76
JSO/29833-10/167.4
_________________________________________________________________
SERVICING AGREEMENT
______________________
among
TL LEASE FUNDING CORP. IV
TRANS LEASING INTERNATIONAL, INC.,
as initial Servicer
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Lender
______________________
Dated as of
January 21, 1997
_________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE IDEFINITIONS 1
1.1 Definitions 1
1.2 Other Definitional Provisions 4
ARTICLE IIADMINISTRATION AND SERVICING OF LEASES 5
2.1 Appointment and Acceptance; Duties 5
2.2 Collection of Payments 7
2.3 Servicer Advances 9
2.4 Realization Upon Defaulted Leases 9
2.5 Maintenance of Insurance Policies 10
2.6 Recording and Filings 10
2.7 Marking of Lease Management System 11
2.8 Representations and Warranties of Servicer 11
2.9 Covenants of Servicer 12
2.10 Servicer Compensation 15
2.11 Payment of Certain Expenses by Servicer 15
2.12 Monthly Statement; Annual Statement 15
2.13 Annual Report as to Compliance 15
2.14 Annual Independent Public Accountants' Servicing
Reports 16
ARTICLE IIIACCOUNTS AND DEPOSITS 16
3.1 Establishment of Accounts 16
3.2 Investment of Accounts 16
3.3 Deposits 17
ARTICLE IVOTHER MATTERS RELATINGTO THE SERVICER 18
4.1 Liability of the Servicer and Others 18
4.2 Merger or Consolidation of Servicer; Assumption of
Servicer's Obligations 18
4.3 The Servicer Not to Resign 19
4.4 Access to Certain Documentation and Information
Regarding the Assets 19
ARTICLE VSERVICER DEFAULTS 20
5.1 Servicer Defaults 20
5.2 Lender to Act; Appointment of Successor 22
5.3 Notification to Lender 23
5.4 Waiver of Past Defaults 24
5.5 List of Leases 24
ARTICLE VIMISCELLANEOUS PROVISIONS 24
6.1 Termination 24
6.2 Amendment 24
6.3 Evidence of Filings 25
6.4 Governing Law 25
6.5 Notices 25
6.6 Severability of Provisions 27
6.7 Assignment 27
6.8 Schedules and Exhibits 27
6.9 No Waiver; Cumulative Remedies 27
6.10 Counterparts 27
6.11 Binding Effect; Third-Party Beneficiaries 27
6.12 Merger and Integration 27
6.13 Headings 28
6.14 Certificates and Opinions of Counsel 28
LIST OF EXHIBITS
Exhibit A Form of Monthly Statement
Exhibit B Form of Certificate
SERVICING AGREEMENT
THIS SERVICING AGREEMENT, dated as of January 21, 1997
(this "Agreement"), among TL Lease Funding Corp. IV, a Delaware
corporation ("TLFC"), Trans Leasing International, Inc., a
Delaware corporation (referred to herein as "Trans Leasing" or
the "Servicer"), and First Union National Bank of North Carolina
(the "Lender"). Other capitalized terms used in this Agreement
are defined in Article I.
TLFC and Trans Leasing have entered into a Contribution
and Sale Agreement providing for, among other things, the
contribution and sale by Trans Leasing to TLFC of Leases and the
related Equipment.
TLFC and the Lender have entered into a Credit
Agreement dated as of December 20, 1996. Under the Credit
Agreement, the Lender has agreed, subject to the satisfaction of
certain conditions, to make loans to TLFC, and TLFC has granted
to the Lender a security interest in TLFC's rights under the
Leases, the related Equipment and this Agreement.
Trans Leasing intends to continue administering and
servicing the Leases and the Equipment in its capacity as
Servicer pursuant to this Agreement.
The execution and delivery of this Agreement is a
condition to the obligation of Lender to make the initial loan
under the Credit Agreement.
In consideration of the mutual agreements contained in
this Agreement, each party agrees as follows for the benefit of
the other parties:
ARTICLE I
DEFINITIONS
I.1 Definitions. Whenever used in this Agreement, the
following words and phrases have the following respective
meanings:
"Contribution and Sale Agreement" means the
Contribution and Sale Agreement dated as of the date hereof
between the Originator and TLFC, together with all amendments,
restatements, supplements and modifications thereof or thereto.
"Credit Agreement" means the Revolving Credit and Term
Loan and Security Agreement dated as of December 20, 1996 between
TLFC and the Lender, together with all amendments, restatements,
supplements and modifications thereof or thereto.
"Eligible Investments" means any of the following, in
each case as determined at the time of the investment or
contractual commitment to invest therein:
(a) investments in commercial paper maturing in 270
days or less from the date of issuance which is accorded the
highest rating by S&P or Moody's or another nationally recognized
credit rating agency of similar standing;
(b) investments in direct obligations of the United
States of America, or any agency thereof, or obligations
guaranteed by the full faith and credit of the United States of
America, provided that all such obligations mature in twelve
months or less from the date of acquisition thereof;
(c) investments in certificates of deposit maturing
within one year from the date of origin, rated A-1 or better by
S&P or P-1 or better by Moody's or a comparable rating by another
nationally recognized rating agency of similar standing, issued
by a bank or trust company organized under the laws of the United
States or any state thereof, having capital, surplus and
undivided profits aggregating at least $100,000,000;
(d) investments in debt obligations of corporations
organized and existing under the laws of the United States, any
state or the District of Columbia maturing in 12 months or less
from the date of acquisition thereof, and rated AA or better by
S&P or AA or better by Moody's or a comparable rating by another
nationally recognized rating agency of similar standing;
(e) money market funds sponsored by insurance
companies, investment banking firms or commercial banking
institutions which are members of the Federal Reserve System,
provided such fund (i) has assets of not less than $100,000,000,
(ii) invests solely in investments permitted under subparagraphs
(a), (b) and (c) above and (iii) are rated AA or better by S&P or
AA or better by Moody's or a comparable rating by another
nationally recognized rating agency of similar standing; and
(f) any other investment reasonably acceptable to the
Lender.
"Late Fees" means any amounts assessed by the
Originator and paid by or on behalf of a Lessee in excess of the
Scheduled Lease Payment due to the delinquency of a Lease payment
on a Lease.
"Lease File" means, with respect to each Lease, the
Lease and all other documents relating to such Lease held by the
Servicer pursuant to this Agreement.
"Lease Management System" means the computerized
electronic lease management system maintained by the Servicer for
all Leases and other agreements similar to the Leases.
"Moody's" means Moody's Investor Service, a division of
Dun & Bradstreet Corporation, and its successors and assigns.
"Monthly Statement" has the meaning set forth in
Section 2.12(a).
"Officer's Certificate" of any Person means a
certificate signed by any Responsible Officer of such Person.
"Opinion of Counsel" means a written opinion of legal
counsel, who may be counsel to Trans Leasing or other counsel
acceptable to the Lender.
"Originator" means Trans Leasing, in its capacity as
the transferor of Leases, Equipment and other assets pursuant to
the Contribution and Sale Agreement.
"Repurchased Lease" means, at any time, any Lease which
has been repurchased by Trans Leasing pursuant to the
Contribution and Sale Agreement as the result of the occurrence
of a Warranty Event.
"S&P" means Standard & Poor's Ratings Services, a
division of McGraw-Hill Companies, Inc., and its successors and
assigns.
"Servicer" means initially Trans Leasing and thereafter
any Person appointed as a Successor Servicer pursuant to this
Agreement, in each case, in such Person's capacity as the
Servicer pursuant to this Agreement.
"Servicer Advance" means an advance of Scheduled Lease
Payments made by the Servicer pursuant to Section 2.3.
"Servicer Default" has the meaning set forth in
Section 5.1(a).
"Skipped Payment" has the meaning set forth in Section
2.2(a).
"Successor Servicer" means any Person appointed as a
successor to the Servicer pursuant to Section 4.3 or 5.2.
"Termination Notice" has the meaning set forth in
Section 5.1(b).
"Transaction Year" means the twelve-month period ending
on June 30 each year; provided that the initial Transaction Year
will be the period commencing on the Closing Date and ending on
June 30, 1997.
I.2 Other Definitional Provisions.
(a) Terms Defined in the Credit Agreement. For the
purposes of this Agreement, capitalized terms used but not
otherwise defined in this Agreement have the respective meanings
assigned to such terms in the Credit Agreement.
(b) Terms used in Related Documents. Each term
defined in this Agreement will have the meaning assigned to such
term in this Agreement when used in any certificate or other
document made or delivered pursuant to this Agreement, unless
such term is otherwise defined therein.
(c) Accounting Terms. As used in this Agreement,
accounting terms which are not defined in Section 1.1 have the
respective meanings given to them under generally accepted
accounting principles, as in effect on the date of this
Agreement. To the extent that the definitions of accounting
terms in this Agreement are inconsistent with the meanings of
such terms under generally accepted accounting principles, the
definitions contained in this Agreement will control.
(d) "Hereof," etc. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this
Agreement will refer to this Agreement as a whole and not to any
particular provision of this Agreement; and Section, Schedule and
Exhibit references contained in this Agreement are references to
Sections, Schedules and Exhibits in or to this Agreement, unless
otherwise specified.
(e) Reference to Payment Date. With respect to any
Payment Date, the "related Determination Date" and the "related
Collection Period," will mean the Determination Date and
Collection Period, respectively, immediately preceding such
Payment Date, and the relationships among Determination Dates and
Collection Periods will be correlative to the foregoing
relationships.
(f) Number and Gender. Each defined term used in this
Agreement has a comparable meaning when used in its plural or
singular form. Each gender-specific term used in this Agreement
has a comparable meaning whether used in a masculine, feminine or
gender-neutral form.
(g) Including. Whenever the term "including" (whether
or not that term is followed by the phrase "but not limited to"
or "without limitation" or words of similar effect) is used in
this Agreement in connection with a listing of items within a
particular classification, that listing will be interpreted to be
illustrative only and will not be interpreted as a limitation on,
or exclusive listing of, the items within that classification.
(h) "Receipt" of Funds. For purposes of this
Agreement, funds constituting Collections and payments under any
Swap Agreement will be deemed to be "received" by the Servicer
when such funds have been deposited in a lock-box account
maintained by the Servicer or on its behalf (or, if earlier, when
such funds come into the Servicer's actual possession).
ARTICLE II
ADMINISTRATION AND SERVICING OF LEASES
II.1 Appointment and Acceptance; Duties.
(a) Appointment of Initial Servicer. Trans Leasing is
hereby appointed as Servicer pursuant to this Agreement. Trans
Leasing accepts the appointment and agrees to act as the Servicer
pursuant to this Agreement. The Servicer acknowledges and agrees
that the rights, duties and obligations of the Servicer hereunder
include the rights, duties and obligations set forth for the
Servicer in the Credit Agreement.
(b) General Duties. The Servicer will service,
administer and enforce the Leases on behalf of TLFC and will have
full power and authority to do any and all things in connection
with such servicing and administration which it deems necessary
or desirable. The Servicer will manage, service, administer, and
make collections on the Leases with reasonable care, using that
degree of skill and attention that the Servicer exercises with
respect to all comparable equipment leases that it services for
itself or others. The Servicer's duties will include collection
and posting of all payments, responding to inquiries of Lessees
regarding the Leases, investigating delinquencies, accounting for
collections, furnishing monthly and annual statements with
respect to collections and distributions in accordance with
Section 2.12, making Servicer Advances as provided in Section 2.3
in its discretion and using its best efforts to maintain the
perfected first priority security interest of the Lender in the
Leases and the related Equipment (subject to the provisos
contained in Section 2.6). The Servicer will follow its
customary standards, policies, and procedures and will have full
power and authority, acting alone, to do any and all things in
connection with such managing, servicing, administration, and
collection that it deems necessary or desirable. If the Servicer
commences a legal proceeding to enforce a Defaulted Lease
pursuant to Section 2.4 or commences or participates in a legal
proceeding (including a bankruptcy proceeding) relating to or
involving a Lease, TLFC will be deemed to have automatically
assigned such Lease to the Servicer for purposes of commencing or
participating in any such proceeding as a party or claimant, and
the Servicer is authorized and empowered by TLFC, pursuant to
this Section 2.1(b), to execute and deliver, on behalf of itself
and the Lender, any and all instruments of satisfaction or
cancellation, or partial or full release or discharge, and all
other notices, demands, claims, complaints, responses, affidavits
or other documents or instruments in connection with any such
proceedings. If in any enforcement suit or legal proceeding it
is held that the Servicer may not enforce a Lease on the ground
that it is not a real party in interest or a holder entitled to
enforce the Lease, then TLFC will, at the Servicer's expense and
direction, take steps to enforce the Lease, including bringing
suit in its name.
(c) Consent to Assignment or Replacement. At the
request of a Lessee, the Servicer may in its sole discretion
consent to the assignment of the related Lease or the sublease of
a unit of the Equipment relating to a Lease, so long as such
Lessee remains liable for all of its obligations under such
Lease. Upon the request of any Lessee, subject to the
limitations in Section 10.4(e) of the Credit Agreement, the
Servicer may, in its sole discretion, provide for the
substitution or replacement of any unit of Equipment for a
substantially similar unit of equipment.
(d) Disposition Upon Termination of Lease. Upon the
expiration or termination of a Lease (or a portion thereof), the
Servicer will use commercially reasonable efforts to dispose of
any related Equipment. Without limiting the generality of the
foregoing, the Servicer may dispose of any such Equipment by
selling such Equipment to Trans Leasing for a purchase price
equal to the fair market value thereof. The Servicer will
deposit any Early Termination Lease Proceeds, any Partial Early
Termination Proceeds and any Expired Lease Proceeds of any such
disposition in accordance with Section 3.3.
(e) Subservicers. The Servicer may enter into
servicing agreements with one or more subservicers (including
Nuvotron, Inc. or any other Affiliate of any Servicer) to perform
all or a portion of the servicing functions on behalf of the
Servicer; provided that the Servicer will remain obligated and be
liable to the Lender for servicing and administering the Leases
in accordance with the provisions of this Agreement without
diminution of such obligation and liability by virtue of the
appointment of such subservicer, to the same extent and under the
same terms and conditions as if the Servicer alone were servicing
and administering the Leases. The fees and expenses of the
subservicer (if any) will be as agreed between the Servicer and
its subservicer and neither TLFC nor the Lender will have any
responsibility therefor. All actions of a subservicer taken
pursuant to such a subservicer agreement will be taken as an
agent of the Servicer with the same force and effect as though
performed by the Servicer.
(f) Further Assurances. The Lender will furnish the
Servicer, and the Servicer will furnish any subservicer, with any
powers of attorney and other documents necessary or appropriate
to enable the Servicer or a subservicer, as applicable, to carry
out its servicing and administrative duties under this Agreement
or the Credit Agreement.
(g) Notice to Lessees. The Servicer will not be re
quired to notify any Lessee that such Lessee's Lease or related
Equipment has been sold, transferred, assigned or conveyed to
TLFC pursuant to the Contribution and Sale Agreement or to the
Lender pursuant to the Credit Agreement; provided that, in the
event that any Servicer resigns or is replaced, then if the place
for payment pursuant to any Lease is changed, the Successor
Servicer shall prior to such change give each related Lessee
prompt written notice of the appointment of the Successor
Servicer and the place to which such Lessee should make payments
pursuant to each such Lease, and the Servicer that resigned or
has otherwise been replaced shall promptly transfer to the
Successor Servicer any payments it receives after such
resignation or replacement.
(h) Notice to Parties to the Swap Agreement. The
Servicer will be responsible for notifying TLFC and each Swap
Counterparty within two Business Days of the occurrence of a Swap
Breakage Event.
II.2 Collection of Payments.
(a) Collection Efforts. The Servicer will make
reasonable efforts to collect all payments called for under the
terms and provisions of the Leases as and when the same become
due and will follow those collection procedures which it follows
with respect to all comparable equipment leases that it services
for itself or others. The Servicer may not grant extensions,
rebates, or adjustments on a Lease which will extend the original
due dates of any Scheduled Lease Payment, reduce the number of
Scheduled Lease Payments or reduce the amount of any Scheduled
Lease Payment; provided, however, that the Servicer may permit
Leases to become Partial Early Termination Leases as described in
Section 2.2(b), and, provided, further, that to the extent
consistent with the Servicer's past practices, the Servicer may,
on only one occasion with respect to any Lease, permit a
deferment of not more than three consecutive Scheduled Lease
Payments (collectively, a "Skipped Payment") under such Lease to
the end of the term of such Lease so long as (i) the sum of the
Discounted Lease Balances of all Leases with respect to which
there has been a Skipped Payment since the Cut-Off Date does not
exceed 5% of the Aggregate Discounted Lease Balance as of the
date of determination. No Skipped Payment shall be considered
delinquent for purposes of this Agreement or the Credit
Agreement, and no Servicer Advance will be required with respect
thereto. The Servicer may in its discretion waive any late
payment charge or any other fees that may be collected in the
ordinary course of servicing any Lease.
(b) Early Termination Leases and Partial Early
Termination Leases. The Servicer may, in its sole discretion,
permit a Lease to become an Early Termination Lease or a Partial
Early Termination Lease (which shall not include a Lease that
becomes an Early Termination Lease or a Partial Early Termination
Lease due to a Casualty Loss), so long as, unless another Lease
is substituted for such Lease or the terminated portion thereof
as described in Section 10.4 of the Credit Agreement, the
Servicer deposits in the Collection Account, not later than the
second Business Day after receipt thereof by the Servicer, the
sum of (i) (A) in the case of an Early Termination Lease, the
Discounted Lease Balance of such Lease as of the Determination
Date related to the Collection Period in which such Lease became
an Early Termination Lease or (B) in the case of a Partial Early
Termination Lease, the reduction in the Discounted Lease Balance
of such Lease as of the Determination Date related to the
Collection Period in which such Lease became a Partial Early
Termination Lease, (ii) one month's interest on the amount
described in clause (i) at the Discount Rate as of the
Determination Date and (iii) the amount of any unreimbursed
Servicer Advances with respect to such Lease.
(c) Acceleration. The Servicer, in its sole
discretion, may accelerate (or elect not to accelerate) the
maturity of all or any Scheduled Lease Payments under any Lease
under which a default under the terms thereof has occurred and is
continuing (after the lapse of any applicable grace period);
provided that the Servicer is required to accelerate the
Scheduled Lease Payments due under any Lease (and take other
action in accordance with the Servicer's past practice, including
repossessing or otherwise converting the related Equipment, to
realize upon the value of such Lease and the related Equipment)
to the fullest extent permitted by the terms of such Lease,
promptly after such Lease becomes a Defaulted Lease.
(d) Taxes and Other Amounts. To the extent provided
for in any Lease, the Servicer will make reasonable efforts to
collect all payments with respect to amounts due for taxes,
assessments and insurance premiums relating to the Leases or the
related Equipment and remit such amounts to the appropriate
Governmental Authority or insurer on or prior to the date such
payments are due.
II.3 Servicer Advances. For each Collection Period
commencing after the Conversion Date, if the Servicer determines
that any Scheduled Lease Payment (or portion thereof) which was
due and payable pursuant to a Lease during such Collection Period
was not received prior to the end of such Collection Period, the
Servicer shall make a Servicer Advance in an amount up to the
amount of such delinquent Scheduled Lease Payment (or portion
thereof), to the extent that in its sole discretion it determines
that it can recoup such amount from subsequent collections under
the related Lease, and such Servicer Advance shall be deemed to
be a payment of such Scheduled Lease Payment (or portion thereof)
for purposes of calculating the Discounted Lease Balance with
respect to such Lease. The Servicer will deposit any Servicer
Advances into the Collection Account on or prior to 10:00 a.m.
(Chicago time) on the related Payment Date, in immediately
available funds. The Servicer will be entitled to be reimbursed
for Servicer Advances pursuant to Sections 3.3(c) and as
described in the Credit Agreement.
II.4 Realization Upon Defaulted Leases. The Servicer
will use its best efforts consistent with its customary and usual
practices and procedures in its servicing of equipment leases to
repossess or otherwise comparably convert the ownership of any
Equipment relating to a Defaulted Lease and will act as sales and
processing agent for Equipment which it repossesses. The
Servicer will follow such other practices and procedures as it
deems necessary or advisable and as are customary and usual in
its servicing of equipment leases and other actions by the
Servicer in order to realize upon such Equipment, which practices
and procedures may include reasonable efforts to enforce all
obligations of Lessees and repossessing and selling such
Equipment at public or private sale in circumstances other than
those described in the preceding sentence. Without limiting the
generality of the foregoing, the Servicer may sell any such
Equipment to Trans Leasing for a purchase price equal to the fair
market value thereof. In any case in which any such Equipment
has suffered damage, the Servicer will not expend funds in
connection with any repair or towards the repossession of such
Equipment unless it determines in its discretion that such repair
and/or repossession will increase the Liquidation Proceeds by an
amount greater than the amount of such expenses. The Servicer
will remit to the Collection Account the Liquidation Proceeds
received in connection with the sale or disposition of Equipment
relating to a Defaulted Lease in accordance with Section 3.3.
II.5 Maintenance of Insurance Policies. The Servicer
will use its best efforts to ensure that each Lessee maintains an
Insurance Policy with respect to the related Equipment in an
amount at least equal to the sum of the Discounted Lease Balance
of the related Lease plus the present value of the estimated fair
value of the related Equipment as of the expiration of the Lease
(calculated in a manner similar to the calculation of Discounted
Lease Balance); provided that the Servicer, in accordance with
its customary servicing procedures, may allow Lessees to self-
insure. Additionally, the Servicer will require that each Lessee
maintain property damage liability insurance during the term of
each Lease in amounts and against risks customarily insured
against by the Lessee on equipment owned by it. If a Lessee
fails to maintain property damage insurance, the Servicer may
purchase and maintain such insurance on behalf of, and at the
expense of, the Lessee. In connection with its activities as
Servicer of the Leases, the Servicer agrees to present, on behalf
of itself, TLFC and the Lender, claims to the insurer under each
Insurance Policy and any such liability policy and to settle,
adjust and compromise such claims, in each case, consistent with
the terms of each Lease.
II.6 Recording and Filings. On or prior to the Closing
Date the Servicer will record and file, on behalf of TLFC and at
the Servicer's expense, financing statements and continuation
statements with respect to the Collateral meeting the
requirements of the UCC in such manner and in such jurisdictions
as are necessary to perfect and maintain the perfection of the
Lender's security interest in the Collateral as described in the
Credit Agreement. Notwithstanding the foregoing, the parties
hereto acknowledge and agree that (i) financing statements will
not be recorded or filed with respect to the Equipment other than
in the Filing Locations, (ii) the Lease Files will not be
physically delivered to the Lender but instead will be held by
the Servicer in its custodial capacity as described herein, (iii)
the financing statements to be filed in the Filing Locations
other than the States of Delaware and Illinois will not be filed
until after the Closing Date (and the Servicer agrees to make
such filings within 5 Business Days of the Closing Date) and (iv)
the certificate of title or other title document to any Equipment
consisting of motor vehicles will not be marked to indicate the
transfer from Trans Leasing to TLFC or the security interest of
the Lender therein.
II.7 Marking of Lease Management System. The Servicer
will mark the Lease Management System, on behalf of TLFC at the
Servicer's expense, on or prior to the Closing Date in a manner
which indicates that the Leases have been contributed and sold to
TLFC and that TLFC has granted a security interest in the Leases
to the Lender.
II.8 Representations and Warranties of Servicer. The
Servicer represents and warrants to TLFC and the Lender that, as
of the Closing Date, insofar as any of the following affects the
Servicer's ability to perform its obligations pursuant to this
Agreement in any material respect:
(a) Organization and Good Standing. The Servicer is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with all requisite
corporate power and authority to own its properties and to
conduct its business as presently conducted and to enter into and
perform its obligations pursuant to this Agreement.
(b) Due Qualification. The Servicer is qualified to
do business as a foreign corporation, is in good standing, and
has obtained all licenses and approvals as required under the
laws of, all states in which the ownership or lease of its
property, the performance of its obligations pursuant to this
Agreement or the other conduct of its business requires such
qualification, standing, license or approval, except to the
extent that the failure to so qualify, maintain such standing or
be so licensed or approved would not, in the aggregate,
materially and adversely affect the ability of the Servicer to
comply with this Agreement.
(c) Power and Authority. The Servicer has the
corporate power and authority to execute and deliver this
Agreement and to carry out its terms. The Servicer has duly
authorized the execution, delivery and performance of this
Agreement by all requisite corporate action.
(d) No Violation. The consummation of the
transactions contemplated by, and the fulfillment of the terms
of, this Agreement by the Servicer (with or without notice or
lapse of time) will not (i) conflict with, result in any breach
of any of the terms or provisions of, or constitute a default
under, the certificate of incorporation or by-laws of the
Servicer, or any term of any indenture, agreement, mortgage, deed
of trust or other instrument to which the Servicer is a party or
by which it is 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, mortgage, deed of trust or other
instrument, or (iii) violate any legal requirement applicable to
the Servicer or any of its properties in any manner, which
conflict, breach, default, lien or violation would have a
material and adverse effect on the ability of the Servicer to
comply with this Agreement.
(e) No Consent. No consent, approval, authorization,
order, registration, filing, qualification, license or permit of
or with any Governmental Authority having jurisdiction over the
Servicer or any of its Properties or assets is required to be
obtained by or with respect to the Servicer in connection with
the execution, delivery and performance by the Servicer of this
Agreement and the consummation of the transactions contemplated
herein.
(f) Binding Obligation. This Agreement constitutes a
legal, valid and binding obligation of the Servicer, enforceable
against the Servicer in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect affecting the enforcement of creditors'
rights generally and (ii) general principles of equity (whether
considered in a suit at law or in equity).
(g) No Proceedings. To the best of the Servicer's
knowledge, there are no proceedings or investigations pending or
threatened against the Servicer before any Governmental Authority
(i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the consummation of any of the transactions contemplated
by this Agreement or (iii) seeking any determination or ruling
that might (in the reasonable judgment of the Servicer)
materially and adversely affect the performance by the Servicer
of its obligations under, or the validity or enforceability of,
this Agreement.
(h) Location of Lease Files. The Lease Files for all
Leases are located at the Servicer's office at 3000 Dundee Road,
Northbrook, Illinois, and the Lease Files have not been located
at any other address during the four-month period prior to the
date hereof. No Person other than TLFC, the Lender and the
Servicer has possession of, or any Lien upon, any Lease Files.
II.9 Covenants of Servicer. The Servicer covenants
that:
(a) Lease Files. The Servicer will, at its own cost
and expense, maintain all Lease Files, as custodian for the
Lender. Without limiting the generality of the preceding
sentence, the Servicer (i) will not dispose of any documents
constituting the Lease Files in any manner which is inconsistent
with the performance of its obligations as the Servicer pursuant
to this Agreement and will not dispose of any original Lease
except as expressly contemplated by this Agreement or the Credit
Agreement, (ii) will maintain the Lease Files in a manner which,
with the assistance of the information set forth in the List of
Leases, will permit the Lease Files to be identified and
segregated from other documents in the Servicer's possession
which relate to leases or other contracts or property which are
not Leases or Equipment and (iii) will not permit any Person
other than the Lender and the Servicer to maintain possession of,
or any Lien (other than a Permitted Lien) upon, any Lease Files
(other than any Lease Files which relate solely to an Early
Termination Lease, an Expired Lease or a Repurchased Lease and/or
the related Equipment).
(b) Indemnification.
(i) In connection with any suit, proceeding or
action brought by the Servicer or the Lender for any sum owing in
respect of a Lease, the Servicer will save, indemnify and keep
the Lender harmless from and against all expense, loss or damage
suffered by the Lender by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of
the Lessee under the related Lease which arises out of a breach
by the Servicer of any obligation under such Lease or arising out
of any other agreement, indebtedness or liability at any time
owing by the Servicer to or in favor of such Lessee or its
successor.
(ii) The Servicer will defend and indemnify the
Lender against all costs, expenses, claims and liabilities
incurred by the Lender in respect of any action taken by the
Servicer, relative to any Lease or arising out of any proven
failure of compliance of any Lease with the provisions of any law
or regulation of any Governmental Authority.
(c) Compliance with Law. The Servicer will comply, in
all material respects, with all laws and regulations of any
Governmental Authority applicable to the Servicer or the Leases
and related Equipment and Lease Files or any part thereof;
provided that the Servicer may contest any such law or regulation
in any reasonable manner which will not materially and adversely
affect the value of (or the rights of the Lender, with respect
to) the Collateral.
(d) Preservation of Security Interest. The Servicer
will execute and file such financing and continuation statements
and any other documents reasonably requested by TLFC or the
Lender to be filed or which may be required by any law or
regulation of any Governmental Authority to preserve and protect
fully the interest of the Lender in, to and under the Collateral;
provided that the Servicer will not be required (i) to file any
financing or continuation statements with respect to the
Equipment in any jurisdiction other than in the Filing Locations,
(ii) except as provided in Article V, to deliver physical
possession of the Lease Files to the Lender (and may permit the
Lease Files to remain in the possession of Trans Leasing, in its
capacity as the Servicer, or any other Servicer) or (iii) to
cause the certificate of title or other title document to any
Equipment consisting of motor vehicles to be marked to indicate
the transfer from Trans Leasing to TLFC or the security interest
of the Lender therein.
(e) Obligations with Respect to Leases. The Servicer
will duly fulfill and comply with, in all material respects, all
obligations on the part of the "lessor" to be fulfilled or
complied with under or in connection with each Lease and will do
nothing to impair the rights of the Lender in, to and under the
Collateral. The Servicer will perform such obligations under the
Leases and will not change or modify the Leases, except as
otherwise provided herein and except insofar as any such failure
to perform, change or modification would not materially and
adversely affect the value of (or the rights of the Lender with
respect to) the Leases or the Equipment.
(f) Location of Lease Files. The Servicer will not
change the location of any material portion of the Lease Files
(other than any Lease Files which relate solely to an Early
Termination Lease, an Expired Lease or a Repurchased Lease and/or
related Equipment) unless the Servicer gives the Lender notice of
such change not less than ten days prior to such change; provided
that at all times the Lease Files shall remain under the care,
custody and control of the Servicer.
(g) No Bankruptcy Petition Against TLFC. The Servicer
agrees that, prior to the date that is one year and one day after
the final distribution with respect to all notes, certificates
and other securities issued by TLFC or any trust formed by TLFC
which have been rated by any nationally recognized statistical
rating organization, it will not institute against TLFC, or join
any other Person in instituting against TLFC, any bankruptcy,
reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceedings under the laws of the
United States or any state of the United States. This Section
2.09(g) will survive the termination of this Agreement.
(h) Swap Breakage Costs. In the event of a Swap
Breakage Event, the Servicer shall pay the related Swap Breakage
Costs. Servicer shall be reimbursed therefor on each Payment
Date thereafter as provided in Section 6.1(b)(l) of the Credit
Agreement.
II.10 Servicer Compensation. The Servicer will be
entitled to receive the Servicing Fee to the extent, in the
amounts and at the times provided in the Credit Agreement. The
Servicer will also be entitled to retain all late payment
charges, extension fees, and other incidental charges and other
Late Fees (from whatever source) collected with respect to the
Leases.
II.11 Payment of Certain Expenses by Servicer. The
Servicer shall pay all expenses incurred by it in connection with
its activities under this Agreement, including fees and
disbursements of independent accountants, taxes imposed on the
Servicer, expenses incurred in connection with distributions and
reports pursuant to this Agreement, and all other fees and
expenses not expressly stated under this Agreement for the
account of TLFC, but excluding Liquidation Expenses incurred as a
result of activities contemplated by Section 2.1(d). The
Servicer shall pay all reasonable fees and expenses owing to the
Lender in connection with the maintenance of the Collection
Account.
II.12 Monthly Statement; Annual Statement.
(a) Monthly Statement. With respect to each Payment
Date and the related Collection Period, the Servicer will provide
to the Lender and TLFC, not less than two Business Days prior to
such Payment Date, a monthly statement (a "Monthly Statement"),
signed by a Responsible Officer of the Servicer and substantially
in the form of Exhibit A.
(b) Annual Statement. The Servicer will provide to
the Lender and TLFC on or prior to September 30 of each year,
commencing September 30, 1997, a cumulative summary of the
information required to be included in the Monthly Statements for
the Collection Periods ending during the immediately preceding
Transaction Year (an "Annual Statement").
II.13 Annual Report as to Compliance. The Servicer
will provide to the Lender and TLFC on or prior to September 30
of each year, commencing September 30, 1997, an annual report
signed by a Responsible Officer of the Servicer stating that
(a) a review of the activities of the Servicer, and the
Servicer's performance pursuant to this Agreement, for the period
ending on the last day of the immediately preceding Transaction
Year has been made under such Person's supervision and (b) to the
best of such Person's knowledge, based on such review, the
Servicer has performed or has caused to be performed in all
material respects all of its obligations under this Agreement
throughout such Transaction Year and no Servicer Default has
occurred and is continuing (or, if a Servicer Default has so
occurred and is continuing, specifying each such event, the
nature and status thereof and the steps necessary to remedy such
event, and, if a Servicer Default occurred during such
Transaction Year and no notice thereof has been given to Lender,
specifying such Servicer Default and the steps taken to remedy
such event).
II.14 Annual Independent Public Accountants'
Servicing Reports. The Servicer will cause a firm of nationally
recognized independent public accountants (who may also render
other services to the Servicer) to furnish to the Lender and
TLFC, on or prior to September 30 of each year, commencing
September 30, 1997, a report relating to the previous Transaction
Year to the effect that (a) such firm has reviewed certain
documents and records relating to the servicing of the Leases,
and (b) based on such examination, such firm is of the opinion
that Monthly Statements for such Transaction Year were prepared
in compliance with this Agreement, except for such exceptions as
it believes to be immaterial and such other exceptions as will be
set forth in such firm's report.
ARTICLE III
ACCOUNTS AND DEPOSITS
III.1 Establishment of Accounts. The Servicer
shall establish the Collection Account as described in Section
10.2 of the Credit Agreement.
III.2 Investment of Accounts. Funds on deposit in
the Collection Account will be invested in Eligible Investments;
provided that all related funds will be available for withdrawal
without loss of principal or interest on the succeeding Payment
Date (except with respect to the Collections received by the
Servicer after the end of the immediately preceding Collection
Period, the proceeds of investments of which need not be
available until the next succeeding Payment Date). Subject to
the restrictions set forth below, the Servicer will have the
authority to instruct the Lender in writing with respect to the
investment of funds on deposit in the Collection Account.
Receipt of such written instructions by the Lender will be a
condition precedent to any investment pursuant to this Section
3.2. Such instructions will relate to specified investments
which constitute Eligible Investments. None of TLFC, the Lender
or the Servicer will be liable for any loss incurred in
connection with any investment made pursuant to this Section 3.2
except with respect to any investment issued or guaranteed by the
Lender in its individual capacity. The Lender may make any
investments pursuant to this Section 3.2 through its own
investment department, in accordance with any such instructions
received from the Servicer. For purposes of determining the
availability of funds in the Collection Account for any reason
under this Agreement or the Credit Agreement, all investment
earnings (net of losses and investment expenses) available to be
withdrawn from the Collection Account will be deemed to be
available from or on deposit in the Collection Account. All
Eligible Investments which have a specified maturity date will be
held to maturity. All Eligible Investments shall be held by and
in the name of the Lender and the Lender will maintain possession
of all instruments or securities evidencing the Eligible
Investments from the time of purchase thereof until the time of
sale or maturity.
III.3 Deposits.
(a) Initial Deposit. Not later than the second
Business Day after the Closing Date, the Servicer will deposit
(in immediately available funds) into the Collection Account all
Collections received after the Initial Cut-Off Date and prior to
the Closing Date.
(b) Deposits. From time to time after the Closing
Date, the Servicer will deposit (in immediately available funds)
all Collections and payments under any Swap Agreement in the
Collection Account, as promptly as possible after the date upon
which such Collections or payments are received (but in no event
later than the second Business Day after such date).
(c) Amounts Exempt from Deposit. Notwithstanding
Sections 3.3(a) and 3.3(b), the following Collections (or
portions thereof) are not required to be deposited into the
Collection Account, and if any such amounts are deposited in the
Collection Account, such amounts may be withdrawn and paid to the
Servicer:
(i) Collections (including the portion of the Warranty
Purchase Price attributable to unreimbursed
Servicer Advances) on any Leases on which (and to
the extent that) the Servicer has previously made
a Servicer Advance which has not been reimbursed
pursuant to this Section 3.3(c)(i) or the Credit
Agreement, which amounts the Servicer may retain
(as a reimbursement of such Servicer Advance); and
(ii) Collections (other than the Repurchase Price) on
any Repurchased Lease or any Lease for which a
Lease has been substituted as described in Section
10.4 of the Credit Agreement, which amounts the
Servicer may retain to the extent necessary to
reimburse the Servicer for any related Servicer
Advance which has not been reimbursed pursuant to
this Section 3.3(c)(i) or the Credit Agreement,
and the remainder of which amounts the Servicer
will pay to the Originator or TLFC, as the case
may be.
ARTICLE IV
OTHER MATTERS RELATING
TO THE SERVICER
IV.1 Liability of the Servicer and Others. The
Servicer will be liable in accordance with this Agreement only to
the extent of the obligations specifically undertaken by the
Servicer in such capacity. Except as provided in Section 4.2,
the Servicer will not be under any liability to TLFC, the Lender
or any other Person for any action taken or for refraining from
the taking of any action in its capacity as Servicer pursuant to
this Agreement whether arising from express or implied duties
under this Agreement; provided, that this provision will not
protect the Servicer against any liability which would otherwise
be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless
disregard of obligations and duties under this Agreement. The
Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any other Person
respecting any matters arising hereunder. The Servicer will not
be under any obligation to appear in, prosecute or defend any
legal action which is not related to its duties to service the
Leases in accordance with this Agreement which in its reasonable
opinion may involve it in any expense or liability. No director,
officer, employee or agent of the Servicer will be under any
liability to the Lender, TLFC or any other Person pursuant to
this Agreement or pursuant to any document delivered hereunder.
It is expressly understood that all such liability is expressly
waived and released as a condition of, and as consideration for,
the execution of this Agreement.
IV.2 Merger or Consolidation of Servicer; Assumption of
Servicer's Obligations. The Servicer will not consolidate with
or merge into, convey or transfer all or substantially all of its
Properties to any Person (which shall not include the
contributions and sales pursuant to the Contribution and Sale
Agreement in the Servicer's capacity as the Originator) unless
(i) the Person formed by such consolidation, merger or which
acquires by conveyance or transfer all or substantially all of
the Properties of the Servicer is organized and existing under
the laws of the United States of America or any state thereof or
the District of Columbia, (ii) such Person expressly assumes (by
an agreement, executed and delivered to the Lender, which
supplements this Agreement and is in a form reasonably
satisfactory to the Lender) the performance of every covenant and
obligation of the Servicer pursuant to this Agreement, and (iii)
the Servicer has delivered to the Lender an Officer's Certificate
and an Opinion of Counsel, each to the effect that such
consolidation, merger, conveyance or transfer and such
supplemental agreements comply with this Section 4.2 and that all
conditions precedent relating to such transaction pursuant to
this Agreement have been met.
IV.3 The Servicer Not to Resign. The Servicer will not
resign from the obligations and duties imposed on it pursuant to
this Agreement except upon a determination that (i) the
performance of its duties pursuant to this Agreement is
impermissible under applicable law and (ii) there is no
reasonable action which the Servicer could take to make the
performance of its duties pursuant to this Agreement permissible
under applicable law. Any determination pursuant to clause (i)
above will be evidenced by an Opinion of Counsel to such effect
and any determination pursuant to clause (ii) above will be
evidenced by an Officer's Certificate, in each case delivered to
the Lender. No Servicer resignation will become effective until
the Lender or a Successor Servicer has assumed the
responsibilities and obligations of the Servicer in accordance
with Section 5.2. If within 120 days of the date of any
determination described in this Section 4.3, the Lender is unable
to appoint a Successor Servicer, the Lender will without further
action be appointed a Successor Servicer. The provisions of
Section 5.1 with respect to the duties of the Servicer in
effecting the termination of its servicing responsibilities and
the transfer of such responsibilities to a Successor Servicer
will apply to any resignation pursuant to this Section 4.3.
IV.4 Access to Certain Documentation and Information
Regarding the Assets. Promptly upon request, the Servicer will
furnish to TLFC or the Lender access to the Lease Files and any
information described in Section 8.1(b) of the Credit Agreement
which is in the Servicer's possession. Such access will be
afforded without charge, but only (i) upon reasonable request and
with reasonable notice, (ii) during the Servicer's normal
business hours, (iii) subject to the Servicer's normal security
and confidentiality procedures and (iv) at offices designated by
the Servicer. Nothing in this Section 4.4 will derogate from any
obligation under this Agreement or obligation of TLFC or the
Servicer to observe any applicable law or agreement prohibiting
disclosure of information regarding the Lessees, and any failure
of the Servicer to provide information or access as provided in
this Section 4.4 by reason of any such obligation will not
constitute a breach of this Section 4.4.
ARTICLE V
SERVICER DEFAULTS
V.1 Servicer Defaults.
(a) Definition. Any of the following events will
constitute a "Servicer Default" pursuant to this Agreement:
(i) any failure by the Servicer to make any payment,
transfer or deposit or deliver any Monthly
Statement or Annual Statement which continues
beyond the second Business Day after the date upon
which such payment, transfer, deposit or delivery
is required to be made pursuant to this Agreement;
(ii) any failure by the Servicer to observe or perform
in any material respect any other covenant or
agreement of the Servicer pursuant to this
Agreement, if such failure materially and
adversely affects the rights of the Lender and
continues unremedied for a period of thirty days
after the earlier of (a) the date on which written
demand that such failure be remedied is given to
the Servicer by the Lender or (b) the date on
which a Responsible Officer of the Servicer
becomes aware of such failure;
(iii) any delegation of the Servicer's duties pursuant
to this Agreement, except as permitted pursuant to
Section 6.7;
(iv) any representation, warranty or certification made
by the Servicer in this Agreement or in any
certificate delivered pursuant to this Agreement
proves to have been incorrect in any material
respect when made and such incorrect statement has
a material and adverse effect on the rights of the
Lender and continues to be incorrect in any
material respect for a period of thirty days after
the earlier of (a) the date on which written
demand that such incorrect statement be remedied
is given to the Servicer by the Lender or (b) the
date on which a Responsible Officer of the
Servicer becomes aware of such incorrect
statement; or
(v) (A) the Servicer consents to the appointment of a
conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceeding of or
relating to the Servicer or all or substantially
all of its Property, (B) a decree or order of a
court or agency or supervisory authority having
proper jurisdiction for the appointment of a
conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceeding, or
for the winding-up or liquidation of the
Servicer's affairs, is entered against the
Servicer and such decree or order remains in force
undischarged or unstayed for a period of 90 days,
or (C) the Servicer admits in writing its
inability to pay, or fails to pay, its debts
generally as they become due, files a petition or
commences any case or proceeding to take advantage
of any applicable bankruptcy, insolvency or
reorganization statute, makes any assignment for
the benefit of its creditors or voluntarily
suspends payment of its obligations.
(b) Consequences of Servicer Default. If any Servicer
Default occurs, then, so long as such Servicer Default is
continuing, the Lender, by written notice (a "Termination
Notice") to the Servicer, may terminate all of the rights and
obligations of the Servicer pursuant to this Agreement and in, to
and under the Collateral. After the Servicer receives a
Termination Notice, and on the date that a Successor Servicer is
appointed pursuant to Section 5.2, all authority and power of the
Servicer pursuant to this Agreement will pass to and be vested in
the Successor Servicer. The Lender is hereby authorized and
empowered (upon the failure of the Servicer to cooperate) to
execute and deliver, on behalf of the Servicer as attorney-in-
fact or otherwise, all documents and other instruments, and to do
and accomplish all other acts or things, which are necessary or
appropriate to effect the transfer of the servicing function
pursuant to this Agreement. The Servicer agrees to cooperate
with the Lender and such Successor Servicer in effecting the
termination of the Servicer's responsibilities and rights
pursuant to this Agreement. The Servicer will promptly transfer
the information contained in the Lease Management System relating
to the Leases to the Successor Servicer in such form as the
Successor Servicer may reasonably request, and will promptly
transfer to the Successor Servicer possession of the Lease Files
and all other records, correspondence and documents necessary for
the continued servicing of the Leases in the manner and at such
times as the Successor Servicer will reasonably request. To the
extent that compliance with this Section 5.1(b) requires the
Servicer to disclose to the Successor Servicer information of any
kind which the Servicer reasonably deems to be confidential, the
Servicer may require the Successor Servicer to enter into such
customary licensing and confidentiality agreements as the
Servicer reasonably deems necessary to protect its interests.
(c) Actions Beyond Servicer's Control.
Notwithstanding the foregoing, any delay in or failure of
performance referred to in Section 5.1(a)(i) for a period not in
excess of five Business Days or under Section 5.1(a)(ii), (iii)
or (iv) for a period not in excess of sixty Business Days (in
each case, without giving effect to any grace period described in
such Section) will not constitute a Servicer Default if such
delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure
was caused by an act of God or the public enemy, acts of declared
or undeclared war, public disorder, rebellion or sabotage,
epidemics, landslides, lightning, fire, hurricanes, earthquakes,
floods or similar causes. The preceding sentence will not
relieve the Servicer of the obligation to use its best efforts to
perform its obligations in a timely manner in accordance with the
terms of this Agreement, and the Servicer will provide the Lender
and TLFC with an Officer's Certificate giving prompt notice of
such failure or delay by it, together with a description of its
efforts to perform its obligations.
V.2 Lender to Act; Appointment of Successor.
(a) Servicer's Continued Performance. On and after
the Servicer's receipt of a Termination Notice pursuant to
Section 5.1(b), the Servicer will continue to perform all
servicing functions pursuant to this Agreement until the date
specified by the Lender in such Termination Notice or, if no such
date is specified, until a date mutually agreed upon by the
Servicer and the Lender.
(b) Appointment; Inability to Appoint. As promptly as
possible after delivery of a Termination Notice the Lender will
appoint a successor to the Servicer. No Person shall act as the
Successor Servicer until such Person accepts its appointment by a
written assumption in a form reasonably acceptable to the Lender.
If no Successor Servicer has been appointed and accepted its
appointment at the time when the Servicer ceases to act as
Servicer, the Lender, without further action, will automatically
be appointed the Successor Servicer, unless the Lender is legally
unable so to act, in which case the Lender will petition a court
of competent jurisdiction to appoint an established servicing
entity having a net worth of not less than $25,000,000 and whose
regular business includes the servicing of leases of equipment
which is of a type or types similar to the Equipment.
(c) Successor's Rights, Duties and Liabilities. Upon
its appointment, the Successor Servicer will be the successor
with respect to servicing functions pursuant to this Agreement
and will be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms
and provisions of this Agreement, and all references in this
Agreement to the Servicer will be deemed to refer to the
Successor Servicer.
(d) Compensation. In connection with such appointment
and assumption, the Lender will be entitled to such compensation,
or may make such arrangements for the compensation of the
Successor Servicer out of collections, as it and such Successor
Servicer agree; provided that no such compensation will be in
excess of the compensation permitted to be paid to the Servicer
pursuant to Section 2.10 of this Agreement.
(e) Cessation of Successor's Authority. All authority
and power granted to a Successor Servicer pursuant to this
Agreement will automatically cease and terminate upon termination
of this Agreement pursuant to Section 6.1 and will pass to and be
vested in TLFC, and TLFC is hereby authorized and empowered to
execute and deliver, on behalf of such Successor Servicer, as
attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things,
which are necessary or appropriate to effect the purposes of such
transfer of the servicing function pursuant to this Agreement.
The Successor Servicer agrees to cooperate with TLFC in effecting
the termination of such Successor Servicer's responsibilities and
rights. The Successor Servicer will transfer its electronic
records relating to the Leases to TLFC in such electronic form as
TLFC may reasonably request and will transfer all other records,
correspondence and documents to TLFC in the manner and at such
times as TLFC will reasonably request. To the extent that
compliance with this Section 5.2(e) requires the Successor
Servicer to disclose to TLFC information of any kind which the
Successor Servicer reasonably deems to be confidential, the
Successor Servicer may require TLFC to enter into such customary
licensing and confidentiality agreements as the Successor
Servicer deems necessary to protect the Successor Servicer's
interests.
V.3 Notification to Lender. Promptly upon the
occurrence of any Servicer Default (and, in any event, within two
Business Days after the Servicer becomes aware thereof), the
Servicer will give the Lender and TLFC written notice of such
Servicer Default. The Lender will promptly give written notice
of any termination or appointment of a Successor Servicer
pursuant to this Article V to TLFC and Trans Leasing.
V.4 Waiver of Past Defaults. The Lender may waive any
default by the Servicer or TLFC in the performance of their
respective obligations under this Agreement and the consequences
of any such default. Upon any such waiver of a past default,
such default will cease to exist, and any default arising from or
relating to such default will be deemed to have been remedied and
cured for all purposes under this Agreement. No such waiver will
extend to any subsequent or other default or impair any right
upon any such subsequent default except to the extent expressly
so waived.
V.5 List of Leases. The Servicer will maintain true,
correct and complete copies of the List of Leases and the Lease
Schedule (as defined in the Contribution and Sale Agreement).
Each time such List of Leases or Lease Schedule is amended as
contemplated by the Credit Agreement or the Contribution and Sale
Agreement, Servicer shall promptly forward to the Lender such
List of Leases or Lease Schedule as so amended (or an amendment
to be attached to the previous List of Leases or Lease Schedule
so delivered to Lender), together with a certificate
substantially in one of the forms attached hereto as Exhibit B.
First Union shall maintain at its offices at One First Union
Center in Charlotte, North Carolina such List of Leases and Lease
Schedule as so amended (or previous List of Leases and Lease
Schedule together with all amendments), which shall constitute
the List of Leases and Lease Schedule, respectively, referred to
in the UCC financing statements filed pursuant to the Credit
Agreement and the Contribution and Sale Agreement, respectively,
upon the earlier to occur of (i) return of such certificate
acknowledged by the Lender or (ii) five Business Days after such
certificate is delivered by the Servicer. First Union shall
provide access to such List of Leases and Lease Schedule, without
charge, to any Person.
ARTICLE VI
MISCELLANEOUS PROVISIONS
VI.1 Termination. The respective obligations and
responsibilities of the parties hereto created by this Agreement
will terminate upon the last to occur of (i) the maturity or
other liquidation of the last Lease and the disposition of any
amounts received upon disposition of any Defaulted Leases; (ii)
payment of all amounts due to the Lender pursuant to the Credit
Agreement; and (iii) the termination of the Credit Agreement.
VI.2 Amendment. This Agreement may be amended from
time to time by the unanimous written consent of each of TLFC,
Trans Leasing and the Lender.
VI.3 Evidence of Filings. The Servicer will cause this
Agreement, all amendments to this Agreement, and all financing
statements and continuation statements and any other necessary
documents relating to the Lender's right, title and interest to
the Collateral, to be promptly recorded, registered and filed
(and at all times to be kept recorded, registered and filed) all
in such manner and in such places as may be required by law to
preserve and protect fully the right, title and interest of the
Lender to all property comprising the Collateral, all as provided
in, and subject to, Sections 2.6 and 2.9(d). The Servicer will
deliver to the Lender a file-stamped copy of, or filing receipt
for, any document recorded or filed as provided in Section 2.6 or
2.9(d) promptly after such copy or receipt becomes available.
TLFC will cooperate fully with the Servicer in connection with
the performance of such Sections and will execute any and all
documents reasonably required to fulfill the intent of such
Sections.
VI.4 Governing Law. All matters arising under or
pursuant to this Agreement will be governed by and construed in
accordance with the domestic laws of the State of Illinois,
without giving effect to any choice of law or conflict provision
or rule (whether of the State of Illinois or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Illinois. In furtherance of
the foregoing, the internal law of the State of Illinois will
control the interpretation and construction of this Agreement,
even in the event that under such jurisdiction's choice of law or
conflict of law analysis, the substantive law of some other
jurisdiction would ordinarily apply.
VI.5 Notices. Except as otherwise provided in this
Agreement, any notice or other communication herein required or
permitted to be given shall be in writing and may be delivered in
person, with receipt acknowledged, or sent by United States mail,
registered or certified, postage prepaid and return receipt
requested, or by Federal Express or other nationally recognized
overnight courier service, postage prepaid and confirmation of
receipt requested, and addressed as follows (or at such other
address as may be substituted by notice given as herein
provided):
If to TLFC:
TL Lease Funding Corp. IV
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
with a copy (which copy will
not constitute notice to
TLFC) to each of:
Trans Leasing International, Inc.
3000 Dundee Road
Northbrook, IL 60062
Attention: Chief Financial Officer
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: Jill L. Sugar
If to the Servicer:
Trans Leasing International, Inc.
3000 Dundee Road
Northbrook, IL 60062
Attention: Chief Financial Officer
with a copy (which copy will not constitute
notice to the Servicer) to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: Jill L. Sugar
If to the Lender:
First Union National Bank of North Carolina
One First Union Center, TW-6
301 South College Street
Charlotte, NC 28288-0610
Attention: Christopher R. Snyder
Vice President
Every notice, demand, request, consent, approval, declaration or
other communication hereunder shall be deemed to have been duly
given or served on the date on which the same shall have been
personally delivered, with receipt acknowledged, three (3)
Business Days after the same shall have been deposited in the
United States mail or on the next succeeding Business Day if the
same has been sent by Federal Express or other nationally
recognized overnight courier service. Failure or delay in
delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the Persons
designated above to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
VI.6 Severability of Provisions. If any covenant,
agreement, provision or term of this Agreement is held invalid
for any reason whatsoever, then such covenant, agreement,
provision or term will be deemed severable from the remaining
covenants, agreements, provisions and terms of this Agreement and
will in no way affect the validity or enforceability of the other
provisions of this Agreement.
VI.7 Assignment. This Agreement may not be assigned by
the Servicer, except as provided in Sections 2.1(e), 4.2, 4.3 or
5.2, without the prior consent of the Lender.
VI.8 Schedules and Exhibits. The Schedules and
Exhibits constitute a part of this Agreement and are incorporated
into this Agreement for all purposes.
VI.9 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Lender,
any right, remedy, power or privilege under this Agreement, will
operate as a waiver of such right, remedy, power or privilege;
nor will any single or partial exercise of any right, remedy,
power or privilege under this Agreement preclude any other or
further exercise of such right, remedy, power or privilege or the
exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided under this
Agreement are cumulative and not exhaustive of any other rights,
remedies, powers and privileges which may be provided by law.
VI.10 Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties on separate
counterparts), each of which will be an original, but all of
which together will constitute one and the same instrument.
VI.11 Binding Effect; Third-Party Beneficiaries. This
Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted
assigns. Except as otherwise provided in this Agreement, no
other Person will have any right or obligation pursuant to this
Agreement.
VI.12 Merger and Integration. Except as specifically
stated otherwise in this Agreement, this Agreement sets forth the
entire understanding of the Parties relating to the subject
matter hereof, and all prior understandings, written or oral, are
superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as expressly
provided in this Agreement.
VI.13 Headings. The headings used in this Agreement are
for the purpose of reference only and will not otherwise affect
the meaning or interpretation of any provision of this Agreement.
VI.14 Certificates and Opinions of Counsel.
(a) Basis for Reliance. Any certificate delivered by
any Person in connection with this Agreement or the transactions
contemplated hereby may be based, insofar as it relates to legal
matters, upon an Opinion of Counsel, unless the Person delivering
such certificate knows, or in the exercise of reasonable care
should know, that such Opinion of Counsel is erroneous. Any
Opinion of Counsel or certificate delivered under this Agreement
may be based, insofar as it relates to factual matters, upon a
certificate of, or representations by, a Responsible Officer or
Responsible Officers of the Servicer or the Originator, as the
case may be, stating that the information with respect to such
factual matters is in the possession of the Servicer or the
Originator, as the case may be, unless the Person delivering such
Opinion of Counsel or certificate knows, or in the exercise of
reasonable care should know, that such certificate, opinion or
representations with respect to such matters are erroneous. Any
such Opinion of Counsel or certificate may be based, insofar as
it relates to accounting matters, upon a certificate or opinion
of or representations by an independent public accountant or firm
of accountants, unless such counsel or the Person delivering such
Opinion of Counsel or certificate knows, or in the exercise of
reasonable care should know, that the certificate, opinion or
representations with respect to the accounting matters are
erroneous.
(b) Consolidation. Where any Person is required to
make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments
pursuant to this Agreement, such Person may, but need not,
consolidate the same and form one instrument.
* * * * *
IN WITNESS WHEREOF, TLFC, the Servicer and the Lender
have caused this Servicing Agreement to be duly executed by their
respective officers as of the day and year written above.
TL LEASE FUNDING CORP. IV
By: /s/ Norman Smagley
Name: Norman Smagley
Title: Vice President - Finance
TRANS LEASING INTERNATIONAL, INC.,
as Servicer
By: /s/ Norman Smagley
Name: Norman Smagley
Title: Vice President - Finance
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
as Lender
By: /s/ Bill A. Shirley
Name: Bill A. Shirley
Title: Vice President
Exhibit A
Form of Monthly Statement
See Attached.
Exhibit B
FORM OF CERTIFICATE
____________ ___, 199_
First Union National Bank
of North Carolina
One First Union Center
301 South College Street
Charlotte, NC 28288
Attached is the true, correct and complete copy of [the List of
Leases] [an amendment to the List of Leases delivered as of
____________, 199_] as contemplated by Section 5.5 of the Servicing
Agreement dated as of ______________, 1997 (the "Servicing Agreement")
among TL Lease Funding Corp. IV, Trans Leasing International, Inc., as
initial Servicer (the "Servicer"), and First Union National Bank of
North Carolina, as Lender. All capitalized terms used and not
otherwise defined herein shall have the respective meanings assigned to
such terms in the Servicing Agreement.
Such List of Leases [together with the List of Leases delivered
as of ____________, 199_] constitutes the List of Leases referred to in
the UCC financing statements filed pursuant to the Contribution and
Sale Agreement [and replaces all prior lists].
Please sign and return a copy hereof to the Servicer to
acknowledge the receipt of this [amendment to the] List of Leases [and
the replacement of all prior lists].
TRANS LEASING INTERNATIONAL, INC.
By:______________________________
Name:____________________________
Title:___________________________
Acknowledged as of __________, 199_
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:________________________________
Name:______________________________
Title:_____________________________