate remaining Lease Scheduled Payments due (which
amount would include an implicit interest amount). Each prepayment will shorten
the weighted average remaining term of the Receivables of any Trust and the
weighted average life of the related Securities. If the related Prospectus
Supplement provides for the distribution to Noteholders and/or
Certificateholders of amounts on account of principal in excess of the Principal
Distribution Amount on any Distribution Date (as defined in the related
Prospectus Supplement), this effect would be greater upon the prepayment of a
Lease, since the amount prepaid would be greater than the related Principal
Balance. (For this purpose the term "prepayments" includes voluntary
prepayments, liquidations due to default, receipts of proceeds from insurance
policies and Receivables purchased for administrative or other reasons, and the
term "weighted average life" means the average amount of time in which each
dollar of principal is repaid.) With respect to any Trust, the related
Prospectus Supplement will set forth the allocations of prepayments of principal
among the related Noteholders and Certificateholders. See "Description of the
Transfer and Servicing Agreements--Distributions" in the related Prospectus
Supplement.
The rate of prepayments on the Receivables may be influenced by a variety of
economic, financial, climatic and other factors. In addition, under certain
circumstances, CFSC will be obligated to repurchase Receivables pursuant to the
Purchase Agreement, and the Seller will be obligated to repurchase Receivables
pursuant to the Sale and Servicing Agreement, in each case as a result of
breaches of representations and warranties, and under the certain circumstances
specified in the related Prospectus Supplement, the Servicer will be obligated
to purchase Receivables pursuant to the Sale and Servicing Agreement as a result
of breaches of certain covenants. The rate of prepayment on the Receivables may
also be influenced by programs offered by providers of financing (including
CFSC) that solicit or make available credit that may be used to prepay
Receivables. Consistent with its normal procedures, the Servicer may, in its
discretion and on a case-by-case basis, arrange with the Obligor respecting a
Receivable to extend or modify the related payment schedule to the extent
specified in the Prospectus Supplement. Any such extensions or modifications may
increase the weighted average remaining term of the Receivables and the weighted
average life of the related Securities. Although each Sale and Servicing
Agreement will restrict the ability of the Servicer to otherwise modify a
Receivable as described herein and in the related Prospectus Supplement, the
Servicer will be permitted to refinance an existing Receivable for an Obligor,
so long as the proceeds of such refinanced receivable would be used to prepay
such existing Receivable in full and any such refinanced receivable is evidenced
by a new Lease or Installment Sales Contract. Any such new receivable resulting
from a refinancing would not be the property of the related Trust. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables" and "--Servicing Procedures" herein. A higher than anticipated rate
of prepayments will reduce the aggregate principal balance of the Receivables
more quickly than expected and thereby reduce anticipated aggregate interest
payments respecting the related Securities. Any reinvestment risks resulting
from a faster or slower incidence of prepayment of Receivables will be borne
entirely by the related Securityholders as set forth in the priority of
distributions in the related Prospectus Supplement. Such reinvestment risks may
include the risk that interest rates are lower
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at the time such holders receive payments from the related Trust than interest
rates would otherwise have been had such prepayments not been made or had such
prepayments been made at a different time. See "Description of the Transfer and
Servicing Agreements--Termination" herein regarding the Servicer's option to
purchase the Receivables of a Trust.
If the related Prospectus Supplement provides for a Reserve Account, and if
the amount required to be withdrawn from such Reserve Account to cover
shortfalls in collections on the Receivables exceeds the amount of cash in such
Reserve Account, a temporary shortfall in the amounts distributed to the
Securityholders of the related Series could result, which could, in turn,
increase the average life of such Securities.
Securityholders of any Series should consider, in the case of Securities
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the related Receivables could result in an actual yield
that is less than the anticipated yield and, in the case of any Securities
purchased at a premium, the risk that a faster than anticipated rate of
principal payments on the related Receivables could result in an actual yield
that is less than the anticipated yield.
CERTAIN UCC CONSIDERATIONS. Certain states have adopted a version of
Article 2A of the UCC ("ARTICLE 2A"). Article 2A purports to codify many
provisions of existing common law. Although there is little precedent regarding
how Article 2A will be interpreted, it may, among other things, limit
enforceability of any "unconscionable" lease or "unconscionable" provision in a
lease, provide a lessee with remedies, including the right to cancel the lease
contract, for certain lessor breaches or defaults, and may add to or modify the
terms of "consumer leases" and leases where the lessee is a "merchant lessee."
However, with respect to each Lease conveyed to a Trust, CFSC will represent
that (i) such Lease is not a "consumer lease" and (ii) to the best of its
knowledge, the related Obligor has accepted the related Financed Equipment
leased to it and, after reasonable opportunity to inspect and test, has not
notified CFSC of any defects therein. Article 2A also recognizes typical
commercial lease "hell or high water" rental payment clauses and validates
reasonable liquidated damages provisions in the event of lessor or lessee
defaults. Moreover, Article 2A recognizes the concept of freedom of contract and
permits the parties in a commercial context a wide degree of latitude to vary
provisions of the law.
BOOK-ENTRY REGISTRATION. As may be set forth in the related Prospectus
Supplement, certain of the Notes and Certificates may be initially represented
by one or more physical notes and certificates registered in the name of Cede or
any successor nominee for DTC and will not be registered in the names of the
beneficial owners of such Notes and Certificates or their nominees. Accordingly,
unless and until Definitive Notes or Definitive Certificates are issued for such
Securities, holders of beneficial interests in such Notes and Certificates will
not be recognized by the applicable Trustees as Noteholders and
Certificateholders and will only be able to exercise the rights of Noteholders
and Certificateholders indirectly through DTC and its Participants. See
"Issuance of the Securities--Book-Entry Registration" herein.
THE TRUSTS
GENERAL
With respect to each Series of Securities, the Seller will establish a
separate Trust for the transactions described herein and in the related
Prospectus Supplement. After its formation, each Trust will not engage in any
activity other than (i) acquiring, holding and managing the Receivables and the
other assets of such Trust and proceeds therefrom, (ii) issuing and making
payments on the related Notes, (iii) issuing and making payments on the related
Certificates representing undivided beneficial equity interests in such Trust
and (iv) engaging in other activities that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected therewith. On
the related Closing Date, simultaneously with the issuance of the Notes and the
Certificates of a given Series, the Seller will sell the Initial Receivables and
its security interests in any Financed Equipment to the related Trust. To the
extent so provided in the related Prospectus Supplement, Subsequent Receivables
may, if at all, be conveyed to the related Trust as frequently as daily during
the related Funding Period. Any Subsequent Receivables so conveyed also will be
assets of the related
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Trust, subject to the prior rights of the related Indenture Trustee and
Noteholders therein. The amount that may be initially deposited into a
Pre-Funding Account, and the length of a Pre-Funding Period, shall be limited as
described herein.
The Servicer will continue to service the Receivables held by each Trust and
will receive fees for such services. See "Description of the Transfer and
Servicing Agreements--Servicing Compensation and Payment of Expenses" herein and
in the related Prospectus Supplement. The related Prospectus Supplement will
specify whether CFSC, the Seller, the Servicer, the related Trust and the
related Indenture Trustee will enter a Custodial Agreement to appoint a
Custodian to maintain physical possession of the related Receivables Files and
other documents related thereto, or if UCC financing statements are to be filed
to perfect such interests. If UCC financing statements are filed, to facilitate
servicing and to minimize administrative burden and expense the Servicer will
maintain possession of the related Receivables Files as custodian on behalf of
such Trust and the related Indenture Trustee, but the Servicer will not stamp
the related Installment Sales Contracts and/or Leases to reflect the ultimate
assignment of the Receivables to such Trust. Regardless of whether UCC financing
statements are filed, financing statements previously filed to perfect the
security interests in the Financed Equipment in favor of CFSC will not be
assigned to such Trust or amended. See "Certain Legal Aspects of the
Receivables" and "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables" herein.
If the credit enhancement provided to the investment of the Noteholders of a
given Series by the subordination of the related Certificates and the protection
provided to the holders of the Securities by the availability of the funds in
the related Reserve Account or any other credit enhancement is insufficient, the
related Trust and such Securityholders must rely solely on the payments from the
Obligors on the related Receivables, and the proceeds from the repossession and
sale of Financed Equipment and certain other cross-collateralized equipment
which secure defaulted Receivables. In such event, certain factors, such as such
Trust's not having first perfected security interests in some of the Financed
Equipment and the risk of fraud or negligence of CFSC or (under certain
circumstances) the related Dealer, may affect such Trust's ability to realize on
the collateral securing the Receivables, and thus the proceeds to be distributed
to Securityholders with respect to the Securities, may be reduced. See
"Description of the Transfer and Servicing Agreements--Distributions", "--Credit
and Cash Flow Enhancement" and "Certain Legal Aspects of the Receivables" herein
and "Description of the Transfer and Servicing Agreements--Distributions" in the
related Prospectus Supplement.
The principal offices of each Trust and of the related Owner Trustee will be
specified in the related Prospectus Supplement.
THE OWNER TRUSTEE
The Owner Trustee for each Trust will be specified in the related Prospectus
Supplement. An Owner Trustee's liability in connection with the issuance and
sale of the Securities of the related Series will be limited solely to the
express obligations of such Owner Trustee set forth in the related Trust
Agreement and the related Sale and Servicing Agreement. An Owner Trustee may
resign at any time, in which event the Servicer will be obligated to appoint a
successor owner trustee. The Administrator of a Trust may also remove the Owner
Trustee if the Owner Trustee ceases to be eligible to continue as Owner Trustee
under the related Trust Agreement or if the Owner Trustee becomes insolvent. In
such circumstances, the Administrator will be obligated to appoint a successor
owner trustee. Any resignation or removal of an Owner Trustee and appointment of
a successor owner trustee will not become effective until acceptance of the
appointment by the successor owner trustee.
THE TRUST PROPERTY
The Notes of any Series will be collateralized by the assets of the related
Trust (the "TRUST PROPERTY") and each Certificate will represent a fractional
undivided beneficial equity interest in such Trust. The Trust Property of any
Trust will include (i) the Receivables, (ii) all monies (including accrued
interest) due or received thereunder on or after the applicable Cut-off Date,
(iii) such amounts as from time to time may be held in one or more accounts
established and maintained by the Servicer pursuant to the related Sale and
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Servicing Agreement, as described below and in the related Prospectus
Supplement, (iv) security interests in the Financed Equipment and in certain
other cross-collateralized equipment, (v) the rights to proceeds from claims on
physical damage, credit life, liability and disability insurance policies, if
any, covering such Financed Equipment or Obligors, as the case may be, (vi) the
proceeds of any repossessed Financed Equipment, (vii) the rights of the Seller
under the related Purchase Agreement, (viii) the interest of the Seller in any
proceeds from recourse to Dealers with respect to Receivables, (ix) interest
earned on short-term investments made by such Trust and (x) any proceeds of the
foregoing. The Receivables will either be originated by the Dealers and
purchased by CFSC pursuant to agreements with the Dealers ("DEALER AGREEMENTS")
or originated directly by CFSC in connection with retail sales by the Dealers.
Subject to the provisions of the related Sales and Servicing Agreement, the
related Receivables will continue to be serviced by the Servicer and will
evidence direct or indirect financing made available by CFSC to the Obligors.
Unless otherwise specified in the related Prospectus Supplement, the related
Reserve Account, if any, and any other Trust Accounts, shall be maintained in
the name of the Indenture Trustee on behalf of the Securityholders of the
related Series.
THE RECEIVABLES POOLS
The Receivables of any Trust will either be purchased by CFSC from the
Dealers which originated the Receivables in the ordinary course of business in
connection with retail sales or leases by them, or will be originated by CFSC in
the ordinary course of its and the Dealers' sale or leasing business. CFSC
purchases or originates contracts in accordance with its credit standards which
are based upon the Obligor's ability to repay the obligation, the Obligor's
credit history and, as described below, the equity position, if any, with
respect to the related Financed Equipment.
The Receivables to be held by each Trust will be selected from the U.S.
Portfolio of Installment Sales Contracts and/or Leases not previously sold
meeting several criteria. As of the applicable Cut-off Date, among the criteria
to be met (except as described under "Certain Legal Aspects of the Receivables"
herein) are that each Receivable: (i) will be secured by a first priority
perfected security interest in the related Financed Equipment (which Financed
Equipment is located in the United States), (ii) will have been originated in
the United States, (iii) will have an Obligor which has a United States billing
address, (iv) in the case of an Installment Sales Contract, will provide for
scheduled payments that fully amortize the amount financed over its original
term to maturity, (v) will not be more than 31 days past due, and (vi) will
satisfy the other criteria, if any, set forth in the related Prospectus
Supplement. As of the applicable Cut-off Date, no Obligor on any related
Receivable will be noted on the related records of the Servicer as being in
default under the related Installment Sales Contract or Lease or as being the
subject of a bankruptcy proceeding. No selection procedures believed by the
Seller to be adverse to the Securityholders of any Series will be used in
selecting the related Receivables.
Information with respect to each pool of Receivables will be set forth in
the related Prospectus Supplement, including, to the extent appropriate, the
composition of the Receivables, the distribution by annual percentage rate
("APR") (as such term is defined in the related Prospectus Supplement), type of
equipment, Principal Balance of the Receivables and the geographic location of
each Obligor of the Receivables, and percentages of new and used equipment,
industry application and payment frequency. See "The Receivables Pool" in the
related Prospectus Supplement.
If the related Prospectus Supplement provides for a Pre-Funding Account,
each Subsequent Receivable of the related Trust must satisfy the eligibility
criteria specified in the related Sale and Servicing Agreement at the time of
its addition. However, except for such criteria, there will be no required
characteristics of such Subsequent Receivables. Therefore, following the
transfer of Subsequent Receivables to the related Trust, the characteristics of
the entire Receivables Pool (as defined in the related Prospectus Supplement)
included in such Trust may vary from those of the Initial Receivables.
THE RETAIL EQUIPMENT FINANCING BUSINESS
GENERAL. CFSC purchases installment sales contracts and leases
(collectively, "receivables") from Dealers and originates receivables directly
with users of Caterpillar products. References herein to the
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financing of equipment, unless otherwise specified, shall also include the
leasing of equipment pursuant to finance leases. The construction equipment
financed by CFSC is used for the building of housing, industrial buildings and
warehouses, as well as for the construction of highways, bridges, water and
sewer systems and other heavy applications. In the mining industry, CFSC
finances equipment used to mine coal, metals, non-metals and oil and gas. CFSC
also finances engines manufactured by Caterpillar and turbines manufactured by
Solar Turbines, a subsidiary of Caterpillar. These engines and turbines are used
in various applications including equipment manufactured by other manufacturers,
marine (including both commercial and pleasure craft), in the generation of
electric power, and in the production of petroleum and natural gas. Machinery
financed by CFSC is manufactured primarily by Caterpillar, except for lift
trucks, which are manufactured primarily by Mitsubishi Caterpillar Forklift
America Inc., an affiliate of Caterpillar. CFSC finances both new and used
equipment, with used equipment financings generally having shorter terms and
higher interest rates and requiring higher down payments.
ORIGINATION PROCESS. CFSC provides Dealers with printed retail forms of
installment sales contracts and leases which generally are used by the Dealers
to arrange transactions and originate receivables. In addition to receivables it
originates directly, CFSC acquires individual receivables from Dealers which
generally meet the following criteria: (i) are current in payment, (ii) have no
payment thereon that has been past due more than 60 days since such receivable
was originated, (iii) have not been extended for more than one month in the last
six months or for more than two months in the last twelve months, and (iv) have
a remaining financed value of at least $10,000 and a remaining term to maturity
of at least 12 months. Acquisitions of finance leases from Dealers take place in
conjunction with CFSC's acquisition of the related financed equipment. A credit
application containing basic obligor information is required for each receivable
financed by CFSC, which application may be submitted verbally to CFSC by the
Dealer or in writing completed by the Dealer, obligor or applicable CFSC
territory manager. The application is processed by one of CFSC's regional
offices in the United States, and additional information is obtained in order to
evaluate the prospective obligor's creditworthiness. The extent of the
additional information required varies based on the amount of financing
requested and the extent of information available. In most cases, CFSC obtains a
credit bureau report on the obligor from an independent credit bureau and credit
references provided by the obligor. The credit references provided by the
obligor, which are typically banks, finance companies or suppliers that have
furnished credit to such obligor, are checked. Whenever possible, audited or
certified financial statements of the obligor are obtained when the aggregate
amount of such obligor's financed contracts exceed $100,000. Individual finance
leases for lift trucks generally do not exceed $100,000 in aggregate Lease
Scheduled Payments (as defined below). CFSC also maintains payment histories on
many past and present CFSC customers which, if available, are reviewed before
any financing is approved.
Creditworthiness of an obligor is evaluated based on criteria established by
CFSC's management. The same credit criteria are applied regardless of which of
CFSC's regional offices reviews the application and regardless of whether CFSC
originates the receivable directly or acquires the receivable from a Dealer
after origination. In the event that the aggregate amount of receivables of any
obligor financed by CFSC exceeds the approval limits of the regional office
staff, a credit narrative is forwarded to CFSC headquarters for review and
concurrence. In assessing the credit quality of a potential receivable, where
the obligor's equity position in the related financed equipment is not
significant, CFSC's credit decision relies more on its evaluation of the
creditworthiness of the prospective obligor, rather than the collateral value of
the financed equipment. Finance leases generally do not require trade-ins or
down payments, and thus may not have significant equity positions in the related
financed equipment. Installment sales contracts also may be originated without
trade-ins or with low or no down payments.
DEALER AGREEMENTS. In the case of receivables not originated directly by
CFSC, at the time CFSC approves an application for credit and fully executed
copies of all required agreements and instruments are delivered by the Dealer to
CFSC, the related receivable is sold by the Dealer to CFSC pursuant to an
assignment agreement between CFSC and such Dealer (a "DEALER AGREEMENT"). With
respect to any Trust, the Seller will assign to such Trust all of its rights
under the Dealer Agreements for the related receivables (including its right to
recourse against the Dealers, if any, for losses due to defaults or prepayments
or for unearned prepaid finance charges). The level of recourse to Dealers
varies and may be subject to certain
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conditions. In order to compensate the related Dealer for negotiating a
favorable interest rate on a receivable, the amount paid by CFSC to a Dealer for
a receivable may sometimes be greater than such receivable's stated principal
balance. Neither the Seller nor the Servicer makes any representation as to the
financial condition of any of the Dealers, and there can be no assurances as to
the ability of any Dealer to perform its obligations under any Dealer Agreement.
See "Certain Legal Aspects of the Receivables-- Dealer Recourse Receivables" in
the related Prospectus Supplement.
INSTALLMENT SALES CONTRACTS--CONTRACT TERMS. CFSC offers installment sales
contracts with a variety of repayment schedules tailored to the obligor's
anticipated cash flows, such as annual, semi-annual, quarterly and monthly
payments. However, a "skip payments" schedule, under which payments, generally
up to three predetermined consecutive months, are "skipped" to coincide with an
obligor's cash flow patterns, can be selected by a qualifying obligor at the
time the installment sales contract is originated. CFSC will take into account
the related obligor's equity position in its financed equipment at origination
before approving a "skip payments" schedule.
The maximum amount that CFSC will finance under an installment sales
contract varies based on the obligor's credit history, the type of equipment
financed, whether the equipment is new or used, the payment schedule and the
length of the contract (which generally ranges at origination from 12 to 72
months). The amount financed is calculated as a percentage of the value of the
related financed equipment, which percentage ranges generally from 75% to 90%
for new equipment and from 65% to 80% for used equipment. These percentages,
however, may vary, depending on the obligor's credit history and the type of
financed equipment. The value of new equipment is based on its original list
price, and the value of used equipment is generally based on its "as is" value
as derived from appropriate market references. At origination or acquisition
from a Dealer of a receivable, CFSC confirms the applicable loan-to-value ratio.
Obligors are required to obtain and maintain physical damage insurance
covering the financed equipment under installment sales contracts naming CFSC as
loss payee. The regional offices are responsible for verifying insurance
coverage on the equipment at the time the receivable is originated or acquired.
Subsequent follow-up on insurance coverage during the term of financing is
provided by an independent supplier of this service. Also, at the time the
receivable is originated, physical damage insurance and term life insurance that
can be financed under the contract may be made available.
The installment sales contracts provide for allocation of payments according
to the actuarial method and commence accruing interest on their origination
date. As such, an installment sales contract provides for amortization of the
amount financed over a series of fixed level payment installments. Each
installment, other than the installment representing the final scheduled payment
on such an installment sales contract, consists of an amount of interest equal
to one-twelfth of the annual percentage rate stated on an installment sales
contract (or a larger fraction based on the number of months since the last
payment if a "skip payments" schedule is in place) multiplied by the unpaid
principal balance of such an installment sales contract, and an amount of
principal equal to the remainder of the installment. The obligor pays a fixed
monthly installment until the final scheduled payment date of such an
installment sales contract, at which time the amount of the final installment is
increased or decreased as necessary to repay the then outstanding principal
balance thereof plus accrued interest thereon.
If such an installment sales contract is prepaid in part, unless CFSC and
the related obligor agree to an amendment of the payment schedule, prepayments
are held for application to the next succeeding scheduled payment or payments,
and the unpaid principal balance (and the interest accrued thereon) is not
adjusted downward until the actual date of the scheduled payment. If an
installment sales contract is prepaid in full, the obligor receives a rebate of
any unearned portion of interest thereon computed on an actuarial basis.
LEASES--CONTRACT TERMS. CFSC offers finance leases with a variety of
payment schedules designed to meet an obligor's needs. The initial term of a
finance lease generally ranges from one to six years. Generally, each finance
lease provides for the monthly payment of rent in advance. Such periodic
payments are referred to herein as "LEASE SCHEDULED PAYMENTS." Lease Scheduled
Payments represent the amortization, generally on a level basis, of the total
amount that a lessee is required to pay throughout the term of a finance lease.
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Lease Scheduled Payments are separated by CFSC for its internal records into
interest and principal components based on the Implicit Interest Rate for such
finance leases. The "IMPLICIT INTEREST RATE" for each finance lease is
determined by CFSC.
Finance leases are recorded by CFSC under generally accepted accounting
principles ("GAAP") as direct financing leases. As direct financing leases, the
finance leases to be included as Receivables in the Trusts are "net leases" and
the related Obligor assumes responsibility for the financed items, including
delivery, installation, operation, maintenance and return of the related
financed equipment. Except for the accommodation billing program described
below, no finance lease imposes any affirmative obligation on CFSC, and such
finance leases are non-cancelable by the lessees. The related Obligor further
agrees to indemnify CFSC for any liabilities arising out of the finance lease.
CFSC is also authorized to perform the related Obligor's obligations under each
finance lease, at the related Obligor's expense, if it so elects in cases where
the related Obligor has failed to perform. In addition, finance leases contain
clauses unconditionally obligating the related Obligor to make periodic
payments, without any right of setoff, at the times and on the dates specified
in the finance lease. Other than a warranty of quiet enjoyment, CFSC makes no
express or implied warranties with respect to the Financed Equipment.
Obligors under any finance lease are required to obtain and maintain
physical damage insurance and comprehensive public liability insurance covering
the financed equipment in the name of CFSC for not less than $500,000 combined
coverage. All such insurance must be in a form and with companies as CFSC shall
approve and shall be primary, without right of contribution from any other
insurance carried by CFSC. The regional offices are responsible for verifying
insurance coverage on the equipment at the time the receivable is originated or
acquired. Subsequent follow-up on insurance coverage during the term of
financing is provided by an independent supplier of this service. Also, at the
time the receivable is originated, physical damage insurance and term life
insurance that can be financed under the receivable may be made available.
Under an accommodation billing system, obligors may aggregate with their
Lease Scheduled Payment the periodic payment for a maintenance contract, which
maintenance would be performed by a Dealer or other service provider and not by
CFSC. Upon receipt of funds by CFSC, CFSC would then forward the appropriate
amount to the service provider; provided, that CFSC will not forward any such
amount until it has received the Lease Scheduled Payment in full. As described
above, failure to perform by a Dealer or any such service provider is not a
defense to payment by such obligor under the related finance lease.
If CFSC receives a payment or payments in advance for a finance lease, such
advance payments are held for application to the next succeeding payment or
payments, and no adjustment in the Lease Scheduled Payments outstanding takes
place until the due date of each such payment. Although finance leases are not
prepayable by their terms, CFSC will generally agree to terminate a finance
lease upon payment by the related obligor of the aggregate Lease Scheduled
Payments outstanding thereunder.
The Leases included as Receivables of any Trust will constitute only leases
intended for security as defined in Section 1-201(37) of the UCC. As leases
intended for security, the Dealer or CFSC, as applicable, in effect finances the
"purchase" of the Financed Equipment by the related Obligor and retains a
security interest in the Financed Equipment. The related Obligor retains the
Financed Equipment for substantially all its economic life and CFSC retains no
significant residual interest. These leases are considered conditional
sales-type leases for federal tax purposes, and, accordingly, CFSC does not take
any federal tax benefits. End of lease options for such finance leases generally
provide for purchase of the Financed Equipment at a prestated price intended to
be significantly below market value.
Obligors under any finance lease may alter or modify the Financed Equipment
relating to CFSC's finance lease only if such alteration or modification does
not impair its originally intended function or use or reduce its value. In
addition, the related Obligor shall not make any "non-reversible" addition (as
defined for federal income tax purposes) to an item of Financed Equipment
without the prior written consent of CFSC. Upon the prior written consent of
CFSC, the related Obligor may sublease or relocate the Financed Equipment. The
right to receive such notice and to grant or deny such consent will be exercised
by the
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Servicer pursuant to the authority delegated to it in the related Sale and
Servicing Agreement. Finance leases generally do not permit the related obligor
to assign its rights in the finance lease without the prior written consent of
CFSC.
CROSS-COLLATERALIZATION. In the course of its business of financing
machinery, receivables are occasionally "cross-collateralized," with CFSC taking
first, second or more junior liens on units in addition to the principal
financed equipment, and obligors of receivables granting first, second or more
junior liens to CFSC on previously financed equipment to finance purchases of
additional machinery. See "Certain Legal Aspects of the
Receivables--Cross-Collateralization" in the related Prospectus Supplement. CFSC
takes the value of these liens into account when calculating the amount it will
finance under a receivable.
EXTENSION/REVISION PROCEDURES. Receivables may be extended or modified when
payment delinquencies result from temporary interruptions in an obligor's cash
flow. An extension provides for one or more payments to be moved to a future
date either within the original maturity or lease term of the receivable or
beyond the original maturity or lease term. A modification is a restructuring of
the entire receivable normally with lower payments and a longer term. A
receivable modification with respect to an installment sales contract can also
involve institution of a "skip payments" schedule if CFSC determines that "skip
payments" are appropriate given the obligor's yearly cash flow pattern. CFSC
charges the obligor a nominal extension fee, which is payable at the time a
receivable is extended. In addition, the obligor is required to pay to CFSC an
extension charge equal to interest accrued on the unpaid balance of the
receivable during the period that payments are not required to be made as a
result of the extension. The length of an extension generally does not exceed
six months. In determining whether a receivable should be extended or modified,
CFSC will consider (i) the obligor's equity in the financed equipment, (ii) the
obligor's financial status and prospects and (iii) the reason for the obligor's
deferral. CFSC, as Servicer, to the extent specified in the related Prospectus
Supplement, is not permitted to make certain revisions to a Receivable assigned
to a Trust, and if CFSC, as servicer, extends, modifies or revises a receivable
it may be required to repurchase the related Receivable from the related Trust.
In addition, CFSC in the ordinary course of business may refinance a receivable
for an obligor. The proceeds of such refinancing would be used to prepay such
existing receivable in full. Any such new receivable resulting from a
refinancing would not be the property of a Trust. See "Description of the
Transfer and Servicing Agreements--Servicing Procedures" herein.
While the terms and conditions of the finance leases do not permit
cancellation by the related Obligor, it is not uncommon for finance leases to be
modified or terminated before the end of the lease term. Modifications generally
involve repricing a finance lease or modification of the lease term.
Modifications to a finance lease term and early lease terminations often are
permitted by CFSC because they are generally associated with additional
financing opportunities from the same Obligor. Unless otherwise specified in the
related Prospectus Supplement, CFSC expects, as Servicer, to continue to allow
these modifications and terminations with respect to the Leases included in the
Trusts pursuant to the authority delegated to it in the related Sale and
Servicing Agreement, subject to certain conditions and covenants of the Servicer
described under "Description of the Transfer and Servicing Agreements--Servicing
Procedures" herein.
BILLING AND COLLECTION PROCEDURES. Payments received more than 10 days
after their due date may be assessed a late fee where permitted by law. A
monthly payment is deemed to be "31-60" days past due if it is not collected by
the last day of the succeeding month (I.E., a payment due any time in January is
not considered "31-60" days past due unless it remains uncollected as of
February 28). 60, 90 and 120 day accounts are similarly defined. Receivables
over 14 days delinquent are considered "delinquent," and collection activity
commences at such time.
REPOSSESSION/WRITEOFF PROCEDURES. The applicable regional offices make the
determination as to whether to repossess the financed equipment related to a
delinquent receivable. After such determination is made, the obligor and any
guarantor are sent "default letters."
Within 20 days of repossession, the regional office submits an appraisal and
inspection report of the related financed equipment to CFSC's headquarters. It
is at that time that the related receivable is written down to its appraised
value, and if necessary, a write-off or loss is taken. Financed equipment put up
for sale is advertised or sold through a variety of means.
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DELINQUENCIES, REPOSSESSIONS AND NET LOSSES. Certain information concerning
the experience of CFSC pertaining to delinquencies, repossessions and net losses
with respect to its entire United States portfolio of installment sales
contracts and/or its entire United States portfolio of finance leases, as
applicable, serviced by CFSC (including receivables previously sold which CFSC
continues to service) (respectively, the "U.S. ISC PORTFOLIO" and the "U.S.
LEASE PORTFOLIO," and collectively, the "U.S. PORTFOLIO") will be set forth in
each Prospectus Supplement. There can be no assurance that the delinquency,
repossession and net loss experience on any Receivables will be comparable to
prior experience or to such information.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Securities of any Series will generally be
influenced by the rate at which the principal balances of the related
Receivables are paid, which payment may be in the form of scheduled amortization
or prepayments. (For this purpose, the term "prepayments" includes prepayments
in full, partial prepayments (including those related to rebates of insurance
premiums), liquidations due to default, and receipts of proceeds from physical
damage and term life insurance policies and the repurchase of Receivables by the
Seller or the Servicer pursuant to the Seller's option to purchase the
Receivables or for other administrative reasons set forth herein). Installment
Sales Contracts are prepayable at any time without penalty by their terms.
Although Leases are generally not optionally prepayable by their terms, Obligors
generally are permitted to prepay a Lease upon payment of the aggregate
remaining Lease Scheduled Payments due (which amount would include an implicit
interest amount). Each prepayment will shorten the weighted average remaining
term of the Receivables and the weighted average life of the related Securities.
If the related Prospectus Supplement provides for the distribution to
Noteholders and/or Certificateholders of amounts on account of principal in
excess of the Principal Distribution Amount on any Distribution Date, this
effect would be greater upon the prepayment of a Lease, since the amount prepaid
would be greater than the related Principal Balance. The related Prospectus
Supplement will set forth the allocation of prepayments among the various
Classes of Securities of the related Series. See "Description of the Transfer
and Servicing Agreements--Distributions" in the related Prospectus Supplement.
The rate of prepayments on the Receivables is influenced by a variety of
economic, financial, climatic and other factors. However, CFSC does not maintain
historical prepayment data with respect to its portfolio of retail installment
sales contracts and finance leases. In addition, under certain circumstances,
the Seller will be obligated to repurchase Receivables from a Trust pursuant to
the related Sale and Servicing Agreement, as a result of breaches of
representations and warranties, and under the certain circumstances specified in
the related Prospectus Supplement, the Servicer will be obligated to purchase
Receivables from a Trust pursuant to the related Sale and Servicing Agreement as
a result of breaches of certain covenants. See "Description of the Transfer and
Servicing Agreements--Termination" herein regarding the Servicer's option to
purchase the Receivables from a Trust. Consistent with its normal servicing
procedures, the Servicer may, in its discretion and on a case-by-case basis,
arrange with the Obligor respecting a Receivable to extend or modify the related
payment schedule to the extent specified in the related Prospectus Supplement.
Although each Sale and Servicing Agreement will restrict the ability of the
Servicer to otherwise modify a Receivable as described herein and in the related
Prospectus Supplement, the Servicer will be permitted to refinance an existing
Receivable for an Obligor, so long as the proceeds of such refinanced receivable
would be used to repay such existing Receivable in full and any such refinanced
receivable is evidenced by a new Lease or Installment Sales Contract. Any such
new receivable resulting from a refinancing would not be property of the related
Trust. Any such extensions or modifications may lengthen the weighted average
remaining term of the Receivables and the weighted average life of the related
Securities. See "The Receivables Pools--The Retail Equipment Financing
Business--EXTENSION/REVISION PROCEDURES" and "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables" and "--Servicing
Procedures" herein.
In light of the above considerations, there can be no assurance as to the
amount of principal payments to be made on the Securities on a given Series on
each Distribution Date, since such amount will depend, in part, on the amount of
principal collected on the related Receivables during the applicable Collection
Period. Any reinvestment risks resulting from a faster or slower incidence of
prepayment of Receivables will be borne entirely by the Securityholders of a
given Series, as set forth in the related Prospectus Supplement.
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Such reinvestment risks may include the risk that interest rates are lower at
the time such holders receive payments from the related Trust than interest
rates would otherwise have been had such prepayments not been made or had such
prepayments been made at a different time.
The related Prospectus Supplement may set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to the particular Receivables and any Class of Securities of the
related Series.
POOL FACTORS AND TRADING INFORMATION
Unless otherwise provided in the related Prospectus Supplement with respect
to each Series, the Noteholders of record will receive reports on or about each
Distribution Date concerning the Receivables, the "POOL BALANCE" (as such term
is defined in the related Prospectus Supplement), each Note Pool Factor and
various other items of information, and the Certificateholders of record will
receive reports on or about each Distribution Date concerning the Receivables,
the Pool Balance, each Certificate Pool Factor and various other items of
information. In addition, Securityholders of record during any calendar year
will be furnished information for tax reporting purposes not later than the
latest date permitted by law. See "Issuance of the Securities--Reports to
Securityholders" herein.
With respect to each Series of Securities, the related Prospectus Supplement
will set forth the calculation of each "NOTE POOL FACTOR" and each "CERTIFICATE
POOL FACTOR", as applicable, with respect to each Class of related Securities.
USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement, the net
proceeds from the sale of the Securities of a given Series will be applied by
the related Trust (i) to the purchase of the Receivables from the Seller, (ii)
to make the initial deposit into the Reserve Account, if any, and (iii) to make
the deposit of the Pre-Funded Amount into the Pre-Funding Account, if any. The
amount that may be initially deposited into a Pre-Funding Account, and the
length of a Pre-Funding Period, are limited as described herein. Unless
otherwise specified in the related Prospectus Supplement, the Seller will use
that portion of such net proceeds paid to it with respect to any such Trust to
purchase the related Receivables from CFSC.
THE SELLER, CATERPILLAR AND THE SERVICER
CATERPILLAR FINANCIAL FUNDING CORPORATION
The Seller is a wholly-owned subsidiary of CFSC. The Seller was incorporated
in the State of Nevada on July 20, 1995. The Seller is organized for the limited
purpose of purchasing wholesale and retail receivables from CFSC, transferring
such receivables to third parties and any activities incidental to and necessary
or convenient for the accomplishment of the foregoing purposes. The principal
executive offices of the Seller are located at Greenview Plaza, 2950 East
Flamingo Road, Suite C-3B, Las Vegas, Nevada 89121 and its telephone number is
(702) 735-2514.
The Seller has taken and will take steps in structuring the transactions
contemplated hereby that are intended to ensure that a voluntary or involuntary
petition for relief by or against CFSC under any Insolvency Law will not result
in the substantive consolidation of the assets and liabilities of the Seller
with those of CFSC. These steps include the creation of the Seller as a
separate, limited-purpose entity pursuant to Articles of Incorporation
containing (i) certain limitations (including restrictions on the nature of the
Seller's business and a restriction on the Seller's ability to commence a
voluntary case or proceeding under any Insolvency Law without the prior
unanimous affirmative vote of all of its directors) and (ii) a requirement that
at least one of the Seller's directors be independent of CFSC and its
affiliates. However, there can be no assurance that the activities of the Seller
would not result in a court's concluding that the assets and liabilities of the
Seller should be substantively consolidated with those of CFSC in a proceeding
under any Insolvency Law. See "Risk Factors--Substantive Consolidation of CFSC
and the Seller" herein.
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In addition, the Owner Trustee, the Indenture Trustee, all Noteholders and
all Certificateholders of each Series will covenant that they will not at any
time institute against the Seller any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
CFSC will warrant to the Seller in each Purchase Agreement that the sale of
the related Receivables by it to the Seller is an absolute sale of such
Receivables to the Seller. In addition, CFSC and the Seller will treat the
transactions described herein and in the related Prospectus Supplement as a sale
of the related Receivables to the Seller, and the Seller will take all actions
that are required to perfect and maintain perfection of the Seller's ownership
interest in the Receivables by the Seller's taking possession of the related
Receivables Files through a custodian (unless the related Prospectus Supplement
provides that such interests will be perfected by filing UCC financing
statements). Notwithstanding the foregoing, if CFSC were to become a debtor in a
bankruptcy case, and a creditor or trustee-in-bankruptcy of CFSC or CFSC itself
were to take the position that the sale of Receivables to the Seller should be
recharacterized as a pledge of such Receivables to secure a borrowing of CFSC,
then delays in payments of collections of Receivables to the Seller could occur
or, should the court rule in favor of such trustee, debtor or creditor,
reductions in the amount of such payments or a reduction in the amount of
Receivables securing such a borrowing, could result. If the transactions
contemplated herein and in the related Prospectus Supplement are treated as a
sale, the related Receivables would not be part of CFSC's bankruptcy estate and
would not be available to CFSC's creditors. See "Risk Factors--True Sale Risks"
herein.
CATERPILLAR INC.
Caterpillar, together with its consolidated subsidiary companies, operates
in three principal business segments: (a) Machinery--design, manufacture, and
marketing of earthmoving, construction, and materials handling machinery, (b)
Engines--design, manufacture, and marketing of engines, and (c) Financial
Products--providing through CFSC financing alternatives for Caterpillar and
non-competitive related equipment sold through Caterpillar dealers, extending
loans to Caterpillar customers and dealers, and providing various forms of
insurance for Caterpillar dealers, suppliers and end-users. The principal
executive office of Caterpillar is located at 100 NE Adams Street, Peoria,
Illinois 61629. As used herein, the term "CATERPILLAR" means Caterpillar Inc.
and its consolidated subsidiary companies, unless the context otherwise
requires.
Caterpillar is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports and other information with the
Commission. For further information regarding Caterpillar, reference is made to
such reports and other information which are available as described under
"Available Information" herein. Certain current information regarding
Caterpillar will be set forth in the related Prospectus Supplement.
CATERPILLAR FINANCIAL SERVICES CORPORATION
CFSC is a wholly-owned finance subsidiary of Caterpillar. CFSC and its
wholly-owned subsidiaries are principally engaged in the business of financing
sales and leases of Caterpillar products and non-competitive related equipment
through Caterpillar Dealers and are also engaged in extending loans to
Caterpillar customers and Dealers.
CFSC's business is largely dependent upon the ability of Caterpillar Dealers
to generate sales and leasing activity, the willingness of the customers and the
Dealers to enter into financing transactions with CFSC, and the availability of
funds to CFSC to finance such transactions.
CFSC currently offers the following types of retail financing plans: (1)
installment sales contracts; (2) non-tax (financing) leases; (3) tax-oriented
leases; (4) customer loans; (5) dealer loans; and (6) governmental
lease-purchase contracts. CFSC also currently offers wholesale financing to
Caterpillar Dealers for their inventory and rental fleets.
CFSC is a Delaware corporation which was incorporated in 1981 and is the
successor to a company formed in 1954. CFSC has wholly-owned finance
subsidiaries in Canada, Australia, Germany, France, the
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United Kingdom, Spain, Sweden, Ireland, Mexico, Chile, Singapore and Poland.
Unless the context otherwise requires, the term "CFSC" includes its predecessor
and subsidiary companies (other than the Seller). The principal executive office
of CFSC is located at 3322 West End Avenue, Nashville, Tennessee 37203-1071, and
its telephone number is (615) 386-5800.
Certain current information regarding CFSC will be set forth in the related
Prospectus Supplement.
DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust, one or more Classes of Notes of a given Series
will be issued pursuant to the terms of an indenture between the related Trust
and the related indenture trustee (the "INDENTURE TRUSTEE"), which Indenture
will be substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following summary, as well
as other pertinent information included elsewhere in this Prospectus and in the
related Prospectus Supplement, describes the material terms generally applicable
to the Notes, but does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the provisions of the Notes and the
Indenture.
Unless otherwise specified in the related Prospectus Supplement, each Class
of Notes will initially be represented by one or more Notes registered in the
name of the nominee of DTC (together with any successor depository selected by
the related Trust, the "DEPOSITORY") except as set forth below. Unless otherwise
specified in the related Prospectus Supplement, the Notes will be available for
purchase in denominations of $1,000 and integral multiples thereof and will be
available in book-entry form only. See "Issuance of the Securities--Definitive
Securities" and "--Book-Entry Registration" herein.
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payments, seniority, allocations of losses,
Interest Rate and amount of or method of determining payments of principal and
interest on each Class of Notes of a given Series will be as described in the
related Prospectus Supplement. The rights of Noteholders to receive payments of
principal and interest may be senior or subordinate to the rights of Noteholders
of another Class or Series, as described in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, payments of
interest on the Notes of such Series will be made prior to payments of principal
thereon. To the extent provided in the related Prospectus Supplement, a Series
may include one or more Classes of Strip Notes entitled to (i) principal
payments with disproportionate, nominal or no interest payments or (ii) interest
payments with disproportionate, nominal or no principal payments. Each Class of
Notes may have a different Interest Rate, which may be a fixed, variable or
adjustable Interest Rate (and which may be zero for certain Classes of Strip
Notes), or any combination of the foregoing. The related Prospectus Supplement
will specify the Interest Rate for each Class of Notes of a given Series or the
method for determining such Interest Rate. See also "Certain Information
Regarding the Securities--Fixed Rate Securities" and "--Floating Rate
Securities." One or more Classes of Notes of a Series may be prepayable in whole
or in part under the circumstances specified in the related Prospectus
Supplement, including at the end of the Funding Period (if any) or as a result
of the Servicer's exercising its option to purchase the Receivables of the
related Trust in the manner and on the respective terms and conditions described
under "Description of the Transfer and Servicing Agreements--Termination"
herein.
To the extent specified in any Prospectus Supplement, one or more Classes of
Notes of a given Series may have fixed principal payment schedules. Noteholders
of such Notes would be entitled to receive as payments of principal on any given
Distribution Date the applicable amounts set forth on such schedule with respect
to such Notes, in the manner and to the extent set forth in the related
Prospectus Supplement.
Under certain circumstances, the amount available for payments to
Noteholders in respect of interest could be less than the amount of interest
payable on the Notes on any of the dates specified for payments on Notes and
Certificates in the related Prospectus Supplement (each, a "DISTRIBUTION DATE"),
in which case, unless otherwise provided in the related Prospectus Supplement,
each Class of Noteholders will receive its
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ratable share (based upon the aggregate amount of interest due to such Class of
Noteholders) of the aggregate amount available to be distributed in respect of
interest on the Notes of such Series. See "Description of the Transfer and
Servicing Agreements--Distributions" in the related Prospectus Supplement.
In the case of a Series of Notes which includes two or more Classes of
Notes, the sequential order and priority of payment in respect of principal and
interest, and any schedule or formula or other provisions applicable to the
determination thereof, of each such Class will be set forth in the related
Prospectus Supplement. Payments in respect of principal and interest of any
Class of Notes will be made on a pro rata basis among all the Noteholders of
such Class.
If the Servicer exercises its option to purchase the Receivables of a Trust
in the manner and on the respective terms and conditions described under
"Description of the Transfer and Servicing Agreements-- Termination" herein, the
related outstanding Notes will be prepaid as set forth in the related Prospectus
Supplement. In addition, if the related Prospectus Supplement provides that the
property of a Trust will include a Pre-Funding Account, the related outstanding
Notes may be subject to partial prepayment on or immediately following the end
of the related Funding Period in an amount and manner specified in the related
Prospectus Supplement. In the event of such partial prepayment, the Noteholders
of the related Series may be entitled to receive a prepayment premium from the
related Trust, in the amount and to the extent provided in the related
Prospectus Supplement. See "Weighted Average Life of the Securities" herein.
THE INDENTURE
MODIFICATION OF INDENTURE. With respect to each Trust, with the consent of
the holders of a majority of the outstanding principal amount of the Notes of
the related Series, the related Indenture Trustee and the related Trust may
execute a supplemental indenture to add provisions to, or change in any manner
or eliminate any provisions of, the Indenture with respect to the Notes, or to
modify (except as provided below) in any manner the rights of the Noteholders.
Notwithstanding the foregoing, unless otherwise specified in the related
Prospectus Supplement, without the consent of the holder of each outstanding
Note of the related Series affected thereby, no supplemental indenture shall (i)
change the due date of any installment of principal of or interest on any Note
of such Series or reduce the principal amount thereof, the interest rate
specified thereon or the prepayment price with respect thereto or change any
place of payment where, or the coin or currency in which, any Note or any
interest thereon is payable, (ii) impair the right to institute suit for the
enforcement of certain provisions of the related Indenture regarding payment,
(iii) reduce the percentage of the aggregate amount of the outstanding Notes of
such Series 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 the related Indenture or of
certain defaults thereunder and their consequences as provided for in such
Indenture, (iv) modify or alter the provisions of the related Indenture
regarding the voting of Notes held by the related Trust, the Seller, an
affiliate of either of them or any obligor on such Notes, (v) reduce the
percentage of the aggregate outstanding amount of the Notes of such Series the
consent of the holders of which is required to direct the related Indenture
Trustee to sell or liquidate the related Receivables if the proceeds of such
sale would be insufficient to pay the principal amount and accrued but unpaid
interest on the outstanding Notes of such Series, (vi) decrease the percentage
of the aggregate principal amount of such Notes required to amend the sections
of the related Indenture which specify the applicable percentage of the
aggregate principal amount of the Notes of such Series necessary to amend the
related Indenture or certain of the other Transfer and Servicing Agreements or
(vii) permit the creation of any lien ranking prior to or on a parity with the
lien of the related Indenture with respect to any of the collateral for such
Notes or, except as otherwise permitted or contemplated in the Indenture,
terminate the lien of the related Indenture on any such collateral or deprive
the holder of any such Note of the security afforded by the lien of such
Indenture.
Unless otherwise provided in the related Prospectus Supplement, the related
Trust and the related Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of Noteholders of the related Series,
for the purpose of, among other things, adding any provisions to or changing in
any
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manner or eliminating any of the provisions of the related Indenture or of
modifying in any manner the rights of such Noteholders, including curing any
ambiguity or correcting or supplementing any inconsistent provision therein;
PROVIDED, HOWEVER, that such action will not, in the opinion of counsel
satisfactory to the Indenture Trustee, materially and adversely affect the
interest of any such Noteholder.
In addition, unless otherwise provided in the related Prospectus Supplement,
the related Trust and the related Indenture Trustee may enter into supplemental
indentures, without obtaining the consent of the Noteholders of the related
Series, to substitute credit enhancement for any Class of Notes, provided the
Rating Agencies confirm in writing that such substitution will not result in the
reduction or withdrawal of the rating for such Class of Notes or any other Class
of Securities of the related Series.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. With respect to the Notes
of a given Class and Series, unless otherwise specified in the related
Prospectus Supplement, an "EVENT OF DEFAULT" with respect to such Notes will be
defined in the related Indenture as being: (i) a default for five days or more
in the payment of any interest on any such Note; (ii) a default in the payment
of the principal of or any installment of the principal of any such Note when
the same becomes due and payable; (iii) a default in the observance or
performance of any covenant or agreement of the related Trust made in the
related Indenture and the continuation of any such default for a period of 30
days after notice thereof is given to such Trust by the related Indenture
Trustee or to such Trust and such Indenture Trustee by the holders of at least
25% in principal amount of such Notes then outstanding; (iv) any representation
or warranty made by such Trust in the related Indenture or in any certificate
delivered pursuant thereto or in connection therewith having been incorrect in a
material respect as of the time made, and such breach not having been cured
within 30 days after notice thereof is given to such Trust by such Indenture
Trustee or to such Trust and such Indenture Trustee by the holders of at least
25% in principal amount of such Notes then outstanding; or (v) certain events of
bankruptcy, insolvency, receivership or liquidation of the related Trust.
However, the amount of principal required to be distributed to the Noteholders
of such Series under the related Indenture will be generally limited to amounts
available therefor in the related Note Distribution Account absent acceleration
of such Notes, and will be distributed to the Noteholders of each Class in the
manner set forth in the related Prospectus Supplement. Therefore, unless
otherwise specified in the related Prospectus Supplement, the failure to pay
principal on such Notes may not result in the occurrence of an Event of Default
until the applicable Final Scheduled Distribution Date.
If an Event of Default should occur and be continuing with respect to the
Notes of any Series or any Class thereof, the related Indenture Trustee or
holders of a majority in principal amount of such Notes of such Series then
outstanding may declare the principal of the Notes of such Series to be
immediately due and payable. Unless otherwise specified in the related
Prospectus Supplement, such declaration may, under certain circumstances, be
rescinded by the holders of a majority in principal amount of such Notes then
outstanding.
Subject to the conditions specified below, if the Notes of any Series have
been declared to be due and payable following an Event of Default with respect
thereto, the related Indenture Trustee may, in its discretion, to the extent
permitted by applicable law, either sell the related Receivables or elect to
have the related Trust maintain possession of such Receivables and continue to
apply distributions on such Receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related Prospectus Supplement,
the related Indenture Trustee is prohibited from selling the related Receivables
following an Event of Default, other than a default in the payment of any
principal or a default for five days or more in the payment of any interest on
any such Note, unless (i) all the holders of the outstanding Notes of such
Series consent to such sale, (ii) the proceeds of such sale are sufficient to
pay in full the principal of and the accrued interest on the outstanding Notes
of such Series at the date of such sale or (iii) such Indenture Trustee
determines that the proceeds of the related Receivables would not be sufficient
on an ongoing basis to make all payments on such Notes as such payments would
have become due if such obligations had not been declared due and payable, and
such Indenture Trustee obtains the consent of the holders of 66 2/3% of the
aggregate outstanding amount of such Notes.
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Subject to the provisions of the related Indenture relating to the duties of
the related Indenture Trustee, in case an Event of Default shall occur and be
continuing with respect to a Series of Notes, such Indenture Trustee shall be
under no obligation to exercise any of the rights or powers under such Indenture
if requested or directed by any of the holders of such Notes if such Indenture
Trustee reasonably believes it will not be adequately indemnified against the
costs, expenses and liabilities which might be incurred by it in complying with
such request. Subject to such provisions for indemnification and certain
limitations contained in the related Indenture, the holders of a majority (or
66 2/3% if an Event of Default has occurred and is continuing) in principal
amount of the outstanding Notes of a Series will have the right to direct the
time, method and place of conducting any proceeding or any remedy available to
the related Indenture Trustee, and the holders of a majority in principal amount
of such Notes then outstanding may, in certain cases, waive any default with
respect thereto, except a default in the payment of principal or interest or a
default in respect of a covenant or provision of such Indenture that cannot be
modified without the waiver or consent of all of the holders of such outstanding
Notes.
Unless otherwise specified in the related Prospectus Supplement, no
Noteholder of any Series will have the right to institute any proceeding with
respect to the related Indenture, unless (i) such Noteholder previously has
given to the related Indenture Trustee written notice of a continuing Event of
Default, (ii) the holders of not less than 25% in principal amount of the
outstanding Notes of such Series have made written request of such Indenture
Trustee to institute such proceeding in its own name as Indenture Trustee, (iii)
such Noteholder or Noteholders have offered such Indenture Trustee reasonable
indemnity, (iv) such Indenture Trustee has for 60 days failed to institute such
proceeding and (v) no direction inconsistent with such written request has been
given to such Indenture Trustee during such 60-day period by the holders of a
majority in principal amount of the outstanding Notes.
Notwithstanding anything herein to the contrary, if junior Notes of a Series
are issued, the rights of the junior Noteholders of any Class of such Series to
consent to or direct any action may be limited as set forth in the related
Indenture and as described in the related Prospectus Supplement.
In addition, with respect to any Trust, the related Indenture Trustee and
the related Noteholders will covenant that they will not at any time institute
against such Trust any bankruptcy, reorganization or other proceeding under any
federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Owner Trustee in its individual capacity, nor any holder of a
Certificate representing an ownership interest in such Trust, nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
successors or assigns shall, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or interest
on the Notes or for the agreements of such Trust contained in the related
Indenture.
CERTAIN COVENANTS. With respect to any Trust, the related Indenture will
provide that such Trust may not consolidate with or merge into any other entity,
unless (i) the entity formed by or surviving such consolidation or merger is
organized under the laws of the United States, any state thereof or the District
of Columbia, (ii) such entity expressly assumes such Trust's obligation to make
due and punctual payments upon the Notes of the related Series and the
performance or observance of every agreement and covenant of such Trust under
the related Indenture, (iii) no Event of Default shall have occurred and be
continuing immediately after such merger or consolidation, (iv) such Trust has
been advised that the ratings of neither the Notes nor the Certificates of such
Series would be reduced or withdrawn by the applicable Rating Agencies as a
result of such merger or consolidation, (v) such Trust has received an opinion
of counsel to the effect that such consolidation or merger would have no
material adverse tax consequence to such Trust or to any related Noteholder or
Certificateholder, (vi) any action as is necessary to maintain the lien and
security interest created by the related Indenture shall have been taken and
(vii) such Trust has received an opinion of counsel and officer's certificate
each stating that such consolidation or merger satisfies all requirements under
the related Indenture.
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Each Trust will not, among other things, (i) except as expressly permitted
by the related Indenture, the related Transfer and Servicing Agreements or
certain related documents (collectively, the "RELATED DOCUMENTS"), sell,
transfer, exchange or otherwise dispose of any of the assets of such Trust, (ii)
claim any credit on or make any deduction from the principal and interest
payable in respect of the Notes of the related Series (other than amounts
withheld under the Code or applicable state law) or assert any claim against any
present or former holder of Notes because of the payment of taxes levied or
assessed upon such Trust, (iii) except as contemplated by the Related Documents,
dissolve or liquidate in whole or in part or (iv) (y) permit the validity or
effectiveness of the related Indenture to be impaired or permit any person to be
released from any covenants or obligations with respect to such Notes under such
Indenture except as may be expressly permitted thereby or (z) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance to be
created on or extend to or otherwise arise upon or burden the assets of such
Trust or any part thereof, or any interest therein or the proceeds thereof,
except as may be created by the terms of the related Indenture.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "Formation of the
Trust--The Trust." No Trust will incur, assume or guarantee any indebtedness
other than indebtedness incurred pursuant to the related Notes and the related
Indenture or otherwise in accordance with the Related Documents.
If so specified in the related Prospectus Supplement, the related Trust will
not make any payments, distributions or dividends to Certificateholders in
respect of their Certificates for any Collection Period unless the conditions
set forth in such Prospectus Supplement have been satisfied.
Each Trust will or will cause the Servicer to deliver to the related
Indenture Trustee on each Determination Date the Servicer's Certificate as
required by the related Sale and Servicing Agreement.
LIST OF NOTEHOLDERS. Three or more holders of the Notes of any Series (each
of whom has owned a Note for at least six months) may, by written request to the
related Indenture Trustee, obtain access to the list of all Noteholders of such
Series maintained by such Indenture Trustee for the purpose of communicating
with other Noteholders of such Series with respect to their rights under such
Indenture or such Notes. Such Indenture Trustee may elect not to afford the
requesting Noteholders access to the list of such Noteholders if it agrees to
mail the desired communication or proxy, on behalf and at the expense of the
requesting Noteholders, to all Noteholders of record.
ANNUAL COMPLIANCE STATEMENT. The Administrator on behalf of each Trust will
be required to file annually with the related Indenture Trustee a written
statement as to the fulfillment of its obligations under the related Indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT. If required by law, the Indenture
Trustee for each Trust will mail each year to all related Noteholders a brief
report relating to its eligibility and qualification to continue as the
Indenture Trustee under the related Indenture, any amounts advanced by it under
such Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by such Trust to such Indenture Trustee in its individual
capacity, the property and funds physically held by such Indenture Trustee as
such and any action taken by it that materially affects such Notes and that has
not been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE. An Indenture will be discharged
with respect to the Trust Property securing the related Notes upon the delivery
to such Indenture Trustee for cancellation of all such Notes or, with certain
limitations, upon deposit with such Indenture Trustee of funds sufficient for
the payment in full of all of such Notes.
THE INDENTURE TRUSTEE. The Indenture Trustee for a Series of Notes will be
specified in the related Prospectus Supplement. The Indenture Trustee for any
Series may resign at any time, in which event the related Trust will be
obligated to appoint a successor Indenture Trustee for such Series. A Trust may
also remove the related Indenture Trustee if such Indenture Trustee ceases to be
eligible to continue as such under the related Indenture or if such Indenture
Trustee becomes insolvent. In such circumstances, such Trust will be obligated
to appoint a successor Indenture Trustee for the related Series of Notes. If the
related Prospectus
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Supplement provides that a given Class of Notes is junior in priority to one or
more other Classes of Notes, pursuant to the Trust Indenture Act, as amended,
the related Indenture Trustee may be deemed to have a conflict of interest and
be required to resign as trustee for one or more of such Classes if an Event of
Default occurs under the Indenture. In such cases, the related Indenture will
provide for a successor trustee to be appointed for one or more of such Classes
of Notes. In these circumstances, the related Indenture will set forth the
rights of senior Noteholders and junior Noteholders, which may be different, to
consent to or direct actions by the related Indenture Trustee. Any resignation
or removal of an Indenture Trustee and appointment of a successor Indenture
Trustee for any Series of Notes does not become effective until acceptance of
the appointment by the successor Indenture Trustee for such Series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust, one or more Classes of Certificates of a given
Series may be issued pursuant to the terms of a Trust Agreement between the
Seller and the related Owner Trustee, a form of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
following summary, as well as other pertinent information included elsewhere in
this Prospectus and in the related Prospectus Supplement, describes the material
terms of the Certificates and each Trust Agreement, but does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the related Certificates and the related Trust
Agreement.
With respect to any Series of Certificates, the related Prospectus
Supplement will specify whether each Class of Certificates will be represented
by one or more Certificates in fully registered, certificated form or registered
in the name of the Depository (except as set forth below); provided, that any
Certificates purchased by the Seller will be issued in fully registered,
certificated form.
With respect to a Class of Certificates issued in fully registered,
certificated form, such Certificates will be available for purchase in the
minimum and integral denominations specified in the related Prospectus
Supplement. See "Issuance of the Securities--Definitive Securities" and
"--Book-Entry Registration" herein.
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of losses,
Pass-Through Rate and amount of or method of determining distributions with
respect to principal and interest of each Class of Certificates of a given
Series will be described in the related Prospectus Supplement. Distributions of
interest on such Certificates will be made on the Distribution Dates specified
in the related Prospectus Supplement and will be made prior to distributions
with respect to principal of such Certificates. To the extent provided in the
related Prospectus Supplement, a Series may include one or more Classes of Strip
Certificates entitled to (i) distributions in respect of principal with
disproportionate, nominal or no interest distributions or (ii) distributions in
respect of interest with disproportionate, nominal or no principal
distributions. Each Class of Certificates may have a different Pass-Through
Rate, which may be a fixed, variable or adjustable Pass-Through Rate (and which
may be zero for certain Classes of Strip Certificates), or any combination of
the foregoing. The related Prospectus Supplement will specify the Pass-Through
Rate for each Class of Certificates of a given Series or the method for
determining such Pass-Through Rate. See also "Certain Information Regarding the
Securities--Fixed Rate Securities" and "--Floating Rate Securities" herein.
Unless otherwise provided in the related Prospectus Supplement, distributions in
respect of the Certificates of a given Series will be subordinate to payments in
respect of the Notes of such Series as more fully described in the related
Prospectus Supplement. Distributions in respect of interest on and principal of
any Class of Certificates will be made on a pro rata basis among all the
Certificateholders of such Class.
In the case of a Series of Certificates which includes two or more Classes
of Certificates, the timing, sequential order, priority of payment or amount of
distributions in respect of interest and principal, and any schedule or formula
or other provisions applicable to the determination thereof, of each such Class
shall be as set forth in the related Prospectus Supplement.
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If the Servicer exercises its option to purchase the Receivables of a Trust
in the manner and on the respective terms and conditions described under
"Description of the Transfer and Servicing Agreements-- Termination" herein,
related Certificateholders will receive as prepayment an amount in respect of
such Certificates as specified in the related Prospectus Supplement. In
addition, if the related Prospectus Supplement provides that the property of a
Trust will include a Pre-Funding Account, related Certificateholders may receive
a partial prepayment of principal on or immediately following the end of the
Funding Period in an amount and manner specified in the related Prospectus
Supplement. In the event of such partial prepayment, the Certificateholders may
be entitled to receive a prepayment premium from the related Trust, in the
amount and to the extent provided in the related Prospectus Supplement.
LIST OF CERTIFICATEHOLDERS
Three or more Certificateholders of any Series or one or more
Certificateholders evidencing not less than 25% of the Certificate Balance of
such Series may, by written request to the related Owner Trustee, obtain access
to the list of all Certificateholders of such Series for the purpose of
communicating with such Certificateholders with respect to their rights under
the related Trust Agreement or under such Certificates.
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CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each Class of Securities (other than certain Classes of Strip Notes or Strip
Certificates) may bear interest at a fixed rate per annum ("FIXED RATE
SECURITIES") or at a variable or adjustable rate per annum ("FLOATING RATE
SECURITIES"), as more fully described below and in the related Prospectus
Supplement. Each Class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Pass-Through Rate, as the case may be,
specified in the related Prospectus Supplement. Unless otherwise set forth in
the related Prospectus Supplement, interest on each Class of Fixed Rate
Securities will be computed on the basis of a 360-day year of twelve 30-day
months. See "Description of the Notes--Principal and Interest on the Notes" and
"Description of the Certificates--Distributions of Principal and Interest"
herein.
FLOATING RATE SECURITIES
Each Class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (with respect to a Class of Floating Rate
Securities, the "INTEREST RESET PERIOD") at a rate per annum determined by
reference to an interest rate basis (the "BASE RATE"), plus or minus the Spread,
if any, or multiplied by the Spread Multiplier, if any, in each case as
specified in the related Prospectus Supplement. The "SPREAD" is the number of
basis points (one basis point equals one one-hundredth of a percentage point)
that may be specified in the related Prospectus Supplement as being applicable
to such Class, and the "SPREAD MULTIPLIER" is the percentage that may be
specified in the related Prospectus Supplement as being applicable to such
Class.
The related Prospectus Supplement will designate a Base Rate for a given
Floating Rate Security based on LIBOR, commercial paper rates, federal funds
rates, U.S. Government treasury securities rates, negotiable certificates of
deposit rates or another rate as set forth in such Prospectus Supplement.
As specified in the related Prospectus Supplement, Floating Rate Securities
of a given Class may also have either or both of the following (in each case
expressed as a rate per annum): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period and (ii) a minimum
limitation, or floor, on the rate at which interest may accrue during any
interest period. In addition to any maximum interest rate that may be applicable
to any Class of Floating Rate Securities, the interest rate applicable to any
Class of Floating Rate Securities will in no event be higher than the maximum
rate permitted by applicable law, as the same may be modified by United States
law of general application.
Each Trust with respect to which a Class of Floating Rate Securities will be
issued will appoint, and enter into agreements with, a calculation agent (each,
a "CALCULATION AGENT") to calculate interest rates on each such Class of
Floating Rate Securities issued with respect thereto. The related Prospectus
Supplement will set forth the identity of the Calculation Agent for each such
Class of Floating Rate Securities of a given Series, which may be either the
Owner Trustee or Indenture Trustee with respect to such Series. All
determinations of interest by the Calculation Agent shall, in the absence of
manifest error, be conclusive for all purposes and binding on the holders of
Floating Rate Securities of a given Class. Unless otherwise specified in the
related Prospectus Supplement, all percentages resulting from any calculation of
the rate of interest on a Floating Rate Security will be rounded, if necessary,
to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a
percentage point rounded upward.
INDEXED SECURITIES
To the extent so specified in the related Prospectus Supplement, any Class
of Securities of a given Series may consist of Securities ("INDEXED SECURITIES")
in which the principal amount payable at the Final Scheduled Distribution Date
for such Class (the "INDEXED PRINCIPAL AMOUNT") is determined by reference to a
measure (the "INDEX") which will be related to (i) the difference in the rate of
exchange between United States dollars and a currency or composite currency (the
"INDEXED CURRENCY") specified in the related Prospectus Supplement (such Indexed
Securities, the "CURRENCY INDEXED SECURITIES"); (ii) the difference in the price
of a specified commodity (the "INDEXED COMMODITY") on specified dates (such
Indexed Securities, "COMMODITY INDEXED SECURITIES"); (iii) the difference in the
level of a specified stock index (the "STOCK INDEX"), which may be based on U.S.
or foreign stocks on specified dates (such Indexed Securities, "STOCK
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INDEXED SECURITIES"); or (iv) such other objective price or economic measures as
are described in the related Prospectus Supplement. The manner of determining
the Indexed Principal Amount of an Indexed Security and historical and other
information concerning the Indexed Currency, the Indexed Commodity, the Stock
Index or other price or economic measures used in such determination will be set
forth in the related Prospectus Supplement, together with information concerning
tax consequences to the holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed Security
is based on an Index calculated or announced by a third party and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time such Indexed Security was issued and
permitted changes described in the related Prospectus Supplement), then such
Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the related Prospectus Supplement on the
same basis, and subject to the same conditions and controls, as applied to the
original third party. If for any reason such Index cannot be calculated on the
same basis and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of such Indexed Security
shall be calculated in the manner set forth in the related Prospectus
Supplement. Any determination of such independent calculation agent shall, in
the absence of manifest error, be binding on all parties.
Unless otherwise specified in the related Prospectus Supplement, interest on
an Indexed Security will be payable based on the amount designated in the
related Prospectus Supplement as the "FACE AMOUNT" of such Indexed Security. The
related Prospectus Supplement will describe whether the principal amount of the
related Indexed Security, if any, that would be payable upon redemption or
repayment prior to the applicable Final Scheduled Distribution Date will be the
Face Amount of such Indexed Security, the Indexed Principal Amount of such
Indexed Security at the time of redemption or repayment or another amount
described in such Prospectus Supplement.
ISSUANCE OF THE SECURITIES
DEFINITIVE SECURITIES
The Prospectus Supplement related to a given Series will specify whether the
Notes or the Certificates of such Series will be issued in fully registered,
certificated form ("DEFINITIVE NOTES" or "DEFINITIVE CERTIFICATES",
respectively, and collectively referred to herein as "DEFINITIVE SECURITIES") to
the Noteholders or Certificateholders or their respective nominees.
Distributions of principal of and interest on such Definitive Securities
will be made by the Indenture Trustee or Owner Trustee, as applicable (each, a
"TRUSTEE") in accordance with the procedures set forth in the related Indenture
or the related Trust Agreement, as applicable, directly to holders of Definitive
Securities in whose names the Definitive Securities were registered at the close
of business on the applicable "RECORD DATE" (as defined in the related
Prospectus Supplement) specified for such Securities in the related Prospectus
Supplement. Such distributions will be made by check mailed to the address of
such holder as it appears on the register maintained by the applicable Trustee.
The final payment on any such Definitive Security, however, will be made only
upon presentation and surrender of such Definitive Security at the office or
agency specified in the notice of final distribution to the applicable
Securityholders.
Definitive Securities will be transferable and exchangeable at the offices
of the applicable Trustee or of a certificate registrar named in a notice
delivered to holders of Definitive Securities. No service charge will be imposed
for any registration of transfer or exchange, but the applicable Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith.
BOOK-ENTRY REGISTRATION
The Prospectus Supplement related to a given Series will specify whether the
holders of the Notes or Certificates of such Series may hold their respective
Securities through DTC (in the United States) or Cedel
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Bank, societe anonyme ("CEDEL") or Euroclear (as defined below) (in Europe) if
they are participants of such systems, or indirectly through organizations that
are participants in such systems ("BOOK-ENTRY NOTES" or "BOOK-ENTRY
CERTIFICATES," respectively, and collectively referred to herein as "BOOK-ENTRY
SECURITIES").
The Seller has been informed by DTC that DTC's nominee will be Cede, unless
another nominee is specified in the related Prospectus Supplement. Accordingly,
such nominee is expected to be the holder of record of the Securities of any
Series held through DTC. Cede, as nominee for DTC, or such other nominee
specified in the related Prospectus Supplement, will hold the global Securities.
Cedel and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries (collectively the "DEPOSITARIES"), which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC.
DTC is a limited purpose trust company organized under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York UCC and a "clearing agency" registered
pursuant to Section 17A of the Exchange Act. DTC was created to hold securities
for its participants ("PARTICIPANTS") and to facilitate the clearance and
settlement of securities transactions between Participants through electronic
book-entries, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations. Indirect access to the DTC system also is
available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("INDIRECT PARTICIPANTS").
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Participant or Euroclear Participant on such business day. Cash received by
Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
Cedel or Euroclear cash account only as of the business day following settlement
in DTC.
The Securityholders that are not Participants or Indirect Participants but
who desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Notes may do so only through Participants and Indirect
Participants. In addition, Securityholders will receive all distributions of
principal and interest from the applicable Trustee through the Participants who
in turn will receive them from DTC. Under a book-entry format, Securityholders
may experience some delay in their receipt of payments, since such payments will
be forwarded by the applicable Trustee to Cede, as nominee for DTC. DTC will
forward such payments to its Participants, which thereafter will forward them to
Indirect Participants or Securityholders. To the extent the related Prospectus
Supplement provides that Book-Entry Securities will be issued, the only
"NOTEHOLDER" or
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"CERTIFICATEHOLDER," as applicable, will be Cede, as nominee of DTC.
Securityholders will not be recognized by the applicable Trustee as
"NOTEHOLDERS" or "CERTIFICATEHOLDERS," as such term is used in the related
Indenture or Trust Agreement, as applicable, and Securityholders will be
permitted to exercise the rights of Securityholders only indirectly through DTC
and its Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "RULES"), DTC is required to make book-entry transfers of
Securities among Participants on whose behalf it acts with respect to the
Securities and to receive and transmit distributions of principal of, and
interest on, the Securities. Participants and Indirect Participants with which
the Securityholders have accounts with respect to their respective Securities
similarly are required to make book-entry transfers and receive and transmit
such payments on behalf of their respective Securityholders. Accordingly,
although the Securityholders will not possess their respective Securities, the
Rules provide a mechanism by which Participants will receive payments and will
be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
Securities, may be limited due to the lack of a physical certificate for such
Securities.
DTC will advise the Administrator in respect of each Trust that it will take
any action permitted to be taken by a Securityholder under the related Indenture
or Trust Agreement, as applicable, only at the direction of one or more
Participants to whose accounts with DTC such Securities are credited. DTC may
take conflicting actions with respect to other undivided interests to the extent
that such actions are taken on behalf of Participants whose holdings include
such undivided interests.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("CEDEL
PARTICIPANTS") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 36
currencies, including United States dollars. Cedel provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the Underwriters with respect to any Series of
Securities. Indirect access to Cedel is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Participant, either directly or indirectly.
The Euroclear System ("EUROCLEAR" or the "EUROCLEAR SYSTEM") was created in
1968 to hold securities for its participants ("EUROCLEAR PARTICIPANTS") and to
clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby eliminating
the need for physical movement of certificates and the risk from transfers of
securities and cash that are not simultaneous.
The Euroclear System has subsequently been extended to clear and settle
transactions between Euroclear Participants and counterparties both in Cedel and
in many domestic securities markets. Transactions may be settled in any of 34
settlement currencies. In addition to safekeeping (custody) and securities
clearance and settlement, the Euroclear System includes securities lending and
borrowing and money transfer services. The Euroclear System is operated by the
Brussels, Belgium office of Morgan Guaranty Trust Company of New York (the
"EUROCLEAR OPERATOR"), under contract with Euroclear Clearance System S.C., a
Belgian cooperative corporation that establishes policy on behalf of Euroclear
Participants. The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
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All operations are conducted by the Euroclear Operator and all Euroclear
securities clearance accounts and cash accounts are accounts with the Euroclear
Operator. They are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System, and
applicable Belgian law (collectively, the "TERMS AND CONDITIONS"). The Terms and
Conditions govern all transfers of securities and cash, both within the
Euroclear System and receipts and withdrawals of securities and cash. All
securities in the Euroclear System are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
Euroclear Participants include banks (including central banks), securities
brokers and dealers and other professional financial intermediaries and may
include any of the Underwriters of any Series of Securities. Indirect access to
the Euroclear System is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant, either directly
or indirectly. The Euroclear Operator acts under the Terms and Conditions only
on behalf of Euroclear Participants, and has no record of or relationship with
persons holding through Euroclear Participants.
Unless and until Definitive Securities are issued under the limited
circumstances described herein or in the related Prospectus Supplement, no
Securityholder will be entitled to receive a physical certificate representing a
Book-Entry Security. All references herein and in the related Prospectus
Supplement to actions by Securityholders shall refer to actions taken by DTC
upon instructions from its Participants, and all references herein and in the
related Prospectus Supplement to distributions, notices, reports and statements
to Securityholders shall refer to distributions, notices, reports and statements
to DTC or its nominee as the registered holder of the Book-Entry Securities, as
the case may be, for distribution to Book-Entry Securityholders in accordance
with DTC's procedures with respect thereto.
If (i) (A) the Administrator advises the applicable Trustee in writing that
DTC is no longer willing or able to discharge properly its responsibilities as
depository with respect to such Securities and (B) the Administrator is unable
to locate a qualified successor, (ii) the Administrator, at its option, elects
to terminate the book-entry system through DTC or (iii) after the occurrence of
an Event of Default or a Servicer Default, Securityholders representing at least
a majority of the outstanding principal amount of the Notes or the Certificates,
as the case may be, of such Series advise the applicable Trustee through DTC in
writing that the continuation of a book-entry system through DTC (or a successor
thereto) is no longer in the best interest of such Securityholders of such
Series, then any Securities held in book-entry form will be issued as Definitive
Securities to the applicable Securityholders or their respective nominees.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee will be required to notify all applicable
Securityholders through Participants of the availability of Definitive
Securities. Upon surrender by DTC of the definitive certificates representing
the corresponding Securities and receipt of instructions for re-registration,
the applicable Trustee will reissue such Securities as Definitive Securities to
such Securityholders.
Except as required by law, neither the Administrator nor the applicable
Trustee with respect to any Trust will have any liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Securities held by Cede, as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary, as well as other pertinent information included
elsewhere in this Prospectus and the related Prospectus Supplement, describes
the material terms with respect to each Series of Securities relating to each of
(i) the Sale and Servicing Agreement pursuant to which a Trust will purchase
Receivables from the Seller and the Servicer will undertake to service such
Receivables, (ii) the Purchase Agreement pursuant to which the Seller will
purchase such Receivables from CFSC, (iii) the Administration Agreement pursuant
to which CFSC will undertake certain administrative duties with respect to such
Trust, (iv) the Trust Agreement pursuant to which such Trust will be created and
the related Certificates will be issued and (v) the Custodial Agreement pursuant
to which the related Custodian will maintain custody of the related Receivables
Files on behalf of such Trust and the related Indenture Trustee (if UCC
financing statements are not
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filed) (collectively, the "TRANSFER AND SERVICING AGREEMENTS"). Forms of the
Transfer and Servicing Agreements have been filed as exhibits to the
Registration Statement of which this Prospectus forms a part. This summary does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the applicable provisions of the related Transfer and Servicing
Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
On the initial Closing Date specified in the related Prospectus Supplement
with respect to a Trust (the "CLOSING DATE"), CFSC will sell and assign to the
Seller, without recourse, its entire interest in the related Receivables (the
"INITIAL RECEIVABLES"), including its security interests in the related Financed
Equipment and in certain other cross-collateralized equipment, pursuant to a
Purchase Agreement (the "PURCHASE AGREEMENT"). On such Closing Date, the Seller
will sell and assign to the related Trust, without recourse, its entire interest
in such Receivables, including its security interests in the related Financed
Equipment and in such cross-collateralized equipment, pursuant to the related
Sale and Servicing Agreement. Each such Receivable will be identified in a
schedule appearing as an exhibit to the Sale and Servicing Agreement (a
"SCHEDULE OF RECEIVABLES"). The related Owner Trustee, on behalf of such Trust,
will, concurrently with such sale and assignment on the related Closing Date,
execute, authenticate and deliver the related Certificates and execute the
related Notes, and the Indenture Trustee will authenticate and deliver the
related Notes. The net proceeds received from the sale of such Notes and the
Certificates will be applied to the purchase of the related Initial Receivables
and, if so specified in the Prospectus Supplement, to the deposit of the Pre-
Funded Amount into the Pre-Funding Account. If applicable, the related
Prospectus Supplement for a given Trust will specify the terms, conditions and
manner under which subsequent Receivables ("SUBSEQUENT RECEIVABLES") will be
sold by the Seller to the related Trust from time to time during the Funding
Period on each date specified as a transfer date in the related Prospectus
Supplement (each, a "SUBSEQUENT CLOSING DATE"). If the related Prospectus
Supplement so provides for a Pre-Funding Account, the funds on deposit in such
Pre-Funding Account on the related Closing Date will not exceed 25% of the
related Trust Property, and the related Pre-Funding Period shall not exceed
three months from the related Closing Date.
In each Purchase Agreement, CFSC will represent and warrant to the Seller,
among other things, that (i) the information provided with respect to the
related Receivables is correct in all material respects; (ii) the Obligor on
each Receivable is required to maintain physical damage insurance and/or
liability insurance, as applicable, covering the Financed Equipment in
accordance with CFSC's normal requirements; (iii) as of the related Closing Date
or related Subsequent Closing Date, if any, the related Receivables are free and
clear of all security interests, liens, charges and encumbrances and no offsets,
defenses, or counterclaims have been asserted or threatened; (iv) as of the
related Closing Date or related Subsequent Closing Date, if any, each of such
Receivables is secured by a first perfected security interest in the Financed
Equipment in favor of CFSC; (v) each Receivable, at the time it was originated,
complied and, as of the related Closing Date or related Subsequent Closing Date,
if any, complies in all material respects with applicable federal and state laws
including, without limitation, consumer credit, truth in lending, equal credit
opportunity and disclosure laws; and (vi) each Lease, if any, (A) is a "lease
intended as security" under the UCC, (B) is not a "consumer lease" within the
meaning of Article 2A of the UCC in any jurisdiction where said Article 2A has
been adopted and governs the construction thereof, and (C) constitutes "chattel
paper", as defined under the UCC. If the related Prospectus Supplement specifies
that the interests of the related Seller, Trust and Indenture Trustee will be
perfected by possession of the related Receivables Files by a custodian, CFSC
will also represent that there is only one original of each related Installment
Sales Contract and/or Lease. Unless otherwise specified in the related
Prospectus Supplement, if the Seller breaches any of its representations and
warranties made in the related Sale and Servicing Agreement, and such breach has
not been cured by the last day of the second (or, if the Seller elects, the
first) month following the discovery by or notice to the Seller of such breach,
the Seller will repurchase any Receivable materially and adversely affected by
such breach from the related Trust, and if such breach arises from the breach of
a representation and warranty by CFSC in the related Purchase Agreement, CFSC
will repurchase such Receivable from the Seller, in each case at a price (the
"PURCHASE AMOUNT") at least equal to the "PRINCIPAL BALANCE" (as such term is
defined in the related Prospectus Supplement) plus interest thereon at the
respective "CUT-OFF DATE APR" (as such term is defined in the related Prospectus
Supplement). The obligation of the Seller to repurchase any Receivable with
respect to which any such representation or warranty of CFSC has been breached
is subject to CFSC's
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repurchase of such Receivable for the Purchase Amount. The repurchase obligation
will constitute the sole remedy available to the Noteholders, the Indenture
Trustee, the Certificateholders or the Owner Trustee in respect of such Trust
for any such uncured breach.
Pursuant to the related Sale and Servicing Agreement and Custodial
Agreement, unless the related Prospectus Supplement specifies that the interests
of the Seller, the related Trust and the related Indenture Trustee will be
perfected by filing UCC financing statements, the Seller, the related Trust and
the related Indenture Trustee will appoint the Custodian as custodian of the
related Receivables, and the ownership and security interests of the Seller,
such Trust and such Indenture Trustee, as applicable, will be perfected by the
Custodian's possession of the related physical Installment Sales Contracts and
Leases on behalf of such parties. CFSC's accounting records and computer systems
will reflect the sale and assignment of the Receivables to the Seller and the
sale and assignment by the Seller to each Trust, but the Installment Sales
Contracts and/or Leases will not be stamped to reflect the sale and assignment
of the Receivables to such Trust.
If UCC financing statements are filed to perfect the interests of the
Seller, the related Trust and the related Indenture Trustee, CFSC's accounting
records and computer systems will reflect the sales and assignments described
above, and the Servicer will maintain possession of the related Installment
Sales Contracts and/or Leases to facilitate servicing and to minimize
administrative burden and expense. The Servicer will not stamp the Installment
Sales Contracts and/or Leases to reflect the sale and assignment of the
Receivables to the related Trust or Indenture Trustee.
ACCOUNTS
With respect to each Trust, the Servicer will establish and maintain at the
office of the related Indenture Trustee one or more accounts, in the name of
such Indenture Trustee on behalf of the related Securityholders, into which all
payments made on or with respect to the related Receivables will be deposited
(collectively, the "COLLECTION ACCOUNT"). The Servicer will also establish and
maintain at the office of such Indenture Trustee one or more accounts, in the
name of such Indenture Trustee on behalf of the related Noteholders, in which
amounts released from the Collection Account and the Reserve Account, if any, or
any other credit enhancement for payment to Noteholders will be deposited and
from which all payments to Noteholders will be made (each, a "NOTE DISTRIBUTION
ACCOUNT"). The Servicer will also establish and maintain at the office of the
related Owner Trustee an account, in the name of such Owner Trustee, on behalf
of the related Certificateholders, in which amounts released from the related
Collection Account and the Reserve Account, if any, or any other credit
enhancement for distribution to Certificateholders will be deposited and from
which all distributions to Certificateholders will be made (the "CERTIFICATE
DISTRIBUTION ACCOUNT"). If so specified in the related Prospectus Supplement,
the Seller may also establish and maintain a Pre-Funding Account, in the name of
such Indenture Trustee on behalf of the related Securityholders, which will be
used to purchase Subsequent Receivables from the Seller from time to time during
the Funding Period. The amount that may be initially deposited into the
Pre-Funding Account, and the length of a Pre-Funding Period, shall be limited as
described herein.
Any other accounts to be established with respect to a Trust will be
described in the related Prospectus Supplement.
With respect to any Series of Securities, funds in the Collection Account,
the Note Distribution Account, the Certificate Distribution Account, any Reserve
Account, any Pre-Funding Account and in any accounts identified as such in the
related Prospectus Supplement (collectively, the "TRUST ACCOUNTS") shall be
invested as provided in the related Sale and Servicing Agreement in Eligible
Investments. "ELIGIBLE INVESTMENTS" are generally limited to investments
acceptable to the Rating Agencies as being consistent with the ratings of such
Securities (and shall be defined in the related Sale and Servicing Agreement).
Except as described below or in the related Prospectus Supplement, Eligible
Investments are limited to obligations or securities that mature on or before
the business day preceding the day of the next distribution. However, to the
extent permitted by the Rating Agencies and provided in the related Sale and
Servicing Agreement, funds in any Reserve Account may be invested in securities
that will not mature prior to the next Distribution Date and will not be sold to
meet any shortfalls. Thus, the amount of cash in any Reserve Account at any time
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available for withdrawal may be less than the balance of the Reserve Account at
such time. If the amount required to be withdrawn from any Reserve Account to
cover shortfalls in collections on the related Receivables (as provided in the
related Prospectus Supplement) exceeds the amount of cash in such Reserve
Account, a temporary shortfall in the amounts distributed to the related
Noteholders or Certificateholders, as applicable, could result, which could, in
turn, increase the average life of the related Securities. Except as otherwise
specified in the related Prospectus Supplement, investment earnings on funds
deposited in the Trust Accounts, net of losses and investment expenses
(collectively, "INVESTMENT EARNINGS"), shall be deposited in the related
Collection Account on each Distribution Date and shall be treated as collections
of interest on the related Receivables.
The Trust Accounts of all Series will be maintained as Eligible Deposit
Accounts. "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 have a credit rating from each
Rating Agency in one of its generic rating categories which signifies investment
grade. "ELIGIBLE INSTITUTION" means, with respect to any Series, (a) the
corporate trust department of the related Indenture Trustee, the related Owner
Trustee or such other institution acceptable to the Rating Agencies as being
consistent with the ratings of the Securities, 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 a long-term or short-term unsecured debt rating
acceptable to the Rating Agencies and (B) whose deposits are insured by the
Federal Deposit Insurance Corporation or (ii) (A) the parent corporation of
which has either a long-term or short-term unsecured debt rating acceptable to
the Rating Agencies and (B) whose deposits are insured by the Federal Deposit
Insurance Corporation.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables held by any Trust and, in a manner consistent with
the related Sale and Servicing Agreement, will continue such collection
procedures as the Servicer follows with respect to machinery retail installment
sales contracts and leases it services for itself and others. Consistent with
its normal procedures, the Servicer may, in its discretion and on a case-by-case
basis, arrange with the Obligor on a Receivable to extend or modify the payment
schedule; provided, however, that unless otherwise specified in the related
Prospectus Supplement, no such modifications may reduce the underlying APR of
such Receivable, reduce the aggregate amount of scheduled payments or the amount
of any scheduled payment due under such Receivable, release or modify CFSC's
security interest in the Financed Equipment securing such Receivable or
otherwise amend or modify such Receivable in a manner that would have a material
adverse effect on the interests of the related Securityholders. To the extent
provided in the related Prospectus Supplement, some of such extensions may not
be permitted or may result in the Servicer's repurchasing such Receivable.
Although each Sale and Servicing Agreement will restrict the ability of the
Servicer to otherwise modify a Receivable as described herein, the Servicer will
be permitted to refinance an existing Receivable for an Obligor, so long as the
proceeds of such refinanced receivable would be used to prepay such existing
Receivable in full and any such refinanced receivable is evidenced by a new
Lease or Installment Sales Contract. Any such new receivable resulting from a
refinancing would not be the property of the related Trust. The Servicer may
sell the Financed Equipment securing the respective Receivable at a public or
private sale, or take any other action permitted by applicable law. See "The
Receivables Pools--The Retail Equipment Financing Business-- EXTENSION/REVISION
PROCEDURES" and "Certain Legal Aspects of the Receivables" herein.
PAYMENTS ON RECEIVABLES
With respect to each Trust, the Servicer will deposit all payments on the
related Receivables (from whatever source, but subject to net deposits by the
Servicer as described under "--Net Deposits" herein) and all proceeds of such
Receivables collected during each Collection Period specified in the related
Prospectus Supplement into the related Collection Account; PROVIDED, HOWEVER,
that when a Receivable becomes a Liquidated Receivable (as defined in the
related Prospectus Supplement), the Receivable will be reassigned to the Seller
(to the extent of receipt by the holders of Securities on the related
Distribution Date of an
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amount representing the principal balance with respect to such Liquidated
Receivable), and any proceeds after such date (deficiency proceeds) would not be
proceeds of Receivables in the related Trust. Unless the related Prospectus
Supplement provides for more frequent deposits (as described below), if (i) CFSC
is the Servicer, (ii) each other condition to making deposits less frequently
than daily as may be specified by the Rating Agencies or set forth in the
related Prospectus Supplement is satisfied, and (iii) a Servicer Default (as
described below) does not exist, CFSC as Servicer will be permitted to deposit
all collections of Receivables into the related Collection Account on or before
the business day preceding the related Distribution Date. If the related
Prospectus Supplement so provides, or if the above described conditions are not
met, the deposit of collections for a Collection Period will be made within two
business days of receipt and identification thereof, and any Purchase Amounts
will be deposited in the related Collection Account when due. Normally,
collections are identified within one day of receipt. Pending deposit into the
Collection Account, regardless of frequency of deposit, collections may be
invested by the Servicer at its own risk, for its own benefit and without being
subject to any investment restrictions, and will not be segregated from funds of
the Servicer. If the Servicer were unable to remit such funds, or if the
Servicer were to become insolvent, the Securityholders might incur a loss. To
the extent set forth in the related Prospectus Supplement, the Servicer, in
order to satisfy the requirements described above for monthly remittances, may
obtain a letter of credit or other security for the benefit of the related Trust
to secure the timely remittances of collections on the related Receivables and
the payment of the aggregate Purchase Amount with respect to such Receivables
purchased by the Servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the Prospectus Supplement with respect to any
Trust, the Servicer will be entitled to receive a Servicing Fee for each
Collection Period in an amount equal to a specified percentage per annum (as set
forth in the related Prospectus Supplement, the "SERVICING FEE RATE") of the
Pool Balance as of the first day of the related Collection Period (the
"SERVICING FEE"). The Servicing Fee with respect to any Trust (together with any
portion of such Servicing Fee that remains unpaid from prior Distribution Dates)
will be paid solely to the extent of the funds available therefor as set forth
in the related Prospectus Supplement under "Description of the Transfer and
Servicing Agreements--Distributions." However, the Servicing Fee will be paid
prior to the distribution of any portion of the "TOTAL DISTRIBUTION AMOUNT" (as
such term is defined in the related Prospectus Supplement) to the related
Noteholders or the related Certificateholders and prior to payment of the
related Administration Fee. The Servicing Fee with respect to each Collection
Period will decline over the life of the Securities as the Pool Balance
decreases.
Unless otherwise specified in the Prospectus Supplement with respect to any
Trust, the Servicer will also collect any late fees, extension fees, property
and sales taxes (with respect to Leases) and other administrative fees or
similar charges allowed by applicable law with respect to the related
Receivables (collectively, the "SERVICER'S YIELD"), and will be entitled to
amounts of Servicer's Yield collected as such amounts are received. Payments by
or on behalf of Obligors will be allocated first to scheduled payments, second
to other charges (except for late fees) and third, to late fees, all in
accordance with the Servicer's normal practices and procedures.
The Servicing Fee with respect to any Trust will compensate the Servicer for
performing the functions of a third party servicer of machinery receivables as
an agent for their beneficial owner, including collecting and posting all
payments, responding to inquiries of Obligors on the related Receivables,
investigating delinquencies, sending payment coupons to Obligors, reporting tax
information to Obligors, paying costs of disposition of defaults, and policing
the collateral. Such Servicing Fee also will compensate the Servicer for
administering the related Receivables, accounting for collections and furnishing
monthly and annual statements to the Seller, the related Owner Trustee and the
related Indenture Trustee with respect to distributions and retaining the
Custodian to hold custody of the related Receivables. Such Servicing Fee also
will reimburse the Servicer for certain taxes, accounting fees, outside auditor
fees, data processing costs and other costs incurred in connection with
administering the Receivables of each Trust.
Under certain circumstances, the Servicer will be permitted to make deposits
of collections into the Collection Account net of the Servicing Fee and the
Servicer's Yield, as described herein under "--Net Deposits."
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DISTRIBUTIONS
With respect to each Series of Securities, beginning on the Distribution
Date specified in the related Prospectus Supplement, distributions of principal
and interest (or, where applicable, of principal or interest only) on each Class
of such Securities entitled thereto will be made by the applicable Trustee to
the Noteholders and the Certificateholders of such Series. The timing,
calculation, allocation, order, source, priorities of and requirements for all
payments to each Class of Noteholders and all distributions to each Class of
Certificateholders of such Series will be set forth in the related Prospectus
Supplement.
With respect to each Trust, on each Distribution Date, collections on the
related Receivables will be transferred from the related Collection Account to
the related Note Distribution Account and the related Certificate Distribution
Account for distribution to Noteholders and Certificateholders of the related
Series to the extent provided in the related Prospectus Supplement. Credit
enhancement, such as a Reserve Account, will be available to cover any
shortfalls in the amount available for distribution on such date to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a Class of Securities of a given Series
will be subordinate to distributions in respect of interest on such Class, and
distributions in respect of the Certificates of such Series may be subordinate
to payments in respect of the Notes of such Series.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit enhancement arrangements and the provider
thereof, if applicable, with respect to each Class of Securities of a given
Series, if any, will be set forth in the related Prospectus Supplement. If and
to the extent provided in the related Prospectus Supplement, credit enhancement
may be in the form of subordination of one or more Classes of Securities,
Reserve Accounts, over-collateralization, letters of credit, credit or liquidity
facilities, surety bonds, guaranteed investment contracts, swaps or other
interest rate protection agreements, repurchase obligations, other agreements
with respect to third party payments or other support, cash deposits or such
other arrangements as may be described in the related Prospectus Supplement or
any combination of two or more of the foregoing. If specified in the related
Prospectus Supplement, credit enhancement for a Class of Securities may cover
one or more other Classes of Securities of the same Series, and credit
enhancement for a Series of Securities may cover one or more other Series of
Securities. In addition, if specified in the related Prospectus Supplement,
credit enhancement for one or more Classes of Securities of a Series may cover
all or a portion of the outstanding amount of such Classes or may cover losses
incurred from all or a portion of the related Receivables.
The presence of a Reserve Account and other forms of credit enhancement for
the benefit of all or any portion of any Class or Series of Securities is
intended to enhance the likelihood of receipt by the Securityholders of such
Class or Series of the full amount of principal and interest due thereon and to
decrease the likelihood that such Securityholders will experience losses. Unless
otherwise specified in the related Prospectus Supplement, the credit enhancement
for all or any portion of a Class or Series of Securities will not provide
protection against all risks of loss and will not guarantee repayment of the
entire principal balance and interest thereon. If losses occur which exceed the
amount covered by any credit enhancement or which are not covered by any credit
enhancement, Securityholders of any Class or Series will bear their allocable
share of deficiencies, as described in the related Prospectus Supplement. In
addition, if a form of credit enhancement covers more than one Series of
Securities, Securityholders of any such Series will be subject to the risk that
such credit enhancement will be exhausted by the claims of Securityholders of
other Series.
Unless otherwise provided in the related Prospectus Supplement, the Seller
may replace the credit enhancement for any Class of Securities with another form
of credit enhancement without the consent of Securityholders, provided the
applicable Rating Agencies confirm in writing that substitution will not result
in the reduction or withdrawal of the rating of such Class of Securities or any
other Class of Securities of the related Series.
RESERVE ACCOUNT. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement, the Seller will establish
for a Series or Class of Securities an account, as specified in the related
Prospectus Supplement (the "RESERVE ACCOUNT"), which will be maintained in the
name of the related Indenture Trustee. Unless otherwise provided in the related
Prospectus Supplement, the Reserve Account will be funded by an initial deposit,
if any, by the Seller on the related Closing Date in the amount
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set forth in the related Prospectus Supplement. As further described in the
related Prospectus Supplement, the amount on deposit in the Reserve Account will
be increased on each Distribution Date thereafter up to the "SPECIFIED RESERVE
ACCOUNT BALANCE" (as such term is defined in the related Prospectus Supplement)
by the deposit therein of the amount of collections on the related Receivables
remaining on each such Distribution Date after the payment of all other required
payments and distributions on such date and, if applicable, any amounts
deposited from time to time from the Pre-Funding Account in connection with the
purchase of Subsequent Receivables. The related Prospectus Supplement will
describe the circumstances and manner under which distributions may be made out
of the Reserve Account, either to holders of the Securities covered thereby, to
the Seller or to any transferee or assignee of the Seller.
The Seller may at any time, without consent of the Securityholders, sell,
transfer, convey or assign in any manner its rights to and interests in
distributions from the Reserve Account, including interest earnings thereon[,
provided that (i) the Rating Agencies confirm in writing that such action will
not result in a reduction or withdrawal of the rating of any Class of
Securities, (ii) the Seller provides to the related Owner Trustee and the
related Indenture Trustee an opinion of counsel from independent counsel that
such action will not cause the related Trust to be treated as an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes and (iii) such transferee or assignee agrees in writing to take
positions for tax purposes consistent with the tax positions agreed to be taken
by the Seller].
NET DEPOSITS
As an administrative convenience, the Servicer will be permitted to make the
deposit of collections and Purchase Amounts for any Trust for or with respect to
the related Collection Period net of distributions to be made to the Servicer
for such Trust with respect to such Collection Period (including the Servicing
Fee and any Servicer's Yield); PROVIDED, that if the Servicer is required to
remit collections daily (see "--Payments on Receivables" above), deposits of
such amounts may only be made net of the Servicer's Yield and may not be made
net of the Servicing Fee. The Servicer, however, will account to the Indenture
Trustee, the Owner Trustee, the Noteholders and the Certificateholders with
respect to each Trust as if all deposits, distributions and transfers were made
individually.
REPORTS TO SECURITYHOLDERS
With respect to each Series of Securities, on or prior to each Distribution
Date, the Servicer will prepare and provide (a) to the related Indenture Trustee
a statement to be delivered to the related Noteholders on such Distribution Date
and (b) to the related Owner Trustee a statement to be delivered to the related
Certificateholders on such Distribution Date. With respect to each Series of
Securities, each such statement to be delivered to Noteholders will include (to
the extent applicable) the following information (and any other information so
specified in the related Prospectus Supplement) as to the Notes of such Series
with respect to such Distribution Date or the period since the previous
Distribution Date, as applicable, and each such statement to be delivered to
Certificateholders will include (to the extent applicable) the following
information (and any other information so specified in the related Prospectus
Supplement) as to the Certificates of such Series with respect to such
Distribution Date or the period since the previous Distribution Date, as
applicable.
(i)
the amount of the distribution allocable to principal of each Class
of Securities of such Series;
(ii)
the amount of the distribution allocable to interest on or with
respect to each Class of Securities of such Series;
(iii)
the Pool Balance as of the close of business on the last day of the
preceding Collection Period;
(iv)
the aggregate outstanding principal balance and the Note Pool Factor
for each Class of such Notes, and the Certificate Balance and the
Certificate Pool Factor for each Class of such Certificates, each after
giving effect to all payments reported under clause (i) above on such date;
(v)
the amount of the Servicing Fee paid to the Servicer with respect to
the related Collection Period;
(vi)
the Interest Rate or Pass-Through Rate for the next period for any
Class of Notes or Certificates of such Series with variable or
adjustable rates;
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(vii)
the amount of the Administration Fee paid to the Administrator in
respect of the related Collection Period;
(viii)
the amount of the aggregate "REALIZED LOSSES" (as defined in the
related Prospectus Supplement), if any, for such Collection Period;
(ix)
the aggregate Purchase Amounts for Receivables, if any, that were
repurchased or purchased in such Collection Period;
(x)
the balance of the Reserve Account (if any) on such Distribution
Date, after giving effect to withdrawals therefrom and deposits
thereto on such Distribution Date, and the Specified Reserve Account Balance
on such date;
(xi)
for each such date during the Funding Period (if any), the remaining
Pre-Funded Amount; and
(xii)
for the first such date that is on or immediately following the end
of the Funding Period (if any), the amount of any remaining
Pre-Funded Amount that has not been used to fund the purchase of Subsequent
Receivables and is being passed through as payments of principal on the
Securities of such Series.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (vii) with
respect to the Notes or the Certificates of any Series will be expressed as a
dollar amount per $1,000 of the initial principal balance of such Notes or the
initial Certificate Balance of such Certificates, as applicable.
Within the prescribed period of times for tax reporting purposes after the
end of each calendar year during the term of each Trust, the applicable Trustee
will mail to each person who at any time during such calendar year has been a
Securityholder with respect to such Trust and received any payment thereon, a
statement containing certain information for the purposes of such
Securityholder's preparation of federal income tax returns. See "Certain Federal
Income Tax Considerations" herein.
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Distribution Date with respect to each Series of Securities,
the Servicer will provide to the related Indenture Trustee and the related Owner
Trustee as of the close of business on the last day of the preceding Collection
Period a statement setting forth substantially the same information as is
required to be provided in the periodic reports provided to Securityholders of
such Series described under "--Reports to Securityholders" above.
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement will provide that a firm of independent
public accountants will furnish to the related Trust and Indenture Trustee
annually a statement as to compliance by the Servicer during the preceding 12
months ended December 31 (or, in the case of the first such certificate, the
period from the related Closing Date to December 31 of the same year) with
certain standards relating to the servicing of the related Receivables, the
Servicer's accounting records with respect thereto (including, if necessary, any
computer files) and certain other matters.
Each Sale and Servicing Agreement will also provide for delivery to the
related Trust and Indenture Trustee, substantially simultaneously with the
delivery of the accountants' statement referred to above, of a certificate
signed by an officer of the Servicer stating that the Servicer either has
fulfilled its obligations under such Sale and Servicing Agreement in all
material respects throughout the preceding 12 months ended December 31 (or, in
the case of the first such certificate, the period from the related Closing Date
to December 31 of the same year) or, if there has been a default in the
fulfillment of any such obligation in any material respect, describing each such
default. The Servicer will agree to give each Indenture Trustee and each Owner
Trustee notice of certain Servicer Defaults under the related Sale and Servicing
Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the applicable Trustee.
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CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement will provide that CFSC may not resign from
its obligations and duties as Servicer thereunder, except upon determination
that CFSC's performance of such duties is no longer permissible under applicable
law. No such resignation will become effective until the related Indenture
Trustee or a successor servicer has assumed CFSC's servicing obligations and
duties under such Sale and Servicing Agreement.
Each Sale and Servicing Agreement will further provide that neither the
Servicer nor any of its directors, officers, employees and agents shall be under
any liability to the related Trust, the related Noteholders or the related
Certificateholders for taking any action or for refraining from taking any
action pursuant to such Sale and Servicing Agreement, or for errors in judgment;
PROVIDED, HOWEVER, that neither the Servicer nor any such person will be
protected 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 thereunder. In addition,
such Sale and Servicing Agreement will provide that the Servicer is under no
obligation to appear in, prosecute, or defend any legal action that is not
incidental to its servicing responsibilities under such Sale and Servicing
Agreement and that, in its opinion, may cause it to incur any expense or
liability.
Under the circumstances specified in such Sale and Servicing Agreement
(including confirmation by the Rating Agencies that such succession will not
result in the reduction or withdrawal of the rating of any Class of Securities
of the related Series), (a) any entity into which the Servicer may be merged or
consolidated, (b) any entity resulting from any merger or consolidation to which
the Servicer is a party, (c) any entity succeeding to the business of the
Servicer or (d) any corporation 50% or more of the voting stock of which is
owned, directly or indirectly, by Caterpillar, which corporation or other entity
in each of the foregoing cases assumes the obligations of the Servicer, will be
the successor of the Servicer under such Sale and Servicing Agreement.
SERVICER DEFAULT
With respect to each Trust, "SERVICER DEFAULT" under each Sale and Servicing
Agreement will consist of (i) any failure by the Servicer (A) to deliver to the
related Indenture Trustee for deposit in any of the related Trust Accounts any
required payment or (B) to direct the related Indenture Trustee to make any
required distributions therefrom, in either case which failure continues
unremedied for three business days after written notice from such Indenture
Trustee or the related Owner Trustee is received by the Servicer or after
discovery by the Servicer; (ii) any failure by the Servicer or the Seller, as
the case may be, duly to observe or perform in any material respect any other
covenant or agreement in any Transfer and Servicing Agreement, which failure
materially and adversely affects the rights of Noteholders or Certificateholders
of the related Series and which continues unremedied for 60 days after the
giving of written notice of such failure (A) to the Servicer or the Seller, as
the case may be, by such Indenture Trustee or such Owner Trustee or (B) to the
Servicer or the Seller, as the case may be, and to such Indenture Trustee and
such Owner Trustee by holders of Notes or Certificates of such Series, as
applicable, evidencing not less than 25% in aggregate principal amount of the
outstanding Notes or Certificates of the related Series; (iii) certain events of
insolvency, readjustment of debt, marshalling of assets and liabilities, or
similar proceedings with respect to the Servicer and certain actions by the
Servicer indicating its insolvency, reorganization pursuant to bankruptcy
proceedings, or inability to pay its obligations (each, an "INSOLVENCY EVENT");
and (iv) with respect to any Trust, the additional event or events, if any,
specified in the related Prospectus Supplement.
RIGHTS UPON SERVICER DEFAULT
Unless otherwise provided in the related Prospectus Supplement, as long as a
Servicer Default under a Sale and Servicing Agreement remains unremedied, the
related Indenture Trustee or the Noteholders of the related Series (without the
consent of the related Indenture Trustee) evidencing not less than 25% of the
outstanding principal amount of such Notes (or such Class or Classes of Notes
specified in the related Prospectus Supplement) may terminate all the rights and
obligations of the Servicer under such Sale and Servicing Agreement, whereupon a
successor servicer appointed by such Indenture Trustee or such Indenture Trustee
will succeed to all the responsibilities, duties and liabilities of the Servicer
under such Sale and
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Servicing Agreement and will be entitled to similar compensation arrangements.
If, however, a bankruptcy trustee or similar official has been appointed for the
Servicer, and no Servicer Default other than such appointment has occurred, such
trustee or official may have the power to prevent such Indenture Trustee or such
Noteholders from effecting a transfer of servicing. In the event that the
Indenture Trustee is unwilling or unable to so act, it may appoint, or petition
a court of competent jurisdiction for the appointment of, a successor with a net
worth of at least $50,000,000 and whose regular business includes the servicing
of receivables similar to the related Receivables. Such Indenture Trustee may
make such arrangements for compensation to be paid, which in no event may be
greater than the servicing compensation payable to the Servicer under such Sale
and Servicing Agreement. Neither an Owner Trustee nor the related
Certificateholders have the right to remove the Servicer if a Servicer Default
occurs.
WAIVER OF PAST DEFAULTS
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement, the holders of Notes evidencing not less than a majority
of the outstanding principal amount of the then outstanding Notes of the related
Series (or such Class or Classes of Notes specified in the related Prospectus
Supplement) (or, if no Notes are outstanding the holders of Certificates
evidencing not less than a majority of the outstanding Certificate Balance) may,
on behalf of all such Noteholders and Certificateholders, waive any default by
the Servicer in the performance of its obligations under the related Sale and
Servicing Agreement and its consequences, except a default in making any
required deposits to or payments from any of the Trust Accounts in accordance
with such Sale and Servicing Agreement. Therefore, all or some of the
Noteholders of any Series have the ability, as limited above, to waive defaults
by the Servicer which could materially and adversely affect the other related
Noteholders and the related Certificateholders. With respect to any Series, no
such waiver shall impair the Noteholders' or the Certificateholders' rights with
respect to subsequent defaults.
AMENDMENT
Unless otherwise provided in the related Prospectus Supplement, each of the
Transfer and Servicing Agreements (other than any Custodial Agreement) may be
amended by the parties thereto, without the consent of the related Noteholders
or Certificateholders, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of any such Transfer and
Servicing Agreement or of modifying in any manner the rights of such Noteholders
or Certificateholders; PROVIDED, HOWEVER, that such action will not, in the
opinion of counsel satisfactory to the related Indenture Trustee and the related
Owner Trustee, materially and adversely affect the interest of any such
Noteholder or Certificateholder or the tax characterization of the Notes or the
Certificates. In addition, unless otherwise provided in the related Prospectus
Supplement, each of the Transfer and Servicing Agreements (other than any
Custodial Agreement) may be amended by the parties thereto, without the consent
of the related Noteholders or Certificateholders, to substitute credit
enhancement for any Class of Securities, provided the applicable Rating Agencies
confirm in writing that such amendment will not result in a reduction or
withdrawal of the rating of such Class of Securities or any Class of Securities
of the related Series and an opinion of counsel satisfactory to the related
Indenture Trustee and the related Owner Trustee is provided to the effect that
such change will not adversely affect the tax characterization of the Notes or
the Certificates. In addition, unless otherwise provided in the related
Prospectus Supplement, each of the Transfer and Servicing Agreements (other than
any Custodial Agreement) may be amended by the Seller, the Servicer, the related
Owner Trustee and the related Indenture Trustee with the consent of the holders
of Notes evidencing at least a majority in the then outstanding principal amount
of such Notes and the holders of Certificates evidencing at least a majority of
the related Certificate Balance for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Agreements
or of modifying in any manner the rights of Noteholders or Certificateholders of
the related Series; 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 payments or distributions that are
required to be made for the benefit of the Noteholders or the Certificateholders
or (ii) reduce the aforesaid percentage of the Notes and Certificates of such
Series which are required to consent to any such amendment, without the consent
of the holders of all the
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outstanding Notes or Certificates, as the case may be, of such Series. A
Custodial Agreement may be amended by the parties thereto, provided the
applicable Rating Agencies confirm in writing that such amendment will not
result in a reduction or withdrawal of the rating of any related Class of
Securities.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of a given Series and the
satisfaction and discharge of the related Indenture, the related Owner Trustee
will succeed to all the rights of the related Indenture Trustee, and the
Certificateholders of such Series will succeed to all the rights of the
Noteholders of such Series, in each case under the related Sale and Servicing
Agreement, except as otherwise provided therein.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the Seller, the
related Owner Trustee and the related Indenture Trustee pursuant to the related
Transfer and Servicing Agreements will terminate upon (i) the maturity or other
liquidation of the last related Receivables and the disposition of any amounts
received upon liquidation of any such remaining Receivables and (ii) the payment
to Noteholders and Certificateholders of the related Series of all amounts
required to be paid to them pursuant to such Transfer and Servicing Agreements.
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement, in order to avoid excessive administrative expense, if as
of the last day of any Collection Period, the then outstanding Pool Balance with
respect to the Receivables held by such Trust is 10% or less of the "INITIAL
POOL BALANCE" (as such term is defined in the related Prospectus Supplement),
the Servicer shall have the option to purchase all remaining related Receivables
as of such last day at a price equal to the aggregate Purchase Amount for the
Receivables (including defaulted Receivables but not including liquidated
Receivables).
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related Series will be prepaid concurrently upon either
of the events specified above and the subsequent distribution to the related
Certificateholders of all amounts required to be distributed to them pursuant to
the related Trust Agreement will effect early retirement of the Certificates of
such Series.
ADMINISTRATION AGREEMENT
CFSC, in its capacity as administrator (the "ADMINISTRATOR"), will enter
into an agreement (as amended and supplemented from time to time, the
"ADMINISTRATION AGREEMENT") with each Trust and the related Indenture Trustee
pursuant to which the Administrator will agree, to the extent provided in such
Administration Agreement, to provide the notices and to perform on behalf of the
related Trust certain other administrative obligations required by the related
Indenture. As compensation for the performance of the Administrator's
obligations under the Administration Agreement and as reimbursement for its
expenses related thereto, the Administrator will be entitled to a monthly
administration fee in an amount to be set forth in the related Prospectus
Supplement (the "ADMINISTRATION FEE").
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SALE AND TRANSFER OF RECEIVABLES
Unless the related Prospectus Supplement provides that such transfers and
grant will be perfected by filing UCC financing statements, the transfer of
ownership of the Receivables of each Trust from CFSC to the Seller and from the
Seller to such Trust, and the granting of the security interest in such
Receivables by such Trust to the related Indenture Trustee, will in each case be
perfected by the Custodian, on behalf of the applicable assignee, taking
possession of the related Receivables Files. The Custodian will maintain its
possession of the Receivables Files in a space leased by the Custodian which
space may, if the related Prospectus Supplement so provides, be proximate to the
principal executive offices of the Seller. Although steps will be taken to
ensure that the Seller does not obtain possession or control of the Receivables
Files, should a court find that the Seller did have possession or control of
such Receivables Files, the interests of the related Trust and the related
Indenture Trustee in such Receivables may be unperfected under certain
circumstances and distributions to Securityholders may be adversely affected.
CFSC will indicate on its computer records that such Receivables have been sold,
but, unless otherwise specified in the related
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Prospectus Supplement, UCC financing statements will not be filed to perfect
such transfers of ownership or such grant of a security interest in such
Receivables. If UCC financing statements are filed to perfect such transfers of
ownership or grants of security interests, to facilitate servicing and reduce
administrative costs, the Receivables Files will be retained by the Servicer and
will not be physically segregated from other similar documents that are in the
Servicer's possession or otherwise stamped or marked to reflect the transfer to
the related Trust so long as CFSC is servicing the Receivables. However, UCC
financing statements will be filed reflecting the sale and assignment of the
Receivables by CFSC to the Seller, and by the Seller to such Trust, and the
Servicer's accounting records and computer files will be marked to reflect such
sales and assignments. Because the Receivables Files will remain in the
Servicer's possession and will not be stamped or otherwise marked to reflect the
assignment to the Indenture Trustee, if a subsequent purchaser were able to take
physical possession of the Receivables Files without knowledge of such
assignment, the Indenture Trustee's interest in the Receivables could be
defeated. In such event, distributions to Securityholders may be adversely
affected.
BANKRUPTCY
The Seller has taken and will take steps in structuring the transactions
contemplated hereby that are intended to ensure that a voluntary or involuntary
petition for relief by or against CFSC under any Insolvency Law will not result
in the substantive consolidation of the assets and liabilities of the Seller
with those of CFSC. These steps include the creation of the Seller as a
separate, limited-purpose entity pursuant to Articles of Incorporation
containing (i) certain limitations (including restrictions on the nature of the
Seller's business and a restriction on the Seller's ability to commence a
voluntary case or proceeding under any Insolvency Law without the prior
unanimous affirmative vote of all of its directors) and (ii) a requirement that
at least one of the Seller's directors be independent of CFSC and its
affiliates. However, there can be no assurance that the activities of the Seller
would not result in a court's concluding that the assets and liabilities of the
Seller should be substantively consolidated with those of CFSC in a proceeding
under any Insolvency Law.
CFSC will warrant to the Seller in each Purchase Agreement that the sale of
the related Receivables by it to the Seller is an absolute sale of such
Receivables to the Seller. In addition, CFSC and the Seller will treat the
transactions described herein and in the related Prospectus Supplement as a sale
of the related Receivables to the Seller, and the Seller has taken and will take
all actions that are required to perfect the Seller's ownership interest in the
related Receivables by the Seller taking possession of the related Receivables
Files through the Custodian or, if so specified in the related Prospectus
Supplement, by the Seller filing UCC financing statements. Notwithstanding the
foregoing, if CFSC were to become a debtor in a bankruptcy case, and a creditor
or trustee-in-bankruptcy of CFSC or CFSC itself were to take the position that a
sale of Receivables to the Seller should be recharacterized as a pledge of such
Receivables to secure a borrowing of CFSC, then delays in payments of
collections of such Receivables to the Seller could occur or, should the court
rule in favor of any such trustee, debtor or creditor, reductions in the amount
of such payments, or a reduction in the amount of Receivables securing such a
borrowing, could result. If the transactions contemplated herein and in the
related Prospectus Supplement are treated as a sale, the related Receivables
would not be part of CFSC's bankruptcy estate and would not be available to
CFSC's creditors.
The U.S. Court of Appeals for the Tenth Circuit issued its opinion in
OCTAGON GAS SYSTEMS, INC. V. RIMMER (IN RE MERIDIAN RESERVE, INC.) (decided May
27, 1993) in which it concluded (noting that its position is in contrast to that
taken by another court) that accounts receivable sold by the debtor prior to the
filing for bankruptcy remain property of the debtor's bankruptcy estate.
Although the Receivables are likely to be viewed as "chattel paper," as defined
under the UCC, rather than as accounts, the rationale behind the OCTAGON ruling
could be applied to chattel paper. The circumstances under which the OCTAGON
ruling would apply are not fully known, and the extent to which the OCTAGON
decision will be followed in other courts or outside of the Tenth Circuit is not
certain. If the holding in the OCTAGON case were applied in a CFSC bankruptcy,
however, even if the transfers of Receivables to the Seller and to a Trust were
treated as sales, the related Receivables would be part of CFSC's bankruptcy
estate and would be subject to claims of certain creditors and delays and
reductions in payments to the Seller and holders of the related Securities, or a
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reduction in the amount of Receivables supporting such Securities, could result.
The Seller will warrant in each Sale and Servicing Agreement that the sale of
the related Receivables to the related Trust is an absolute sale of such
Receivables to such Trust.
SECURITY INTEREST IN EQUIPMENT
The documents contained in the Receivables Files will constitute personal
property security agreements and will include or constitute grants of security
interests in the related Financed Equipment and certain other
cross-collateralized equipment under the applicable UCC. Perfection of security
interests in the equipment is generally governed by the laws of the state in
which such equipment (or the Obligor, if the equipment constitutes mobile goods
under the UCC) is located. The UCC generally governs the perfection of such
interests.
All of such Installment Sales Contracts and Leases originated or acquired by
CFSC will name CFSC as obligee or assignee and as the secured party of a first
priority security interest in the related Financed Equipment. Pursuant to the
Transfer and Servicing Agreements, CFSC will contractually agree to take all
actions necessary under the laws of the state in which the Financed Equipment is
located to perfect its security interests in the Financed Equipment in its name,
including the filing of UCC financing statements in the appropriate offices.
Obligors will generally be notified of the sale of Receivables from the Dealers
to CFSC. However, because the Servicer continues to service the Installment
Sales Contracts and Leases, the Obligors will not be notified of the sale from
CFSC to the Seller and, in the ordinary course, no action will be taken to
record the transfer of the security interest from CFSC to the Seller by
amendment or assignments of the UCC financing statements or otherwise.
Pursuant to each Purchase Agreement, CFSC will sell and assign its security
interests in the Financed Equipment and certain other cross-collateralized
equipment securing Receivables to the Seller and, pursuant to each Sale and
Servicing Agreement, the Seller will assign its security interests in the
Financed Equipment and such cross-collateralized equipment to the related Trust.
However, because of the administrative burden and expense, none of the Seller,
the Servicer, CFSC or the related Owner Trustee will amend or file any UCC
financing statement to identify the related Trust as the new secured party on
the financing statement relating to the Financed Equipment or such
cross-collateralized equipment. See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables" herein. There are certain
limited circumstances under the UCC and applicable federal law in which prior or
subsequent transferees of Receivables could have an interest in such Receivables
with priority over the related Trust's interest. In addition, while CFSC is the
Servicer, cash collections on the Receivables of any Trust will, under certain
circumstances, be commingled with the funds of CFSC prior to deposit into the
related Collection Account and, in the event of the bankruptcy of CFSC, such
Trust may not have a perfected interest in such collections.
In most states, an assignment of a security interest in Financed Equipment
such as that under a Purchase Agreement and a Sale and Servicing Agreement is an
effective conveyance of a security interest without amendment of any UCC
financing statement relating to such Financed Equipment, and the assignee
succeeds thereby to the assignor's rights as secured party. By not identifying a
Trust as the secured party on the financing statement, the security interest of
such Trust in the related Financed Equipment could be defeated through fraud or
negligence by CFSC or (under certain circumstances) the related Dealer. In the
absence of error, fraud or forgery by the related Obligor or administrative
error by state or local agencies, the proper initial filing of the financing
statement relating to such Financed Equipment will be sufficient to protect a
Trust against the rights of subsequent purchasers of such Financed Equipment or
subsequent lenders who take a security interest in the Financed Equipment
related to a Receivable. If there is any Financed Equipment as to which the
original secured party, if any, failed to obtain and assign to CFSC a perfected
security interest, the security interest of CFSC would be subordinated to, among
others, subsequent purchasers of the equipment and holders of perfected security
interests. Such a failure, however, would constitute a breach of the warranties
of CFSC under each Purchase Agreement and would create an obligation of CFSC to
repurchase the related Receivables unless the breach is cured. The Seller will
assign its rights pursuant to each Purchase Agreement to the related Trust. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables" herein.
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Under each Sale and Servicing Agreement, the Servicer will be obligated to
take appropriate steps, at its own expense, to maintain perfection of security
interests in each item of Financed Equipment and is obligated to repurchase the
related Receivable if it fails to do so.
Under the laws of most states, liens for repairs performed on the equipment
and liens for unpaid taxes may take priority over even a perfected security
interest in such goods. The Servicer will represent that, as of the related
Closing Date or Subsequent Closing Date, as applicable, each security interest
in Financed Equipment is prior to all other present liens upon and security
interests in such Financed Equipment. However, liens for repairs or taxes unpaid
by an Obligor could arise at any time during the term of a Receivable. Neither
the Seller nor the Servicer will have any obligation to repurchase a Receivable
if any such lien results in a Trust losing the priority of its security interest
or its security interest in any Financed Equipment after the related Closing
Date, or, if applicable, any related Subsequent Closing Date. No notice will be
given to the related Owner Trustee, Indenture Trustee, Noteholders or
Certificateholders of any Series in the event such a lien arises.
REPOSSESSION
In the event of default by the obligor, the holder of the retail installment
sales contract or finance lease has all the remedies of a secured party under
the UCC, except where specifically limited by other state laws. Among the UCC
remedies, the secured party has the right to perform self-help repossession
unless such act would constitute a breach of the peace. Self-help is the method
employed by the Servicer in most cases and is accomplished simply by retaking
possession of the financed equipment. In the event of default by the obligor,
some jurisdictions require that the obligor be notified of the default and be
given a time period within which he may cure the default prior to repossession.
In cases where the obligor objects or raises a defense to repossession, or if
otherwise required by applicable state law, a court order must be obtained from
the appropriate state court, and the equipment must then be repossessed in
accordance with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws generally require the secured party to provide
the obligor with reasonable notice of the date, time and place of any public
sale and/or the date after which any private sale of the collateral may be held.
The obligor generally has the right to redeem the collateral prior to actual
sale by paying the secured party the unpaid principal balance of the obligation
plus reasonable expenses for repossessing, holding and preparing the collateral
for disposition and arranging for its sale, plus, in some jurisdictions,
reasonable attorneys' fees. In some states, the obligor may cure the default or
reinstate the retail installment sales contract or finance lease by payment of
delinquent installments or the unpaid balance.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of any Financed Equipment generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the indebtedness. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in those states
that do not prohibit or limit such judgments. However, the deficiency judgment
would be a personal judgment against the obligor for the shortfall, and a
defaulting obligor can be expected to have very little capital or sources of
income available following repossession. Therefore, in many cases, it may not be
useful to seek a deficiency judgment or, if one is obtained, it may be settled
at a significant discount.
Occasionally, after resale of the equipment and payment of all expenses and
all indebtedness, there is a surplus of funds. In that case, the UCC requires
the lender to remit the surplus to any holder of a junior lien with respect to
the equipment or, if no such lienholder exists or there are remaining funds, the
UCC requires the lender to remit the surplus to the obligor.
Courts have applied general equitable principles to secured parties pursuing
repossession or litigation involving deficiency balances. These equitable
principles may have the effect of relieving an obligor from some or all of the
legal consequences of a default.
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In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by the
creditor do not involve sufficient state action to afford constitutional
protection to consumers.
CFSC will warrant under each Purchase Agreement that each Receivable
complies with all requirements of applicable law in all material respects.
Accordingly, if an Obligor has a claim against a Trust for violation of any law
and such claim materially and adversely affects such Trust's interest in a
Receivable, such violation would constitute a breach of the warranties of CFSC
under the related Purchase Agreement and would create an obligation of CFSC to
repurchase such Receivable unless the breach is cured. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables" herein.
LEASES
Certain states have adopted a version of Article 2A of the UCC ("ARTICLE
2A"). Article 2A purports to codify many provisions of existing common law.
Although there is little precedent regarding how Article 2A will be interpreted,
it may, among other things, limit enforceability of any "unconscionable" lease
or "unconscionable" provision in a lease, provide a lessee with remedies,
including the right to cancel the lease, for certain lessor breaches or
defaults, and may add to or modify the terms of "consumer leases" and leases
where the lessee is a "merchant lessee." However, with respect to any Lease
conveyed to a Trust, CFSC will represent in the related Purchase Agreement that
(i) such Lease contract is not a "consumer lease" and (ii) to the best of its
knowledge, the related Obligor has accepted the related Financed Equipment
leased to it and, after reasonable opportunity to inspect and test, has not
notified CFSC of any defects therein. Article 2A also recognizes typical
commercial lease "hell or high water" rental payment clauses and validates
reasonable liquidated damages provisions in the event of lessor or lessee
defaults. Moreover, Article 2A recognizes the concept of freedom of contract and
permits the parties in a commercial context a wide degree of latitude to vary
provisions of the law.
OTHER
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a lender to
realize upon collateral or enforce a deficiency judgment. For example, in a case
under the federal bankruptcy law, a court may prevent a lender from repossessing
the equipment, and, as part of the rehabilitation plan, reduce the amount of the
secured indebtedness to the market value of the equipment at the time of
bankruptcy (as determined by the court), leaving the party providing financing
as a general unsecured creditor for the remainder of the indebtedness. A
bankruptcy court may also reduce the monthly payments due under a contract or
change the rate of interest and time of repayment of the indebtedness. For a
discussion of other legal aspects relating to Receivables of a Trust, see
"Certain Legal Aspects of the Receivables" in the related Prospectus Supplement.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain United States federal income tax
consequences of an investment in the Notes and Certificates as of the date
hereof. The summary is based on the Internal Revenue Code of 1986, as amended
(the "CODE"), and existing final, temporary and proposed Treasury Regulations,
Revenue Rulings and judicial decisions, all of which are subject to prospective
and retroactive changes. The summary is addressed only to original purchasers of
the Notes and the Certificates and deals only with Notes and Certificates held
as capital assets within the meaning of Section 1221 of the Code and does not
address tax consequences of holding Notes and Certificates that may be relevant
to investors in special tax situations, such as certain financial institutions,
tax-exempt organizations, life insurance companies, dealers in securities or
currencies, or investors holding the Notes or the Certificates as part of a
conversion transaction, as part of a hedge or hedging transaction, or as a
position in a straddle for tax purposes. The summary is further addressed only
to original purchasers of the Certificates who are "UNITED STATES PERSONS" (as
defined in Code Section 7701(a)(30)). Each Trust will be provided with an
opinion of counsel to each Trust specified in
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the related Prospectus Supplement ("SPECIAL TAX COUNSEL") regarding certain
federal income tax matters discussed below. An opinion of Special Tax Counsel,
however, is not binding on the Internal Revenue Service ("IRS") or the courts,
and no ruling on any of the issues discussed below will be sought from the IRS.
Moreover, there are no authorities on similar transactions involving both debt
and equity interests issued by a trust with terms similar to those of the Notes
and the Certificates described herein and in the related Prospectus Supplement.
Accordingly, persons considering the purchase of Notes or Certificates should
consult their own tax advisors with regard to the United States federal income
tax consequences of an investment in the Notes or Certificates and the
application of United States federal income tax laws, as well as the laws of any
state, local or foreign taxing jurisdictions, to their particular situations.
FOR PURPOSES OF THE FOLLOWING SUMMARY, REFERENCES TO THE TRUST, THE NOTES,
THE CERTIFICATES AND RELATED TERMS, PARTIES AND DOCUMENTS SHALL BE DEEMED TO
REFER, UNLESS OTHERWISE SPECIFIED HEREIN, TO EACH TRUST AND THE NOTES,
CERTIFICATES AND RELATED TERMS, PARTIES AND DOCUMENTS APPLICABLE TO SUCH TRUST.
TAX CHARACTERIZATION OF THE TRUST
Special Tax Counsel will deliver its opinion that the Trust will not be
classified as an association (or publicly traded partnership) taxable as a
corporation for United States federal income tax purposes. This opinion is based
on the assumption that the terms of the Trust Agreement and related documents
will be complied with, and on Special Tax Counsel's conclusions that the nature
of the income of the Trust will exempt it from the rule that certain publicly
traded partnerships are taxable as corporations.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
TREATMENT OF THE NOTES AS INDEBTEDNESS. The Seller and the Trust will
agree, and the Noteholders will agree by their purchase of Notes, to treat the
Notes as debt for United States federal income tax purposes. Special Tax Counsel
will, except as otherwise provided in the related Prospectus Supplement, advise
the Trust that the Notes will be classified as debt for United States federal
income tax purposes. The discussion below assumes that the characterization of
the Notes as debt is correct.
OID, INDEXED SECURITIES, ETC. The discussion below assumes that all
payments on the Notes are denominated in U.S. dollars, and the Notes are not
Indexed Securities or Strip Notes. Moreover, the discussion assumes that the
interest formula for the Notes meets the requirements for "qualified stated
interest" under Treasury regulations (the "OID REGULATIONS") relating to
original issue discount ("OID"), and that any OID on the Notes (I.E., any excess
of the principal amount of the Notes over their issue price) does not exceed a
DE MINIMIS amount (I.E., 1/4% of their principal amount multiplied by their
weighted average life, calculated using the prepayment assumption used in
pricing the Notes and weighting each payment by reference to the number of
complete years from the issue date to the day of such payment, all within the
meaning of the OID Regulations). If these conditions are not satisfied with
respect to any given Series of Notes, and as a result the Notes are treated as
issued with OID, additional tax considerations with respect to such Notes will
be disclosed in the related Prospectus Supplement.
INTEREST INCOME ON THE NOTES. Based on the above assumptions, except as
discussed below, the Notes will not be considered to have been issued with
original issue discount. Accordingly, the stated interest on a Note will be
taxable to a Noteholder as ordinary interest income at the time it accrues or is
received in accordance with the Noteholder's regular method of accounting for
tax purposes. A purchaser who buys a Note for more or less than its principal
amount will generally be subject, respectively, to the premium amortization or
market discount rules of the Code.
However, because a failure to pay interest currently on the Notes is not a
default and does not give rise to a penalty, under recently issued Treasury
Regulations relating to the treatment of debt instruments issued at an original
issue discount, the Notes might be viewed as having been issued with original
issue discount. Holders of the Notes would be required to include the original
issue discount in gross income for federal income tax purposes as it accrues, in
accordance with a constant interest method based on a compounding of interest,
in advance of receipt of the cash payments attributable to such income.
SALE OF THE NOTES. Upon the sale of a Note, the Noteholder will recognize
taxable gain or loss in an amount equal to the difference between the amount
realized on the sale (other than amounts attributable to
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accrued interest) and the Noteholder's adjusted tax basis in the Note. The
Noteholder's adjusted tax basis in the Note will equal the cost of the Note to
such Noteholder, increased by any market discount previously included in income
by such Noteholder with respect to the Note, and decreased by the amount of any
bond premium previously amortized and any principal payments previously received
by such Noteholder with respect to such Note. Any such gain or loss will be
capital gain or loss, except to the extent of accrued market discount not
previously included in income (or, in the case of a prepayment or redemption,
any OID not yet accrued), and will be long term capital gain or loss if at the
time of sale the Note has been held for more than one year.
FOREIGN HOLDERS. Under United States federal income tax law now in effect,
payments of interest by the Trust to a Noteholder who, as to the United States,
is a nonresident alien individual, a foreign corporation or other non-United
States person (a "FOREIGN PERSON") generally will be considered "portfolio
interest," and generally will not be subject to United States federal income tax
and withholding tax, provided the interest is not effectively connected with the
conduct of a trade or business within the United States by the foreign person
and the foreign person (i) is not actually or constructively a "10 percent
shareholder" of the Trust or the Seller (including a holder of 10% of the
outstanding Certificates), is not for United States federal income tax purposes
a "controlled foreign corporation" with respect to which the Trust or the Seller
is a "related person" within the meaning of the Code, or is not a bank extending
credit pursuant to a loan agreement entered into in the ordinary course of its
trade or business, and (ii) provides the person who is otherwise required to
withhold United States tax with respect to the Notes with an appropriate
statement (on IRS Form W-8 or a substitute form), signed under penalties of
perjury, certifying that the beneficial owner of the Note is a foreign person
and providing the foreign person's name and address. If a Note is held through a
securities clearing organization or certain other financial institutions (as is
expected to be the case unless Definitive Notes are issued), the organization or
institution may provide the relevant signed statement to the withholding agent;
in that case, however, the signed statement must be accompanied by an IRS Form
W-8 or substitute form provided by the foreign person that owns the Note. If
such interest is not portfolio interest, then it will be subject to United
States federal income and withholding tax at a rate of 30%, unless reduced or
eliminated pursuant to an applicable tax treaty or such interest is effectively
connected with the conduct of a trade or business within the United States and,
in either case, the appropriate statement has been provided.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income tax and withholding tax, provided that (i) such gain is
not effectively connected with the conduct of a trade or business in the United
States by the foreign person, and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.
If the interest, gain or income on a Note held by a foreign person is
effectively connected with the conduct of a trade or business in the United
States by the foreign person, the holder (although exempt from the withholding
tax previously discussed if a duly executed Form 4224 is furnished) generally
will be subject to United States federal tax on the interest, gain or income at
regular federal income tax rates.
BACKUP WITHHOLDING. Payments of principal and interest, as well as payments
of proceeds from the sale, retirement or disposition of a Note, may be subject
to "backup withholding" tax under Section 3406 of the Code at a rate of 31% if a
recipient of such payments fails to furnish to the payor certain identifying
information. Any amounts deducted and withheld would be allowed as a credit
against such recipient's United States federal income tax, provided appropriate
proof is provided under rules established by the IRS. Furthermore, certain
penalties may be imposed by the IRS on a recipient of payments that is required
to supply information but that does not do so in the proper manner. Backup
withholding will not apply with respect to payments made to certain exempt
recipients, such as corporations and financial institutions. Noteholders should
consult their tax advisors regarding their qualification for exemption from
backup withholding and the procedure for obtaining such an exemption.
POSSIBLE ALTERNATIVE TREATMENTS OF THE NOTES. If, contrary to the opinion
of Special Tax Counsel, the IRS successfully asserted that one or more Classes
of the Notes did not represent debt for United States federal income tax
purposes, the Notes might be treated as equity interests in the Trust. If so
treated, the Trust might
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be taxable as a corporation with the adverse consequences that the taxable
corporation would not be able to reduce its taxable income by deductions for
interest expense on Notes recharacterized as equity. Alternatively, and most
likely in the view of Special Tax Counsel, the Trust might be treated as a
publicly traded partnership that would not be taxable as a corporation because
it would meet certain qualifying income tests. Nonetheless, treatment of the
Notes as equity interests in such a publicly traded partnership could have
adverse tax consequences to certain holders. For example, income to foreign
persons generally would be subject to United States tax and United States tax
return filing and withholding requirements, and individual holders might be
subject to certain limitations on their ability to deduct their share of Trust
expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
TREATMENT OF THE TRUST AS A PARTNERSHIP. As indicated above, Special Tax
Counsel will deliver an opinion that the Trust will not be classified as an
association (or publicly traded partnership) taxable as a corporation for United
States federal income tax purposes. The Seller and the Servicer will agree, and
the Certificateholders will agree by their purchase of Certificates, to treat
the Trust as a partnership for purposes of United States federal income tax,
with the assets of the partnership being the assets held by the Trust, the
partners of the partnership being the Certificateholders (including the Seller
in its capacity as recipient of distributions from any Reserve Account and any
other account specified in the related Prospectus Supplement in which the Seller
has an interest), and the Notes being debt of the partnership. However, the
proper characterization of the arrangement involving the Trust, the
Certificates, the Notes, the Seller and the Servicer is not clear because there
is no authority on transactions closely comparable to that contemplated herein.
A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Seller or the Trust. Any such
characterization would not result in materially adverse tax consequences to
Certificateholders as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership.
INDEXED SECURITIES, ETC. The following discussion assumes that all payments
on the Certificates are denominated in U.S. dollars, none of the Certificates
are Indexed Securities or Strip Certificates, and a Series of Securities
includes a single Class of Certificates. If these conditions are not satisfied
with respect to any given Series of Certificates, additional tax considerations
with respect to such Certificates will be disclosed in the related Prospectus
Supplement.
PARTNERSHIP TAXATION. As a partnership, the Trust will not be subject to
federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the Receivables (including
appropriate adjustments for market discount, OID and bond premium) and any gain
upon collection or disposition of Receivables. The Trust's deductions will
consist primarily of interest accruing with respect to the Notes, servicing and
other fees and losses or deductions upon collection or disposition of
Receivables.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury Regulations and the partnership agreement (here, the
Trust Agreement and related documents). The Trust Agreement will provide, in
general, that the Certificateholders will be allocated gross income of the Trust
for each Collection Period equal to the sum of (i) the interest that accrues on
the Certificates in accordance with their terms for such month, including
interest accruing at the Pass-Through Rate for such month and interest on
amounts previously due on the Certificates but not yet distributed; (ii) any
Trust income attributable to discount on the Receivables that corresponds to any
excess of the principal amount of the Certificates over their initial issue
price; (iii) prepayment premium payable to the Certificateholders for such
month; and (iv) any other amounts of income payable to the Certificateholders
for such month. Such allocation will be reduced by any amortization by the Trust
of premium on Receivables that corresponds to any excess of the issue price of
Certificates over their principal amount. All remaining taxable income of the
Trust will be allocated to the Seller. It is not expected that losses will be
allocated to Certificateholders unless the Reserve Account (if any) is depleted
and in such case losses would be allocated to the Certificateholders only to the
extent that they are expected to bear the economic burden of such losses unless
otherwise provided in the
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related Supplement. Based on the economic arrangement of the parties, this
approach for allocating Trust income should be permissible under applicable
Treasury Regulations, although no assurance can be given that the IRS would not
require a greater amount of income to be allocated to Certificateholders.
Moreover, even under the foregoing method of allocation, Certificateholders may
be allocated income equal to the entire Pass-Through Rate plus the other items
described above even though the Trust might not have sufficient cash to make
current cash distributions of such amount. Thus, cash basis holders will in
effect be required to report income from the Certificates on the accrual basis
and Certificateholders may become liable for taxes on Trust income even if they
have not received cash from the Trust to pay such taxes. If a Certificateholder
is allocated income in excess of cash distributions, the Certificateholder's
basis in the Certificates will be increased by the amount of such excess, which
will reduce any gain or increase any loss upon a sale or other disposition of
the Certificates, as discussed below under "--Sale of Certificates." If the
Reserve Account becomes depleted and losses are allocated to the Certificates,
such losses could be treated as capital losses, whereas any income allocated to
the Certificates in respect of later payments to Certificateholders in repayment
of those losses could be treated as ordinary income. In this regard, if a
Certificateholder were allocated items of loss or deduction that are
characterized as capital losses (including losses that are recognized upon the
sale, extension, revision or, in certain circumstances, default of a
Receivable), such losses would generally be deductible by such Certificateholder
only against capital gain income (whether from the Trust or other sources). In
addition, because tax allocations and tax reporting will be done on a uniform
basis for all Certificateholders, but Certificateholders may be purchasing
Certificates at different times and at different prices, Certificateholders may
be required to report on their tax returns taxable income that is greater or
less than the amount reported to them by the Trust.
An individual taxpayer's share of expenses of the Trust (including fees to
the Servicer but not interest expense) would be "miscellaneous itemized
deductions". Such deductions might be disallowed to the individual in whole or
in part and might result in such holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to such holder over the life of
the Trust. Further, individual Certificateholders may be subject to other
limitations on their ability to deduct losses and other deductions, including
limitations applicable to investment interest, and should consult their own tax
advisors regarding such limitations.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the Trust
might be required to incur additional expense, but it is believed that there
would not be a material adverse effect on Certificateholders.
In lieu of the allocations described above, it is possible that the IRS
would require the Trust to allocate to Certificateholders net income (instead of
gross income) equal to the foregoing amounts, which allocations would comprise
items of gross income and losses and deductions of the Trust. If the Trust were
to allocate net income to Certificateholders, a Certificateholder's taxable
income could exceed the amount of net income allocated because of limitations on
the deductibility of capital losses and "miscellaneous itemized deductions" as
discussed above. Alternatively, the IRS might treat Certificateholders as
receiving guaranteed payments from the Trust, in which event the payments would
be treated as ordinary income but not as interest income. The Seller is
authorized to adjust the allocations described above to reflect the economic
income, gain or loss to the Certificateholders (including the Seller) or as
otherwise required by the Code.
DISCOUNT AND PREMIUM. It is believed that the Receivables were (i) not
issued with original issue discount and (ii) not subject to the "imputed
interest" rules of the Code, and, therefore, the Trust should not have original
issue discount income. However, the purchase price paid by the Trust for the
Receivables may be greater or less than the remaining principal balance of the
Receivables at the time of purchase. If so, the Receivables will have been
acquired at a premium or market discount, as the case may be. (As indicated
above, the Trust will make this calculation on an aggregate basis, but might be
required to recompute it on a Receivable-by-Receivable basis.)
DISTRIBUTIONS TO CERTIFICATEHOLDERS. Certificateholders generally will not
recognize gain or loss with respect to distributions from the Trust. A
Certificateholder will recognize gain, however, to the extent that
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any money distributed exceeds the Certificateholder's adjusted basis (as
described below under "--Sale of Certificates") in the Certificates immediately
before the distribution. A Certificateholder will recognize loss upon
termination of the Trust or termination of the Certificateholder's interest in
the Trust if the Trust only distributes money to the Certificateholder and the
amount distributed is less than the Certificateholder's adjusted basis in the
Certificates. Any gain or loss generally will be long-term capital gain or loss
if the Certificateholder's holding period of the Certificates is more than one
year.
If the Trust acquires the Receivables at a market discount or premium, the
Trust will elect to include any such discount in income currently as it accrues
over the life of the Receivables or to offset any such premium against interest
income on the Receivables. As indicated above, a portion of such market discount
income or premium deduction may be allocated to Certificateholders.
SECTION 708 TERMINATION. Under Section 708 of the Code, a Trust will be
deemed to terminate for United States federal income tax purposes if 50% or more
of the capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, the Trust will be considered to
distribute its assets to the partners (i.e. the Certificateholders and any other
equity holder in the Trust), who would then be treated as recontributing those
assets to the Trust, as a new partnership. The Trust will not comply with
certain technical requirements that might apply when such a constructive
termination occurs. As a result, a Trust may be subject to certain tax penalties
and may incur additional expenses if it is required to comply with those
requirements. Furthermore, the Trust might not be able to comply due to lack of
data. Such deemed distribution and recontribution resulting from a Section 708
termination generally should not result in material adverse tax consequences to
Certificateholders (although it may accelerate the recognition of income from
the Trust for Certificateholders whose taxable year is different than the
Trust's taxable year and result in a shorter holding period for
Certificateholders in their Certificates to the extent the amount distributed to
them in the deemed termination consists of money).
SALE OF CERTIFICATES. Generally, capital gain or loss will be recognized on
a sale of Certificates in an amount equal to the difference between the amount
realized and the seller's tax basis in the Certificates sold. A
Certificateholder's tax basis in a Certificate will generally equal the holder's
cost increased by the holder's share of Trust income (includable in income) and
decreased by any distributions received with respect to such Certificate. In
addition, both the tax basis in the Certificate and the amount realized on a
sale of a Certificate would include the holder's share of the Notes and other
liabilities of the Trust. A holder acquiring Certificates at different prices
may be required to maintain a single aggregate adjusted tax basis in such
Certificates, and, upon sale or other disposition of some of the Certificates,
allocate a portion of such aggregate tax basis to the Certificates sold (rather
than maintaining a separate tax basis in each Certificate for purposes of
computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share of
unrecognized accrued market discount, if any, on the Receivables would generally
be treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid those
special reporting requirements, the Trust will elect to include market discount
in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise to
a capital loss upon the retirement of the Certificates.
ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES. In general, the Trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the Certificateholders in
proportion to the principal amount of Certificates owned by them as of the close
of the last day of such month. As a result, a holder purchasing Certificates may
be allocated tax items (which will affect its tax liability and tax basis)
attributable to periods before the actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the Certificateholder's interest),
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taxable income or losses of the Trust might be reallocated among the
Certificateholders. The Seller is authorized to revise the Trust's method of
allocation between transferors and transferees to conform to a method permitted
by future regulations.
SECTION 754 ELECTION. In the event that a Certificateholder sells its
Certificates at a profit (or loss), the purchasing Certificateholder will have a
higher (or lower) basis in the Certificates than that of the selling
Certificateholder. The tax basis of the Trust's assets will not be adjusted to
reflect that higher (or lower) basis unless the Trust were to file an election
under Section 754 of the Code. In order to avoid the administrative complexities
that would be involved in keeping accurate accounting records, as well as
potentially onerous information reporting requirements, unless otherwise
provided in the related Prospectus Supplement, the Trust will not make such
election. As a result, Certificateholders might be allocated a greater or lesser
amount of Trust income than would be appropriate based on their own purchase
price for Certificates.
ADMINISTRATIVE MATTERS. The Owner Trustee is required to keep or have kept
complete and accurate books of the Trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis, and the fiscal year of
the Trust will be the calendar year. The Owner Trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust and will report each Certificateholder's allocable share of items of Trust
income and expense to such holders and the IRS on Schedule K-l. The Trust will
provide the Schedule K-l information to nominees that fail to provide the Trust
with the information statement described below and such nominees will be
required to forward such information to the beneficial owners of the
Certificates. Generally, Certificateholders must file tax returns that are
consistent with the information return filed by the Trust or be subject to
penalties unless the Certificateholder notifies the IRS of all such
inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust with
a statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (x) the name, address and identification number of such person, (y)
whether such person is a United States Person, a tax-exempt entity or a foreign
government, an international organization, or any wholly-owned agency or
instrumentality of either of the foregoing and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
The Seller will be designated as the tax matters partner in the related
Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust by the appropriate taxing authorities could
result in an adjustment of the returns of the Certificateholders, and, under
certain circumstances, a Certificateholder may be precluded from separately
litigating a proposed adjustment to the items of the Trust. An adjustment could
also result in an audit of a Certificateholder's returns and adjustments of
items not related to the income and losses of the Trust.
TAX CONSEQUENCES TO FOREIGN CERTIFICATEHOLDERS. Ownership of Certificates
by foreign persons (as defined above) raises tax issues unique to such persons
which may have adverse tax consequences to them, and which may subject the Trust
to United States withholding tax and reporting requirements. For this reason,
purchasers (including nominees of beneficial owners) of Certificates and their
assignees must represent that the beneficial owners are United States persons
(as defined above), and each purchaser must provide a certification of
non-foreign status signed under penalties of perjury.
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<PAGE>
BACKUP WITHHOLDING. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup withholding" tax
of 31% under Section 3406 of the Code if, in general, the Certificateholder
fails to comply with certain identification procedures, unless the
Certificateholder is an exempt recipient under applicable provisions of the
Code.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTEHOLDER'S OR
CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES OR THE CERTIFICATES, AS
APPLICABLE, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
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<PAGE>
CERTAIN STATE TAX CONSIDERATIONS
The following is a discussion of certain Tennessee state tax considerations.
Unless otherwise specified in the related Prospectus Supplement, Tuke Yopp &
Sweeney of Nashville, Tennessee will act as special Tennessee tax counsel for
the Trust regarding the state tax matters discussed below. In rendering their
opinion, Tuke Yopp & Sweeney will rely upon Tennessee Revenue Ruling #92-06 (the
"RULING"), issued by the Tennessee Department of Revenue (the "TDOR"). The
Ruling involved the applicability of the Tennessee income tax (the "HALL TAX")
and the Tennessee Franchise and Excise Tax (the "F&E TAX") to the securitization
of finance leases. Except for the Ruling, there are no other rulings or reported
cases involving Tennessee taxation with respect to similar transactions. The
statutes and regulations regarding Tennessee taxation are subject to change
(which change may be retroactive) and further interpretation by the TDOR and the
courts. No formal ruling on any of the issues discussed below will be sought
from the TDOR with respect to any Trust.
FOR PURPOSES OF THE FOLLOWING SUMMARY, REFERENCES TO THE TRUST, THE NOTES
AND RELATED TERMS, PARTIES AND DOCUMENTS SHALL BE DEEMED TO REFER, UNLESS
OTHERWISE SPECIFIED HEREIN, TO EACH TRUST AND THE NOTES, CERTIFICATES AND
RELATED TERMS, PARTIES AND DOCUMENTS APPLICABLE TO SUCH TRUST.
TENNESSEE TAX LAW GENERALLY. The State of Tennessee has two general tax
laws which may affect the Trust, the Certificates or the Notes. The first of
these is the Hall Tax, which generally imposes a tax of six percent (6%) upon
individuals, partnerships, trusts and estates that are residents of Tennessee
on: (1) income they receive by way of "dividends" from "stock;" and (2)
"interest" on "bonds." The second is the F&E Tax, which imposes an Excise Tax of
six percent (6%) on the net income apportioned to Tennessee of a taxpayer which
is not an individual "doing business" in Tennessee and a Franchise Tax of
one-quarter of 1% on each $100 of the apportioned Franchise Tax base (the
greater of adjusted net worth or tangible property) of a taxpayer "doing
business" in Tennessee.
APPLICABILITY TO CERTIFICATES AND NOTES. In the opinion of Tuke Yopp &
Sweeney (1) the Certificates of each Series will be treated as "stock" and
interim distributions by the Trust to the Certificateholders (other than
distributions in liquidiation) will be taxable as "dividends" under the Hall
Tax, (2) the Notes of each Series will be treated as "bonds" and the interest
paid by such Trust to such Noteholders will be taxable under the Hall Tax.
Liquidation distributions are exempt from the Hall Tax. Noteholders who are not
residents of Tennessee are not subject to the Hall Tax.
With respect to Certificateholders or Noteholders that are corporations
subject to Tennessee taxation, the tax characterization of the Certificates or
Notes and the distributions thereon will be the same as for federal income tax
purposes.
APPLICABILITY TO A TRUST. Each Trust will be a Delaware business trust. The
activities to be undertaken by the Servicer, on behalf of each such Trust, in
servicing and collecting the Receivables, will take place in Nevada and
Tennessee. If a Trust were "doing business" in Tennessee, the Trust would be
subject to the F&E Tax. In addition, if a Trust were a "resident" of Tennessee,
a literal interpretation of the Hall Tax would subject such Trust to taxation
thereunder. In the opinion of Tuke Yopp & Sweeney, based upon existing legal
precedent, neither the activities of the Servicer on behalf of the Trust in
Tennessee nor the location of the physical evidence of the Receivables (I.E.,
the Leases and/or the Installment Sales Contracts) should cause a Trust to be
deemed either a "resident" of or "doing business" in Tennessee. Furthermore, in
the opinion of Tuke Yopp & Sweeney, the Hall Tax would not be applied to such
Trust (even if "doing business" in Tennessee) because of federal constitutional
limitations on unapportioned income taxes.
If a Trust were subject to either the F&E Tax or the Hall Tax, such taxes
would reduce the amounts otherwise available for distribution to the related
Certificateholders. In the case of the F&E Tax, unless the related Prospectus
Supplement otherwise specifies, the amount of tax (and the resulting reduction
in amounts available for distribution) would be DE MINIMIS because of the
minimal amount of tax base that would be apportioned to Tennessee.
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<PAGE>
BECAUSE EACH STATE'S INCOME TAX LAWS VARY, IT IS IMPOSSIBLE TO PREDICT THE
INCOME TAX CONSEQUENCES TO THE HOLDERS OF THE CERTIFICATES AND THE NOTES IN ALL
OF THE STATE TAXING JURISDICTIONS IN WHICH SUCH HOLDERS WILL BE SUBJECT TO TAX.
FURTHER, IT IS IMPOSSIBLE TO PREDICT THE INCOME TAX CONSEQUENCES TO THE TRUST IN
ALL TAXING JURISDICTIONS. NOTEHOLDERS AND CERTIFICATEHOLDERS ARE ENCOURAGED TO
CONSULT THEIR OWN TAX AND OTHER ADVISORS.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code impose certain requirements on employee benefit
plans and certain other plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and certain collective investment funds or
insurance company general or separate accounts in which such plans, accounts or
arrangements are invested, that are subject to the fiduciary responsibility and
prohibited transaction provisions of ERISA and/ or Section 4975 of the Code
(collectively, "PLANS"), and on persons who are fiduciaries with respect to
Plans, in connection with the investment of "plan assets" of any Plan for
purposes of applying Title I of ERISA and Section 4975 of the Code ("PLAN
ASSETS"). ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. Generally, any person who has discretionary authority or
control respecting the management or disposition of Plan Assets, and any person
who provides investment advice with respect to Plan Assets for a fee, is a
fiduciary with respect to such Plan Assets.
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons ("PARTIES IN INTEREST" under ERISA and
"DISQUALIFIED PERSONS" under the Code) who have certain specified relationships
to a Plan or its Plan Assets, unless a statutory or administrative exemption is
available. Parties in Interest or Disqualified Persons that participate in a
prohibited transaction may be subject to a penalty imposed under ERISA and/or an
excise tax imposed pursuant to Section 4975 of the Code, unless a statutory or
administrative exemption is available. These prohibited transactions generally
are set forth in Section 406 of ERISA and Section 4975 of the Code.
ANY FIDUCIARY OR OTHER PLAN INVESTOR CONSIDERING WHETHER TO PURCHASE ANY
SECURITIES ON BEHALF OF OR WITH PLAN ASSETS OF ANY PLAN SHOULD CONSULT WITH ITS
COUNSEL AND REFER TO THE RELATED PROSPECTUS SUPPLEMENT FOR GUIDANCE REGARDING
THE ERISA CONSIDERATIONS APPLICABLE TO THE SECURITIES OFFERED THEREBY.
Certain employee benefit plans, such as governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA), are not subject to the requirements of ERISA or Section 4975 of the
Code. Accordingly, except as provided in the applicable Prospectus Supplement,
assets of such plans may be invested in the Securities of any Series without
regard to the ERISA considerations described herein, subject to the provisions
of other applicable federal and state law. However, any such plan that is
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code
is subject to the prohibited transaction rules set forth in Section 503 of the
Code.
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<PAGE>
PLAN OF DISTRIBUTION
The Securities of each Series may be sold to or through underwriters (the
"UNDERWRITERS") by a negotiated firm commitment underwriting and public
reoffering by the Underwriters or such other underwriting arrangement as may be
specified in the related Prospectus Supplement or may be placed either directly
or through agents. The Seller intends that the Securities will be offered
through such various methods from time to time and that offerings may be made
concurrently through more than one of such methods or that an offering of a
particular Series of Securities may be made through a combination of such
methods.
Each Prospectus Supplement will either (i) set forth the price at which each
Class of Notes and Certificates, as the case may be, being offered thereby will
be offered to the public and any concessions that may be offered to certain
dealers participating in the offering of such Notes and Certificates, as the
case may be, or (ii) specify that the related Notes and Certificates, as the
case may be, are to be resold by the underwriters in negotiated transactions at
varying prices to be determined at the time of such sale. After the initial
public offering of any such Notes and Certificates, as the case may be, such
public offering prices and such concessions may be changed.
Each Underwriting Agreement (as defined in the related Prospectus
Supplement) will provide that the Seller and CFSC will indemnify the related
Underwriters against certain civil liabilities, including liabilities under the
Securities Act, or contribute to payments the several underwriters may be
required to make in respect thereof.
Each Trust may, from time to time, invest the funds in its Trust Accounts in
Eligible Investments acquired from such underwriters.
Pursuant to each of the Underwriting Agreements with respect to a given
Series of Securities, the closing of the sale of each Class of Securities will
be contingent on the closing of the sale of all other such Classes. The place
and time of delivery for the Securities in respect of which this Prospectus is
delivered will be set forth in the related Prospectus Supplement.
RATINGS
Each Class of Securities of a Series offered pursuant to this Prospectus and
a related Prospectus Supplement will be rated at its initial issuance in one of
the four highest categories by at least one nationally recognized statistical
rating organization (each, a "RATING AGENCY").
A security rating is not a recommendation to buy, sell or hold Securities
and may be subject to revision or withdrawal at any time by the assigning Rating
Agency. No person is obligated to maintain the rating on any Security, and,
accordingly, there can be no assurance that the ratings assigned to a Security
upon initial issuance will not be lowered or withdrawn by a Rating Agency at any
time thereafter. In general, ratings address credit risk and do not represent
any assessment of the likelihood of rate of principal prepayments.
LEGAL OPINIONS
Certain legal matters relating to the Securities will be passed upon for
each Trust, the Seller and the Servicer by Orrick, Herrington & Sutcliffe LLP,
San Francisco, California.
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INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus and
the pages on which the definitions of such terms may be found herein:
<TABLE>
<S> <C>
Administration Agreement........................................................... 10, 49
Administration Fee................................................................. 10, 49
Administrator...................................................................... 10, 49
APR................................................................................ 20
Article 2A......................................................................... 18, 53
Base Rate.......................................................................... 35
Book-Entry Certificates............................................................ 37
Book-Entry Notes................................................................... 37
Book-Entry Securities.............................................................. 37
Calculation Agent.................................................................. 35
Caterpillar........................................................................ 6, 27
Cede............................................................................... 33
Cedel.............................................................................. 38
Cedel Participants................................................................. 37
Certificate Balance................................................................ 5
Certificate Distribution Account................................................... 41
Certificate Pool Factor............................................................ 26
Certificateholder.................................................................. 38
Certificateholders................................................................. 5, 38
Certificates....................................................................... 1
CFSC............................................................................... 4, 28
Class.............................................................................. 1
Closing Date....................................................................... 40
Code............................................................................... 12, 53
Collection Account................................................................. 41
Commission......................................................................... 3
Commodity Indexed Securities....................................................... 35
Currency Indexed Securities........................................................ 35
Custodial Agreement................................................................ 9
Custodian.......................................................................... 9
Cut-off Date....................................................................... 7
Cut-off Date APR................................................................... 40
Dealer Agreement................................................................... 21
Dealer Agreements.................................................................. 20
Dealers............................................................................ 7
Definitive Certificates............................................................ 36
Definitive Notes................................................................... 36
Definitive Securities.............................................................. 36
Depositaries....................................................................... 37
Depository......................................................................... 28
Disqualified Persons............................................................... 61
Distribution Date.................................................................. 28
DTC................................................................................ 3
Eligible Deposit Account........................................................... 42
Eligible Institution............................................................... 42
Eligible Investments............................................................... 41
ERISA.............................................................................. 12, 61
Euroclear.......................................................................... 38
Euroclear Operator................................................................. 38
Euroclear Participants............................................................. 38
</TABLE>
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<TABLE>
<S> <C>
Euroclear System................................................................... 38
Event of Default................................................................... 30
Exchange Act....................................................................... 3
F&E Tax............................................................................ 60
Face Amount........................................................................ 36
Financed Equipment................................................................. 1, 6
Fixed Rate Securities.............................................................. 35
Floating Rate Securities........................................................... 35
foreign person..................................................................... 55
Funding Period..................................................................... 5
GAAP............................................................................... 22
Hall Tax........................................................................... 60
Implicit Interest Rate............................................................. 22
Indenture.......................................................................... 4
Indenture Trustee.................................................................. 1, 28
Index.............................................................................. 35
Indexed Commodity.................................................................. 35
Indexed Currency................................................................... 35
Indexed Principal Amount........................................................... 35
Indexed Securities................................................................. 35
Indirect Participants.............................................................. 37
Initial Cut-off Date............................................................... 7
Initial Pool Balance............................................................... 49
Initial Receivables................................................................ 7, 40
Insolvency Event................................................................... 47
Insolvency Laws.................................................................... 14
Installment Sales Contract......................................................... 6
Interest Rate...................................................................... 4
Interest Reset Period.............................................................. 35
Investment Earnings................................................................ 42
IRS................................................................................ 54
Issuer............................................................................. 4
Lease.............................................................................. 6
Lease Scheduled Payments........................................................... 22
Mechanics' Liens................................................................... 11
Note Distribution Account.......................................................... 41
Note Pool Factor................................................................... 26
Noteholder......................................................................... 37
Noteholders........................................................................ 4, 38
Notes.............................................................................. 1
Obligors........................................................................... 7
OID................................................................................ 54
OID Regulations.................................................................... 54
Owner Trustee...................................................................... 1
Participants....................................................................... 37
Parties in Interest................................................................ 61
Pass-Through Rate.................................................................. 5
Plan Assets........................................................................ 61
Plans.............................................................................. 61
Pool Balance....................................................................... 26
Pre-Funded Amount.................................................................. 7, 16
Pre-Funding Account................................................................ 1, 8
Principal Balance.................................................................. 40
Prospectus Supplement.............................................................. 1
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Purchase Agreement................................................................. 7, 40
Purchase Amount.................................................................... 40
Rating Agency...................................................................... 61
Realized Losses.................................................................... 46
Receivables........................................................................ 1, 6, 20
Receivables Files.................................................................. 10, 13
Record Date........................................................................ 36
Registration Statement............................................................. 3
Related Documents.................................................................. 32
Reserve Account.................................................................... 44
Rules.............................................................................. 38
Ruling............................................................................. 59
Sale and Servicing Agreement....................................................... 7
Schedule of Receivables............................................................ 40
Securities......................................................................... 1
Securities Act..................................................................... 3
Securityholders.................................................................... 5
Seller............................................................................. 1, 4
Senior Securities.................................................................. 16
Series............................................................................. 1
Servicer........................................................................... 4
Servicer Default................................................................... 47
Servicer's Yield................................................................... 10, 43
Servicing Fee...................................................................... 9, 43
Servicing Fee Rate................................................................. 10, 43
Special Tax Counsel................................................................ 54
Specified Reserve Account Balance.................................................. 8, 45
Spread............................................................................. 35
Spread Multiplier.................................................................. 35
Stock Index........................................................................ 35
Stock Indexed Securities........................................................... 35
Strip Certificates................................................................. 6
Strip Notes........................................................................ 5
Subsequent Closing Date............................................................ 40
Subsequent Cut-off Date............................................................ 7
Subsequent Receivables............................................................. 1, 40
TDOR............................................................................... 60
Tennessee Tax Counsel.............................................................. 12
Terms and Conditions............................................................... 39
Total Distribution Amount.......................................................... 43
Transfer and Servicing Agreements.................................................. 40
Trust.............................................................................. 1, 4
Trust Accounts..................................................................... 41
Trust Agreement.................................................................... 4
Trust Property..................................................................... 19
Trustee............................................................................ 36
U.S. ISC Portfolio................................................................. 24
U.S. Lease Portfolio............................................................... 24
U.S. Portfolio..................................................................... 24
UCC................................................................................ 9, 13
Underwriters....................................................................... 61
United States Persons.............................................................. 53
</TABLE>
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PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.*
<TABLE>
<CAPTION>
Registration Statement Fee...................................... $ 261,040
<S> <C>
Printing and Engraving Expenses................................. 70,000
Trustee's Fees and Expenses..................................... 100,000
Legal Fees and Expenses......................................... 350,000
Blue Sky Fees and Expenses...................................... 30,000
Accountants's Fees and Expenses................................. 120,000
Rating Agency Fees.............................................. 300,000
Miscellaneous Fees and Expenses................................. 168,960
---------
Total....................................................... $1,400,000
---------
---------
</TABLE>
- -------------------
*Reflects expenses related to this Registration Statement and expenses related
to Registration Statement No. 333-2988 whose unissued Asset-Backed Securities
are being carried forward.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Sale and Servicing Agreement will provide that any director, officer,
employee or agent of the Registrant will be indemnified by the Servicer from and
against (a) certain liabilities arising in connection with the Financed
Equipment, (b) taxes levied against such person in connection with the
transaction (including costs and expenses in defending against the same) and (c)
certain liabilities arising in connection with the Servicer's negligence,
willful malfeasance or bad faith in the performance of its duties.
Chapter 78, section 751, subsection 1 of the Business Associations;
Securities; Commodities Law of the State of Nevada empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, except an action by or in the
right of the corporation, by reason of the fact that he is or was a director,
officer, employee or agent of another corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation partnership, joint venture, trust or other enterprise, against
expenses, including attorneys' fees, judgements, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
Subsection 2 of section 751 empowers a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses, including amounts paid in settlement and attorneys' fees
actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit if he acted in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter as
to which such a person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable to the corporation or
for amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the
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<PAGE>
action or suit was brought or other court of competent jurisdiction determines
upon application that in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such expenses as the court
deems proper.
Subsection 3 of section 751 further provides that to the extent that a
director, officer, employee or agent of a corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to in
subsections 1 and 2 of section 751, or in defense of any claim, issue or matter
therein, he must be indemnified by the corporation against expenses, including
attorneys' fees, actually and reasonably incurred by him in connection with the
defense.
Article 6 of the Articles of Incorporation of Registrant provides that (i)
every person who was or is a party to, or is threatened to be made a party to,
or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he, or a person of
whom he is the legal representative, is or was a director or officer of the
Registrant, or is or was serving at the request of the Registrant as a director
or officer of another corporation, or as its representative in a partnership,
joint venture, trust or other enterprise, shall be indemnified and held harmless
to the fullest extent legally permissible under the laws of the State of Nevada
from time to time against all expenses, liability and loss (including attorney's
fee, judgments, fines and amounts paid or to be paid in settlement) reasonably
incurred or suffered by him in connection therewith, (ii) such right of
indemnification shall be a contract right which may be enforced in any manner
desired by such person, (iii) the expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
Registrant as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
Registrant, and that (iv) such right of indemnification shall not be exclusive
of any other right which such directors, officers or representatives may have or
hereafter acquire, and, without limiting the generality of such statement, they
shall be entitled to their respective rights of indemnification under any
By-law, agreement, vote of stockholders, provision of law, or otherwise, as well
as their rights under such Articles of Incorporation.
Furthermore, such Articles of Incorporation provide that the Board of
Directors may adopt By-laws from time to time with respect to indemnification,
to provide at all times the fullest indemnification permitted by the laws of the
State of Nevada, and may cause the Registrant to purchase and maintain insurance
on behalf of any person who is or was a director or officer of the Registrant,
or is or was serving at the request of the Registrant as director or officer of
another corporation, or as its representative in a partnership, joint venture,
trust or other enterprise against any liability asserted against such person and
incurred in any such capacity or arising out of such status, whether or not the
corporation would have the power to indemnify such person.
Finally, such Articles of Incorporation provide that the indemnification
provided shall continue as to a person who has ceased to be a director, officer,
employee or agent, and shall inure to the benefit of the heirs, executors and
administrators of such person.
In addition, Article V of the by-laws of Caterpillar Inc. (the "PARENT")
provides, in effect, to the extent and under the circumstances permitted by
section 751 of the Business Associations; Securities; Commodities Law of the
State of Nevada, the Parent shall indemnify directors, officers, employees and
agents of the Parent, or persons serving at the request of the Parent as
directors, officers, employees or agents of another corporation or enterprise
against loss and expenses. The Registrant believes that the officers and
directors of the Registrant are serving at the request of the Parent and are
therefore entitled to such indemnity from the Parent.
The Parent has purchased liability insurance of the type referred to in
section 751. Subject to a certain specified deductible for each loss, the policy
covers the Parent with respect to its obligation to indemnify directors and
officers of the Parent and its wholly-owned direct and indirect subsidiaries. In
addition, the policy covers directors and officers of the Parent and its
wholly-owned direct and indirect subsidiaries with respect to certain
liabilities which are not reimbursable by the Parent. Subject to certain
exclusions from the coverage, the insurance provides for payment of loss in
excess of the applicable deductible to an aggregate
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<PAGE>
specified limit for each policy year. Insurance coverage does not extend to
certain claims, including claims based upon or attributable to the insured's
gaining personal profit or advantage to which he is not legally entitled, claims
brought about or contributed to by the dishonesty of the insured, and claims
under Section 16(b) of the Securities Exchange Act of 1934 for an accounting of
profits resulting from the purchase or sale by the insured of the Parent's
securities.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1.1 --Form of Underwriting Agreement for the Certificates.*
1.2 --Form of Underwriting Agreement for the Notes.*
3.1 --Certificate of Incorporation of Caterpillar Financial Funding Corporation.*
3.2 --By-laws of Caterpillar Financial Funding Corporation.*
3.3 --Form of Certificate of Trust of a Trust.
4.1(A) --Form of Indenture (Notes and Certificates).
4.1(B) --Form of Indenture (Senior Notes and Junior Notes).
4.2 --Form of Trust Agreement.
4.3(A) --Form of Sale and Servicing Agreement (Notes and Certificates).
4.3(B) --Form of Sale and Servicing Agreement (Senior Notes and Junior Notes).
4.4 --Form of Certificate.
4.5 --Form of Class A Note.
4.5(B) --Form of Class B Note.
5.1 --Opinion of Orrick, Herrington & Sutcliffe LLP with respect to legality.
8.1 --Opinion of Orrick, Herrington & Sutcliffe LLP with respect to federal tax
matters.
8.2 --Opinion of Tuke Yopp & Sweeney with respect to Tennessee tax matters.
10.1 --Form of Purchase Agreement.
10.2 --Form of Administration Agreement.
10.3 --Form of Custodial Agreement.
23.1 --Consents of Orrick, Herrington & Sutcliffe LPP (included in its opinions
filed as Exhibits 5.1 and 8.1).
23.2 --Consent of Tuke Yopp & Sweeney (included in its opinion filed as Exhibit
8.2).
24.1 --Powers of Attorney (included on page II-5 of this Registration Statement).
</TABLE>
- -------------------
* Incorporated herein by reference to the identically numbered Exhibit to
Registrant's Registration Statement on Form S-3 (No. 333-2988).
ITEM 17. UNDERTAKINGS.
The undersigned Registrant on behalf of the Caterpillar Financial Asset
Trusts (the "TRUSTS") hereby undertakes as follows:
(a) (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement; (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement; PROVIDED, HOWEVER, that (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports filed
by the Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
II-3
<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of the
offering.
(b) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) with respect to any Trust that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(c) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 15
above, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of each
issue.
(d) (1) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial BONA FIDE offering thereof.
(e) To file an application for the purpose of determining the eligibility of
the Indenture Trustee for each Trust to act under subsection (a) of Section 310
of the Trust Indenture Act of 1939 in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of such Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Nashville, State of Tennessee, on May
2, 1997.
CATERPILLAR FINANCIAL FUNDING CORPORATION
as originator of the Trusts and as Registrant
By: /s/ PAUL J. GAETO
-----------------------------------------
Name: Paul J. Gaeto
Title: Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed on May 2, 1997 by the
following persons in the capacities indicated.
SIGNATURE TITLE
- ------------------------------ ---------------------------
* /s/ SCOTT E. HARRIS President and Director
- ------------------------------ (Principal Executive
Scott E. Harris Officer)
* /s/ EDWARD J. SCOTT Treasurer
- ------------------------------ (Principal Financial
Edward J. Scott Officer)
Chief Financial Officer and
* /s/ C. DAVID BROOKS Director
- ------------------------------ (Principal Accounting
C. David Brooks Officer)
* /s/ THOMAS H. HOLTER Director
- ------------------------------
Thomas H. Holter
* /s/ LEE FAIR Director
- ------------------------------
Lee Fair
* /s/ STEVE W. SIMONSON Director
- ------------------------------
Steve W. Simonson
* Paul J. Gaeto, by signing his name hereto, does sign this document on behalf
of each of the persons indicated above for whom he is attorney-in-fact
pursuant to a power of attorney duly executed by such persons and filed with
the Securities and Exchange Commission.
/s/ PAUL J. GAETO
-----------------------------------------
Paul J. Gaeto
Attorney-in-fact
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- --------- -------------------------------------------------------------------------------------- -----------
<C> <S> <C>
1.1 --Form of Underwriting Agreement for the Certificates.*
1.2 --Form of Underwriting Agreement for the Notes.*
3.1 --Certificate of Incorporation of Caterpillar Financial Funding Corporation.*
3.2 --By-laws of Caterpillar Financial Funding Corporation.*
3.3 --Form of Certificate of Trust of a Trust.
4.1(A) --Form of Indenture (Notes and Certificates).
4.1(B) --Form of Indenture (Senior Notes and Junior Notes).
4.2 --Form of Trust Agreement.
4.3(A) --Form of Sale and Servicing Agreement (Notes and Certificates).
4.3(B) --Form of Sale and Servicing Agreement (Senior Notes and Junior Notes).
4.4 --Form of Certificate.
4.5(A) --Form of Class A Note.
4.5(B) --Form of Class B Note.
5.1 --Opinion of Orrick, Herrington & Sutcliffe LLP with respect to legality.
8.1 --Opinion of Orrick, Herrington & Sutcliffe LLP with respect to federal tax matters.
8.2 --Opinion of Tuke Yopp & Sweeney with respect to Tennessee tax matters.
10.1 --Form of Purchase Agreement.
10.2 --Form of Administration Agreement.
10.3 --Form of Custodial Agreement.
23.1 --Consents of Orrick, Herrington & Sutcliffe LPP (included in its opinions filed as
Exhibits 5.1 and 8.1).
23.2 --Consent of Tuke Yopp & Sweeney (included in its opinion filed as Exhibit 8.2).
24.1 --Powers of Attorney (included on page II-5 of this Registration Statement).
</TABLE>
- -------------------
* Incorporated herein by reference to the identically numbered Exhibit to
Registrant's Registration Statement on Form S-3 (No. 333-2988).
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF TRUST
OF
CATERPILLAR FINANCIAL ASSET TRUST [__]
THIS Certificate of Trust of CATERPILLAR FINANCIAL ASSET TRUST [__] (the
"Trust"), dated [__], [__], is being duly executed and filed by [__], a
[__] banking corporation, as trustee, to form a business trust under the
Delaware Business Trust Act (12 DEL. C. Section 3801 ET SEQ.).
1. NAME: The name of the business trust formed hereby is CATERPILLAR
FINANCIAL ASSET TRUST [__].
2. DELAWARE TRUSTEE: The name and business address of the trustee of the
Trust in the State of Delaware is [__], [__], [__], Delaware [__]. 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.
[__],
not in its individual capacity
but solely as Owner Trustee
By:
----------------------------
Name:
Title:
<PAGE>
EXHIBIT 4.1(A)
FORM OF INDENTURE
(NOTES AND CERTIFICATES)
- --------------------------------------------------------------------------------
CATERPILLAR FINANCIAL ASSET TRUST 199[_]-[_]
Class A-1 [____]% Asset Backed Notes and
Class A-2 [____]% Asset Backed Notes
Class A-3 [____]% Asset Backed Notes
_____________________________
INDENTURE
Dated as of [_______] 1, 199[_]
_____________________________
[___________________________________]
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
ii
<PAGE>
Page
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.......... 19
SECTION 3.08. Negative Covenants............................................ 21
SECTION 3.09. Statements as to Compliance................................... 22
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms........... 22
SECTION 3.11. Successor or Transferee....................................... 24
SECTION 3.12. No Other Business............................................. 24
SECTION 3.13. No Borrowing.................................................. 24
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.................................. 25
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............................................. 27
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment............ 28
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee.......................................... 29
SECTION 5.04. Remedies; Priorities.......................................... 31
SECTION 5.05. Optional Preservation of the Receivables...................... 32
SECTION 5.06. Limitation of Suits........................................... 33
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................................ 34
SECTION 5.10. Delay or Omission Not a Waiver................................ 34
iii
<PAGE>
Page
SECTION 5.11. Control by Noteholders........................................ 34
SECTION 5.12. Waiver of Past Defaults....................................... 35
SECTION 5.13. Undertaking for Costs......................................... 35
SECTION 5.14. Waiver of Stay or Extension Laws.............................. 36
SECTION 5.15. Action on Notes............................................... 36
SECTION 5.16. Performance and Enforcement of Certain Obligations............ 36
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee................................... 37
SECTION 6.02. Rights of Indenture Trustee................................... 38
SECTION 6.03. Individual Rights of Indenture Trustee........................ 39
SECTION 6.04. Indenture Trustee's Disclaimer................................ 39
SECTION 6.05. Notice of Defaults............................................ 39
SECTION 6.06. Reports by Indenture Trustee to Holders....................... 39
SECTION 6.07. Compensation and Indemnity.................................... 39
SECTION 6.08. Replacement of Indenture Trustee.............................. 40
SECTION 6.09. Successor Indenture Trustee by Merger......................... 41
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.............. 43
SECTION 6.13. Appointment of Custodians..................................... 43
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders................................................... 43
SECTION 7.02. Preservation of Information; Communications to Noteholders.... 44
SECTION 7.03. Reports by Issuer............................................. 44
SECTION 7.04. Reports by Indenture Trustee.................................. 44
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money........................................... 45
SECTION 8.02. Trust Accounts................................................ 45
iv
<PAGE>
Page
SECTION 8.03. General Provisions Regarding Accounts......................... 46
SECTION 8.04. Release of Trust Estate....................................... 46
SECTION 8.05. Opinion of Counsel............................................ 47
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders........ 47
SECTION 9.02. Supplemental Indentures with Consent of Noteholders........... 48
SECTION 9.03. Execution of Supplemental Indentures.......................... 50
SECTION 9.04. Effect of Supplemental Indenture.............................. 50
SECTION 9.05. Conformity With Trust Indenture Act........................... 50
SECTION 9.06. Reference in Notes to Supplemental Indentures................. 50
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. Redemption.................................................... 51
SECTION 10.02. Form of Redemption Notice..................................... 51
SECTION 10.03. Notes Payable on Redemption Date.............................. 52
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and Opinions etc...................... 52
SECTION 11.02. Form of Documents Delivered to Indenture Trustee.............. 54
SECTION 11.03. Acts of Noteholders........................................... 54
SECTION 11.04. Notices, etc. to Indenture Trustee, Issuer and
Rating Agencies............................................... 55
SECTION 11.05. Notices to Noteholders; Waiver................................ 56
SECTION 11.06. Alternate Payment and Notice Provisions....................... 56
SECTION 11.07. Conflict with Trust Indenture Act............................. 56
SECTION 11.08. Effect of Headings and Table of Contents...................... 57
SECTION 11.09. Successors and Assigns........................................ 57
SECTION 11.10. Separability.................................................. 57
SECTION 11.11. Benefits of Indenture......................................... 57
SECTION 11.12. Legal Holidays................................................ 57
SECTION 11.13. GOVERNING LAW................................................. 57
SECTION 11.14. Counterparts.................................................. 57
SECTION 11.15. Recording of Indenture........................................ 57
v
<PAGE>
Page
SECTION 11.16. Trust Obligation.............................................. 58
SECTION 11.17. No Petition................................................... 58
SECTION 11.18. Inspection.................................................... 58
EXHIBITS
EXHIBIT A - Schedule of Receivables.....................................A-1
EXHIBIT B - [Reserved]..................................................B-1
EXHIBIT C - Form of Depository Agreement................................C-1
EXHIBIT D - Form of Note................................................D-1
vi
<PAGE>
This INDENTURE dated as of [________________] is hereby executed by and
between CATERPILLAR FINANCIAL ASSET TRUST [______], a Delaware business trust
(the "Issuer" or the "Trust"), and [___________________________], 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 [____]% Asset
Backed Notes, Class A-2 [____]% Asset Backed Notes and Class A-3 [____]% 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
[_______ __, ____], 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 [____]% Asset Backed Note.
"CLASS A-2 NOTE" means any Note, substantially in the form of EXHIBIT D,
designated therein as a Class A-2 [____]% Asset Backed Note.
"CLASS A-3 NOTE" means any Note, substantially in the form of EXHIBIT D,
designated therein as a Class A-3 [____]% Asset Backed Note.
"CLASS A-1 NOTE INTEREST RATE" means, for any Distribution Date, [____]%
per annum.
"CLASS A-2 NOTE INTEREST RATE" means, for any Distribution Date, [____]%
per annum.
"CLASS A-3 NOTE INTEREST RATE" means, for any Distribution Date, [____]%
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 [_________________].
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
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"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 [______________________________________], Attention: [________________],
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
[___________________________], 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 [__] day of each calendar month, or, if any
such date is not a Business Day, the next succeeding Business Day, commencing
[_________________].
"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
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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 [____________________], 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 [________]-[___] 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).
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings specified
in SECTION 2.04.
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"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.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes, or
a class of Notes, as applicable, Outstanding at the date of determination.
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"OWNER TRUSTEE" means [ ], 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.
"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
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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 [_________________], 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 [____________________].
"TRUST AGREEMENT" means the Trust Agreement, as amended and restated as of
[___________________], 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.
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(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.
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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 $[________] Class A-2 Notes for an original issue in an aggregate principal
amount of $[_________], and Class A-3 Notes for an original issue in an
aggregate principal amount of $[_________]. 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.
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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
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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,
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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 Sections
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
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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
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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
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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 [____], 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
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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
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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:
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(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 [____]),
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, [____], the period from the Closing Date to
December 31, [____]) 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
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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
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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 [____]-[_]
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 [____]-[_] 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.
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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.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal 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
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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
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(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
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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
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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;
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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 all the Notes have been declared due and
payable pursuant to Section 5.02, 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), 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.
(b) If the Indenture Trustee collects any money or property pursuant to
this ARTICLE V 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), 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 Notes for amounts due and unpaid on the
Class A Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class A Notes for
principal;
FOURTH: 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
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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
(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.
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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 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;
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(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.
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).
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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.
(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,
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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:
(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.
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(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.
(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
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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 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
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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.
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.
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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 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.
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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
(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.
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(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 Section 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 Section 310(b), including
the optional provision permitted by the second sentence of TIA Section
310(b)(9); PROVIDED, HOWEVER, that there shall be excluded from the operation of
TIA Section 310(b)(1) any indenture or indentures under which other securities
of the issuer are outstanding if the requirements for such exclusion set forth
in TIA Section 310(b)(1) are met.
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 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
[____________] 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.
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.
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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 Section 312(b), with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
SECTION 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 Section 313(c)) such
summaries of any information, documents and reports required to be filed by
the Issuer pursuant to CLAUSES (I) and (II) of this SECTION 7.03(A) 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 Section
313(a), within 60 days after each March 31 beginning with March 31, [____], the
Indenture Trustee shall mail to each Noteholder as required by TIA Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are
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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.
(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;
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(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) 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
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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 Sections 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.
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;
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(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.
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
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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;
(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.
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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, 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
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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.
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,
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to any Holder of any Note shall not impair or affect the validity of the
redemption of any other Note.
SECTION 10.03. NOTES PAYABLE ON REDEMPTION DATE. The Notes or portions
thereof to be redeemed shall, following notice of redemption as required by
SECTION 10.02, on the Redemption Date become due and payable at the Redemption
Price and (unless the Issuer shall default in the payment of the Redemption
Price) no interest shall accrue on the Redemption Price for any period after the
date to which accrued interest is calculated for purposes of calculating the
Redemption Price.
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 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.
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(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.
(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)
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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 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
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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 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 [_________]-[___], in care of [_________], as Owner
Trustee, [__________________], Attention: [_____________], 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.
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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.
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 Sections 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
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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 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.
57
<PAGE>
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.
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.
58
<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 [____]-[_],
By: [_______________], not in
its individual capacity but
solely as Owner Trustee,
By:_____________________________________
Name:
Title:
[_______________________________],
not in its individual capacity but as
Indenture Trustee,
By:_____________________________________
Name: [_____________________]
Title: [_______________]
<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 [______________] 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 [__] day of [______],
[____].
__________________________
Notary Public
[Seal]
My commission expires:
______________________
60
<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 [_______________] 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
[__________________________] 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 [____] day of [______],
[____].
__________________________
Notary Public
[Seal]
My commission expires:
______________________
61
<PAGE>
EXHIBIT A
SCHEDULE OF RECEIVABLES
A-1
<PAGE>
EXHIBIT B
[RESERVED]
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 [______ __, ____] . 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 [______] 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 [________]-[___]
[[____]%] [[____]%] [[____]%] [CLASS A-l] [CLASS A-2]
[CLASS A-3]
ASSET BACKED NOTES
Caterpillar Financial Asset Trust [_______]-[___], 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 $[INSERT INITIAL PRINCIPAL AMOUNT OF
NOTE] and the denominator of which is [$[________] [for Class A-1 Notes]]
[$[_________] [for Class A-2 Notes]] [$[_________] [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 [______]
Distribution Date [for Class A-1]] [the [_______] Distribution Date [for Class
A-2]] [and [______] 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 [______ __], [____] 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 [___]-[__],
By: [________________], 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.
[__________________________________],
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 [[____]%] [[____]%]
[[____]%] [Class A-1] [Class A-2] [Class A-3] Asset Backed Notes (herein called
the "Notes"), all issued under an Indenture dated as of [_______], [____] (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and [_____________________], 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 [___] day of
each calendar month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing [___________].
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the [[________] Distribution Date [for
Class A-1]] [the [_________] Distribution Date [for Class A-2] [the ________
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 [_________]),
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 shall be binding upon all future Holders of this Note
and of any Note issued upon the
D-6
<PAGE>
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 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.
D-7
<PAGE>
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.
It is the intent of the Seller, the Noteholders, the Note Owners, the
Issuer, the Certificateholders and the Certificate Owners that, the Notes will
be classified as indebtedness of the Issuer for all United States tax purposes.
The Noteholders, by acceptance of a Note, agree to treat, and to take no action
inconsistent with the treatment of, the Notes for such tax purposes as
indebtedness of the Issuer.
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.
D-8
<PAGE>
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 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 [__________________________] 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
<PAGE>
EXHIBIT 4.1(B)
FORM OF INDENTURE
(SENIOR NOTES AND JUNIOR NOTES)
- --------------------------------------------------------------------------------
CATERPILLAR FINANCIAL ASSET TRUST [________]-[___]
Class A-1 [____]% Asset Backed Notes and
Class A-2 [____]% Asset Backed Notes
Class A-3 [____]% Asset Backed Notes
Class B [__]% Asset Backed Notes
INDENTURE
Dated as of [_____________], [_____]
[_____________________]
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.
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<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............. 10
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........................ 11
SECTION 2.03. Temporary Notes............................................... 11
SECTION 2.04. Registration; Registration of Transfer and Exchange........... 12
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes.................... 13
SECTION 2.06. Persons Deemed Owner.......................................... 14
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest......... 14
SECTION 2.08. Cancellation.................................................. 15
SECTION 2.09. Release of Collateral......................................... 15
SECTION 2.10. Book-Entry Notes.............................................. 16
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............................. 17
SECTION 3.02. Maintenance of Office or Agency............................... 17
SECTION 3.03. Money for Payments To Be Held in Trust........................ 17
SECTION 3.04. Existence..................................................... 19
SECTION 3.05. Protection of Trust Estate.................................... 19
SECTION 3.06. Opinions as to Trust Estate................................... 20
SECTION 3.07. Performance of Obligations; Servicing of Receivables.......... 20
SECTION 3.08. Negative Covenants............................................ 22
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Page
SECTION 3.09. Statements as to Compliance................................... 23
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms........... 23
SECTION 3.11. Successor or Transferee....................................... 25
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.......................................... 26
SECTION 3.17. Removal of Administrator...................................... 26
SECTION 3.18. Restricted Payments........................................... 26
SECTION 3.19. Notice of Events of Default................................... 26
SECTION 3.20. Further Instruments and Acts.................................. 26
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture....................... 27
SECTION 4.02. Application of Trust Money.................................... 28
SECTION 4.03. Repayment of Moneys Held by Paying Agent...................... 28
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............................................. 30
SECTION 5.04. Remedies; Priorities.......................................... 32
SECTION 5.05. Optional Preservation of the Receivables...................... 34
SECTION 5.06. Limitation of Suits........................................... 34
SECTION 5.07. Unconditional Rights of Noteholders to Receive Principal and
Interest...................................................... 35
SECTION 5.08. Restoration of Rights and Remedies............................ 35
SECTION 5.09. Rights and Remedies Cumulative................................ 36
SECTION 5.10. Delay or Omission Not a Waiver................................ 36
SECTION 5.11. Control by Noteholders........................................ 36
SECTION 5.12. Waiver of Past Defaults....................................... 36
SECTION 5.13. Undertaking for Costs......................................... 37
SECTION 5.14. Waiver of Stay or Extension Laws.............................. 37
SECTION 5.15. Action on Notes............................................... 37
SECTION 5.16. Performance and Enforcement of Certain Obligations............ 38
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Page
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee................................... 39
SECTION 6.02. Rights of Indenture Trustee................................... 40
SECTION 6.03. Individual Rights of Indenture Trustee........................ 40
SECTION 6.04. Indenture Trustee's Disclaimer................................ 41
SECTION 6.05. Notice of Defaults............................................ 41
SECTION 6.06. Reports by Indenture Trustee to Holders....................... 41
SECTION 6.07. Compensation and Indemnity.................................... 41
SECTION 6.08. Replacement of Indenture Trustee.............................. 42
SECTION 6.09. Successor Indenture Trustee by Merger......................... 43
SECTION 6.10. Appointment of Co-Trustee or Separate Indenture Trustee....... 43
SECTION 6.11. Eligibility; Disqualification................................. 44
SECTION 6.12. Preferential Collection of Claims Against Issuer.............. 44
SECTION 6.13. Appointment of Custodians..................................... 45
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders................................................... 45
SECTION 7.02. Preservation of Information; Communications to Noteholders.... 45
SECTION 7.03. Reports by Issuer............................................. 45
SECTION 7.04. Reports by Indenture Trustee.................................. 46
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money........................................... 46
SECTION 8.02. Trust Accounts................................................ 47
SECTION 8.03. General Provisions Regarding Accounts......................... 48
SECTION 8.04. Release of Trust Estate....................................... 49
SECTION 8.05. Opinion of Counsel............................................ 49
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Page
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders........ 49
SECTION 9.02. Supplemental Indentures with Consent of Noteholders........... 51
SECTION 9.03. Execution of Supplemental Indentures.......................... 52
SECTION 9.04. Effect of Supplemental Indenture.............................. 52
SECTION 9.05. Conformity With Trust Indenture Act........................... 52
SECTION 9.06. Reference in Notes to Supplemental Indentures................. 53
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. Redemption................................................... 53
SECTION 10.02. Form of Redemption Notice.................................... 53
SECTION 10.03. Notes Payable on Redemption Date............................. 54
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and Opinions etc..................... 54
SECTION 11.02. Form of Documents Delivered to Indenture Trustee............. 56
SECTION 11.03. Acts of Noteholders.......................................... 57
SECTION 11.04. Notices, etc. to Indenture Trustee, Issuer and Rating Agencies..
57
SECTION 11.05. Notices to Noteholders; Waiver............................... 58
SECTION 11.06. Alternate Payment and Notice Provisions...................... 59
SECTION 11.07. Conflict with Trust Indenture Act............................ 59
SECTION 11.08. Effect of Headings and Table of Contents..................... 59
SECTION 11.09. Successors and Assigns....................................... 59
SECTION 11.10. Separability................................................. 59
SECTION 11.11. Benefits of Indenture........................................ 59
SECTION 11.12. Legal Holidays............................................... 59
SECTION 11.13. GOVERNING LAW................................................ 60
SECTION 11.14. Counterparts................................................. 60
SECTION 11.15. Recording of Indenture....................................... 60
SECTION 11.16. Trust Obligation............................................. 60
SECTION 11.17. No Petition.................................................. 60
SECTION 11.18. Inspection................................................... 60
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Page
EXHIBITS
EXHIBIT A - Schedule of Receivables.....................................A-1
EXHIBIT B - Reserved....................................................B-1
EXHIBIT C - Form of Depository Agreement................................C-1
EXHIBIT D - Form of Class A Note........................................D-1
EXHIBIT E - Form of Class B Note........................................E-1
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This INDENTURE dated as of [_____________] [______], is hereby executed by
and between CATERPILLAR FINANCIAL ASSET TRUST [________]-[____], a Delaware
business trust (the "Issuer" or the "Trust"), and [___________________________],
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
ratable benefit of the Holders of the Issuer's Class A-1 [____]% Asset Backed
Notes, Class A-2 [____]% Asset Backed Notes, Class A-3 [____]% Asset Backed
Notes (collectively, the "Class A Notes") and the Class B [____]% Asset Backed
Notes (the "Class B Notes", and together with the Class A Notes, 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, ratably
without prejudice, priority
<PAGE>
or distinction, and to secure compliance with the provisions of this Indenture,
all as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders of the
Notes, acknowledges such Grant, accepts the 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
[_____________], [_____], 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.
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"BASIC DOCUMENTS" means the Certificate of Trust, the Trust Agreement, the
Purchase Agreement, the Sale and Servicing Agreement, the Administration
Agreement, the Depository Agreement, the Custodial Agreement, the Underwriting
Agreements and other documents and certificates delivered in connection
therewith.
"BOOK-ENTRY CLASS A NOTES" means a beneficial interest in the Class A
Notes, ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in SECTION 2.10.
"BOOK-ENTRY CLASS B NOTES" means a beneficial interest in the Class B
Notes, ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in SECTION 2.10.
"BOOK-ENTRY NOTES" means the Book-Entry Class A Notes and the Book-Entry
Class B Notes.
"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 NOTE OWNER" means, with respect to a Book-Entry Class A Note, the
Person who is the owner of such Book-Entry Class A 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).
"CLASS A NOTES" means, collectively, the Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes."
"CLASS A-1 NOTE" means any Note, substantially in the form of EXHIBIT D,
designated therein as a Class A-1 [____]% Asset Backed Note.
"CLASS A-2 NOTE" means any Note, substantially in the form of EXHIBIT D,
designated therein as a Class A-2 [____]% Asset Backed Note.
3
<PAGE>
"CLASS A-3 NOTE" means any Note, substantially in the form of EXHIBIT D,
designated therein as a Class A-3 [____]% Asset Backed Note.
"CLASS A-1 NOTE INTEREST RATE" means, for any Distribution Date, [____]%
per annum.
"CLASS A-2 NOTE INTEREST RATE" means, for any Distribution Date, [____]%
per annum.
"CLASS A-3 NOTE INTEREST RATE" means, for any Distribution Date, [____]%
per annum.
"CLASS B NOTE OWNER" means, with respect to a Book-Entry Class B Note, the
Person who is the owner of such Book-Entry Class B 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).
"CLASS B NOTE RATE" means, for any Distribution Date, [__]% per annum.
"CLASS B NOTES" means any Note, substantially in the form of EXHIBIT E,
designated therein as a Class B [__]% Asset Backed Note.
"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 [___________], [_____] .
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"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 [______________________________________], Attention: [________________],
except that for purposes of SECTION 3.02, such term shall mean the office or
agency of the Indenture Trustee in the [______________________________________]
which office at the date hereof is located at [___________________________], or
at such other address as the Indenture Trustee may designate from time to time
by notice to the Noteholders and the 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
4
<PAGE>
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 [___] day of each calendar month, or, if any
such date is not a Business Day, the next succeeding Business Day, commencing
[______________, ____].
"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 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 [_____________________________________], as
Indenture Trustee under this Indenture, or any successor Indenture Trustee under
this Indenture.
5
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"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 [________]-[___] 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 a Class A Note Owner and/or a Class B Note Owner.
"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, the Class
A-3 Notes and the Class B 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.
6
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"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; PROVIDED, HOWEVER, that (i) at anytime following an Event of
Default, 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, and (ii) at any time
following a Servicer Default, in determining whether the Holders of the
requisite Outstanding Amount may terminate all the rights and obligations of the
Servicer to the extent set forth in Section 8.01 of the Sale and Servicing
Agreement the Class B Notes shall be disregarded and deemed not to be
Outstanding. 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.
"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 [____________], 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
7
<PAGE>
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.
"REDEMPTION DATE" means the Distribution Date specified by the Servicer or
the Issuer pursuant to SECTION 10.01, as applicable.
"REDEMPTION PRICE" means in the case of a redemption of the Class A-3 Notes
and the Class B Notes pursuant to SECTION 10.01, an amount equal to the
principal amount of the Class A-3 Notes and the Class B Notes redeemed plus
accrued and unpaid interest thereon at the Class A-3 Note Interest Rate and the
Class B Note Interest Rate to but excluding the Redemption Date.
"REGISTERED HOLDER" means the Person in whose name a Note is registered in
the Note Register on the applicable Record Date.
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"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 [______________], [_____], 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 [_______]-[____].
"TRUST AGREEMENT" means the Trust Agreement, as amended and restated as of
[_____________], [_____], 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.
(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
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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.
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.
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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, and the Class B Notes,
together with the Indenture Trustee's certificate of authentication, shall be in
substantially the form set forth in EXHIBIT E, in each case 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
Class A Notes set forth in EXHIBIT D and the terms of the Class B Notes set
forth in EXHIBIT E 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 $[________] Class A-2 Notes for an original issue in an aggregate principal
amount of $[_________], Class A-3 Notes for an original issue in an aggregate
principal amount of $[_________] and Class B Notes for an original issue in an
aggregate principal amount of $[_________]. The aggregate principal amount of
Class A-1 Notes, Class A-2 Notes , Class A-3 Notes and Class B Notes outstanding
at any time may not exceed such amounts, respectively, except as provided in
SECTION 2.05.
Each Note shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes in the minimum denomination of $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
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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 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.
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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, 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
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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 Class A Notes shall accrue interest as provided in the form
of the Class A Note set forth in EXHIBIT D and the Class B Notes shall accrue
interest as provided in the form of the Class B Note set forth in EXHIBIT E, and
in each case 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 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)
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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 Class A Note shall be payable in installments on
each Distribution Date as provided in the form of Class A Note set forth in
EXHIBIT D. The principal of the Class B Notes shall be payable in installments
on each Distribution Date as provided in the form of Class B Note set forth in
Exhibit E. 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 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.
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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 Sections
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.
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
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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 Class A
Note Distribution Account and the Class B 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 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
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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, the Class A Note Distribution Account and the Class B 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, the Class A Note Distribution Account and the Class B
Note Distribution Account for payments of Class A Notes and Class B Notes,
respectively, 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 (a) the
Class A Note Distribution Account an aggregate sum sufficient to pay the amounts
then becoming due under the Class A 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) and (b) the Class B Note Distribution Account, an aggregate
sum sufficient to pay the amounts then becoming due under the Class B Notes,
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
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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
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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 [_____], 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
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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
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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:
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(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
[_____]), 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, [_____], the period from the Closing Date to
December 31, [_____]) 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
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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
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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
[_____]-[___] 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 [______]-[___] 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.
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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.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal 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, (C)
the Class A-3 Final Scheduled Distribution Date with respect to the Class
A-3 Notes and (D) the Class B Note Final Scheduled Distribution Date with
respect to the Class B 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
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Indenture Trustee for cancellation when due to (x) the Class A-1 Final
Scheduled Distribution Date, Class A-2 Final Scheduled Distribution Date,
Class A-3 Final Scheduled Distribution Date or Class B Final 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
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(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
(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
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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 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
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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 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
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of Notes allowed in any judicial proceedings relative to the Issuer, its
creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the 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;
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(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
(iv) in the event that all the Notes have been declared due and
payable pursuant to Section 5.02, 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), 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.
(b) If the Indenture Trustee collects any money or property pursuant to
this ARTICLE V 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), 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 Class A Noteholders for amounts due and unpaid on the
Class A Notes for interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class A Notes for
interest;
THIRD: to Holders of Class A Notes for amounts due and unpaid on the
Class A Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class A Notes for
principal;
FOURTH: to Holders of Class B Notes for amounts due and unpaid on the
Class B Notes for interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class B Notes for
interest;
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FIFTH: to Holders of Class B Notes for amounts due and unpaid on the
Class B Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class B Notes for
principal; 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
(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;
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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 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.
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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.
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
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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.
(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
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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:
(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
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(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.
(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.
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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 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
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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.
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
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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 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
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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
(iii) the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
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(c) Any notice, request or other writing given to the 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 Section 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 Section 310(b), including
the optional provision permitted by the second sentence of TIA Section
310(b)(9); PROVIDED, HOWEVER, that there shall be excluded from the operation of
TIA Section 310(b)(1) any indenture or indentures under which other securities
of the issuer are outstanding if the requirements for such exclusion set forth
in TIA Section 310(b)(1) are met.
If an Event of Default, in accordance with Section 6.08 of this Indenture,
within 90 days after ascertaining the occurrence of such Event of Default the
Indenture Trustee shall resign with respect to the Class A Notes and the Class B
Notes, and the Issuer shall appoint a successor Indenture Trustee for one or
both of such Classes, as applicable, so that there will be separate Indenture
Trustees for the Class A Notes and the Class B Notes. In the event the
Indenture Trustee fails to comply with the terms of the preceding sentence, the
Indenture Trustee shall comply with TIA Section 3.10(b)(ii) and (iii).
In the case of the appointment hereunder of a successor Indenture Trustee
with respect to any Class of Notes pursuant to Section 6.11, the Issuer, the
retiring Indenture Trustee and the successor Indenture Trustee with respect to
such Class of Notes shall execute and deliver an indenture supplemental hereto
wherein the each successor Indenture Trustee shall accept such appointment and
which (i) shall contain such provisions as shall be necessary or desirable to
transfer and confirm to, and to vest in, the successor Indenture Trustee all the
rights, powers, trusts and duties of the retiring Indenture Trustee with respect
to the Notes of the Class to which the appointment of such successor Indenture
Trustee relates, (ii) if the retiring Indenture Trustee
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is not retiring with respect to all Classes of Notes, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Indenture Trustee with respect
to the Notes of each Class as to which the retiring Indenture Trustee is not
retiring shall continue to be vested in the Indenture Trustee, and (iii) shall
add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more
than one Indenture Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Indenture Trustees co-trustees of
the same trust and that each such Indenture Trustee shall be trustee of a trust
or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Indenture Trustee; and upon the removal of the
retiring Indenture Trustee shall become effective to the extent provided
therein.
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 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.
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.
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(b) Noteholders may communicate, pursuant to TIA Section 312(b), with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
SECTION 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 Section 313(c)) such
summaries of any information, documents and reports required to be filed by
the Issuer pursuant to CLAUSES (I) and (II) of this SECTION 7.03(A) 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 Section
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 Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
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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 Class A Note Distribution
Account and/or the Class B Note Distribution Account as provided in Sections
5.04 and 5.05 of the Sale and Servicing Agreement.
(c) On each Distribution Date and Redemption Date, the Indenture Trustee
shall distribute all amounts on deposit in the Class A Note Distribution Account
to the Class A Noteholders, in respect of the Class A Notes to the extent of
amounts due and unpaid on the Class A 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 Class A Notes; PROVIDED that
if there are not sufficient funds in the Class A Note Distribution Account
to pay the entire amount of accrued and unpaid interest then due on the
Class A Notes, the amount in the Class A Note Distribution Account shall be
applied to the payment of such interest on each class of the Class A Notes
pro rata on the basis of the total such interest due on the Class A 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;
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(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.
(d) On each Distribution Date and Redemption Date, the Indenture Trustee
shall distribute all amounts on deposit in the Class B Note Distribution Account
to the Class B Noteholders in respect of the Class B Notes to the extent of
amounts due and unpaid on the Class B 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 Class B Notes; PROVIDED that
if there are not sufficient funds in the Class B Note Distribution Account
to pay the entire amount of accrued and unpaid interest then due on the
Class B Notes, the amount, if any, in the Class B Note Distribution Account
shall be applied to the payment of such interest on each class of the Class
B Notes pro rata on the basis of the total such interest due on the Class B
Notes; and
(ii) to the Holders of the Class B Notes until the Outstanding Amount
of the Class B Notes is reduced to zero; PROVIDED that no principal
payments will be made to with respect to the Class B Notes until the
Outstanding Amount of the Class B 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.
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(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) 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 Sections 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.
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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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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;
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(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,
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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. The Class A-3 Notes and the Class B 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 the Class B 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 and the Class B Notes are to be redeemed
pursuant to this SECTION 10.01, 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
(i) Class A Note Distribution Account the Redemption Price of the Class A-3
Notes to be redeemed and (ii) the Class B Note Distribution Account the
Redemption Price of the Class B Notes to be redeemed, whereupon all such Class
A-3 Notes and Class B 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.
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SECTION 10.02. FORM OF REDEMPTION NOTICE. (a) Notice of redemption under
SECTION 10.01 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.
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, 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 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.
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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.
(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.
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(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 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
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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 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 [________]-[___], in care of
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[___________], as Owner Trustee, [________________________] Attention:
[_________], 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.
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
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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 Sections 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.08. 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 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
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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.
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,
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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.
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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 [______]-___[],
By: [____________], not in
its individual capacity but
solely as Owner Trustee,
By:________________________________
Name:
Title:
[_______________________________],
not in its individual capacity
but as Indenture Trustee,
By:________________________________
Name: [_____________________]
Title: [_______________]
<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 [________________] 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 [__] day of [______],
[_____].
__________________________
Notary Public
[Seal]
My commission expires:
______________________
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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 [_______________] 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
[__________________________] 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 [____] day of [______],
[______].
__________________________
Notary Public
[Seal]
My commission expires:
______________________
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EXHIBIT A
SCHEDULE OF RECEIVABLES
A-1
<PAGE>
EXHIBIT B
[RESERVED]
B-1
<PAGE>
EXHIBIT C
FORM OF DEPOSITORY AGREEMENT
C-1
<PAGE>
EXHIBIT D
FORM OF CLASS A NOTE
REGISTERED $___________*
No. ____
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.________
[UNLESS THIS CLASS A 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 CLASS A
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, [________], HAS AN INTEREST HEREIN.]
THE PRINCIPAL OF THIS CLASS A NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A NOTE AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
[THIS CLASS A NOTE WAS ISSUED ON [______________], [____] . IT IS POSSIBLE
THAT APPLICABLE LAW AND PROPOSED TREASURY REGULATIONS COULD BE INTERPRETED TO
PROVIDE THAT ALL INTEREST PAYMENTS ON THIS CLASS A NOTE ARE TO BE TREATED AS
PART OF THE STATED REDEMPTION PRICE AT MATURITY OF THIS CLASS A NOTE (I.E.,
PRINCIPAL) THEREBY CAUSING THIS CLASS A 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 CLASS A
NOTE PAYS IN ACCORDANCE WITH PROJECTED CASH FLOWS BASED ON CERTAIN ASSUMPTIONS
USED IN PRICING THE CLASS A NOTES: (I) THE AMOUNT
_______________________
* Denominations of [______] and integral multiples thereof.
D-1
<PAGE>
OF OID AS A PERCENTAGE OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS CLASS A NOTE
WOULD BE APPROXIMATELY ____%; AND (II) THE ANNUAL YIELD OF THIS CLASS A 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 [_______]-[___]
[[____]%] [[____]%] [[____]%] [CLASS A-l] [CLASS A-2] [CLASS A-3]
ASSET BACKED NOTES
Caterpillar Financial Asset Trust [________]-[___], 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 $[INSERT INITIAL PRINCIPAL AMOUNT OF
CLASS A NOTE] and the denominator of which is [$[________] [for Class A-1
Notes]] [$[_________] [for Class A-2 Notes]] [$[_________] [for Class A-3 Notes]
] by (ii) the aggregate amount, if any, payable from the Class A 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 Class A Note shall be due and
payable on the earlier of [the [______] Distribution Date [for Class A-1]] [the
[_______] Distribution Date [for Class A-2]] [and [______] Distribution for the
[Class A-3]] and the Redemption Date, if any, pursuant to SECTION 10.01 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 Class A Note at the [Class A-1] [Class A-2]
[Class A-3] Note Interest Rate on each Distribution Date until the principal of
this Class A Note is paid or made available for payment, on the principal amount
of this Class A 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 Class A Note). Interest on this Class A 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 [_____________], [____] 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 Class A Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Class A 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 Class A Note shall be applied first to interest due and
payable on this Class A Note as provided above and then to the unpaid principal
of this Class A Note.
Reference is made to the further provisions of this Class A Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Class A 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 Class A
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 [________]-[___],
By: [_______________], 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 Class A Notes designated above and referred to in the
within-mentioned Indenture.
[__________________________________],
not in its individual capacity but
solely as Indenture Trustee,
By:____________________________________
Name:
Title:
D-5
<PAGE>
[REVERSE OF NOTE]
This Class A Note is one of the [Class A-1] [Class A-2] [Class A-3] Notes
of a duly authorized issue of Class A Notes of the Issuer, designated as its
[[____]%] [[____]%] [[____]%] [Class A-1] [Class A-2] [Class A-3] Asset Backed
Notes (herein called the "Class A Notes"), all issued under an Indenture dated
as of [_______] 1, 199[_] (such indenture, as supplemented or amended, is herein
called the "Indenture"), between the Issuer and [_____________________], 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 Class A Notes. The Notes are subject to all terms of the Indenture. All
terms used in this Class A Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class A Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Class A Notes will be payable on each Distribution Date in
an amount described on the face hereof. "DISTRIBUTION DATE" means the [__] day
of each calendar month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing [___________].
As described above, the entire unpaid principal amount of this Class A Note
shall be due and payable on the earlier of the [[________] Distribution Date
[for Class A-1]] [the [_________] Distribution Date [for Class A-2] [the
[________] Distribution Date [for Class A-3]] and the Redemption Date, if any,
pursuant to SECTION 10.01 of the Indenture. Notwithstanding the foregoing, the
entire unpaid principal amount of the Class A 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 Class A Notes representing a
majority of the Outstanding Amount of the Class A Notes have declared the Class
A Notes to be immediately due and payable in the manner provided in SECTION 5.02
of the Indenture. All principal payments on the Class A Notes of a Class shall
be made pro rata to the Class A Noteholders of such Class entitled thereto.
Payments of interest on this Class A 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 Class A Note, shall be made by check mailed
to the Person whose name appears as the Registered Holder of this Class A 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 Class A Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be [_________]), 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
D-6
<PAGE>
without requiring that this Class A Note be submitted for notation of payment.
Any reduction in the principal amount of this Class A Note (or any one or more
Predecessor Notes) effected by any payments made on any Distribution Date shall
be binding upon all future Holders of this Note and of any Class A 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 Class A 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 Class A 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 Class A Note may be registered on the Note
Register upon surrender of this Class A 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 Class A 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 Class A 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 Class A Note or, in the
case of a Note Owner, a beneficial interest in a Class 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
Class A 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
D-7
<PAGE>
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Class A Noteholder or Class A Note Owner, by acceptance of a Class A
Note or, in the case of a Class A Note Owner, a beneficial interest in a Class 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 Class A Notes, the Indenture or the Basic Documents.
It is the intent of the Seller, the Class A Noteholders, the Note Owners,
the Issuer, the Certificateholders and the Certificate Owners that, the Class A
Notes will be classified as indebtedness of the Issuer for all United States tax
purposes. The Class A Noteholders, by acceptance of a Class A Note, agree to
treat, and to take no action inconsistent with the treatment of, the Notes for
such tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Class A
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Class A 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 Class A 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 Class A Notes under the Indenture at
any time by the Issuer with the consent of the Holders of Class A 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
Class A Notes issued thereunder.
The term "Issuer" as used in this Class A Note includes any successor to
the Issuer under the Indenture.
D-8
<PAGE>
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 Class A Notes under the Indenture.
The Class A Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Class A 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 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 Class A 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 Class A
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 [__________________________] 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 Class A 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 Class A 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 Class A 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 Class A Note and all rights thereunder, and hereby irrevocably
constitutes and appoints attorney, to transfer said Class A 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
<PAGE>
EXHIBIT E
FORM OF CLASS B NOTE
REGISTERED $___________*
No. ____
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.________
[UNLESS THIS CLASS B 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 CLASS B
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, [________], HAS AN INTEREST HEREIN.]
THE PRINCIPAL OF THIS CLASS B NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS B NOTE AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
[THIS CLASS B NOTE WAS ISSUED ON [_____________], [____] . IT IS POSSIBLE
THAT APPLICABLE LAW AND PROPOSED TREASURY REGULATIONS COULD BE INTERPRETED TO
PROVIDE THAT ALL INTEREST PAYMENTS ON THIS CLASS B NOTE ARE TO BE TREATED AS
PART OF THE STATED REDEMPTION PRICE AT MATURITY OF THIS CLASS B NOTE(I.E.,
PRINCIPAL) THEREBY CAUSING THIS CLASS B 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 CLASS B
NOTE PAYS IN ACCORDANCE WITH PROJECTED CASH FLOWS BASED ON CERTAIN ASSUMPTIONS
USED IN PRICING THE CLASS B NOTES: (I) THE AMOUNT
_____________________
* Denominations of [______] and integral multiples thereof.
E-1
<PAGE>
OF OID AS A PERCENTAGE OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS CLASS B NOTES
WOULD BE APPROXIMATELY ____%; AND (II) THE ANNUAL YIELD OF THIS CLASS B NOTES
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.]
E-2
<PAGE>
CATERPILLAR FINANCIAL ASSET TRUST [_______]-[___]
CLASS B [____]% ASSET BACKED NOTES
Caterpillar Financial Asset Trust [________]-[___], 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
CLASS B NOTE] and the denominator of which is $[________] by (ii) the aggregate
amount, if any, payable from the Class B Note Distribution Account in respect of
principal on the Class B 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 [______] Distribution Date and the Redemption
Date, if any, pursuant to SECTION 10.01 of the Indenture. No payments of
principal of the Class B Notes shall be made until the principal of the Class A
Notes has been paid in its entirety. The Issuer will pay interest on this Class
B Note at the Class B Note Interest Rate on each Distribution Date until the
principal of this Class B Note is paid or made available for payment, on the
principal amount of this Class B 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 Class B Note). Interest on this Class B 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 [____________],
[____] 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 Class B Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Class B 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 Class B Note shall be applied first to interest due and
payable on this Class B Note as provided above and then to the unpaid principal
of this Class B Note.
Reference is made to the further provisions of this Class B Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Class B Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Class B
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.
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<PAGE>
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 [_______]-[___],
By: [_______________], not in
its individual capacity but
solely as Owner Trustee under
the Trust Agreement,
By: _____________________________
Name:
Title:
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<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Notes designated above and referred to in the
within-mentioned Indenture.
[__________________________________],
not in its individual capacity but
solely as Indenture Trustee,
By:____________________________________
Name:
Title:
E-5
<PAGE>
[REVERSE OF CLASS B NOTE]
This Class B Note is one of the Class B Notes of a duly authorized issue of
Class B Notes of the Issuer, designated as its [___]% Class B Asset Backed Notes
(herein called the "Class B Notes"), all issued under an Indenture dated as of
[______________], [____] (such indenture, as supplemented or amended, is herein
called the "Indenture"), between the Issuer and [_____________________], 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 Class B Notes. The Class B Notes are subject to all terms of the Indenture.
All terms used in this Class B Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class B Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Class B Notes will be payable on each Distribution Date in
an amount described on the face hereof. "DISTRIBUTION DATE" means the [__] day
of each calendar month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing [___________].
As described above, the entire unpaid principal amount of this Class B Note
shall be due and payable on the earlier of the [_________] Distribution Date and
the Redemption Date, if any, pursuant to SECTION 10.01 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Class B
Notes shall be due and payable on the date on which an Event of Default shall
have occurred and be continuing and the Indenture Trustee or the Holders of the
Class B Notes representing a majority of the Outstanding Amount of the Class B
Notes have declared the Class B Notes to be immediately due and payable in the
manner provided in SECTION 5.02 of the Indenture. All principal payments on the
Class B Notes shall be made pro rata to the Class B Noteholders entitled
thereto.
Payments of interest on this Class B 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 Class B Note, shall be made by check mailed
to the Person whose name appears as the Registered Holder of this Class B 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 the Class B Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be [_________]), 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 Class B Note be submitted for notation
of payment. Any reduction in the principal amount of this Class B Note (or any
one or more Predecessor Notes) effected by any payments made on any Distribution
Date shall be binding upon all future
E-6
<PAGE>
Holders of this Class B Note and of any Class B 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 Class B 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
Class B 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 B Note Interest Rate to the extent lawful.
[As provided in the Indenture, the Class A-3 Notes and the Class B 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 Class B Note may be registered on the Note
Register upon surrender of this Class B 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 Class B 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 Class B 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 Class A Note or, in the
case of a Note Owner, a beneficial interest in a Class B 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
Class B 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
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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 Class B Note or, in the
case of a Note Owner, a beneficial interest in a Class B 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 Class B Notes, the Indenture or the Basic Documents.
It is the intent of the Seller, the Class B Noteholders, the Class B Note
Owners, the Issuer, the Certificateholders and the Certificate Owners that, the
Class B Notes will be classified as indebtedness of the Issuer for all United
States tax purposes. The Class B Noteholders, by acceptance of a Class B Note,
agree to treat, and to take no action inconsistent with the treatment of, the
Class B Notes for such tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Class B
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Class B 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 Class B 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 Class B
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
Class B Notes issued thereunder.
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EXHIBIT 4.2
FORM OF TRUST AGREEMENT
- --------------------------------------------------------------------------------
CATERPILLAR FINANCIAL ASSET TRUST [____]-[__]
AMENDED AND RESTATED TRUST AGREEMENT
between
CATERPILLAR FINANCIAL FUNDING CORPORATION,
as Seller
and
[____________________]
as Owner Trustee
Dated as of [___________________]
- --------------------------------------------------------------------------------
<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..................................... 5
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................. 6
SECTION 2.11. Gross Income and Loss Allocations........................ 7
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..................................... 9
SECTION 3.03. Authentication of Certificates........................... 10
SECTION 3.04. Registration of Transfer and Exchange of
Certificates......................................... 10
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SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Certificates........ 11
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 3.11. 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.................. 15
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
ARTICLE VII
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<PAGE>
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
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.01. Eligibility Requirements for Owner Trustee.............. 24
SECTION 10.02. Resignation or Removal of Owner Trustee................. 24
SECTION 10.03. Successor Owner Trustee................................. 25
SECTION 10.04. Merger or Consolidation of Owner Trustee................ 25
SECTION 10.05. Appointment of Co-Trustee or Separate Trustee........... 26
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Supplements and Amendments.............................. 27
SECTION 11.02. No Legal Title to Owner Trust Estate in Owners.......... 28
SECTION 11.03. Limitations on Rights of Others......................... 28
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<PAGE>
SECTION 11.04. Notices................................................. 28
SECTION 11.05. Severability............................................ 29
SECTION 11.06. Separate Counterparts................................... 29
SECTION 11.07. Successors and Assigns.................................. 29
SECTION 11.08. Covenant of the Seller.................................. 29
SECTION 11.09. No Petition............................................. 30
SECTION 11.10. No Recourse............................................. 30
SECTION 11.11. Headings................................................ 30
SECTION 11.12. GOVERNING LAW........................................... 30
SECTION 11.13. Certificate Transfer Restrictions....................... 30
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
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<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT dated as of [________________],
between CATERPILLAR FINANCIAL FUNDING CORPORATION, a Nevada corporation, as
Seller, and [____________________], 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
[____________________], 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 Section 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.
"Certificate Register" and "Certificate Registrar" shall mean the register
mentioned and the registrar appointed pursuant to SECTION 3.04.
<PAGE>
"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
[____________________________]; 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 [____________________], 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 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 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 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 [____________________], a [__________], not in
its individual capacity but solely as owner trustee under this Agreement, and
any successor Owner Trustee hereunder.
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<PAGE>
"Paying Agent" shall mean any paying agent or co-paying agent appointed
pursuant to SECTION 3.09 and shall initially be [____________________].
"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 [____________________], 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.
(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,
3
<PAGE>
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 [___________]-[_]," 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 [and the Class B Notes] pursuant to the Indenture and the
Certificates pursuant to this Agreement, and to sell $[____________]
aggregate principal amount of the Class A-1 Notes, $[____________]
aggregate principal amount of Class A-2 Notes[,] [and] $[____________]
aggregate principal amount of the Class A-3 Notes [and $[_________]
aggregate principal amount of Class B Notes] to
[________________________________] upon the written order of the Seller and
[sell] [issue] $[____________] aggregate principal amount of the
Certificates to [____________________] [the Seller] 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,
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<PAGE>
by directing [____________________] 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.
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
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<PAGE>
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. No Owner 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 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.
6
<PAGE>
(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.
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
7
<PAGE>
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 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
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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 [_________ __,
____] between the Seller and Owner Trustee.
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.
SECTION 3.02. FORM OF CERTIFICATES. The Certificates shall be issued in
denominations of $1,000 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. 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,
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the Owner Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided.
[____________________] 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.
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.
The Certificates have not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities laws and neither this Certificate nor any interest therein may be
offered, sold, pledged or otherwise transferred except in accordance with
applicable securities laws of any state of the United States and in reliance on
the private placement exemption of the Securities Act.
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
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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 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 [_________________], 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 [__________________], [_____________________________] 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
[____________________], and any
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co-paying agent chosen by [____________________], and acceptable to the Owner
Trustee. [____________________] shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Owner Trustee. In the event that
[____________________] 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. [Reserved]
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;
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(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 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.
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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
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.
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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.
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, [_______], 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:
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(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.
"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
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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 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,
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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 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 Owner Trustee and the Seller agree that no election to treat the Trust other
than as a partnership for United States Federal income tax purposes or any
relevant state tax purposes shall be made by or on behalf of the Trust. The
Owners shall not direct the Owner Trustee or the Seller 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
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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;
(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
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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 [_________________] duly organized and validly existing
in good standing under the laws of [______________]. It has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(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 [____________] 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.
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(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 [____________________]
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 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.
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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 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. Any
money or other property held as part of the Owner Trust Estate following
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such distribution shall be distributed to the Seller. The bankruptcy,
liquidation, dissolution, death or incapacity of any Owner 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 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.
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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
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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
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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.
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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 or the tax characterization of the
Notes or the Certificates.
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
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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 C-3B, 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.
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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.
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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")), whether or not such plan is subject to the provisions of
Title I of ERISA, (ii) a plan (as defined in Section 4975(e)(1) of the Code) is
subject to Section 4975 of the Code, or (iii) any entity whose underlying assets
include "plan assets" by reason of any such plan's investment in the entity and
the application of U.S. Department of Labor (the "DOL") Regulation Section
2510.3-101 (the "Plan Asset Regulation") (excluding any investment company that
is registered under the Investment Company Act of 1940, as amended) (each, a
"Benefit Plan Investor"), except as provided in the next following sentence. By
accepting and holding a Certificate, the Holder thereof shall be deemed to have
represented, warranted and covenanted that it is (A) not a Benefit Plan
Investor, and that no assets of any Benefit Plan Investor were used to acquire
the Certificate, or (B) it is an insurance company acting on behalf of its
general account, and (i) on the date it acquires the Certificates, less than 25%
of the assets of such general account constitute Plan Assets and (ii) if at any
time during any calendar quarter after the initial acquisition of the
Certificates, 25% or more of the assets of such general account constitute "plan
assets" (as defined in the Plan Asset Regulation) and no exemption or exception
from the prohibited transaction rules applies to the continued holding of the
Certificates under Section 401(c) of ERISA and final regulations thereunder or
an exemption or regulation issued by the DOL under ERISA, then such insurance
company will dispose of all of the Certificates then held in its general account
by the end of the next following calendar quarter, 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
30
<PAGE>
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.
[____________________]
not in its individual capacity
but solely as Owner Trustee,
By:
---------------------------
Name:
Title:
CATERPILLAR FINANCIAL
FUNDING CORPORATION,
as Seller,
By:
---------------------------
Name:
Title:
<PAGE>
EXHIBIT A
NUMBER $____________
R- CUSIP NO.___________
SEE REVERSE FOR CERTAIN DEFINITIONS
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")),
WHETHER OR NOT SUCH PLAN IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (ii)
A PLAN (AS DEFINED IN SECTION 4975(e)(1) OF THE CODE) IS SUBJECT TO SECTION 4975
OF THE CODE, OR (iii) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS"
BY REASON OF ANY SUCH PLAN'S INVESTMENT IN THE ENTITY AND THE APPLICATION OF
U.S. DEPARTMENT OF LABOR (THE "DOL") REGULATION SECTION 2510.3-101 (THE "PLAN
ASSET REGULATION") (EXCLUDING ANY INVESTMENT COMPANY THAT IS REGISTERED UNDER
THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED) (EACH, A "BENEFIT PLAN
INVESTOR"), EXCEPT AS PROVIDED IN THE NEXT FOLLOWING SENTENCE. BY ACCEPTING AND
HOLDING A CERTIFICATE, THE HOLDER THEREOF SHALL BE DEEMED TO HAVE REPRESENTED,
WARRANTED AND COVENANTED THAT IT IS (A) NOT A BENEFIT PLAN INVESTOR, AND THAT NO
ASSETS OF ANY BENEFIT PLAN INVESTOR WERE USED TO ACQUIRE THE CERTIFICATE, OR (B)
IT IS AN INSURANCE COMPANY ACTING ON BEHALF OF ITS GENERAL ACCOUNT, AND (i) ON
THE DATE IT ACQUIRES THE CERTIFICATES, LESS THAN 25% OF THE ASSETS OF SUCH
GENERAL ACCOUNT CONSTITUTE PLAN ASSETS AND (ii) IF AT ANY TIME DURING ANY
CALENDAR QUARTER AFTER THE INITIAL ACQUISITION OF THE CERTIFICATES, 25% OR MORE
OF THE ASSETS OF SUCH GENERAL ACCOUNT CONSTITUTE "PLAN ASSETS" (AS DEFINED IN
THE PLAN ASSET REGULATION) AND NO EXEMPTION OR EXCEPTION FROM THE PROHIBITED
TRANSACTION RULES APPLIES TO THE CONTINUED HOLDING OF THE CERTIFICATES UNDER
SECTION 401(c) OF ERISA AND FINAL REGULATIONS THEREUNDER OR AN EXEMPTION OR
REGULATION ISSUED BY THE DOL UNDER ERISA, THEN SUCH INSURANCE COMPANY WILL
DISPOSE OF ALL OF THE CERTIFICATES THEN HELD IN ITS GENERAL ACCOUNT BY THE END
OF THE NEXT FOLLOWING CALENDAR QUARTER, 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.
A-1
<PAGE>
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.
THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE IN INSTALLMENTS AS SET FORTH
IN THE TRUST AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS
CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.]
A-2
<PAGE>
CATERPILLAR FINANCIAL ASSET TRUST [____]-[_]
[____]% 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 [____]-[_] (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 [__________________](the "Trust Agreement"), between the Seller and
[__________________], 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 [_________ __, ____] (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
"[____]% Asset Backed Certificates" (herein called the "Certificates"). Also
issued under the Indenture dated as of [_________ __, ____], between the Trust
and [____________________], as indenture trustee, are Notes designated as "Class
A-1 [____]% Asset Backed Notes" (the "Class A-1 Notes"), "Class A-2 [____]%
Asset Backed Notes" (the "Class A-2 Notes")[,] [and] "Class A-3 [____]% Asset
Backed Notes" (the "Class A-3 Notes") [and Class B [___]% Asset Backed Notes
(the "Class B Notes"]; together with the A-1 Notes, the A-2 Notes and the Class
A-3 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 [__________________] 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 [_____________________] between Caterpillar Financial
Services Corporation and
A-3
<PAGE>
the Seller and all proceeds of the foregoing. The Holder of this Certificate
acknowledges and agrees that its rights to receive distributions in respect of
this Certificate are subordinated to the rights of the Noteholders as described
in the Sale and Servicing Agreement and the Indenture.
Under the Trust Agreement, there will be distributed on the [_____] day of
each month or, if such day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on [____________________],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.
Each Certificateholder, by its acceptance of a Certificate or a beneficial
interest in a Certificate, acknowledges and agrees that neither the Seller nor
the Owner Trustee is authorized to elect to treat the Issuer other than as a
partnership for United States federal income tax purposes or any relevant state
tax purposes. Each Certificateholder, by its acceptance of a Certificate or a
beneficial interest in a Certificate, agrees not to take any actions (or direct
the Owner Trustee to take such acts or actions) that would violate such
restriction.
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.
A-4
<PAGE>
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-5
<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 [____]-[_],
By: [____________________],
as Owner Trustee
Dated: By:
----------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
[____________________], or [____________________],
as Owner Trustee as Owner Trustee
By
--------------------------,
Authenticating Agent
By: By:
----------------------------- -------------------------------------
Authorized Signatory Authorized Signatory
A-6
<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 [_____________________], 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
[_____________________].
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 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 Registrar
A-7
<PAGE>
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 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")), whether or not such plan is
subject to the provisions of Title I of ERISA, (ii) a plan (as defined in
Section 4975(e)(1) of the Code) is subject to Section 4975 of the Code, or (iii)
any entity whose underlying assets include "plan assets" by reason of any such
plan's investment in the entity and the application of U.S. Department of Labor
(the "DOL") Regulation Section 2510.3-101 (the "Plan Asset Regulation")
(excluding any investment company that is registered under the Investment
Company Act of 1940, as amended) (each, a "Benefit Plan Investor"), except as
provided in the next following sentence. By accepting and holding a
Certificate, the Holder thereof shall be deemed to have represented, warranted
and covenanted that it is (A) not a Benefit Plan Investor, and that no assets of
any Benefit Plan Investor were used to acquire the Certificate, or (B) it is an
insurance company acting on behalf of its general account, and (i) on the date
it acquires the Certificates, less than 25% of the assets of such general
account constitute Plan Assets and (ii) if at any time during any calendar
quarter after the initial acquisition of the Certificates, 25% or more of the
assets of such general account constitute "plan assets" (as defined in the Plan
Asset Regulation) and no exemption or exception from the prohibited transaction
rules applies to the continued holding of the Certificates under Section 401(c)
of ERISA and final regulations thereunder or an exemption or regulation issued
by the DOL under ERISA, then such insurance company will dispose of all of the
Certificates then held in its general account by the end of the next following
calendar quarter, 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.
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
A-8
<PAGE>
to time upon request, a duly executed Certificateholder Certification in the
form set forth in Exhibit C.
A-9
<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 [____]-[_]
THIS Certificate of Trust of CATERPILLAR FINANCIAL ASSET TRUST [____]-[_]
(the "Trust"), dated [_________ __, ____], is being duly executed and filed by
[________ _______________], as trustee, to form a business trust under the
Delaware Business Trust Act (12 DEL. CODE, Section 3801 ET SEQ.).
1. NAME. The name of the business trust formed hereby is CATERPILLAR
FINANCIAL ASSET TRUST [____]-[_].
2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Trust in the State of Delaware is [____________________],
[____________________], 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 [____]-[_]
Amended and Restated Trust Agreement, dated as of [________ __, ____] (the
"Trust Agreement"), between Caterpillar Financial Funding Corporation and
[____________________], 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 [____]-[_] [____]% 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).
2. I am not a plan (as defined in Section 4975(e)(1) of the Code) which
is subject to Section 4975 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 and the application
of U.S. Department of Labor Regulation Section 2510.3-101 (excluding
any investment company that is registered under the Investment Company
Act of 1940, as amended).
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
<PAGE>
Form A-Notes and Certificates
EXHIBIT 4.3A
================================================================================
SALE AND SERVICING AGREEMENT
among
CATERPILLAR FINANCIAL ASSET TRUST 199[_]-[_]
Issuer
CATERPILLAR FINANCIAL FUNDING CORPORATION
Seller
and
CATERPILLAR FINANCIAL SERVICES CORPORATION
Servicer
Dated as of [______________]
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.............................................. 1
SECTION 1.02. Other Definitional Provisions............................ 19
SECTION 1.03. Calculations............................................. 20
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01. Conveyance of Receivables................................ 20
SECTION 2.02. Closing.................................................. 21
SECTION 2.03. Books and Records........................................ 21
ARTICLE III
THE RECEIVABLES
SECTION 3.01. Representations and Warranties of Seller................. 21
SECTION 3.02. Repurchase by Seller or CFSC Upon Breach................. 22
SECTION 3.03. Custody of Receivable Files.............................. 23
SECTION 3.04. Duties of Servicer....................................... 23
SECTION 3.05. Acceptance by Issuer and the Indenture Trustee of the
Receivables; Certification by the Indenture Trustee...... 24
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01. Duties of Servicer....................................... 26
SECTION 4.02. Collection of Receivable Payments........................ 26
SECTION 4.03. Realization upon Receivables............................. 27
SECTION 4.04. Physical Damage Insurance................................ 27
SECTION 4.05. Maintenance of Security Interests in Financed Equipment.. 27
SECTION 4.06. Covenants of Servicer.................................... 27
SECTION 4.07. Purchase by Servicer of Receivables upon Breach.......... 28
SECTION 4.08. Servicing Fee............................................ 28
SECTION 4.09. Servicer's Certificate................................... 28
SECTION 4.10. Annual Statement as to Compliance; Notice of Default..... 28
SECTION 4.11. Annual Independent Certified Public Accountants' Report.. 29
SECTION 4.12. Servicer Expenses........................................ 29
i
<PAGE>
ARTICLE V
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.01. Establishment of Trust Accounts.......................... 30
SECTION 5.02. Collections.............................................. 32
SECTION 5.03. Additional Deposits...................................... 32
SECTION 5.04. Distributions............................................ 32
SECTION 5.05. Reserve Account.......................................... 33
SECTION 5.06. Statements to Certificateholders and Noteholders......... 35
SECTION 5.07. Net Deposits............................................. 37
ARTICLE VI
THE SELLER
SECTION 6.01. Representations of Seller................................ 38
SECTION 6.02. [Reserved]............................................... 39
SECTION 6.03. Liability of Seller; Indemnities......................... 39
SECTION 6.04. Merger or Consolidation of, or Assumption of the
Obligations of, Seller................................... 40
SECTION 6.05. Limitation on Liability of Seller and Others............. 40
SECTION 6.06. Seller May Own Certificates or Notes..................... 40
ARTICLE VII
THE SERVICER
SECTION 7.01. Representations of Servicer.............................. 41
SECTION 7.02. Indemnities of Servicer.................................. 42
SECTION 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer................................. 44
SECTION 7.04. Limitation on Liability of Servicer and Others........... 44
SECTION 7.05. CFSC Not To Resign as Servicer........................... 45
ARTICLE VIII
DEFAULT
SECTION 8.01. Servicer Default......................................... 45
SECTION 8.02. Appointment of Successor................................. 46
SECTION 8.03. Notification to Noteholders and Certificateholders....... 47
SECTION 8.04. Waiver of Past Defaults.................................. 47
ARTICLE IX
TERMINATION
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SECTION 9.01. Optional Purchase of All Receivables; Trust Termination.. 48
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment................................................ 49
SECTION 10.02. Protection of Title to Trust............................. 50
SECTION 10.03. Notices.................................................. 52
SECTION 10.04. Assignment............................................... 52
SECTION 10.05. Limitations on Rights of Others.......................... 52
SECTION 10.06. Severability............................................. 52
SECTION 10.07. Separate Counterparts.................................... 53
SECTION 10.08. Headings................................................. 53
SECTION 10.09. Governing Law............................................ 53
SECTION 10.10. Assignment to Indenture Trustee.......................... 53
SECTION 10.11. Nonpetition Covenants.................................... 53
SECTION 10.12. Limitation of Liability of Owner Trustee and
Indenture Trustee........................................ 53
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
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SALE AND SERVICING AGREEMENT dated as of [____________], among CATERPILLAR
FINANCIAL ASSET TRUST [____]-[_], 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
[____________] among the Trust, the Seller, CFSC, as Administrator, and
[_______________________________], 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,
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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.
"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, [____________________________________________] 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, $[________] and,
thereafter, equals $[________], 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 [________]
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, if any, 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, and (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.
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"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.
"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, if any, 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.
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"Class" means the Class A-1 Notes, the Class A-2 Notes or the Class A-3
Notes, as applicable.
"Class A-1 Note Final Scheduled Distribution Date" means the [_________]
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, if any, 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 [_________]
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.
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"Class A-2 Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess, if any, of (a) the sum of (i) the
Class A-2 Noteholders' Monthly Principal 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 [________ ____]
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 [____]%; provided that if the
amount on deposit in the Reserve Account is less than the lesser of (a) [____]%
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%.
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"Class A-3 Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess, if any, 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' 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 [_______________].
"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 [______________] 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.
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"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 [______________________________________], Attention:
[___________________], except that for purposes of Section 3.02 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 [__________],[__________________________________]; 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 [______________________________], as custodian of the
Receivable Files, and each successor thereto pursuant to the Custodial
Agreement.
"Custodial Agreement" means the Custodial Agreement, dated as of
[_____________], among CFSC, as originator and Servicer, the Seller, as
depositor, the Issuer, and [___________________________], as Indenture Trustee
and Custodian, as the same may be amended and supplemented from time to time.
"Cut-off Date" means [______________].
"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 New York
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 New York 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
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in blank to a financial intermediary (as defined in Section 8-313 of the
New York 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 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 New York 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 New York 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 United States Securities Entitlement, the
following procedures, all in accordance with applicable law, including
applicable Federal regulations and Articles 8 and 9 of the New York 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 New York UCC and that is
not governed by clause (b)
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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 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 [___] day of each calendar month or, if such
day is not a Business Day, the immediately following Business Day, commencing on
[_____________].
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee, the Owner Trustee, [____________________] as long as it is
paying agent under the Trust Agreement or [__________________________], 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, [____________________] or [______________________________]
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 (certificated or uncertificated (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 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
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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.
"Eligible Securities 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.
"Farm Credit Entitlement" means a "Security Entitlement" as defined in 12
C.F.R. as defined in 12 C.F.R. ss.615.5450.
"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.
"FHLBank Entitlement": means a "Security Entitlement" as defined in 12
C.F.R. ss. 912.1.
"Final Maturity Date" means _______________________.
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"Fitch" means Fitch Investors Service, L.P., or its successor.
"Funding Corporation Entitlement" means a "Security Entitlement" as
defined in 12 C.F.R. ss. 1511.1
"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.
"HUD Entitlement" means a "Security Entitlement" as defined in 24 C.F.R.
ss. 81.2
"Indenture" means the Indenture dated as of [_____________], between the
Issuer and the Indenture Trustee, as the same may be amended and supplemented
from time to time.
"Indenture Trustee" means [______________________________], 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 $[____________].
"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
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to be deposited into the Collection Account on such Distribution Date pursuant
to Section 5.01(b).
"Issuer" means Caterpillar Financial Asset Trust [____]-[_].
"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 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 [__________] 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 [__________] 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 [__________] Distribution
Date and will be calculated on the basis of a 360-day year of twelve 30-day
months.
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"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 [__________] 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.
"New York UCC" means the uniform commercial code in effect in the State of
New York.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.01.
"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, if any, 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.
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"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 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.
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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.
"Owner Trustee" means [____________________] 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 [____]%.
"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.
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"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
[__________], 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).
"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
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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 $[____________].
"Sallie Mae Entitlement" means a "Security Entitlement" as defined in 31
C.F.R. ss. 354.1.
"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.
"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) [____]% of the Pool Balance as of the close of business
on the last day of the
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preceding Collection Period and (ii) $[_______]; 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 [____]% 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 [____]% 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 such Current Distribution Date exceeds
an amount equal to [____]% 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.
"Tennesse Valley Entitlement" means a Security Entitlement as defined in
18 C.F.R. ss. 1314.2.
"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.
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"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.
"Treasury Entitlement" means a "Security Entitlement" as defined in 31
C.F.R. ss. 357.2.
"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 [________ __, ____], 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.
"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.
"United States Securities Entitlement" means a Treasury Entitlement, a HUD
Entitlement, a FHLBank Entitlement, a Funding Corporation Entitlement, a Farm
Credit Entitlement, Tennessee Valley Entitlement or a Sallie Mae Entitlement.
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.
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(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.
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) $[____________], and (ii) a
Certificate in the principal amount of $[_____], 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;
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(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 LLP, 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.
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
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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 New York 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, New York UCC filings with the Delaware and Nevada Secretaries of
State and precautionary New York 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.
(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
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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
(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.
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(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 New York 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 New York 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 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
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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 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.
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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.
SECTION 4.02. Collection of Receivable Payments. (a) 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. The Servicer shall
not reduce the principal balance of, reduce the stated annual percentage rate of
interest, reduce the aggregate amount of Scheduled Payments or the amount of any
Scheduled Payment due under any Receivable, or otherwise amend or modify a
Receivable in a manner that would have a material adverse effect on the
interests of the Securityholders. Notwithstanding the foregoing, the Servicer
may grant extensions on a Receivable; provided, however, that if the Servicer
reschedules the due date of any Scheduled Payment to a date beyond the Final
Maturity 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. Notwithstanding anything in this
Agreement to the contrary, any
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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).
(b) Notwithstanding anything in this Agreement to the contrary (but
subject to the immediately succeeding sentence), the Servicer may refinance any
Receivable by accepting a new Contract from the related Obligor and applying the
proceeds of such refinancing to pay all obligations in full of such Obligor
under such Receivable. The receivable created by the refinancing shall not be
property of the Trust. The parties hereto intend that the Servicer will not
refinance a Receivable pursuant to this Section 4.02(b) 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 4.03. 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 or modify such security interest
except (A) in accordance with Section 4.03 above or (B) in the 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
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Receivable; or (iii) 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(a), 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 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,
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on or before April 30 of each year, an Officers' Certificate stating that (i) a
review of the activities of the Servicer during the preceding 12-month period
ending on December 31 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, 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 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.
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.
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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 Securities 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 Securities 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 Securities 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 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,
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at any time, any of the Trust Accounts ceases to be an Eligible Securities
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 Securities Account and shall transfer any cash and/or any investments
to such new Trust Account. So long as [______________________________] is an
Eligible Institution, any Trust Account may be maintained with it in an Eligible
Securities 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 Securities Accounts; and each such
Eligible Securities 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 New York UCC) acting
solely for the Indenture Trustee;
(C) any Trust Account Property that is a United States Securities
Entitlement 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 New York 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 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
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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 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;
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(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.
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 [__________] 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
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 [__________]
Distribution Date, if the amount on deposit in the Reserve Account (after taking
into account any deposits thereto pursuant to Section 5.04(b)(x) 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
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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 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 [____]% of the
Pool Balance as of the end of the immediately preceding Collection Period, then
amounts will be withdrawn from the Reserve
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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 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;
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(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;
(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;
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(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.
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.
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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, 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
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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 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.
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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 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
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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 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
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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.
(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
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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 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
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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.
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
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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 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
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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.
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
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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 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
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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 [______________________________], 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. [______________________________] 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 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) [Reserved]
(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
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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 or the tax characterization
of the Notes or the Certificates.
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, 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
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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 ss. 9-402(7) of the New
York 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).
(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 New York 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.
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(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:
(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
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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 C-3B, 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.
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.
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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.
(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 [________________] not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer, and in no
event shall [________________] in its individual capacity or, except as
expressly provided in the Trust Agreement, as beneficial owner of the Issuer
have
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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 [_________________________] not
in its individual capacity but solely as Indenture Trustee, and in no event
shall [_________________________] 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.
54
<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
[____________]-[_____]
By:[________________],
not in its individual capacity but solely as
Owner Trustee on behalf of the Trust,
By:
---------------------------------------------
Name:
Title:
CATERPILLAR FINANCIAL FUNDING
CORPORATION,
Seller,
By:
---------------------------------------------
Name:
Title:
CATERPILLAR FINANCIAL SERVICES
CORPORATION,
Servicer,
By:
---------------------------------------------
Name:
Title:
Acknowledged and Accepted:
[_________________________],
not in its individual capacity
but solely as Indenture Trustee and as Custodian
By:
---------------------------------------------
Name:
Title:
55
<PAGE>
SCHEDULE A
Schedule of Receivables
<PAGE>
SCHEDULE B
Location of Receivable Files
[_________________________]
B-1
<PAGE>
SCHEDULE C-1
FORM OF INDENTURE TRUSTEE INITIAL CERTIFICATION
________________, [____]
[Trust]
[Servicer]
[Seller]
Re: Sale and Servicing Agreement (the "Sale and Servicing
Agreement"), dated as of [_____________] among Caterpillar
Financial Services Corporation as Servicer, Caterpillar
Financial Funding Corporation and Caterpillar Financial Asset
Trust [______]
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.
[_________________________],
as Indenture Trustee
By:
----------------------------------
C-1-1
<PAGE>
SCHEDULE C-2
FORM OF INDENTURE TRUSTEE FINAL CERTIFICATION
___________, [____]
[Trust]
[Servicer]
[Seller]
Re: Sale and Servicing Agreement (the "Sale and Servicing
Agreement"), dated as of [____________] among Caterpillar
Financial Services Corporation, as Servicer, Caterpillar
Financial Funding Corporation and Caterpillar Financial Asset
Trust [_______]-[____]
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.
[___________________________________],
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 [_____________] between Caterpillar
Financial Asset Trust [______], 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 [___]% 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 [___]% 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 [___]% 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 [____________] between Caterpillar Financial
Asset Trust [____]-[_], 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
<PAGE>
EXHIBIT 4.3B
================================================================================
SALE AND SERVICING AGREEMENT
among
CATERPILLAR FINANCIAL ASSET TRUST [____]-[_]
Issuer
CATERPILLAR FINANCIAL FUNDING CORPORATION
Seller
and
CATERPILLAR FINANCIAL SERVICES CORPORATION
Servicer
Dated as of [______________]
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.............................................. 1
SECTION 1.02. Other Definitional Provisions............................ 20
SECTION 1.03. Calculations............................................. 21
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01. Conveyance of Receivables................................ 21
SECTION 2.02. Closing.................................................. 22
SECTION 2.03. Books and Records........................................ 22
ARTICLE III
THE RECEIVABLES
SECTION 3.01. Representations and Warranties of Seller................. 22
SECTION 3.02. Repurchase by Seller or CFSC Upon Breach................. 23
SECTION 3.03. Custody of Receivable Files.............................. 24
SECTION 3.04. Duties of Servicer....................................... 24
SECTION 3.05. Acceptance by Issuer and the Indenture Trustee of the
Receivables; Certification by the Indenture Trustee...... 25
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01. Duties of Servicer....................................... 27
SECTION 4.02. Collection of Receivable Payments........................ 27
SECTION 4.03. Realization upon Receivables............................. 28
SECTION 4.04. Physical Damage Insurance................................ 28
SECTION 4.05. Maintenance of Security Interests in Financed Equipment.. 28
SECTION 4.06. Covenants of Servicer.................................... 28
SECTION 4.07. Purchase by Servicer of Receivables upon Breach.......... 29
SECTION 4.08. Servicing Fee............................................ 29
SECTION 4.09. Servicer's Certificate................................... 29
SECTION 4.10. Annual Statement as to Compliance; Notice of Default..... 29
SECTION 4.11. Annual Independent Certified Public Accountants' Report.. 30
SECTION 4.12. Servicer Expenses........................................ 30
ARTICLE V
i
<PAGE>
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.01. Establishment of Trust Accounts.......................... 31
SECTION 5.02. Collections.............................................. 33
SECTION 5.03. Additional Deposits...................................... 33
SECTION 5.04. Distributions............................................ 33
SECTION 5.05. Reserve Account.......................................... 34
SECTION 5.06. Statements to Certificateholders and Noteholders......... 36
SECTION 5.07. Net Deposits............................................. 39
ARTICLE VI
THE SELLER
SECTION 6.01. Representations of Seller................................ 39
SECTION 6.02. [Reserved]............................................... 41
SECTION 6.03. Liability of Seller; Indemnities......................... 41
SECTION 6.04. Merger or Consolidation of, or Assumption of the
Obligations of, Seller................................... 41
SECTION 6.05. Limitation on Liability of Seller and Others............. 42
SECTION 6.06. Seller May Own Certificates or Notes..................... 42
ARTICLE VII
THE SERVICER
SECTION 7.01. Representations of Servicer.............................. 42
SECTION 7.02. Indemnities of Servicer.................................. 44
SECTION 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer................................. 45
SECTION 7.04. Limitation on Liability of Servicer and Others........... 46
SECTION 7.05. CFSC Not To Resign as Servicer........................... 46
ARTICLE VIII
DEFAULT
SECTION 8.01. Servicer Default......................................... 47
SECTION 8.02. Appointment of Successor................................. 48
SECTION 8.03. Notification to Noteholders and Certificateholders....... 49
SECTION 8.04. Waiver of Past Defaults.................................. 49
ARTICLE IX
TERMINATION
SECTION 9.01. Optional Purchase of All Receivables; Trust Termination.. 50
ARTICLE X
ii
<PAGE>
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment................................................ 50
SECTION 10.02. Protection of Title to Trust............................. 51
SECTION 10.03. Notices.................................................. 53
SECTION 10.04. Assignment............................................... 54
SECTION 10.05. Limitations on Rights of Others.......................... 54
SECTION 10.06. Severability............................................. 54
SECTION 10.07. Separate Counterparts.................................... 54
SECTION 10.08. Headings................................................. 54
SECTION 10.09. Governing Law............................................ 54
SECTION 10.10. Assignment to Indenture Trustee.......................... 54
SECTION 10.11. Nonpetition Covenants.................................... 55
SECTION 10.12. Limitation of Liability of Owner Trustee and
Indenture Trustee........................................ 55
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 [____________], among CATERPILLAR
FINANCIAL ASSET TRUST [____]-[_], 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
[____________] among the Trust, the Seller, CFSC, as Administrator, and
[_______________________________], 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, [_______________] 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, $[________] and,
thereafter, equals $[________], 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 [________]
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, if any, 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, and (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.
"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
2
<PAGE>
A Notes and the Class B Notes have been reduced to zero, zero, (b) on or after
the Distribution Date on which the principal amount of the Class A Notes and the
Class B Notes are reduced to zero, the Principal Distribution Amount for such
Distribution Date (less the portion thereof required on such first Distribution
Date to reduce the outstanding principal amount of the Notes to zero).
"Certificateholders' Principal Carryover Shortfall" means, as of the close
of any Distribution Date, the sum of (a) the excess, if any, 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, the Class A-3
Notes or the Class B Notes, as applicable.
"Class A Notes" means the Class A-1 Notes, the Class A-2 Notes, and the
Class A-3 Notes, collectively.
"Class A Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.01.
"Class A Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of (a) the Class A Noteholders' Principal
Distributable Amount and (b) the Class A Noteholders' Interest Distributable
Amount.
"Class A Noteholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the sum of (a) the excess, if any, of (i) the sum of (A)
the Class A Noteholders' Monthly Interest Distributable Amount for the preceding
Distribution Date and (B) any outstanding Class A Noteholders' Interest
Carryover Shortfall on such preceding Distribution Date, over (ii) the amount in
respect of interest that is actually deposited in the Class A Note
3
<PAGE>
Distribution Account on such preceding Distribution Date, and (b) interest on
the amount of interest due but not paid to Class A 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 Class A Notes from and including such
preceding Distribution Date to but excluding the current Distribution Date.
"Class A Noteholders' Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of (a) the Class A Noteholders' Monthly
Interest Distributable Amount for such Distribution Date and (b) the Class A
Noteholders' Interest Carryover Shortfall for such Distribution Date.
"Class A 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.
"Class A 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.
"Class A Notes" means the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes, collectively.
"Class A-1 Note Final Scheduled Distribution Date" means the [_________]
Distribution Date.
"Class A Noteholders" has the meaning assigned to such term in Section
1.01 of the Indenture.
"Class A-1 Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date, the lesser of (a) 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, if any, 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 Class A 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
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deposited in the Class A 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 [_________]
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, the Principal Distribution Amount.
"Class A-2 Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess, if any, of (a) the sum of (i) the
Class A-2 Noteholders' Monthly Principal 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 Class A
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 Class A 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.
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<PAGE>
"Class A-3 Final Scheduled Distribution Date" means the [____ ____]
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 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
Principal Distribution Amount.
"Class A-3 Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess, if any, 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' 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 Class A
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 Class A 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.
"Class B Final Scheduled Distribution Date" means the [________________]
Distribution Date.
"Class B Noteholders" has the meaning assigned to such term in Section
1.01 of the Indenture.
"Class B Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of (a) the Class B Noteholders' Principal
Distributable Amount and (b) the Class B Noteholders' Interest Distributable
Amount.
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<PAGE>
"Class B 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 Notes is reduced
to zero, zero; (b) if such Distribution Date is the Distribution Date on which
the principal amount of the Class A Notes is reduced to zero, the amount, if
any, by which the Principal Distribution Amount exceeds the outstanding
principal amount of the Class A 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 Notes has been reduced to zero, the
Principal Distribution Amount.
"Class B Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess, if any, of (a) the sum of (i) the
Class B Noteholders' Monthly Principal Distributable Amount for such
Distribution Date and (ii) any outstanding Class B 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 Class B
Note Distribution Account and allocated to the Class B Notes.
"Class B Noteholders' Principal Distributable Amount" means, with respect
to any Distribution Date, the sum of (a) the Class B Noteholders' Monthly
Principal Distributable Amount for such Distribution Date and (b) the Class B
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 B Notes, and on the Class B
Final Scheduled Distribution Date, the Class B Noteholders' Distributable
Principal Amount will include the amount necessary (after giving effect to the
other amounts to be deposited in the Class B Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal amount of the Class B Notes to zero.
"Class B Note Interest Rate" has the meaning assigned to such term in the
Indenture.
"Class B 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 B Notes as
of such date (after giving effect to payments in reduction of the principal
amount of the Class B Notes on such date) divided by the original outstanding
principal amount of the Class B Notes.
"Closing Date" means [_______________].
"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 [______________] 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.
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<PAGE>
"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 [______________________________________], Attention:
[___________________], except that for purposes of Section 3.02 of the
Indenture, such term shall mean the office or agency of the Indenture Trustee in
[____________], [____________] which office at the date hereof is located at
[____________________________]; 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 [________________________].
"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 [______________________________], as custodian of the
Receivable Files, and each successor thereto pursuant to the Custodial
Agreement.
"Custodial Agreement" means the Custodial Agreement, dated as of
[_____________], among CFSC, as originator and Servicer, the Seller, as
depositor, the Issuer, and [___________________________], as Indenture Trustee
and Custodian, as the same may be amended and supplemented from time to time.
"Cut-off Date" means [______________].
"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 New York
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,
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<PAGE>
with respect to a certificated security (as defined in Section 8-102 of
the New York New York 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 New York 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 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 New York 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 New York 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 United States Securities Entitlement, the
following procedures, all in accordance with applicable law, including
applicable Federal regulations and Articles 8 and 9 of the New York 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
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<PAGE>
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the New York 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 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
[__] Business Day prior to such Distribution Date.
"Distribution Date" means the [__] day of each calendar month or, if such
day is not a Business Day, the immediately following Business Day, commencing on
[_____________].
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee, the Owner Trustee, [____________] as long as it is paying
agent under the Trust Agreement or [__________________________], 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, [_________] or [______________________________] 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 (uncertificated or certificated) (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 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
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<PAGE>
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.
"Eligible Securities 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.
"Farm Credit Entitlement" means a "Security Entitlement" as defined in 12
C.F.R. ss. 615.5450.
"Final Maturity Date" means __________________________.
"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.
"FHLBank Entitlement": means a "Security Entitlement" as defined in 12
C.F.R. ss. 912.1.
"Fitch" means Fitch Investors Service, L.P., or its successor.
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<PAGE>
"Funding Corporation Entitlement" means a "Security Entitlement" as
defined in 12 C.F.R. ss. 1511.1.
"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.
"HUD Entitlement" means a "Security Entitlement" as defined in 24 C.F.R.
ss. 81.2.
"Indenture" means the Indenture dated as of [_____________], between the
Issuer and the Indenture Trustee, as the same may be amended and supplemented
from time to time.
"Indenture Trustee" means [______________________________], 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 $[________________].
"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 [____]-[_].
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<PAGE>
"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 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 Class 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 Class 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 Class
A-1 Notes will accrue from and including the Closing Date to but excluding the
[__________] 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 Class 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 Class 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 Class
A-2 Notes will accrue from and including the Closing Date to but excluding the
[__________] 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 Class 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 Class 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 Class
A-3 Notes will accrue from and including the Closing Date to but excluding the
[__________] Distribution Date and will be calculated on the basis of a 360-day
year of twelve 30-day months.
"Monthly B Note Interest" means, with respect to any Distribution Date, an
amount equal to one-twelfth of the product of (a) the Class B Note Interest Rate
and (b) the outstanding principal balance of the Class B Notes as of the close
of business on the preceding Distribution Date after giving effect to all
payments of principal made to the Class B Noteholders on such preceding
Distribution Date; provided, however, that with respect to the first
Distribution Date, interest on the outstanding principal balance of the Class B
Notes will accrue from and including
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<PAGE>
the Closing Date to but excluding the [__________] 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 [__________] 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.
"New York UCC" has the means the New York Commercial Code in effect in the
State of New York.
"Note Register" or "Note Registrar" have the meanings specified in Section
2.04 of the Indenture.
"Notes" means the Class A Notes and the Class B 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, all Notes included in Class
A-3 Notes, or all Notes included in Class B 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 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:
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"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.
"Owner Trustee" means [__________________] 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 [____]%.
"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
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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
[__________], 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).
"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.
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"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 $[_________].
"Sallie Mae Entitlement" means a "Security Entitlement" as defined in 31
C.F.R. ss. 354.1.
"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.
"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.
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"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) [____]% of the Pool Balance as of the close of business
on the last day of the preceding Collection Period and (ii) $[_______];
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 [____]% 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 [____]% 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 such Current Distribution Date exceeds
an amount equal to [____]% 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 (y) upon
payment of all principal and interest due on the Notes, 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.
"Tennesse Valley Entitlement" means a Security Entitlement as defined in
18 C.F.R. ss. 1314.2.
"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
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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.
"Treasury Entitlement" means a "Security Entitlement" as defined in 31
C.F.R. 357.2.
"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, investment
property 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 [______________], 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.
"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.
"United States Securities Entitlement" means a Treasury Entitlement, a HUD
Entitlement, a FHLBank Entitlement, a Funding Corporation Entitlement, a Farm
Credit Entitlement, Tennessee Valley Entitlement or a Sallie Mae Entitlement.
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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.
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) $[____________], and (ii) a
Certificate in the principal amount of $[_____], 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 Account PropertyTrust
Accounts and all amounts credited thereto;
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(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 LLP, 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.
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
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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.
(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
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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
(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
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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 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.
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(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 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
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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.
SECTION 4.02. Collection of Receivable Payments. (a) 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. The Servicer shall
not reduce the principal balance of, reduce the stated annual percentage rate of
interest, reduce the aggregate amount of Scheduled Payments or the amount of any
Scheduled Payment due under any Receivable, or otherwise amend or modify a
Receivable in a manner that would have a material adverse effect on the
interests of the Securityholders. Notwithstanding the foregoing, the Servicer
may grant extensions on a Receivable; provided, however, that if the Servicer
reschedules the due date of any Scheduled Payment to a date beyond the Final
Maturity 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. 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).
(b) Notwithstanding anything in this Agreement to the contrary (but
subject to the immediately succeeding sentence), the Servicer may refinance any
Receivable by accepting a new Contract from the related Obligor and applying the
proceeds of such refinancing to pay all obligations in full of such Obligor
under such Receivable. The receivable created by the refinancing shall not be
property of the Trust. The parties hereto intend that the Servicer will not
refinance a Receivable pursuant to this Section 4.02(b) 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.
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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 or modify such security interest
except (A) in accordance with Section 4.03 above or (B) in the 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;
or (iii) 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(a), 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
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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 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, an Officers'
Certificate stating that (i) a review of the activities of the Servicer during
the preceding 12-month period ending on December 31 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).
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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, 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 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.
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 Securities 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) (1) The Seller, for the benefit of the Class A Noteholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible
Securities Account (the "Class A Note Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Class A Noteholders.
(2) The Seller, for the benefit of the Class B Noteholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible
Securities Account ( the "Class B Note
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Distribution Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Class B 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 Securities Account (the "Reserve Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Noteholders.
(b) Funds on deposit in the Collection Account, the Class A Note
Distribution Account, the Class B 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
applicable Noteholders and, if applicable, the Certificateholders; 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 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 Securities
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 Securities Account and shall transfer any cash and/or any investments
to such new Trust Account. So long as [______________________________] is an
Eligible Institution, any Trust Account may be maintained with it in an Eligible
Securities 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 Securities Accounts; and each such
Eligible Securities 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;
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(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 United States Security
Entitlement 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 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.
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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 Class A Note Distribution Account, Class B 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 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 Class A Note Distribution Account, the Class A
Noteholders' Interest Distributable Amount;
(iv) to the Class B Note Distribution Account, the Class B
Noteholders Interest Distributable Amount;
(v) to the Class A Note Distribution Account, the Class A-1
Noteholders' Principal Distributable Amount;
(vi) to the Class A Note Distribution Account, the Class A-2
Noteholders' Principal Distributable Amount;
(vii) to the Class A Note Distribution Account, the Class A-3
Noteholders' Principal Distributable Amount;
(viii) to the Class B Note Distribution Account, the Class B
Noteholders' Principal Distribution Amount;
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(ix) to the Certificate Distribution Account, the
Certificateholders' Interest Distributable Amount;
(x) to the Certificate Distribution Account, the Certificateholders'
Principal Distributable Amount;
(xi) to the Servicer (if CFSC or an Affiliate is the Servicer), the
Servicing Fee and all unpaid Servicing Fees from prior Collection Periods;
and
(xii) 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, the amounts set fourth in
clauses (v), (vii) and (viii) above will be deposited into the Class A Note
Distribution Account prior to depositing the amount set forth in clause (iv)
above in the Class B Note Distribution Account.
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 [__________] 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
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 the
outstanding principal amount of the Notes, 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 [__________]
Distribution Date, if the amount on deposit in the Reserve Account (after taking
into account any deposits thereto pursuant to Section 5.04(b)(xii) 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 Class A Note Distribution
Account pursuant to Sections 5.04(b)(v), (vi) or (vii) or 5.05(c) and the Class
B Note Distribution Account pursuant to Sections 5.04(b)(viii) or 5.05(d) on
such Distribution Date), then the Servicer shall instruct the Indenture Trustee
(A) to deposit the entire amount of such excess to the Class A 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) and then (B) deposit the amount of such excess not distributed to the
Class A-3 Noteholders following their payment
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in full to the Class B Note Distribution Account for distribution to Class B
Noteholders as principal (until the Class B Notes are paid in full). The amount
of such excess not distributed to the Class B Noteholders following their
payment in full pursuant to the immediately preceding sentence shall be
distributed to the Seller.
(c) In the event that the Class A Noteholders' Distributable Amount for a
Distribution Date exceeds the amount deposited into the Class A Note
Distribution Account pursuant to Section 5.04(b)(iii), (v), (vi) and (vii) 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 Class A Note Distribution Account pursuant to the terms of the
Indenture.
(d) In the event that the Class B Distributable Amount for a Distribution
Date exceeds the amount deposited in the Class B Distribution Account pursuant
to Section 5.04(b)(iv) 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 Class B 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)(x) 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
balance of the Notes to result from the deposits made in the Class A Note
Distribution Account and the Class B 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)(xii), 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 [____]% 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 Class A Noteholders' Interest Distributable
Amount, and Class B Noteholders' 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 Class A Noteholders' Principal
Distributable Amount or Class B Noteholders' Interest Distributable Amount, in
each case otherwise unpaid on such date.
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(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, the Class A-3 Notes and the Class B
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 Class B Note Pool Factor, the Certificate
Balance and the Certificate Pool Factor, in each case 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 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;
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(xi) the Class A Noteholders' Distributable Amount, the components
thereof, and the amount, if any, to be withdrawn from the Reserve Account
and deposited into the Class A Note Distribution Account pursuant to
Section 5.05(c);
(xii) the Class B Noteholders' Distributable Amount, the components
thereof, and the amount, if any, to be withdrawn from the Reserve Account
and deposited into the Class B Note Distribution Account pursuant to
Section 5.05(d); and
(xiii) the Certificateholders' Distributable Amount, the components
thereof, and the amount, if any, to be withdrawn from the Reserve Account.
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.
(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, the Class A-3 Notes and the Class B 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;
(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 Class B 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
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(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 Class A Noteholders' Distributable Amount, the components
thereof, and the amount, if any, to be withdrawn from the Reserve Account
and deposited into the Class A Note Distribution Account pursuant to
Section 5.05(c);
(xii) the Class B Noteholders' Distributable Amount, the components
thereof, and the amount, if any, to be withdrawn from the Reserve Account
and deposited into the Class B Note Distribution Account pursuant to
Section 5.05(d); and
(xiii) the Certificateholders' Distributable Amount, the components
thereof, and the amount, if any, to be withdrawn from the Reserve Account.
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.
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.
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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, 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
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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 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
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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 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.
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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 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, administra- tive agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties:
(i) asserting the invalidity of this Agreement, the Indenture, the Notes,
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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.
(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,
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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 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
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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.
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,
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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 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 (including the Class B 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
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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.
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
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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 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 [______________________________], 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. [______________________________] 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.
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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 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) [Reserved]
(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 or the tax characterization
of the Notes or the Certificates.
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 (including the Class
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B 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, 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
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the meaning of ss. 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).
(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
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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:
(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 C-3B, 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.
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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.
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
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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 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 [_____________] not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer, and in no
event shall [_______________] 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 [_________________________] not
in its individual capacity but solely as Indenture Trustee, and in no event
shall [_________________________] 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
CATERPILLAR FINANCIAL ASSET TRUST
[____]_[_]
By: [__________________],
not in its individual capacity but solely as
Owner Trustee on behalf of the Trust,
By:
---------------------------------------------
Name:
Title:
CATERPILLAR FINANCIAL FUNDING
CORPORATION,
Seller,
By:
---------------------------------------------
Name:
Title:
CATERPILLAR FINANCIAL SERVICES
CORPORATION,
Servicer,
By:
---------------------------------------------
Name:
Title:
Acknowledged and Accepted:
[_________________________],
not in its individual capacity
but solely as Indenture Trustee and as Custodian
By:
- ---------------------------------------
Name:
Title:
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SCHEDULE A
Schedule of Receivables
A-1
<PAGE>
SCHEDULE B
Location of Receivable Files
[_________________________]
[_________________________]
B-1
<PAGE>
SCHEDULE C-1
FORM OF INDENTURE TRUSTEE INITIAL CERTIFICATION
________________, [____]
[Trust]
[Servicer]
[Seller]
Re: Sale and Servicing Agreement (the "Sale and Servicing
Agreement"), dated as of [_____________] among Caterpillar
Financial Services Corporation as Servicer, Caterpillar
Financial Funding Corporation and Caterpillar Financial Asset
Trust [______]
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.
[_________________________],
as Indenture Trustee
By:
----------------------------------------
C-1-1
<PAGE>
SCHEDULE C-2
FORM OF INDENTURE TRUSTEE FINAL CERTIFICATION
___________, [____]
[Trust]
[Servicer]
[Seller]
Re: Sale and Servicing Agreement (the "Sale and Servicing
Agreement"), dated as of [____________] among Caterpillar
Financial Services Corporation, as Servicer, Caterpillar
Financial Funding Corporation and Caterpillar Financial Asset
Trust [____]-[_]
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.
[___________________________________],
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 [_______ __], [____] between
Caterpillar Financial Asset Trust [____]-[_], 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 Class A Noteholders' Monthly Interest
Distributable Amount;
(vi) Class A Noteholders' Interest Carryover Shortfall;
(vii) clause (ii) of Class A Noteholders' Monthly Interest
Distributable Amount;
(viii) Class A Noteholders' Monthly Interest Distributable
Amount;
(ix) Class A Noteholders' Principal Distributable Amount;
(x) Class A-1 Noteholders' Monthly Distribution Amount;
(xi) Class A-1 Noteholders' Principal Carryover Shortfall;
(xii) Class A-1 Noteholders' Principal Distributable Amount;
(xiii) [Intentionally Omitted];
(xiv) Class A-2 Noteholders' Monthly Principal Distribution
Amount;
(xv) Class A-2 Noteholders' Principal Carryover Shortfall;
(xvi) Class A-2 Noteholders' Principal Monthly Distributable
Amount;
(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;
D-2
<PAGE>
(xx) Class B Noteholders' Monthly Principal Distribution
Amount;
(xxi) Class B Noteholders' Principal Carryover Shortfall;
(xxii) Class B Noteholders' Monthly Distributable Amount;
(xxiiii) Class B Noteholders' Principal Distributable Amount;
(xxiv) the amount of principal to be distributed to the Class A-2
Noteholders, Class A-3 Noteholders and/or Class B
Noteholders pursuant to Section 5.05(b)(ii);
(xxv) Monthly Certificate Interest;
(xxvi) Certificateholders' Interest Carryover Shortfall;
(xxvii) Certificateholders' Interest Distributable Amount;
(xxviii) Certificateholders' Monthly Principal Distributable
Amount;
(xxix) Certificateholders' Principal Carryover Shortfall;
(xxx) Certificateholders' Principal Distributable Amount;
(xxxi) Certificateholders' Distributable Amount;
(xxxii) the amount to be deposited into the Reserve Account
pursuant to Section 5.04(b);
(xxxiii) the Specified Reserve Account Balance;
(xxxiv) 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;
(xxxv) the amount to be distributed from the Reserve Account to
the Seller pursuant to Section 5.05(b)(i) or (ii), as
applicable;
(xxxvi) the amount to be withdrawn from the Reserve Account and
deposited into the Class A Note Distribution Account
pursuant to Section 5.05(c) (separately stating interest
and principal);
D-3
<PAGE>
(xxxvii) the amount to be withdrawn from the Reserve Account and
deposited into the Class B Note Distribution Account
pursuant to Section 5.05(d) (separately stating interest
and principal);
(xxxviii) the Pool Balance as of the close of business on the last
day of the related Collection Period;
(xxxix) 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 outstanding
principal amount of the Class B Notes, the Class B 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;
(xi) the aggregate amount of the Purchase Amounts for Purchased
Receivables with respect to the related Collection Period;
(xii) the amount of Realized Losses, if any, for the related
Collection Period; and
(xiii) the balance of the Reserve Account on such Distribution
Date, after giving effect to distributions made on such
Distribution Date.
(xiii) 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 [____]% 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 [____]% 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
D-4
<PAGE>
immediately preceding such Distribution Date and
(ii) the amount equal to [____]% of the Pool Balance
as of the end of such Collection Period.
D-5
<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 [____________] between Caterpillar Financial
Asset Trust [____]-[_], 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 $[___]
original principal
amount)
(d) Class B Notes:_______________ ($____ per $[___]
original principal
amount)
(e) Certificates:__________________ ($ per $[___]
original principal
amount)
(f) Total:_______________
(ii) (a) Amount of interest being paid or distributed:
(a) Class A-1 Notes:_____________ ($____ per $[___]
original principal
amount)
(b) Class A-2 Notes:_____________ ($____ per $[___]
original principal
amount)
(c) Class A-3 Notes:_____________ ($____ per $[___]
original principal
amount)
(d) Class B Notes:_____________ ($____ per $[___]
original principal
amount)
A-1
<PAGE>
(e) Certificates:________________ ($____ per $[___]
original principal
amount)
(f) Total:_______________
(iii) Pool Balance at end of related Collection Period:________.
(iv) after giving effect to distributions on this Distribution Date:
(a) (1) outstanding principal amount of Class
A-1 Notes:_____________
(2) Class A-1 Note Pool Factor:______________
(b) (1) outstanding principal amount of Class
A-2 Notes:_____________
(2) Class A-2 Note Pool Factor:____________
(c) (1) outstanding principal amount of Class
A-3 Notes:_____________
(2) Class A-3 Note Pool Factor:____________
(d) (1) outstanding principal amount of Class B Notes:__________
(2) Class B Note Pool Factor:____________
(e) (1) Certificate Balance:_____________
(2) Certificate Pool Factor:____________
(v) Amount of Servicing Fee being paid :____________.
(vi) Amount of Administration Fee being paid:____________.
(vii) Aggregate Purchase Amounts for Collection Period:____________.
(viii) Aggregate amount of Realized Losses for the Collection
Period:__________.
(ix) Amount in Reserve Account:_______________.
A-2
<PAGE>
EXHIBIT B
TO SCHEDULE E
Statement for Noteholders
pursuant to Section 5.08(a)
Distribution Date:___________________
(i) Amount of principal being paid on Notes:
(a) Class A-1 Notes:_______________ ($____ per $[___]
original principal
amount)
(b) Class A-2 Notes:_______________ ($____ per $[___]
original principal
amount)
(c) Class A-3 Notes:_______________ ($____ per $[___]
original principal
amount)
(d) Class B Notes:_______________ ($____ per $[___]
original principal
amount)
(e) Total:_______________
(ii) Amount of interest being paid or distributed:
(a) Class A-1 Notes:_____________ ($____ per $[___]
original principal
amount)
(b) Class A-2 Notes:_____________ ($____ per $[___]
original principal
amount)
(c) Class A-3 Notes:_____________ ($____ per $[___]
original principal
amount)
(d) Class B Notes:_____________ ($____ per $[___]
original principal
amount)
(e) Total:_______________
(iii) Pool Balance at end of related Collection Period:_________.
(iv) after giving effect to distributions on this Distribution Date:
B-1
<PAGE>
(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) outstanding principal amount of Class B Notes:__________
(2) Class B Note Pool Factor:__________
(e) (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) Class A Noteholders' Interest Distributable Amount to be deposited
into Class A Noteholders' Distribution Account: __________.
(iv) Class B Noteholders' Interest Distributable Amount to be deposited
into Class B Noteholders' Distribution Account: __________.
(v) Class A Noteholders' Principal Distributable Amount to be deposited
into Class A Noteholders' Distribution Account: __________.
(vi) Class B Noteholders' Principal Distributable Amount to be deposited
into Class B Noteholders' Distribution Account: __________.
(vii) Certificateholders' Interest Distributable Amount to be deposited
into Certificateholders' Distribution Account: __________.
(viii) Certificateholders' Principal Distributable Amount to be deposited
into Certificateholders' Distribution Account: __________.
(ix) Deposit to Reserve Account: __________.
(x) (A) Distribute Excess Reserve Account Amount to Seller: ________.
(B) Pay Excess Reserve Account Amount to Noteholders.
C-1
<PAGE>
EXHIBIT 4.4
[FORM OF CERTIFICATE]
NUMBER $____________
R- CUSIP NO.___________
SEE REVERSE FOR CERTAIN DEFINITIONS
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")), WHETHER OR NOT SUCH PLAN IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (ii) A PLAN (AS DEFINED IN
SECTION 4975(e)(1) OF THE CODE) IS SUBJECT TO SECTION 4975 OF THE CODE, OR (iii)
ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY SUCH
PLAN'S INVESTMENT IN THE ENTITY AND THE APPLICATION OF U.S. DEPARTMENT OF LABOR
(THE "DOL") REGULATION SECTION 2510.3-101 (THE "PLAN ASSET REGULATION")
(EXCLUDING ANY INVESTMENT COMPANY THAT IS REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED) (EACH, A "BENEFIT PLAN INVESTOR"), EXCEPT AS
PROVIDED IN THE NEXT FOLLOWING SENTENCE. BY ACCEPTING AND HOLDING A
CERTIFICATE, THE HOLDER THEREOF SHALL BE DEEMED TO HAVE REPRESENTED, WARRANTED
AND COVENANTED THAT IT IS (A) NOT A BENEFIT PLAN INVESTOR, AND THAT NO ASSETS OF
ANY BENEFIT PLAN INVESTOR WERE USED TO ACQUIRE THE CERTIFICATE, OR (B) IT IS AN
INSURANCE COMPANY ACTING ON BEHALF OF ITS GENERAL ACCOUNT, AND (i) ON THE DATE
IT ACQUIRES THE CERTIFICATES, LESS THAN 25% OF THE ASSETS OF SUCH GENERAL
ACCOUNT CONSTITUTE PLAN ASSETS AND (ii) IF AT ANY TIME DURING ANY CALENDAR
QUARTER AFTER THE INITIAL ACQUISITION OF THE CERTIFICATES, 25% OR MORE OF THE
ASSETS OF SUCH GENERAL ACCOUNT CONSTITUTE "PLAN ASSETS" (AS DEFINED IN THE PLAN
ASSET REGULATION) AND NO EXEMPTION OR EXCEPTION FROM THE PROHIBITED TRANSACTION
RULES APPLIES TO THE CONTINUED HOLDING OF THE CERTIFICATES UNDER SECTION 401(c)
OF ERISA AND FINAL REGULATIONS THEREUNDER OR AN EXEMPTION OR REGULATION ISSUED
BY THE DOL UNDER ERISA, THEN SUCH INSURANCE COMPANY WILL DISPOSE OF ALL OF THE
CERTIFICATES THEN HELD IN ITS GENERAL ACCOUNT BY THE END OF THE NEXT FOLLOWING
CALENDAR QUARTER, 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.
1
<PAGE>
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.
THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE IN INSTALLMENTS AS SET FORTH
IN THE TRUST AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS
CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.]
2
<PAGE>
CATERPILLAR FINANCIAL ASSET TRUST [____]-[_]
[____]% 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 [____]-[_] (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 [__________________](the "Trust Agreement"), between the Seller and
[__________________], 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 [_________ __, ____] (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
"[____]% Asset Backed Certificates" (herein called the "Certificates"). Also
issued under the Indenture dated as of [_________ __, ____], between the Trust
and [____________________], as indenture trustee, are Notes designated as "Class
A-1 [____]% Asset Backed Notes" (the "Class A-1 Notes"), "Class A-2 [____]%
Asset Backed Notes" (the "Class A-2 Notes")[,] [and] "Class A-3 [____]% Asset
Backed Notes" (the "Class A-3 Notes") [and Class B [___]% Asset Backed Notes
(the "Class B Notes"]; together with the A-1 Notes, the A-2 Notes and the Class
A-3 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 [__________________] 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 [_____________________] between Caterpillar Financial
Services Corporation and
3
<PAGE>
the Seller and all proceeds of the foregoing. The Holder of this Certificate
acknowledges and agrees that its rights to receive distributions in respect of
this Certificate are subordinated to the rights of the Noteholders as described
in the Sale and Servicing Agreement and the Indenture.
Under the Trust Agreement, there will be distributed on the [_____] day of
each month or, if such day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on [____________________],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.
Each Certificateholder, by its acceptance of a Certificate or a beneficial
interest in a Certificate, acknowledges and agrees that neither the Seller nor
the Owner Trustee is authorized to elect to treat the Issuer other than as a
partnership for United States federal income tax purposes or any relevant state
tax purposes. Each Certificateholder, by its acceptance of a Certificate or a
beneficial interest in a Certificate, agrees not to take any actions (or direct
the Owner Trustee to take such acts or actions) that would violate such
restriction.
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.
4
<PAGE>
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.
5
<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 [____]-[_],
By: [____________________],
as Owner Trustee
Dated: By: ___________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
[____________________], or [____________________],
as Owner Trustee as Owner Trustee
By ______________________,
Authenticating Agent
By:___________________________ By:________________________________
Authorized Signatory Authorized Signatory
6
<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 [_____________________], 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
[_____________________].
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 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 Registrar may
7
<PAGE>
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 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")), whether or not such plan is
subject to the provisions of Title I of ERISA, (ii) a plan (as defined in
Section 4975(e)(1) of the Code) is subject to Section 4975 of the Code, or (iii)
any entity whose underlying assets include "plan assets" by reason of any such
plan's investment in the entity and the application of U.S. Department of Labor
(the "DOL") Regulation Section 2510.3-101 (the "Plan Asset Regulation")
(excluding any investment company that is registered under the Investment
Company Act of 1940, as amended) (each, a "Benefit Plan Investor"), except as
provided in the next following sentence. By accepting and holding a
Certificate, the Holder thereof shall be deemed to have represented, warranted
and covenanted that it is (A) not a Benefit Plan Investor, and that no assets of
any Benefit Plan Investor were used to acquire the Certificate, or (B) it is an
insurance company acting on behalf of its general account, and (i) on the date
it acquires the Certificates, less than 25% of the assets of such general
account constitute Plan Assets and (ii) if at any time during any calendar
quarter after the initial acquisition of the Certificates, 25% or more of the
assets of such general account constitute "plan assets" (as defined in the Plan
Asset Regulation) and no exemption or exception from the prohibited transaction
rules applies to the continued holding of the Certificates under Section 401(c)
of ERISA and final regulations thereunder or an exemption or regulation issued
by the DOL under ERISA, then such insurance company will dispose of all of the
Certificates then held in its general account by the end of the next following
calendar quarter, 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.
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
8
<PAGE>
to time upon request, a duly executed Certificateholder Certification in the
form set forth in Exhibit C.
9
<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 4.5(A)
[FORM OF CLASS A NOTE]
REGISTERED $___________*
No. ____
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.________
[UNLESS THIS CLASS A 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 CLASS A
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, [________], HAS AN INTEREST HEREIN.]
THE PRINCIPAL OF THIS CLASS A NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A NOTE AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
[THIS CLASS A NOTE WAS ISSUED ON [______________], [____] . IT IS POSSIBLE
THAT APPLICABLE LAW AND PROPOSED TREASURY REGULATIONS COULD BE INTERPRETED TO
PROVIDE THAT ALL INTEREST PAYMENTS ON THIS CLASS A NOTE ARE TO BE TREATED AS
PART OF THE STATED REDEMPTION PRICE AT MATURITY OF THIS CLASS A NOTE (I.E.,
PRINCIPAL) THEREBY CAUSING THIS CLASS A 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 CLASS A
NOTE PAYS IN ACCORDANCE WITH PROJECTED CASH FLOWS BASED ON CERTAIN ASSUMPTIONS
USED IN PRICING THE CLASS A NOTES: (I) THE AMOUNT
_____________________
* Denominations of [_____] and integral multiples thereof.
<PAGE>
OF OID AS A PERCENTAGE OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS CLASS A NOTE
WOULD BE APPROXIMATELY ____%; AND (II) THE ANNUAL YIELD OF THIS CLASS A 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.]
2
<PAGE>
CATERPILLAR FINANCIAL ASSET TRUST [_______]-[___]
[[____]%] [[____]%] [[____]%] [CLASS A-l] [CLASS A-2] [CLASS A-3]
ASSET BACKED NOTES
Caterpillar Financial Asset Trust [________]-[___], 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 $[INSERT INITIAL PRINCIPAL AMOUNT OF
CLASS A NOTE] and the denominator of which is [$[________] [for Class A-1
Notes]] [$[_________] [for Class A-2 Notes]] [$[_________] [for Class A-3 Notes]
] by (ii) the aggregate amount, if any, payable from the Class A 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 Class A Note shall be due and
payable on the earlier of [the [______] Distribution Date [for Class A-1]] [the
[_______] Distribution Date [for Class A-2]] [and [______] Distribution for the
[Class A-3]] and the Redemption Date, if any, pursuant to SECTION 10.01 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 Class A Note at the [Class A-1] [Class A-2]
[Class A-3] Note Interest Rate on each Distribution Date until the principal of
this Class A Note is paid or made available for payment, on the principal amount
of this Class A 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 Class A Note). Interest on this Class A 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 [_____________], [____] 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 Class A Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Class A 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 Class A Note shall be applied first to interest due and
payable on this Class A Note as provided above and then to the unpaid principal
of this Class A Note.
Reference is made to the further provisions of this Class A Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Class A Note.
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<PAGE>
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Class A
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 [________]-[___],
By: [_______________], not in
its individual capacity but
solely as Owner Trustee under
the Trust Agreement,
By: _____________________________
Name:
Title:
4
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Notes designated above and referred to in the
within-mentioned Indenture.
[__________________________________],
not in its individual capacity but
solely as Indenture Trustee,
By:____________________________________
Name:
Title:
5
<PAGE>
[REVERSE OF NOTE]
This Class A Note is one of the [Class A-1] [Class A-2] [Class A-3] Notes
of a duly authorized issue of Class A Notes of the Issuer, designated as its
[[____]%] [[____]%] [[____]%] [Class A-1] [Class A-2] [Class A-3] Asset Backed
Notes (herein called the "Class A Notes"), all issued under an Indenture dated
as of [_______] 1, 199[_] (such indenture, as supplemented or amended, is herein
called the "Indenture"), between the Issuer and [_____________________], 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 Class A Notes. The Notes are subject to all terms of the Indenture. All
terms used in this Class A Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class A Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Class A Notes will be payable on each Distribution Date in
an amount described on the face hereof. "DISTRIBUTION DATE" means the [__] day
of each calendar month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing [___________].
As described above, the entire unpaid principal amount of this Class A Note
shall be due and payable on the earlier of the [[________] Distribution Date
[for Class A-1]] [the [_________] Distribution Date [for Class A-2] [the
[________] Distribution Date [for Class A-3]] and the Redemption Date, if any,
pursuant to SECTION 10.01 of the Indenture. Notwithstanding the foregoing, the
entire unpaid principal amount of the Class A 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 Class A Notes representing a
majority of the Outstanding Amount of the Class A Notes have declared the Class
A Notes to be immediately due and payable in the manner provided in SECTION 5.02
of the Indenture. All principal payments on the Class A Notes of a Class shall
be made pro rata to the Class A Noteholders of such Class entitled thereto.
Payments of interest on this Class A 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 Class A Note, shall be made by check mailed
to the Person whose name appears as the Registered Holder of this Class A 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 Class A Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be [_________]), 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
6
<PAGE>
without requiring that this Class A Note be submitted for notation of payment.
Any reduction in the principal amount of this Class A Note (or any one or more
Predecessor Notes) effected by any payments made on any Distribution Date shall
be binding upon all future Holders of this Note and of any Class A 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 Class A 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 Class A 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 Class A Note may be registered on the Note
Register upon surrender of this Class A 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 Class A 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 Class A 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 Class A Note or, in the
case of a Note Owner, a beneficial interest in a Class 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
Class A 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
7
<PAGE>
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Class A Noteholder or Class A Note Owner, by acceptance of a Class A
Note or, in the case of a Class A Note Owner, a beneficial interest in a Class 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 Class A Notes, the Indenture or the Basic Documents.
It is the intent of the Seller, the Class A Noteholders, the Note Owners,
the Issuer, the Certificateholders and the Certificate Owners that, the Class A
Notes will be classified as indebtedness of the Issuer for all United States tax
purposes. The Class A Noteholders, by acceptance of a Class A Note, agree to
treat, and to take no action inconsistent with the treatment of, the Notes for
such tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Class A
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Class A 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 Class A 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 Class A Notes under the Indenture at
any time by the Issuer with the consent of the Holders of Class A 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
Class A Notes issued thereunder.
The term "Issuer" as used in this Class A Note includes any successor to
the Issuer under the Indenture.
8
<PAGE>
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 Class A Notes under the Indenture.
The Class A Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Class A 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 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 Class A 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 Class A
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 [__________________________] 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 Class A 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 Class A 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 Class A Note.
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 Class A Note and all rights thereunder, and hereby irrevocably
constitutes and appoints attorney, to transfer said Class A 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.
10
<PAGE>
EXHIBIT 4.5(B)
[FORM OF CLASS B NOTE]
REGISTERED $___________*
No. ____
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.________
[UNLESS THIS CLASS B 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 CLASS B
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, [________], HAS AN INTEREST HEREIN.]
THE PRINCIPAL OF THIS CLASS B NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS B NOTE AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
[THIS CLASS B NOTE WAS ISSUED ON [_____________], [____] . IT IS POSSIBLE
THAT APPLICABLE LAW AND PROPOSED TREASURY REGULATIONS COULD BE INTERPRETED TO
PROVIDE THAT ALL INTEREST PAYMENTS ON THIS CLASS B NOTE ARE TO BE TREATED AS
PART OF THE STATED REDEMPTION PRICE AT MATURITY OF THIS CLASS B NOTE(I.E.,
PRINCIPAL) THEREBY CAUSING THIS CLASS B 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 CLASS B
NOTE PAYS IN ACCORDANCE WITH PROJECTED CASH FLOWS BASED ON CERTAIN ASSUMPTIONS
USED IN PRICING THE CLASS B NOTES: (I) THE AMOUNT
_______________________
* Denominations of [_______] and integral multiples thereof.
1
<PAGE>
OF OID AS A PERCENTAGE OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS CLASS B NOTES
WOULD BE APPROXIMATELY ____%; AND (II) THE ANNUAL YIELD OF THIS CLASS B NOTES
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.]
2
<PAGE>
CATERPILLAR FINANCIAL ASSET TRUST [_______]-[___]
CLASS B [____]% ASSET BACKED NOTES
Caterpillar Financial Asset Trust [________]-[___], 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
CLASS B NOTE] and the denominator of which is $[________] by (ii) the aggregate
amount, if any, payable from the Class B Note Distribution Account in respect of
principal on the Class B 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 [______] Distribution Date and the Redemption
Date, if any, pursuant to SECTION 10.01 of the Indenture. No payments of
principal of the Class B Notes shall be made until the principal of the Class A
Notes has been paid in its entirety. The Issuer will pay interest on this Class
B Note at the Class B Note Interest Rate on each Distribution Date until the
principal of this Class B Note is paid or made available for payment, on the
principal amount of this Class B 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 Class B Note). Interest on this Class B 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 [____________],
[____] 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 Class B Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Class B 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 Class B Note shall be applied first to interest due and
payable on this Class B Note as provided above and then to the unpaid principal
of this Class B Note.
Reference is made to the further provisions of this Class B Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Class B Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Class B
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.
3
<PAGE>
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 [_______]-[___],
By: [_______________], not in
its individual capacity but
solely as Owner Trustee under
the Trust Agreement,
By: _____________________________
Name:
Title:
4
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Notes designated above and referred to in the
within-mentioned Indenture.
[__________________________________],
not in its individual capacity but
solely as Indenture Trustee,
By:____________________________________
Name:
Title:
5
<PAGE>
[REVERSE OF CLASS B NOTE]
This Class B Note is one of the Class B Notes of a duly authorized issue of
Class B Notes of the Issuer, designated as its [___]% Class B Asset Backed Notes
(herein called the "Class B Notes"), all issued under an Indenture dated as of
[______________], [____] (such indenture, as supplemented or amended, is herein
called the "Indenture"), between the Issuer and [_____________________], 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 Class B Notes. The Class B Notes are subject to all terms of the Indenture.
All terms used in this Class B Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class B Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Class B Notes will be payable on each Distribution Date in
an amount described on the face hereof. "DISTRIBUTION DATE" means the [__] day
of each calendar month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing [___________].
As described above, the entire unpaid principal amount of this Class B Note
shall be due and payable on the earlier of the [_________] Distribution Date and
the Redemption Date, if any, pursuant to SECTION 10.01 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Class B
Notes shall be due and payable on the date on which an Event of Default shall
have occurred and be continuing and the Indenture Trustee or the Holders of the
Class B Notes representing a majority of the Outstanding Amount of the Class B
Notes have declared the Class B Notes to be immediately due and payable in the
manner provided in SECTION 5.02 of the Indenture. All principal payments on the
Class B Notes shall be made pro rata to the Class B Noteholders entitled
thereto.
Payments of interest on this Class B 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 Class B Note, shall be made by check mailed
to the Person whose name appears as the Registered Holder of this Class B 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 the Class B Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be [_________]), 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 Class B Note be submitted for notation
of payment. Any reduction in the principal amount of this Class B Note (or any
one or more Predecessor Notes) effected by any payments made on any Distribution
Date shall be binding upon all future
6
<PAGE>
Holders of this Class B Note and of any Class B 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 Class B 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
Class B 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 B Note Interest Rate to the extent lawful.
[As provided in the Indenture, the Class A-3 Notes and the Class B 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 Class B Note may be registered on the Note
Register upon surrender of this Class B 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 Class B 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 Class B 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 Class A Note or, in the
case of a Note Owner, a beneficial interest in a Class B 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
Class B 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
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 Class B Note or, in the
case of a Note Owner, a beneficial interest in a Class B 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 Class B Notes, the Indenture or the Basic Documents.
It is the intent of the Seller, the Class B Noteholders, the Class B Note
Owners, the Issuer, the Certificateholders and the Certificate Owners that, the
Class B Notes will be classified as indebtedness of the Issuer for all United
States tax purposes. The Class B Noteholders, by acceptance of a Class B Note,
agree to treat, and to take no action inconsistent with the treatment of, the
Class B Notes for such tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Class B
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Class B 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 Class B 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 Class B
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
Class B Notes issued thereunder.
8
<PAGE>
EXHIBIT 5.1
[Orrick, Herrington & Sutcliffe LLP Letterhead]
May 2, 1997
Caterpillar Financial Funding Corporation
Greenview Plaza
2950 East Flamingo Road, Suite 313
Las Vegas, Nevada 89121
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form
S-3 (the "Registration Statement"), as prepared for filing by Caterpillar
Financial Funding Corporation, a Nevada corporation (the "Registrant"), in
connection with the registration under the Securities Act of 1933, as amended
(the "Act"), of Asset Backed Notes and Asset Backed Certificates (collectively,
the "Securities"). The Securities are issuable in Series under a separate Trust
Agreement by and among the Registrant and a Trustee named therein, with respect
to the Asset Backed Certificates of a Series, and a separate Indenture among the
Trust and an Indenture Trustee named therein, with respect to the Asset Backed
Notes of a Series. The Securities of each Series are to be sold as set forth in
the Registration Statement, any amendments thereto, and the Prospectus and
Prospectus Supplement relating to the Securities of such Series. All
capitalized terms used herein that are not otherwise defined have the meanings
set forth in the Prospectus.
We have examined such instruments, documents and records as we deemed
relevant and necessary as a basis of our opinion hereinafter expressed. In such
examination, we have assumed the following: (a) the authenticity of original
documents and the genuineness of all signatures; (b) the conformity to the
originals of all documents submitted to us as copies; (c) the truth, accuracy
and completeness of the information, representations and warranties contained in
the records, documents, instruments and certificates we have reviewed; and (d)
that, as to each party (other than the Registrant) to a Trust Agreement and an
Indenture, each Trust Agreement and each Indenture will be legal, valid and
binding obligations enforceable in accordance with their respective terms.
Based on such examination, we are of the opinion that when the
issuance of each Series of the Securities has been duly authorized by
appropriate corporate action and the Securities of such Series have been duly
executed, authenticated and delivered in accordance with the related Trust
Agreement and Indenture, as applicable, and sold in the manner described in the
Registration Statement, any amendment thereto and the Prospectus and Prospectus
<PAGE>
Caterpillar Financial Funding Corporation
May 2, 1997
Page 2
Supplement relating thereto, the Securities will be legally issued, fully paid,
non-assessable and binding obligations of the Trust created by the applicable
Trust Agreement, and the holders of the Securities of such Series will be
entitled to the benefits of the Trust Agreement and Indenture, as applicable,
except as enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement, fraudulent conveyance, moratorium, or
other laws relating to or affecting the rights of creditors generally and
general principles of equity, including without limitation concepts of
materiality, reasonableness, good faith and fair dealing, and the possible
unavailability of specific performance or injunctive relief, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
We hereby consent to the filing of this opinion letter as an exhibit
to the Registration Statement and to the use of our name wherever appearing in
the Registration Statement and the Prospectus contained therein. In giving such
consent, we do not consider that we are "experts," within the meaning of the
term as used in the Act or the rules and regulations of the Securities and
Exchange Commission issued thereunder, with respect to any part of the
Registration Statement, including this opinion letter as an exhibit or
otherwise.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE>
EXHIBIT 8.1
[Orrick, Herrington & Sutcliffe LLP letterhead]
May 2, 1997
Caterpillar Financial Funding Corporation
Greenview Plaza
2950 East Flamingo Road, Suite 313
Las Vegas, Nevada 89121
Ladies and Gentlemen:
We have advised Caterpillar Financial Funding Corporation (the
"Registrant") with respect to certain federal income tax aspects of the issuance
of Asset Backed Notes and Asset Backed Certificates, each issuable in Series
(collectively, the "Securities"). Such advice conforms to the description of
selected federal income tax consequences to holders of the Securities that
appears under the heading "Certain Federal Income Tax Considerations" in the
prospectus (the "Prospectus") forming a part of the Registration Statement on
Form S-3 (the "Registration Statement") as filed by the Registrant with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act") on the date hereof, for registration of the
Securities under the Act. Such description does not purport to discuss all
possible income tax ramifications of the proposed issuance, but with respect to
those tax consequences which are discussed, in our opinion the description is
accurate in all material respects. All capitalized terms used herein that are
not otherwise defined have the meanings as set forth in the Prospectus.
This opinion letter is based on the facts and circumstances set forth
in the Prospectus and in the other documents reviewed by us. Our opinion as to
the matters set forth herein could change with respect to a particular Series of
Securities as a result of changes in facts and circumstances, changes in the
terms of the documents reviewed by us, or changes in the law subsequent to the
date hereof. As the Registration Statement contemplates Series of Securities
with numerous different characteristics, the particular characteristics of each
Series of Securities must be considered in determining the applicability of this
opinion to a particular Series of Securities.
<PAGE>
Caterpillar Financial Funding Corporation
May 2, 1997
Page 2
We hereby consent to the filing of this opinion letter as an exhibit
to the Registration Statement and to the use of our name wherever appearing in
the Registration Statement and the Prospectus contained therein. In giving such
consent, we do not consider that we are "experts," within the meaning of the
term as used in the Act or the rules and regulations of the Commission issued
thereunder, with respect to any part of the Registration Statement, including
this opinion letter as an exhibit or otherwise.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE>
EXHIBIT 8.2
TUKE YOP & SWEENEY
ATTORNEYS
NATIONS BANK PLAZA, SUITE 1100
414 UNION STREET
NASHVILLE, TENNESSEE 37219
___
TELEPHONE (615) 313-3300
FACSIMILE (615) 313-3310
May 2, 1997
Caterpillar Financial Funding Corporation
Greenview Plaza
2950 East Flamingo Road
Suite C-3B
Las Vegas, Nevada 89121
Ladies and Gentlemen:
We have advised Caterpillar Financial Funding Corporation (the
"Registrant") with respect to certain Tennessee tax aspects with regard to the
issuance of Asset Backed Notes, each issuable in Series (collectively, the
"Securities"). That advice and our opinion with regard to such Tennessee tax
matters conforms with the description of selected Tennessee state tax
consequences to holders of the Securities that appears under the heading
"Certain State Tax Considerations" in the prospectus (the "Prospectus") forming
a part of Amendment No. 1 to the Registration Statement on Form S-3
(Registration No. 333-42373 and 333-24373-01) (the "Registration Statement"), as
filed by the Registrant with the Securities Act of 1933, as amended (the "Act")
on the date hereof, for registration of the Securities under the Act. Although
that description does not purport to discuss all possible income tax
ramifications of the proposed issuance, the description is accurate in all
material respects as to those tax consequence that are discussed.
This opinion is based on the facts and circumstances set forth in the
Prospectus and in the other documents reviewed by us. Our opinion as to the
matters set forth herein could change with respect to a particular Series of
Securities as a result of changes in facts and circumstances, changes in terms
of the documents reviewed by us, or changes in the law subsequent to the date
hereof. As the Registration Statement contemplates Series of Securities with
numerous different characteristics, the particular characteristics of each
Series of Securities must be considered in determining the applicability of this
opinion to a particular Series of Securities.
<PAGE>
May 2, 1997
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever appearing in the
Registration Statement and the Prospectus. In giving such consent, we do not
consider that we are "experts" within the meaning of the term as used in the Act
or the rules and regulations of the Commission issued thereunder, with respect
to any part of the Registration Statement.
Very truly yours,
/s/ Tuke Yopp & Sweeney
TURKE YOPP & SWEENEY
<PAGE>
Exhibit 10.1
FORM OF PURCHASE AGREEMENT
- --------------------------------------------------------------------------------
CATERPILLAR FINANCIAL SERVICES CORPORATION
AND
CATERPILLAR FINANCIAL FUNDING CORPORATION
__________________
PURCHASE AGREEMENT
Dated as of [__________________]
__________________
- --------------------------------------------------------------------------------
<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
i
<PAGE>
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 Formal Assignment
SCHEDULE A Schedule of Receivables
ii
<PAGE>
PURCHASE AGREEMENT dated as of [___________________], 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 199[_]-[_] (the "Trust"), which Trust will
issue [____]% Asset Backed Certificates (the "Certificates") representing
fractional undivided interests in, and Class A-1 [____]% Asset Backed Notes,
Class A-2 [____]% Asset Backed Notes [and] Class A-3 [____]% Asset Backed Notes
[and the Class B [___]% 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, a form of which is
attached to this Agreement as Exhibit A.
<PAGE>
"BASIC DOCUMENTS" shall have the meaning given such term in the Indenture.
"CERTIFICATE" shall have the meaning given such term in the Trust
Agreement.
"CLOSING DATE" shall mean [__________________].
"INDENTURE" shall mean the Indenture dated as of [___________________]
between the Trust and [____________________________], 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 [____________________] 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 [_______________________], 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 $[____________] in Principal Balance of Receivables, the
Purchaser shall (i) deliver to or upon the order of the Seller an amount equal
to $[____________] in cash and (ii) accept a capital contribution from the
Seller equal to $[____________]. 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
3
<PAGE>
(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 agreement[s]
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.
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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
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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 whether the Seller
actually had knowledge of the veracity of any of its representations. 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 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
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such Obligor on any prepayment pursuant to the terms of the related
Contract. With 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.
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(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.
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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) [Reserved]
(xvii) MATURITY OF RECEIVABLES. Each Receivable has a final
scheduled payment date due not later than [__________________] as of the
Cut-off Date and the weighted average remaining term of the Receivables is
[__] 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 $[______] 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 States of New York and Nevada.
(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 [_____]% 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 [____]% 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.
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(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.
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(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.
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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.
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(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.
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(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.
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(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 or the tax
characterization of the Notes or the Certificates. 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 the 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 C-3B, 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.
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<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:
---------------------------------------
Name:
Title:
CATERPILLAR FINANCIAL SERVICES
CORPORATION
By:
----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement (the
"Purchase Agreement") dated as of [_________ __, ____], 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 [_________ __, ____].
CATERPILLAR FINANCIAL SERVICES
CORPORATION
By:
--------------------------
Name:
Title:
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
<PAGE>
Exhibit 10.2
FORM OF ADMINISTRATION AGREEMENT
- --------------------------------------------------------------------------------
CATERPILLAR FINANCIAL ASSET TRUST 199[_]-[_]
Class A-1 [____]% Asset Backed Notes
and
Class A-2 [____]% Asset Backed Notes
Class A-3 [____]% Asset Backed Notes
[Class B [____]% Asset Backed Notes]
ADMINISTRATION AGREEMENT
Dated as of [____________], [______]
-------------------------
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 [______________], [______], among
CATERPILLAR FINANCIAL ASSET TRUST [__________]-[___], 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
[____________________], 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 [____]% Asset Backed Notes (the
"A-1 Notes"), the Class A-2 [____]% Asset Backed Notes (the "Class A-2 Notes")
[,] [and] the Class A-3 [____]% Asset Backed Notes (the "A-3 Notes") [and the
Class B [_______]% Asset Backed Notes (the "Class B Notes"]; together with the
A-1 Notes[,] [and] A-2 Notes [and the Class A-3 Notes], the "Notes") pursuant to
the Indenture dated as of [________ __, ____] (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
[__________________, ______] (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
[______________, ______] (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 [______________, ______] (the
"Custodial Agreement") among CFSC, the Seller, the Issuer, the Indenture Trustee
and [____________________], 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;
<PAGE>
WHEREAS the Administrator has the capacity to provide the services required
hereby and is willing to perform such services for the Issuer and the Owner
Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties 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);
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<PAGE>
(G) the direction to Paying Agents to pay to the Indenture Trustee
all sums held in trust by such Paying Agents (Section 3.03);
(H) the obtaining and preservation of the Issuer's qualification to
do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, the Collateral and each other instrument and agreement included in
the 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);
3
<PAGE>
(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);
(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));
4
<PAGE>
(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);
(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
5
<PAGE>
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 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
[______________, ______] 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.
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<PAGE>
(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 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.
7
<PAGE>
3. COMPENSATION. As compensation for the performance of the
Administrator's obligations under this Agreement, the Administrator shall be
entitled to $[________] 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).
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:
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<PAGE>
(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 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.
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<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 [_________]-[___]
[__________________________________]
[__________________________________]
[__________________________________]
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
[____________________]
[____________________]
[____________________]
(d) if to the Seller, to
Caterpillar Financial Funding Corporation
2950 East Flamingo Road
Suite C-3B
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 or
the tax characterization of the Notes or the Certificates. 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
evidencing a majority in the Outstanding Amount of the Notes and the holders
of Certificates
10
<PAGE>
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 [____________________] not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall [____________________] 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 [____________________] not in its individual
capacity but solely as Indenture Trustee and in no event shall
[____________________] 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 [__________]-[___]
By: [____________________],
not in its individual capacity
but solely as Owner Trustee,
By:
-----------------------------------
Name:
Title:
[____________________],
not in its individual
capacity but solely as Indenture
Trustee,
By:
------------------------------------
Name:
Title:
CATERPILLAR FINANCIAL SERVICES
CORPORATION, as Administrator,
By:
------------------------------------
Name:
Title:
CATERPILLAR FINANCIAL FUNDING
CORPORATION, as Seller
By:
------------------------------------
Name:
Title:
<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 [___]-[_]
("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 [___________, ______], among the Trust, Caterpillar Financial
Services Corporation, as Administrator and Servicer, and [____________________],
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 [___] day of [_____________, _____].
[____________________], not in its
individual capacity but solely as Owner
Trustee
By:
------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.3
FORM OF CUSTODIAL AGREEMENT
================================================================================
FORM OF
CUSTODIAL AGREEMENT
among
CATERPILLAR FINANCIAL SERVICES CORPORATION
Originator and Servicer
CATERPILLAR FINANCIAL FUNDING CORPORATION
Seller
CATERPILLAR FINANCIAL ASSET TRUST [_______]-[_______]
Issuer
and
[____________________]
Indenture Trustee and Custodian
DATED AS OF [______________], 199[__]
================================================================================
<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 [_________], [______], 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
[_______]-[_______] (the "Trust"), [____________________], as Indenture Trustee
under the Indenture (the "Indenture Trustee") and [__________________], 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
[___________], [_______] (the "Sale and Servicing Agreement") among the Trust,
the Seller and the Servicer or in Article I of the Indenture dated as of
[___________], [_______] (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 [____________________], and [____________
2
<PAGE>
________] hereby accepts such appointment, as Custodian to maintain custody 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
2950 East Flamingo Road, Suite C-3B, Las Vegas, Nevada 89121, or at such of its
other offices in Nevada 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
3
<PAGE>
pursuant to the Indenture, together with the Trust's Custodian Certification.
Upon receipt of 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
4
<PAGE>
set forth in the Indenture and the Sale and Servicing Agreement, the
Certificateholders). 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 [________], relating to qualifications, licensure or regulation of
custodians of receivables originated in states other than [________];
(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
[________], relating to qualifications, licensure or regulation of
custodians of receivables originated in states other than [________];
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 C-3B,
Las Vegas, Nevada 89121, (iii) in the case of the Trust, c/o
[____________________], as Owner Trustee, [____________________], (iv) in the
case of the Indenture Trustee, [____________________], [____________________],
(v) in the case of the Custodian, [____________________],
[____________________], 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 [____________________], not in its individual
capacity but solely in its capacity as Indenture Trustee and in no event shall
[____________________] 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 [____________________], not in its
individual capacity but solely as Owner Trustee, and in no event shall
[____________________] 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
--------------------------------------
Name:
Title:
Servicer
--------
CATERPILLAR FINANCIAL
SERVICES CORPORATION,
as Servicer
By
--------------------------------------
Name:
Title:
Seller
CATERPILLAR FINANCIAL
FUNDING CORPORATION
By
--------------------------------------
Name:
Title:
<PAGE>
CATERPILLAR FINANCIAL
ASSET TRUST [_______]-[___],
[________________], not in its
individual capacity but solely as
Owner Trustee under the Trust
Agreement
By
--------------------------------------
Name:
Title:
INDENTURE TRUSTEE
[____________________],
as Indenture Trustee
By
--------------------------------------
Name:
Title:
CUSTODIAN
[____________________],
as Custodian
By
--------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
---------
CUSTODIAN CERTIFICATION
Certification No._____
[______________], [_____]
To: [SELLER]
[TRUST]
[INDENTURE TRUSTEE]
Re: Custodial Agreement, dated as of [______________], [_____] (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 [_________]-[___] (the "Trust"),
[____________________], as Indenture Trustee (the "Indenture
Trustee") and [____________________], 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
[_____________], [_____]. 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 [___________], [_____], 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
[__________]-[____] (the "Trust"), [____________________], as
Indenture Trustee (the "Indenture Trustee") and
[____________________], 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
[___________] [__],
[______]
[____________________],
as Custodian under the
Custodial Agreement (defined below)
[____________________]
[____________________]
Re: Custodial Agreement, dated as of [____________], [______] (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 [_______]-[_____] (the "Trust"),
[____________________], as Indenture Trustee (the "Indenture
Trustee") and [____________________], 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
