1
EXHIBIT 10.33
EQUIPMENT AND LEASE PURCHASE AGREEMENT
THIS EQUIPMENT AND LEASE PURCHASE AGREEMENT (this "Agreement"), dated
as of March 27, 1997, is entered into by and between ROCKFORD LEASE FUNDING
CORP., a New York corporation ("Purchaser"), and ROCKFORD INDUSTRIES, INC., a
California corporation ("Seller").
RECITALS
Any capitalized terms used but not defined in these recitals shall have
the meaning ascribed thereto in Article I below.
Contemporaneously with the execution of this Agreement, (a) Purchaser,
as seller, Seller, as servicer, and Texas Commerce Bank National Association
("Trustee"), as trustee and back-up servicer, have executed that certain Pooling
and Servicing Agreement of even date herewith (the "Pooling and Servicing
Agreement"), and (b) Purchaser, as seller, Centre Square Funding Corporation
("Centre Square"), as purchaser, and Seller and Trustee have executed that
certain Purchase Agreement, of even date herewith (the "Purchase Agreement").
The Commitment Letter provides for the issuance of up to $150,000,000
outstanding principal balance of certificates, as of any date of determination,
pursuant to the Pooling and Servicing Agreement and other pooling and servicing
agreements (determined on an aggregate basis by including the original principal
amount of any certificates issued under all pooling and servicing agreement(s)
entered into pursuant thereto). The Certificates described below evidence
fractional undivided interests in a Trust with a corpus consisting of a pool of
Lease Contracts serviced by Seller.
Under the terms of the Purchase Agreement, Centre Square has agreed,
subject to certain conditions, to purchase the Certificates from Purchaser.
Purchaser desires to purchase from Seller the Lease Contracts that will
be assigned by Purchaser to the Trust under the Purchase Agreement and the
Pooling and Servicing Agreement, together with the Equipment covered by the
Lease Contracts, and Seller desires to sell such Lease Contracts and Equipment
to Purchaser, in accordance with the terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties agree as follows.
-1-
2
ARTICLE I
DEFINITIONS
Section 1.01. Certain Definitions. The following terms shall have the
meanings given them below:
"Available Commitment Amount" shall mean, as of any date of
determination, $150,000,000, less the aggregate outstanding principal
amount of all Certificates previously issued and authenticated pursuant
to the Pooling and Servicing Agreement, plus the aggregate outstanding
principal amount of all Certificates previously issued and
authenticated pursuant to any other pooling and servicing agreement
entered into pursuant to the terms of the Commitment Letter.
"Bill of Sale and Assignment" shall mean the form of Bill of
Sale and Assignment attached hereto as Exhibit "A".
"Commitment Letter" shall mean that certain letter agreement
dated November 4, 1996 by and between Seller and CoreStates Capital
Markets Group, a division of CoreStates Bank, N.A.
"Principal Agreements" means this Agreement, the Pooling and
Servicing Agreement, the Purchase Agreement, the Capital Contribution
Agreement, and the Insurance Agreement.
"Repurchase Price" shall have the meaning given to such term
in Section 6.01(a) hereof.
"Residual Value" means, with respect to the Equipment covered
by a Lease Contract, the amount, if any, by which (a) the fair market
value of such Equipment as of the Closing Date on which such Equipment
is sold to Purchaser, exceeds (b) the Discounted Lease Contract Balance
of such Lease as of such Closing Date.
Section 1.02. Other Definitions. Other capitalized terms used, but not
defined herein, shall have the meanings given them in the Pooling and Servicing
Agreement.
-2-
3
ARTICLE II
PURCHASE AND SALE OF EQUIPMENT AND LEASE CONTRACTS
Section 2.01. [Intentionally Omitted]
Section 2.02. Initial Closing Date Conditions. The Purchaser's
obligations hereunder shall be subject to the satisfaction (or waiver thereof by
the Purchaser, the Trustee, the Bond Insurer and Centre Square) on the Initial
Closing Date of each of the conditions precedent set forth in Section 2.02 of
the Purchase Agreement, which conditions precedent are hereby incorporated by
reference herein to the extent they relate to Seller, with respect to the Lease
Contracts and related Equipment covered by this Agreement.
Section 2.03. Closings.
(a) Subject to the terms and conditions set forth herein, on each
Closing Date Seller shall sell to Purchaser, and Purchaser shall purchase from
Seller, those Eligible Lease Contracts and other rights and interests to be
conveyed by Purchaser to the Trust on the Closing Date under the terms of the
Purchase Agreement and the Pooling and Servicing Agreement, together with the
Equipment covered thereby; provided, however, that the sum for all Closing Dates
of the Aggregate Discounted Lease Contract Balance as of each Closing Date of
the Lease Contracts purchased on such Closing Date shall not exceed the
Available Commitment Amount. The purchase price for the Eligible Lease Contracts
and related Equipment to be sold on each Closing Date shall be equal to the
Aggregate Discounted Lease Contract Balance of such Eligible Lease Contracts.
Notwithstanding anything to the contrary contained herein, all Closing Dates
must occur no later than the date on which the Funding Period is terminated.
Purchaser shall have no further right or obligation to purchase Lease Contracts
and Equipment on or after the date on which the Funding Period is terminated.
(b) Payment for and delivery of the Lease Contracts and related
Equipment to be purchased by Purchaser from Seller on a Closing Date shall be
made at a closing at the offices of Purchaser set forth in Section 8.05(a)
hereof at 12:00 noon New York City time on the relevant Closing Date. Payment of
the purchase price for the Lease Contracts and related Equipment shall be made
by Purchaser in federal or other immediately available funds to Seller's account
at CoreStates Bank, N.A., ABA no. 031-0000-11 for credit to loan account no.
14127-10740, account title: CoreStates Controlled Account for Rockford
Industries, Inc., REF. Rockford.
Section 2.04. Subsequent Closing Conditions. Purchaser's obligation to
purchase and otherwise accept Lease Contracts and related Equipment from Seller
on any Subsequent Closing Date shall be subject to the satisfaction (or waiver
by Purchaser with the consent of the Bond Insurer) on such Subsequent Closing
Date of the following conditions precedent (references in this Section 2.04 to
"Bill of Sale and Assignment", "Lease Contracts" and "Equipment" shall be deemed
to refer to the Bill of Sale and Assignment to be executed by
-3-
4
Seller in connection with such Subsequent Closing Date and the Lease Contracts
and Equipment covered by such Bill of Sale and Assignment):
(a) The Pooling and Servicing Agreement, the Purchase
Agreement, the Capital Contribution Agreement and the Insurance
Agreement shall be in full force and effect.
(b) The representations and warranties of Seller in the
Principal Agreements shall be true and correct in all material respects
on and as of the Subsequent Closing Date with the same effect as though
such representations and warranties had been made on and as of such
date, and Seller shall have complied with all the agreements and
satisfied all the conditions under the Principal Agreements in all
material respects on its part to be performed or satisfied at or prior
to the Subsequent Closing Date.
(c) A Bill of Sale and Assignment properly executed by Seller
and conveying the Lease Contracts and Equipment and other rights and
interests to Purchaser shall have been delivered to Purchaser.
(d) All conditions to closing as set forth in Section 2.03 and
Section 2.04 of the Purchase Agreement shall have been fulfilled, to
the extent they may be fulfilled prior to the performance by Purchaser
of its obligations under this Agreement.
Section 2.05. Execution of Bill of Sale and Assignment. In connection
with each sale and purchase of Lease Contracts and Equipment hereunder, Seller
shall execute a Bill of Sale and Assignment substantially in the form of Exhibit
"A" hereto and deliver the same to Purchaser.
Section 2.06. Intent of the Parties. Except as provided in Section 5.02
hereof with respect to tax treatment only, it is the intention of the parties to
this Agreement that the conveyance of Seller's right, title and interest in and
to the Lease Contracts and Equipment pursuant to this Agreement shall constitute
a purchase and sale and not a loan. If, notwithstanding the foregoing, the
conveyance of the Lease Contracts and Equipment to Purchaser is characterized by
any third party as a pledge, the parties intend that Seller shall be deemed
hereunder to have granted (and does hereby grant) to Purchaser a first priority
perfected security interest in all of Seller's right, title and interest in, to
and under the Lease Contracts, Equipment and other rights, titles and interests
covered by the Bill of Sale and Assignments and all monies due or to become due
with respect thereto after the applicable Cut-Off Date, and all proceeds of any
of the foregoing and that this Agreement shall constitute a security agreement
under applicable law.
-4-
5
Section 2.07. Servicing of Lease Contracts and Equipment. In connection
with the contribution, assignment, transfer and conveyance of the Lease
Contracts and the Equipment to the Purchaser pursuant to this Agreement, the
Seller hereby agrees to service the Lease Contracts and Equipment for the
benefit of the Purchaser (and its successors and assigns) in accordance with the
terms and conditions of the Pooling and Servicing Agreement.
Section 2.08. Delivery of Lease Contracts. The Seller shall deliver the
Lease Contracts and the items described in the definition of Lease Files to the
Trustee so that the Trustee may retain possession thereof as provided in the
Pooling and Servicing Agreement.
Section 2.09. Review of Lease Files.
(a) If the Purchaser, the Seller or the Trustee (who shall thereupon
notify the Seller and the Trustee) discovers that any Lease Contract documents
required to be in the Lease File are missing or defective (that is, mutilated,
damaged, defaced, incomplete, improperly dated, clearly forged or otherwise
physically altered) in any material respect, the Seller shall correct or cure
such omission, defect or other irregularity within 30 days from the date the
Seller discovered, or is notified by the Trustee of, such omission or defect
and, if the Seller does not correct or cure such omission or defect within such
period, the Seller shall repurchase such Lease Contract from the Purchaser or
substitute a Substitute Lease Contract therefor, each in accordance with Section
6.01(a) hereof.
(b) If the original Certificate of Title with respect to any Vehicle
covered by a Lease Contract is not delivered to the Trustee within 90 days after
the Closing Date on which such Lease Contract was sold to the Purchaser
hereunder, then the Seller shall repurchase such Lease Contract from the
Purchaser or substitute a Substitute Lease Contract therefor, each in accordance
with Section 6.01(a) hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
Section 3.01. Regarding Seller.
(a) Seller has the corporate power and authority to execute and deliver
the Principal Agreements and to carry out their terms.
(b) The consummation of the transactions contemplated by and the
fulfillment of the terms of the Principal Agreements will not conflict with or
require any consent or approval under (as applicable) the certificate of
incorporation or by-laws of Seller. The
-5-
6
consummation of the transactions contemplated by and the fulfillment of the
terms of the Principal Agreements also will 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, or require any consent or approval
under (as applicable) the certificate of incorporation or by-laws of Seller or
any material term of any material indenture, agreement, mortgage, deed of trust
or other instrument to which Seller is a party or by which it is bound, (ii)
result in the creation or imposition of any material Lien upon any of its
material properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, or (iii) violate any law or any
order, rule or regulation applicable to Seller of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Seller or any of its properties, which
conflict, breach, Lien or violation might reasonably be expected to have a
material adverse effect on the ability of Seller to comply with the terms of any
of the Principal Agreements or a material adverse effect on the Lease Contracts,
Equipment, and other rights and interests to be sold to Purchaser under this
Agreement.
(c) No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any Governmental Authority having
jurisdiction over Seller or any of its properties or assets is required to be
obtained by or with respect to Seller in connection with the execution, delivery
and performance by Seller of the Principal Agreements and the consummation of
the transactions contemplated hereby and thereby. The Seller has obtained all
necessary licenses, permits and charters required to be obtained by the Seller,
which failure to obtain would render any portion of the Principal Agreements
unenforceable and would have a material adverse effect on the Bond Insurer or
the Certificateholders.
(d) The Principal Agreements have been duly and validly authorized,
executed and delivered by Seller and constitute valid and legally binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms, except as such enforceability is subject to bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors' rights
generally and the availability of equitable remedies.
(e) There are no proceedings or investigations pending, or, to the
knowledge of Seller, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality (i)
asserting the invalidity of any of the Principal Agreements, (ii) seeking to
prevent the consummation of any of the transactions contemplated by any of the
Principal Agreements, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by Seller of its obligations
under, or the validity or enforceability of, any of the Principal Agreements, or
(iv) if determined adversely might reasonably be expected to have a material
adverse effect on the Lease Contracts, Equipment and other rights and interests
to be sold to Purchaser under the terms of this Agreement.
-6-
7
(f) The representations and warranties made by Seller in the Purchase
Agreement, the Pooling and Servicing Agreement, the Capital Contribution
Agreement and the Insurance Agreement are true and correct.
(g) The chief executive office and principal place of business of
Seller is located in Orange County, California, at the address set forth in this
Agreement, and there have been no other such locations during the last four
calendar months.
(h) Seller is solvent and will not become insolvent after giving effect
to the transactions contemplated by the Principal Agreements, Seller has not
incurred any indebtedness or other payment obligations beyond its ability to
pay; and Seller, after giving effect to the transactions contemplated by the
Principal Agreements, will have an adequate amount of capital to conduct its
business in the foreseeable future.
(i) There is no outstanding injunction, writ, restraining order or
other order of any nature that reasonably may be expected to adversely affect
Seller's performance of its obligations under the Principal Agreements or the
consummation of the transactions contemplated thereby.
(j) Seller is in compliance in all material respects with all
applicable laws, rules, regulations, and orders with respect to the Seller, its
business and properties and all of its Lease Contracts and Equipment. Seller has
all material applicable permits, licenses and authorizations necessary for the
conduct of its business and the ownership of its material assets.
(k) Seller has filed on a timely basis all required tax returns.
(l) All of the pension or profit sharing plans of Seller or any of its
Affiliates have been fully funded in accordance with the applicable obligations
of Seller and such Affiliates.
(m) The legal name of Seller is as set forth in this Agreement. Seller
has not changed its name in the last six years and does not have any trade
names, fictitious names, assumed names or "doing business as" names, except that
Seller is qualified to do business in the States of New Jersey and Oklahoma
under the fictitious name "Rockford Financial, Inc."
(n) Seller has valid business reasons for selling the Lease Contracts
and related Equipment rather than obtaining a loan using such assets as
collateral.
-7-
8
(o) No event has occurred which materially and adversely affects
Seller's operations or its ability to perform its obligations under or to
consummate the transactions contemplated by the Principal Agreements.
Section 3.02. Regarding the Lease Contracts and Related Equipment. As
of each Closing Date:
(a) There is no restriction or limitation in any of the Lease Contracts
or otherwise on the sale of the Lease Contracts and Equipment to Purchaser
pursuant to the terms of this Agreement or on the assignment by Purchaser of the
Lease Contracts and other rights and interests to the Trustee pursuant to the
terms of the Purchase Agreement and the Pooling and Servicing Agreement. The
transfer, assignment and contribution to the Purchaser of the Lease Contracts,
Lease Receivables and the Seller's right, title and interest in any item of
Equipment will not violate the terms or provisions of any such Lease Contract or
Lease Receivables or any other agreements to which the Seller then is a party or
by which it is bound.
(b) Seller owns, or will own immediately prior to the sale of such
Lease Contract and Equipment to Purchaser hereunder, the Equipment covered by
each Lease Contract (except for any computer software included therein, for
which Seller's interest is limited to a non-exclusive transferable license) or
has, or will have immediately prior to the sale of such Lease Contract and
Equipment to Purchaser hereunder, a first priority perfected security interest
in such Equipment.
(c) The Seller will cause its records to be marked to reflect the
transfer of the Lease Contracts to the Purchaser.
(d) With respect to each Lease Contract, only one original of such
Lease Contract exists and such Lease Contract along with all documents set forth
in the definition of Lease File has been delivered to the Trustees.
(e) Each Lease Contract is genuine and in full force and effect in
accordance with its terms. Each Lease Contract is noncancelable by the Lessee
during the term of such Lease Contract, and nothing has occurred or failed to be
performed which would or might permit any Lessee to terminate such Lease
Contract or suspend or reduce any payments or obligations due or to become due
in respect of such Lease Contract by reason of default by the lessor party under
such Lease Contract. No Lessee in respect of a Lease Contract is the subject of
a bankruptcy, insolvency or other similar proceeding.
(f) There does not exist any default or any delinquency beyond 30 days
in the payment of any Scheduled Payments due under any Lease Contract and there
does not exist any other default, breach, violation or event permitting
acceleration, termination or
-8-
9
repossession under any Lease Contract or any event which, with notice and the
expiration of any applicable grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration, termination or
repossession under such Lease Contract. To the best of the Seller's knowledge,
no Lease Contract is reflected on the Seller's computer records as having been
referred to counsel. Seller has no reason to believe that the Scheduled Payments
under any Lease Contract will not be timely and fully paid.
(g) No right of the Seller with respect to a Lessee's failure to pay
any payment due under any Lease Contract has been waived by the Seller.
(h) The Seller has done nothing to materially impair the rights of the
Purchaser, the Trustee, the Certificateholders or the Bond Insurer in the Lease
Contracts or the payments due thereunder.
(i) All requirements of any federal, state or local law, rule or
regulation, including without limitation, usury, truth-in-lending and equal
credit opportunity laws, applicable to each Lease Contract (including the
origination, acquisition and servicing thereof) have been complied with in all
material respects, and no party to any Lease Contract is in violation of any
such law, rule or regulation. No Lease Contract violates any other agreement
between Seller or any of its Affiliates and the Lessee thereunder.
(j) No Lease Contract will have been originated in or be subject to the
laws of any jurisdiction whose laws would make the assignment and transfer
thereof pursuant to the terms hereof or any transaction contemplated by the
Principal Agreements unlawful.
(k) Each Lease Contract has the following characteristics:
(i) such Lease Contract was originated in the United States,
Canada or Puerto Rico, and the Scheduled Payments thereunder are
payable in U.S. dollars by a Lessee domiciled in the United States,
Canada or Puerto Rico;
(ii) at least one Scheduled Payment has been made by the
Lessee under such Lease Contract;
(iii) no Lessee in respect of such Lease Contract is an
Affiliate of Purchaser;
(iv) the Lessee under such Lease Contract has unconditionally
accepted the Equipment covered by such Lease Contract after reasonable
opportunity to inspect and test and has not notified the Seller of any
defects therein;
(v) such Lease Contract conforms in all material respects to
one of the forms of Lease Contract as set forth in Exhibit D-1, D-2 or
D-3 to this Agreement;
-9-
10
(vi) Scheduled Payments due under such Lease Contract on and
after the Cut-Off Date are payable into the Lockbox Account;
(vii) such Lease Contract has an original term of less than 72
months;
(viii) such Lease Contract has a final Scheduled Payment due
no later than 6 months prior to the Stated Maturity;
(ix) the Lessee under such Lease Contract does not have any
contractual right to prepay the Scheduled Payments due under such Lease
Contract;
(x) such Lease Contract does not permit the substitution,
exchange or addition of any Equipment subject to such Lease Contract
which would result in any reduction of the amount of payments or change
the timing of the payments due under the Lease Contract;
(xi) such Lease Contract is an Eligible Lease Contract and
complies with all applicable laws for the purposes for which the
Equipment covered thereby is permitted to be used thereunder;
(xii) such Lease Contract constitutes "chattel paper" under
the UCC; and
(xiii) such Lease Contract is not a "consumer lease" as
defined in Article 2A of the UCC.
(l) As of the time of each assignment, transfer and contribution
pursuant to the terms of this Agreement, no Lessee will have been released, in
whole or in part, from any of its obligations in respect of any such Lease
Contract; no such Lease Contract will have been satisfied, canceled, extended or
subordinated, in whole or in part, or rescinded, and no Equipment covered by any
such Lease Contract will have been released from such Lease Contract, in whole
or in part, nor will any instrument have been executed that would effect any
such satisfaction, release, cancellation, subordination or rescission.
(m) Each Lease Contract is a valid, binding and legally enforceable
obligation of the parties thereto, enforceable in accordance with its terms by
the Purchaser (and by the Trustee as assignee) (subject to bankruptcy,
insolvency and other similar laws affecting creditors' rights in general and the
availability of equitable remedies).
(n) Each item of Equipment is subject to a Lease Contract.
(o) No item of Equipment has been repossessed.
-10-
11
(p) Other than financing statements or similar statements or
instruments of registration under the law of any jurisdiction on file or
registered in any public office covering any interest of any kind in the Lease
Contracts or Equipment which (i) are to be terminated, released or assigned to
Trustee on or prior to the Closing Date hereunder, or (ii) are to be filed
pursuant to this Agreement or the Pooling and Servicing Agreement, there are no
such statements or instruments on file.
(q) The Lessee under each Lease Contract is personally and
unconditionally liable for the payment and performance of its obligations in
respect of such Lease Contract. Pursuant to the terms of each Lease Contract, as
of the Cut-Off Date the Lessee under each Lease Contract will be absolutely
required to make to Trustee all payments (including, without limitation, all
Scheduled Payments under such Lease Contract in respect of periods on and after
the Cut-Off Date) and perform all obligations under such Lease Contract without
abatement, deferment or defense of any kind or for any reason. No Lease Contract
is subject to any right of claim, rescission, set-off, counterclaim, abatement
or defense, including (without limitation) any defense of usury, nor will the
operation of any of the terms of any Lease Contract or the exercise of any right
or remedy thereunder render such Lease Contract or the obligations thereunder
unenforceable, or subject the same to any right of claim, rescission, set-off,
counterclaim, abatement or defense. No Lessee has asserted any such right of
claim, rescission, set-off, counterclaim, abatement or defense to its
obligations under its Lease Contract.
(r) None of the Lease Contracts have been modified, amended or extended
at any time (in the manner of an extension in the maturity date, a change in the
amount or time of payment of any installment of rent, or in any way which would
individually or in the aggregate materially adversely affect the Purchaser's or
the Trustee's rights thereunder or would prohibit payment by the Lessee to the
Trustee or otherwise), no indulgences or waivers have been granted in respect of
the obligations of any Lessee under any Lease Contract, and none of Seller,
Purchaser or any Affiliate of either such party has advanced any monies on
behalf of or to cure any breach or default by any Lessee.
(s) Each Lease Contract requires the Lessee thereunder at its own cost
and expense to maintain the Equipment leased thereunder in good repair,
condition and working order, and to the best of Seller's knowledge each Lessee
is currently in compliance with such requirement.
(t) Each Lease Contract requires the Lessee thereunder to pay all fees,
taxes (except income taxes), and other charges or liabilities arising with
respect to the Equipment leased thereunder or the use thereof, to keep the
Equipment free and clear of any and all liens, security interests and other
encumbrances, to hold harmless the lessor thereunder and its successors and
assigns against the imposition of any such fees, charges, liabilities and
-11-
12
encumbrances, to bear all risk of loss associated with the Equipment covered by
or securing the obligations under such Lease Contract during the term of such
Lease Contract and to maintain at the cost of the Lessee public liability and
casualty insurance in respect of such Equipment covered by such Lease Contract.
(u) Each Lease Contract prohibits without the lessor's prior written
consent any relocation of the Equipment covered by such Lease Contract and
requires the Lessee thereunder to execute such agreements and documents
(including without limitation any UCC-1 financing statements or amendments
thereto) as may reasonably be requested by the lessor in connection with any
such relocation.
(v) None of the Lease Contracts or any agreement with any Lessee
requires the consent or approval of any Lessee with respect to the sale,
assignment and transfer by Seller or Purchaser of their respective right, title
and interest in and to such Lease Contracts and the Equipment covered thereby
and grants of security interests in the Equipment under the Principal
Agreements.
(w) The rights with respect to each Lease Contract are assignable by
the Seller without the consent of any person other than consents which will have
been obtained on or before the Closing Date.
(x) Each Lease Contract, Lease Receivable and the Seller's interest in
the Equipment have not been sold, transferred, assigned or pledged by the Seller
to any Person other than the Purchaser.
(y) All federal, state and local sales, use, property and other similar
taxes (and penalties and interest thereon) in respect to the Lease Contracts,
any Equipment covered by or securing the obligations under the Lease Contracts,
or any payments on the Lease Contracts, that have become due and payable have
been paid to every applicable Governmental Authority.
(z) The interest of Seller in respect of the Equipment covered by or
securing the obligations under such Lease Contract has been duly perfected by
the filing or recording in applicable jurisdictions of UCC financing statements
or other documents sufficient to perfect Seller's interest in such Equipment in
accordance with the perfection requirements of Section 2.01(d) of the Pooling
and Servicing Agreement. Without limiting the generality of the foregoing, as to
each such Lease Contract, Seller has properly filed in the appropriate locations
in the state in which the Equipment covered by such Lease Contract is located
properly executed UCC financing statements showing the Lessee as the
lessee/debtor, Seller as the lessor/secured party, and the Equipment as
collateral, and the same are in full force and effect. All Equipment is located
within the United States, Canada or Puerto Rico.
-12-
13
(aa) Each Lease Contract involves the lease of tangible personal
property owned by Seller or the loan of money secured by a security interest in
tangible personal property owned by the Lessee thereunder, except in such case
any computer software included therein, for which Seller's interest is limited
to a non-exclusive, transferable license.
(bb) All filings and recordings required to perfect the title of
Trustee to the Lease Contracts and Lease Receivables and Trustee's security
interest in the Equipment in accordance with the perfection requirements of
Section 2.01(d) of the Pooling and Servicing Agreement have been, or by the
applicable Closing Date will be, accomplished and are, or by the applicable
Closing Date will be, in full force and effect.
(cc) The Scheduled Payments due under the Lease Contracts covered by
this Agreement, if paid in accordance with the Lease Schedule, are in an amount
adequate to pay the original principal balance of the Class A Certificates and
Class B Certificates issued or to be issued under the Pooling and Servicing
Agreement in connection with this Agreement and interest thereon at the
respective interest rates set forth in such Certificates and the Servicing Fee,
Back-up Servicer Fee, Bond Insurer Premium, Trustee Fee applicable to such Lease
Contracts.
(dd) Each Lease Contract was originated or acquired by Rockford in the
ordinary course of its business and at the time of such origination or
acquisition satisfied Rockford's origination criteria for equipment leases of
the type of the Lease Contracts (including, without limitation, credit, type of
equipment, gross receivable limitation and other criteria).
(ee) The Equipment covered by each Lease Contract is insured against
loss by fire and such other hazards as are customary for personal property of
the same or similar type, such insurance being in an amount not less than the
full replacement value of such Equipment subject to customary deductions, all in
accordance with Section 3.02(x) of the Purchase Agreement.
(ff) In the event of a casualty of any item of Equipment or early
termination of any Lease Contract, the Lessee is obligated to pay all future
Scheduled Payments with respect to such item.
(gg) The sale, transfer and conveyance by Seller of the Lease Contracts
and related Equipment to Purchaser are not a "bulk transfer" within the meaning
of Article 6 of the UCC as in effect in any applicable jurisdiction.
(hh) Seller has not received any notice challenging its ownership or
the priority of its security interest in the Equipment covered by any Lease
Contract, and there are no proceedings pending before any court or Governmental
Authority or threatened by any Lessee or other party, (i) asserting the
invalidity of any Lease Contract, (ii) seeking to
-13-
14
prevent payment and performance by any Lessee of any Lease Contract or any other
agreement between such Lessee and Seller, or (iii) seeking any determination or
ruling that might adversely affect the validity or enforceability of any Lease
Contract.
(ii) As to each Lease Contract, there are no agreements or
understandings between Seller and the Lessee in respect of such Lease Contract
or otherwise binding on Seller other than as expressly set forth in the written
instruments contained in the Lease Files.
(jj) None of the Lessees is a Governmental Authority or a merchant with
respect to the Equipment leased under any Lease Contract.
(kk) The Lease Schedule contains a statement of the amount and number
of Scheduled Payments payable by each Lessee under each Lease Contract for
periods on and after the Cut-Off Date applicable to such Lease Contract together
with certain other information as reflected thereon. The information set forth
in the Lease Schedule is true, complete and correct in all respects.
(ll) To the best knowledge of Seller, the historical delinquency and
loss information set forth in Exhibit "H" to the Purchase Agreement is true and
correct.
(mm) Seller has good and legal title to each of the Lease Contracts and
Equipment (except for any computer software included therein, for which Seller's
interest is limited to a non-exclusive, transferable license) and/or a first
priority security interest in the Equipment in accordance with the perfection
requirements of Section 2.01(d) of the Pooling and Servicing Agreement, in all
cases free and clear of any encumbrances and adverse claims, except for the
rights of the Lessees in and to the Equipment that are expressed in and under
the Lease Contracts. The Seller has paid in full to the manufacturers or
supplier or Lessee, as the case may be, the purchase price and any rebated
charges in connection with the acquisition of the Equipment.
(nn) Neither Seller nor any of its Affiliates is a party to any
contract for the servicing of the Lease Contracts or the related Equipment,
other than the Pooling and Servicing Agreement.
(oo) Seller is not a party to any contract to sell or otherwise
transfer any of the Lease Contracts or Equipment, other than the Principal
Agreements and any purchase option rights granted to Lessees under the terms of
their respective Lease Contracts as to the Equipment covered by such Lease
Contract.
(pp) Neither Purchaser nor Seller has given any power of attorney
(irrevocable or otherwise) to any Person for any purpose relating to the Lease
Contracts or the Equipment,
-14-
15
except for any power of attorney granted to any service entity that files UCC
financing statements on Rockford's or Seller's behalf.
(qq) Each Lease Contract and related Equipment, when transferred to the
Purchaser hereunder, shall have been validly sold and delivered to Purchaser by
Seller (who immediately prior to such assignment shall have owned full legal and
equitable title to each Lease Contract). Upon delivery to Purchaser of the Lease
Files, and execution and delivery of Bill of Sale and Assignments of all of the
Lease Contracts and the related Equipment by Seller in favor of Purchaser, all
of Seller's right, title and interest in and to the Lease Contracts and the
related Equipment shall be validly and effectively transferred to Purchaser.
(rr) After giving effect to each assignment, transfer and contribution
contemplated by this Agreement, the Purchaser will be (i) the sole owner of, and
have good and marketable title to, the related Lease Contract and (ii) the
holder of a valid perfected first priority security interest in the related
Equipment in accordance with the perfection requirements of Section 2.01(d) of
the Pooling and Servicing Agreement. At the time each Lease Contract, Lease
Receivable and related Equipment is assigned, transferred and contributed to the
Purchaser, the Lease Contract and the Lease Receivable (including the right to
receive all payments due or to become due thereunder) and the Seller's interest
in the Equipment (subject to the perfection requirements of Section 2.01(d) of
the Pooling and Servicing Agreement) will be free and clear of all liens other
than (w) the rights of each Lessee under the Lease Contracts to which such
Lessee is a party, (A) the lien created by the Pooling and Servicing Agreement,
and (B) with respect to the Equipment subject to an equipment note, conditional
sales contract or finance lease (subject to the perfection requirements of
Section 2.01(d) of the Pooling and Servicing Agreement) , liens subordinate to
the lien of the Pooling and Servicing Agreement, and there will be no delinquent
taxes or other outstanding charges affecting the Equipment which are or may be
liens prior to, equal to or coordinate with, or subordinate to, the lien of the
Trustee under the Pooling and Servicing Agreement.
(ss) Immediately after the transfers and conveyances to the Purchaser
as contemplated in this Agreement, all necessary action will have been taken by
the Seller to validly convey to the Purchaser (i) all right, title and interest
of the Seller and in and to each Lease Contract and all Scheduled Payments to
become due thereunder and (ii) all right, title and interest of the Seller in
and to the related Equipment.
(tt) Seller is not selling the Equipment and the Lease Contracts with
actual intent to hinder, delay or defraud any entity to which it is or will
hereafter become indebted, is not insolvent on the Closing Date and will not
become insolvent as a result of such sale, is not engaged in a business or
transaction, or about to engage in a business or a transaction, for which any
property remaining with Seller is an unreasonably small capital, and does not
intend to incur, and does not believe that it will incur, debts that would be
beyond its ability to pay as such debts mature.
-15-
16
(uu) Neither the Trustee nor the Bond Insurer has notified the Seller
that the Lease Contract is unacceptable for purchase by the Purchaser.
(vv) As of the Cut-off Date, no Lease Contract has a balloon payment
greater than 10% of the purchase price of the related Equipment.
(ww) All of the representations and warranties made by Purchaser in
Section 3.02 of the Purchase Agreement with respect to Lease Contracts and
Equipment that are not otherwise made by Seller hereunder are hereby
incorporated by reference herein as if made by Seller with respect to the Lease
Contracts and the related Equipment covered by this Agreement. In the event of
any inconsistency between any of the representations and warranties set forth in
this Section 3.02 and those set forth in Section 3.02 of the Purchase Agreement,
Seller shall be deemed to have made the respective representations and
warranties set forth in Section 3.02 of the Purchase Agreement.
Section 3.03. Other Representations.
----------------------
(a) The written information supplied by Seller to the Bond Insurer and
the Rating Agencies in connection with obtaining a rating for the Certificates
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated in order to make such information not
misleading.
(b) No tax, assessment or other governmental charge will become payable
by Centre Square or the Trust as a result of (i) the sale, assignment and
transfer to the Trust of the Lease Contracts pursuant to the Principal
Agreements or (ii) the sale of the Certificates to Centre Square as contemplated
by the Purchase Agreement (other than taxes imposed upon Centre Square's or the
Trust's gross or net income). Neither the ownership of the Certificates nor the
transfer of the Lease Contracts or any other assets to the Trust shall, in and
of itself, result in Centre Square becoming subject to taxation or in its being
deemed to be doing business in any jurisdiction in which any Lessee is located.
(c) Neither Seller nor any of its respective officers, directors,
employees or agents has employed any broker, finder or financial advisor or
incurred any liability for any fees or commissions to any person in connection
with the offering, issuance or sale of the Certificates except for any fees
payable by Seller to Centre Square or any affiliate thereof.
Section 3.04. Reconfirmation. Seller agrees that its participation in
the transactions contemplated herein on each Closing Date shall constitute,
without further act, a confirmation that each of its respective representations
and warranties contained herein are
-16-
17
true and correct on and as of such Closing Date as though made on and as of such
Closing Date (except that the representations and warranties under Section 3.02
shall apply only to the Lease Contracts and Equipment conveyed on such Closing
Date).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.01. Generally. Purchaser represents and warrants to Seller
that:
(a) Purchaser has the power and authority to execute and deliver this
Agreement and to carry out its terms.
(b) This Agreement has been duly authorized, executed and delivered by
Purchaser, and constitutes a legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general and the availability
of equitable remedies.
ARTICLE V
COVENANTS OF SELLER
Section 5.01. Generally. Seller agrees that it shall:
(a) Indicate on its computer files that all of the Seller's right title
and interest in the Lease Contracts and Equipment sold and conveyed hereunder
have been sold to Purchaser and that such Lease Contracts and the Seller's
interest in the related Equipment have been sold by Purchaser to the Trustee for
the benefit of the Certificateholders and the Bond Insurer;
(b) Except for the transfers hereunder, Seller shall not sell, pledge,
assign or transfer to any other person, or grant, create, incur, assume or
suffer to exist any Lien on any Lease Contract or Equipment sold to Purchaser,
or any interest therein; Seller will promptly notify Purchaser and Bond Insurer
after Seller learns of the existence of any Lien on any Lease Contract or
Equipment; and Seller shall defend the right, title and interest of Purchaser
in, to and under the Lease Contract and Equipment sold to Purchaser, against all
claims of third parties;
-17-
18
(c) Take such actions, and provide to Purchaser and Bond Insurer such
information, relating to the Lease Contracts, Equipment and the Lease Schedule
as Purchaser or Bond Insurer shall from time to time require by notice to Seller
to permit Purchaser to duly perform its duties and obligations under the
Purchase Agreement, the Insurance Agreement or the Pooling and Servicing
Agreement;
(d) Respond to any inquiries with respect to ownership of a Lease
Contract or related Equipment sold and purchased hereunder by stating that, from
and after the applicable Closing Date relating thereto, Seller is no longer the
owner of such Lease Contract and Equipment and that ownership of such Lease
Contract is held by the Trust and ownership of such Equipment is held by the
Purchaser, subject to the Lease Contract; and
(e) Allow Purchaser and Bond Insurer and their representatives, upon
reasonable prior notice, to have full and free access during normal business
hours to all books, correspondence, and written and computer records of Seller
as appropriate to verify Seller's compliance with this Agreement, and the
accuracy of its representations and warranties hereunder, and allow Purchaser
and Bond Insurer and their respective representatives to examine and audit the
same, and make photocopies thereof, and Seller shall render to Purchaser and
Bond Insurer and their respective representatives, at Seller's cost and expense,
such clerical and other assistance as may be reasonably requested with regard
thereto.
Section 5.02. Characterization of Transactions for Tax Purposes. The
Purchase Agreement and the transactions contemplated by the Pooling and
Servicing Agreement have been structured with the intention that they will be
treated as a financing transaction for purposes of federal, state and local
income and franchise taxes and any other tax imposed on or measured by income
and that the Certificates will be treated as indebtedness. Seller and Purchaser
each agree to take no action inconsistent with the treatment of such
transactions as a financing transaction and the Certificates as indebtedness for
such tax purposes. Seller agrees to treat the transactions contemplated by the
Principal Agreements as a sale of Lease Contracts and Equipment from Seller to
Purchaser, and a sale of Lease Contracts from Purchaser to the Trust, for
financial accounting purposes.
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.01. Repurchase Upon Breach of Certain Representations and
Warranties.
(a) The representations and warranties of Seller set forth in Section
3.02 hereof with respect to each Lease Contract and related Equipment shall
continue so long as such Lease Contract remains outstanding. Upon discovery by
Seller, Purchaser, Trustee, Bond Insurer or any Certificateholder that any such
representation or warranty with respect to any
-18-
19
Lease Contract and related Equipment was incorrect as of the time made, such
Person shall give prompt notice thereof to the other Persons. In the event that
any such representation or warranty with respect to any Lease Contract and
related Equipment is incorrect and materially and adversely affects the interest
of the Certificateholders or the Bond Insurer in such Lease Contract or related
Equipment or the value of such Lease Contract or related Equipment, Seller shall
eliminate or otherwise cure the circumstance or condition which has caused such
representation or warranty to be incorrect, within 30 days (or such longer
period as Trustee and Bond Insurer may in its discretion consent to) after the
discovery thereof by or notice thereof to Seller. If Seller fails or is unable
to cure such circumstance or condition within such cure period (or if Seller is
otherwise required to repurchase a Lease Contract or to provide a Substitute
Lease Contract therefor under Section 2.09 hereof, and the respective cure
period set forth in Section 2.09 hereof has expired), then by 3:00 p.m. New York
City time on the next succeeding Determination Date after the expiration of the
applicable cure period, Seller shall either (i) purchase each Lease Contract and
the related Equipment as to which such representation or warranty is incorrect,
or (ii) substitute for such Lease Contract and the related Equipment a
Substitute Lease Contract and all related Equipment; provided, however, that
each Substitute Lease Contract shall meet the Substitution Criteria and shall be
subject to the requirements of Section 6.02 (b) hereof. The purchase price to be
paid by Seller for the repurchase of any such Lease Contract and related
Equipment (the "Repurchase Price") shall be equal to the sum of (A) the Warranty
Purchase Amount for the Lease Contract, plus (B) the Residual Value of the
Equipment covered by the Lease Contract, plus (C) interest on such Residual
Value at the Discount Pool Rate applicable to such Lease Contract from the
Initial Closing Date to the date that such Lease Contract and Equipment are
repurchased. The proceeds of such Repurchase Price shall be remitted by Seller
to Servicer for deposit by Servicer in the Investment Account on the date of
closing of such repurchase.
(b) It is understood and agreed that the obligation of Seller under
Section 6.01(a) hereof to provide a substitute for or to repurchase any Lease
Contract and related Equipment shall, together with (but without duplication)
the indemnification rights contained in the Principal Agreements, constitute the
sole remedies against Seller available to Purchaser, Centre Square, the Trust,
the Certificateholders or Trustee on behalf of the Certificateholders respecting
the breach by Seller of any representation or warranty under Section 3.02
hereof.
Section 6.02. Repurchase or Substitution of Leases.
-------------------------------------
(a) With respect to any Lease Contract to be prepaid or terminated
early, Seller shall in each such case be entitled either to purchase such Lease
Contract and the related Equipment for the Repurchase Price or to deliver a
Substitute Lease Contract therefor meeting the Substitution Criteria; provided,
however, that the cumulative Discounted Lease Contract Balance of prepaid or
early terminated Lease Contracts which are substituted by
-19-
20
Purchaser (measured as of the date of substitution) shall not exceed 10% of the
Aggregate Discounted Lease Contract Balance (measured as of the date of
substitution).
(b) Seller shall provide to Purchaser and Trustee on the date of
delivery of any Substitute Lease Contract submitted by Seller under Section
6.01(a)(ii) or Section 6.02(a) hereof the items listed in (i) and (ii) below,
and to Bond Insurer the item listed in (i) below, and Seller shall provide to
Purchaser, Trustee and Bond Insurer at or before the end of each calendar
quarter (or, with respect to each Substitute Lease Contract substituted by
Seller hereunder on or after the fifteenth (15th) day of the last month of such
calendar quarter, within fifteen (15) days after the date of such substitution),
the items listed in (iii) below with respect to any Substitute Lease Contracts
substituted during such period;
(i) a supplement to this Agreement and to the Pooling and
Servicing Agreement substantially in the form of Exhibit "B" hereto and
Exhibit "H" to the Pooling and Servicing Agreement, subjecting such
Substitute Lease Contract and all related Equipment to the provisions
hereof and thereof, and providing with respect to the Substitute Lease
Contract and related Equipment the information set forth in the Lease
Schedule;
(ii) the original executed counterpart of the Lease Contract
relating to such Substitute Lease Contract and the related Lease File,
including (without limitation) any related Certificate of Title; and
(iii) evidence that financing statements have been filed with
respect to such Substitute Lease Contract in accordance with the terms
of this Agreement and Section 2.01(d) of the Pooling and Servicing
Agreement
Section 6.03. Transfer and Assignment.
------------------------
(a) Seller shall be entitled to the transfer and assignment of any
Lease Contract and the related Equipment by Purchaser to at any time: (i) after
a payment by Seller of the Repurchase Price under Section 6.01(a) for such Lease
Contract and related Equipment; (ii) after a Substitute Lease Contract is
substituted for such Lease Contract in accordance with Section 6.01(a)(ii) or
Section 6.02(a) hereof; or (iii) upon the termination of a Lease Contract
following the sale, lease or other disposition of the related Equipment;
provided, that, in each such case, the Seller first delivers to Purchaser,
Trustee and Bond Insurer an Officer's Certificate (A) identifying the Lease
Receivable and the related Lease Contract and Equipment to be so transferred and
assigned, (B) requesting the transfer and assignment thereof, (C) certifying
that the requirements of Section 6.01(a)(ii) and Section 6.02 hereof have been
satisfied, in the event such Lease Contract and Equipment are being transferred
and assigned pursuant to clause (iii) hereof, (D) setting forth the amount
deposited in the Investment Account with respect to such Lease Contract and
Equipment, in the event such
-20-
21
Lease Contract and Equipment are being transferred and assigned the pursuant to
clause (i) or (iii) hereof, and (D) certifying that the amount so deposited in
the Investment Account equals (1) the Repurchase Price required to be paid under
Section 6.01(a) for such Lease Contract and related Equipment, in the event of a
transfer and assignment pursuant to clause (i) hereof, or (2) the entire amount
of Recoveries or Residual Proceeds received with respect to such Lease Contract
and related Equipment, in the event of a transfer and assignment pursuant to
clause (iii) hereof; provided, however, that upon the termination of any Lease
Contract, any Residual Proceeds from the related Equipment shall be placed in
the Investment Account prior to Trustee releasing such Equipment from the
security interest granted to the Trustee by Purchaser pursuant to the Pooling
and Servicing Agreement and prior to Purchaser transferring and assigning such
Lease Contract and related Equipment to Seller pursuant to this Agreement.
(b) Upon satisfaction of the conditions specified in Section 6.03(a)
hereof, Purchaser shall release to Seller the related Lease Files and shall
execute and deliver to or upon the order of Seller such instruments of transfer
or assignment of such Lease Contract and related Equipment, in each case without
recourse, representation or warranty, as Seller shall reasonably request (as
shall be prepared by and at the expense of Seller).
Section 6.04. Merger or Consolidation of, or Assumption of the
Obligations of the Seller.
(a) Except as hereinafter provided, the Seller will keep in full effect
its existence, rights and franchises as a corporation, and will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement or any of the Lease Contracts and
to perform its duties under this Agreement.
(b) Any person into which the Seller may be merged or consolidated, or
to whom the Seller has sold substantially all of its assets, or any corporation
resulting from any merger, conversion or consolidation to which the Seller shall
be a party, or any Person succeeding to the business of the Seller shall he the
successor of the Seller hereunder and under the Pooling and Servicing Agreement,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
Immediately after giving effect to such transaction, (i) no representation or
warranty made pursuant to Section 3.01 hereof shall have been breached, (ii) the
Seller shall deliver to the Purchaser, Bond Insurer, the Trustee and each
Certificateholder a certificate of an officer of the Seller and an Opinion of
Counsel each stating that such consolidation, merger, or succession complies
with this Section 6.04, that all conditions precedent, if any, provided for in
this Agreement relating to such transaction have been complied with and that the
surviving entity has succeeded to all of the duties and obligations of the
Seller under this Agreement and the Pooling and Servicing Agreement, and (z) the
-21-
22
Seller shall deliver to the Purchaser, the Trustee, Bond Insurer, the Rating
Agency and each Certificateholder an Opinion of Counsel either (1) stating that,
in the opinion of such Counsel, all financing statements or other lien documents
with respect to Lease Contracts and continuation statements and amendments
thereto that are necessary to fully preserve and protect the interest of the
Purchaser in the Lease Contracts have been executed and filed, or delivered, as
the case may be, and reciting the details of such statements and documents, or
(2) stating that, in the opinion of such Counsel, no such action shall be
necessary to preserve and protect such interest. The Seller shall provide prior
written notice of any such event to the Rating Agencies and the Bond Insurer .
Section 6.05. Preservation of Security Interest. The Seller shall
execute and file such financing statements or other lien documents with respect
to Lease Contracts relating to Vehicles and cause to be executed and filed such
continuation statements, all in such manner and in such places as may be
required by law to fully preserve, maintain, and protect the interest of the
Purchaser under this Agreement in the Lease Contracts and in the proceeds
thereof. The Seller shall deliver (or cause to be delivered) to the Purchaser
and the Trustee file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing. The Seller
shall not be required to file financing statements with respect to the
Equipment, except to the extent provided in the Pooling and Servicing Agreement.
Section 6.06. Preservation of Name, etc. The Seller will not change its
name, identity or corporate structure in any manner that would, could, or might
make any financing statement or continuation statement filed by the Seller in
accordance with Section 6.05 hereof or the Pooling and Servicing Agreement
seriously misleading within the meaning of ss. 9-402 (7) of the UCC, unless it
shall have given the Purchaser, the Bond Insurer and the Trustee at least ten
(10) days prior written notice thereof and shall have made such filings as are
required by Sections 2.01(c) and (d) of the Pooling and Servicing Agreement in
connection therewith.
Section 6.07. Preservation of Office. The Seller will give the
Purchaser, the Bond Insurer and the Trustee at least ten (10) 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 and shall make such filings as are required by
Sections 2.01(c) and (d) of the Pooling and Servicing Agreement in connection
therewith.
Section 6.08. Electronic Ledger. The Seller will mark the Lease Files
and the Lease Management System to the effect that the Lease Contracts and
Equipment have been contributed to the Purchaser and that they have been
transferred and assigned to the Trust pursuant to the Pooling and Servicing
Agreement.
-22-
23
Section 6.09. Obligations with Respect to Lease Contracts. The Seller
will duly fulfill all obligations on its part to be fulfilled under or in
connection with each Lease Contract, will not purport to change or modify the
terms of the Lease Contracts except as expressly permitted by the terms of the
Pooling and Servicing Agreement and will do nothing to impair the rights of the
Purchaser or the Trust in the Lease Contracts, the Equipment or the Vehicles. In
the event that the rights of the Seller under any Lease Contract, any guaranty
of the related Lessee's obligations under any Lease Contract, or any Insurance
Policy are not assignable to the Purchaser or to the Trust, the Seller will
enforce such rights on behalf of the Trust.
Section 6.10. Compliance with Law. The Seller will comply, in all
material respects, with all material acts, rules, regulations, orders, decrees
and directions of any governmental authority applicable to the Trust Assets or
any part thereof; provided, however, that the Seller may contest any act,
regulation, order, decree or direction in any reasonable manner which shall not
materially and adversely affect the rights of the Purchaser or the Trust in the
Trust Assets.
Section 6.11. Conveyance of Trust Assets; Security Interests. Except
for the transfers and conveyances hereunder and pursuant to the Pooling and
Servicing Agreement, 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
Trust Asset, or any interest therein and the Seller shall defend the right,
title, and interest of the Purchaser and its successors and assigns in, to, and
under the Trust Assets, against all claims of third parties claiming through or
under the Seller, or any of its affiliates.
Section 6.12. Notification of Breach. The Seller will advise the
Purchaser and the Trustee promptly, in reasonable detail, following discovery by
or notice to the Seller of any breach by the Seller of any of its
representations, warranties and covenants contained herein.
Section 6.13. Pooling and Servicing Agreement. On the Initial Closing
Date, the Seller shall enter into the Pooling and Servicing Agreement with the
Purchaser, the Backup Servicing and the Trustee.
Section 6.14. Further Assurances. The Seller will make, execute or
endorse, acknowledge and file or deliver to the Purchaser from time to time such
schedules, confirmatory assignments, conveyances, transfer endorsements, powers
of attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Trust Assets and other rights covered by this
Agreement, as the Purchaser may request and reasonably require.
-23-
24
Section 6.15. Notice of-Liens. The Seller shall notify the Purchaser
and the Trustee promptly after becoming aware of any Lien on any Trust Asset.
Section 6.16. Purchaser Status. The Seller shall not amend the
certificate of incorporation of the Purchaser without the prior written consent
of the Rating Agencies, the Bond Insurer and the Majority Certificateholders.
Section 6.17. Purchaser's Stock. The Seller will not transfer, assign,
convey or sell the Common Stock of the Purchaser issued to it pursuant to the
Capital Contribution Agreement. In furtherance of the Seller's negative covenant
pursuant to the preceding sentence, the Seller will deliver to the Trustee on
the Initial Closing Date each certificate representing any Common Stock of the
Purchaser held by the Seller and the Seller promptly will deliver to the Trustee
upon receipt by the Seller each certificate representing any additional shares
of the capital stock of the Purchaser at any time thereafter acquired by the
Seller to hold in escrow until the Trust is terminated.
ARTICLE VII
INDEMNITY
Section 7.01. Indemnities. (a) Seller shall defend and hold harmless,
and hereby indemnifies, Purchaser, Trustee (except to the extent the following
result from the gross negligence or willful misconduct of Trustee), the Trust,
Centre Square, the Bond Insurer and the Certificateholders from and against any
taxes that may at any time be asserted against Purchaser, Trustee, the Trust,
Centre Square, the Bond Insurer or the Certificateholders or their respective
directors, officers, employees and agents, with respect to (i) the execution and
delivery of the Principal Agreements, (ii) the issuance of the Certificates,
(iii) the depositing of funds into the Cash Collateral Account, and (iv) the
sale, transfer and assignment of Lease Contracts and other rights and interests
to Trustee for the benefit of the Certificateholders and the Bond Insurer,
including, without limitation, any sales, gross receipts, general corporation,
tangible or intangible personal property, privilege, or license taxes (but not
including any taxes asserted with respect to ownership of the Equipment or Trust
Assets or federal or other income taxes, including franchise taxes measured by
net income, arising out of the transactions contemplated by the Principal
Agreements), and reasonable out-of-pocket costs and expenses in defending
against the same.
(b) Seller shall defend and hold harmless, and hereby indemnifies,
Purchaser, Trustee, the Trust, Centre Square, the Bond Insurer and the
Certificateholders, and their respective directors, officers, employees and
agents, from and against any loss, liability or expense incurred by reason of
(i) Seller's willful misfeasance, bad faith, or negligence in the performance of
its duties under the Principal Agreements, or (ii) any action taken or failed
-24-
25
to be taken as required by the terms of the Principal Agreements, by Seller in
respect of any of the Lease Contracts or Equipment.
(c) Seller shall defend and hold harmless, and hereby indemnifies,
Purchaser, Trustee, the Trust, Centre Square, the Bond Insurer and the
Certificateholders, from and against any and all loss, liability, damage,
judgment, claim, deficiency or expense that arises out of or is based upon (i) a
breach at any time by Seller of its representations, warranties and covenants
contained in the Principal Agreements, (ii) any information certified in any
schedule or other writing delivered by Seller hereunder, being untrue in any
material respect when any such representation was made or schedule delivered, or
(iii) any act or omission in respect of a Lease Contract or its related
Equipment occurring prior to the Closing Date on which the Lease Contract and
Equipment were purchased hereunder; provided, however, that Seller shall not be
so required to indemnify Purchaser, Trustee, the Trust, Centre Square and the
Certificateholders for or on account of or arising from or in connection with
any breach of a representation or warranty a remedy for the breach of which is
provided in Article VI hereof, except in respect of claims, demands and causes
of action of Lessees, Governmental Agencies, or other third parties.
(d) Seller shall also indemnify, defend and hold harmless Purchaser,
Trustee, the Trust, Centre Square, the Bond Insurer and the Certificateholders
and their respective directors, officers, employees and agents, from and against
any loss, liability or expense incurred by reason of the violation by any of
such parties of federal or state securities laws in connection with the sale of
the Certificates, to the extent such violation results from (i) any information
furnished by or on behalf of Seller that in turn was furnished to the
Certificateholders or the Bond Insurer, or (ii) the failure of Seller to furnish
to Purchaser and the Bond Insurer any information known by any officer or agent
of Seller and that was not otherwise known by any officer or agent of Bond
Insurer, Centre Square or any of its Affiliates.
(e) THE INDEMNITIES OF SELLER UNDER THIS SECTION 7.01 SHALL APPLY
NOTWITHSTANDING THAT A CLAIM, DEMAND, LIABILITY, LOSS, COST OR EXPENSE IS
ATTRIBUTABLE IN WHOLE OR IN PART TO THE NEGLIGENCE OF ANY OF THE INDEMNIFIED
PARTIES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW.
(f) Indemnification under this Section 7.01 shall include reasonable
out-of-pocket fees and expenses of counsel and expenses of litigation, shall
survive the execution, delivery and performance of this Agreement regardless of
any investigation made by the indemnified parties or any other Person, and shall
also survive termination of the Trust or the repurchase of a Lease Contract. If
Seller shall have made any indemnity payments to Purchaser, Trustee, Centre
Square, the Trust and the Certificateholders pursuant to this Section 7.01 and
Purchaser, Trustee, Centre Square, the Trust and the Certificateholders
thereafter shall collect
-25-
26
any of such amounts from persons other than Seller, Purchaser, Trustee, Centre
Square, the Trust or the Certificateholders, as the case may be, shall promptly
upon receipt thereof repay such amounts (or use its best efforts to cause
Purchaser, Trustee, Centre Square or the Certificateholders to repay such
amounts) to Seller, without interest.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Survival. Each of the parties agrees that the
representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the other party hereto, notwithstanding any investigation
heretofore or hereafter made by such other party or on its behalf, and that the
representations, warranties and agreements made by each of the parties hereto
herein or in any such certificate or other instrument shall survive the delivery
and payment for the Lease Contracts and Equipment. The provisions of this
Section 8.01 shall survive any termination or cancellation of this Agreement.
Section 8.02. Governing Law; Counterparts. This Agreement is to be
governed by, and interpreted, construed and enforced in accordance with, the
internal law of the State of New York without regard to principals of conflicts
of laws. This Agreement may be executed in two or more counterparts, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument.
Section 8.03. Amendments. Subject to the provisions of Section 8.10,
this Agreement or any term hereof may not be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought provided that the Bond Insurer shall have given its prior written
consent. The Seller shall give prompt written notice of any amendment to this
Agreement to each of the Rating Agencies.
Section 8.04. Headings. The headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
Section 8.05. Notices. All demands, notices, and communications under
this Agreement shall be in writing and shall be deemed to have been duly given,
made and received (a) when delivered against receipt of registered or certified
mail or upon actual receipt of registered or certified mail, postage prepaid,
return receipt requested; (b) when delivered by courier with appropriate
evidence of receipt; or (c) upon transmission via facsimile transmission with
appropriate evidence of receipt at the following address of the recipient: (i)
in the case of Seller, at 1851 East First Street, Suite 900, Santa Ana,
California
-26-
27
92705, (ii) in the case of Purchaser, at 747 Chestnut Ridge Road, Suite 300,
Chestnut Ridge, New York 10977 and (iii) in the case of Bond Insurer, at 113
King Street, Armonk, New York 10504, Attention: Insured Portfolio Management --
Structured Finance. Any party may alter the address to which communications are
to be sent by giving notice of such change of address in conformity with the
provisions of this Section 8.05 for giving notice and by otherwise complying
with any applicable terms of this Agreement.
Section 8.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 8.07. Assignment. This Agreement may not be assigned by Seller
or Purchaser without the prior consent of the Bond Insurer. Subject to the
foregoing, this Agreement shall inure to the benefit of, and be binding on, the
parties hereto, and their successors and assigns.
Section 8.08. Further Assurances. Seller and Purchaser agree to do and
perform from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by either party, Bond Insurer,
Centre Square or the Trustee more fully to effect the purposes of this Agreement
in a manner consistent with this Agreement, including, without limitation, the
execution of any financing statements or continuation statements or other
documents or instruments relating to the Lease Contracts and the Equipment for
filing under the provisions of the UCC or other relevant laws of any applicable
jurisdiction.
Section 8.09. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of any party hereto, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exhaustive of any rights, remedies,
powers and privileges provided by law.
Section 8.10. Third-Party Beneficiaries. In addition to being for the
benefit of Purchaser, each covenant, representation and warranty of Seller under
this Agreement is expressly for the direct benefit of the Trustee, the Trust,
Centre Square, the Certificateholders, and Bond Insurer, their respective
successors and assigns as fully as if the Trustee, the Trust, Centre Square,
Bond Insurer and the Certificateholders were parties to this Agreement and such
covenants were made with, and such representations and warranties were made to,
the Trustee, the Trust, Centre Square, Bond Insurer and the Certificateholders.
-27-
28
Seller acknowledges that the Trustee, on behalf of the Trust and Bond Insurer,
and Centre Square, have executed the Pooling and Servicing Agreement and the
Purchase Agreement and the Certificateholders have purchased the Certificates in
reliance, in part, on Seller's covenants, representations and warranties under
this Agreement. The Trustee, Centre Square, Bond Insurer and/or the
Certificateholders may directly enforce against Seller in their own names each
of Seller's covenants, representations and warranties under this Agreement,
without the joinder of Purchaser. Notwithstanding any other term or provision
hereof, no amendment of this Agreement shall be effective as to Centre Square,
the Trustee, the Trust, Bond Insurer and the Certificateholders unless such
amendment has been approved by Centre Square, the Trustee, Bond Insurer, and the
Majority Certificateholders. Centre Square, Bond Insurer, the Trustee, the Trust
and the Certificateholders do not assume, and shall have no liability for, any
of the obligations of Purchaser under this Agreement.
[Intentionally left blank.]
-28-
29
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
ROCKFORD LEASE FUNDING CORP.
By:
-------------------------------------
Larry Hartmann
President
ROCKFORD INDUSTRIES, INC.
By:
-------------------------------------
Gerry J. Ricco
President
-29-
30
EXHIBITS
--------
A. Bill of Sale and Assignment
B. Supplement to Equipment and Lease Purchase Agreement (Substitute Leases)
C. [Intentionally left blank.]
D-1 Form of Lease Contract
D-2 Form of Lease Contract
D-3 Form of Promissory Note and Security Agreement
E. Form of Amended Certificate of Acceptance
-30-