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EXHIBIT 10.34
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement"), dated as of March 27,
1997, is entered into by and among ROCKFORD LEASE FUNDING CORP., a New York
corporation ("Seller"), ROCKFORD INDUSTRIES, INC., a California corporation
("Rockford"), CENTRE SQUARE FUNDING CORPORATION, a Delaware corporation
("Purchaser"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States of
America (the "Trustee"), in its capacity as trustee under the trust created
pursuant to the Pooling and Servicing Agreement described below.
RECITALS
Contemporaneously with the execution of this Agreement, Seller, as
seller, Rockford, as servicer and Trustee, as trustee and back-up servicer,
have executed that certain Pooling and Servicing Agreement dated of even date
herewith (the "Pooling and Servicing Agreement"). Seller proposes, subject to
the terms and conditions stated herein, to sell to Purchaser Class A
Certificates issued pursuant to the Pooling and Servicing Agreement. Such
Class A Certificates shall, as of any date of determination, have an
outstanding principal balance not to exceed $150,000,000 (the "Commitment
Amount"). Capitalized terms used in this Agreement have the meanings provided
in Article I below. The Certificates described below evidence fractional
undivided interests in a Trust with a corpus consisting of a pool of Lease
Contracts serviced by Rockford.
Purchaser desires to purchase from Seller the Class A Certificates to
be issued from time to time by the Trust, and Seller desires to sell the Class
A Certificates to Purchaser, subject to the terms and provisions of this
Agreement.
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties agree as follows.
ARTICLE I
DEFINITIONS
Section 1.01 Certain Definitions. The following terms shall
have the meanings given them below:
"Balloon Lease" shall mean any Lease Contract with respect to
which the final Scheduled Payment exceeds three times the highest Scheduled
Payment previously made with respect to such Lease Contract.
"Bill of Sale and Assignment" shall have the meaning given
such term in the Equipment and Lease Purchase Agreement.
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"Computer Equipment" shall include the types of equipment
described on Exhibit K hereto under the following Asset Codes: 5 and 20.
"Eligible Lease Contract" shall mean, as of the relevant date,
a Lease Contract:
(a) which, if included in the Trust, would not
cause any representation or warranty of Seller contained in
Section 3.02 hereof to be untrue or incorrect; and
(b) with respect to which Purchaser has not
notified Seller that such Lease Contract is unacceptable for
purchase.
"Event of Bankruptcy" shall be deemed to have occurred with
respect to a Person if either:
(a) (i) a case or other proceeding shall be commenced,
without the application or consent of such Person, in any court,
seeking the liquidation, reorganization, debt arrangement,
dissolution, winding up, or composition or readjustment of debts of
such Person, the appointment of a trustee, receiver, custodian,
liquidator, assignee, sequestrator (or other similar official) for
such Person or all or substantially all of its assets, or any similar
action with respect to such Person under any law relating to
bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, and such case or proceeding shall continue
unstayed or undismissed for a period of 15 days; or (ii) an order for
relief in respect of such Person shall be entered in an involuntary
case under the federal bankruptcy laws or other similar laws now or
hereafter in effect; or
(b) such Person (i) shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency,
reorganization, debt arrangement, dissolution or other similar law now
or hereafter in effect, or (ii) shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) for, such Person
or for any substantial part of its property, or (iii) shall make any
general assignment for the benefit of creditors, or shall fail to, or
admit in writing its inability to, pay its debts generally as they
become due, or, if a corporation or similar entity, its board of
directors shall vote to implement any of the foregoing.
"Funding Period Trigger Event" shall mean at any time during
the term of the Pooling and Servicing Agreement the failure of any
condition described in Subsections 2.04(e)-(j) and (l)-(kk) hereof to
be satisfied.
"Hard Assets" shall include the types of equipment described
on Exhibit K hereto under the following Asset Codes: 21, 22, 23, 24,
25, 30 and 50.
"Liquidity Agent" means CoreStates Bank, N.A. and its
successors and assigns under the Liquidity Facility.
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"Medical Equipment" shall include the types of equipment
described on Exhibit K hereto under the following Asset Codes: 1, 2,
3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 19, 28, 36 and 65.
"Sale Assignment" shall mean a Sale Assignment in the form
attached hereto as Exhibit B. Such assignment is without recourse,
but subject to Seller's covenants, representations, warranties and
indemnities specifically provided herein.
"Soft Assets" shall include the types of equipment described
on Exhibit K hereto under the following Asset Codes: 18 and 20.01.
"Subsequent Closing Notice" has the meaning given to such term
in Section 2.03(b).
"Treasury Rate" shall have the meaning given such term in
Section 2.05.
"Warranty Purchase Amount" shall have the meaning given such
term in Section 7.01(c).
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.
ARTICLE II
PURCHASE AND SALE OF CERTIFICATES
Section 2.01 [Intentionally Omitted]
Section 2.02 Initial Closing Date Conditions. Trustee's
obligations hereunder shall be subject to the satisfaction (or waiver by
Trustee, Bond Insurer and Purchaser) on the Initial Closing Date of each of the
following conditions precedent:
(a) On or before the Initial Closing Date, Seller and Rockford
shall deliver or cause to be delivered the following documents to Trustee,
Purchaser and Bond Insurer:
(i) An Officer's Certificate of Seller substantially in
the form of Exhibit C and an Officer's Certificate of Rockford
substantially in the form of Exhibit D;
(ii) Opinions of Counsel for Seller and Rockford
substantially in the form of Exhibit E with respect to the treatment
of the transfer from Rockford to Seller as a "true sale," certain
bankruptcy issues with respect to Seller, tax and securities issues
and the first priority perfected security interest of Trustee in the
Trust Assets;
(iii) Copies of resolutions of the board of directors of
Seller approving the execution, delivery and performance by Seller of
the Principal Agreements and the transactions contemplated hereunder
and thereunder, certified by the secretary or any
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assistant secretary of Seller, and copies of resolutions of the board
of directors of Rockford approving the execution, delivery and
performance by Rockford of the Principal Agreements and the
transactions contemplated thereunder, certified by the secretary or
any assistant secretary of Rockford;
(iv) Officially certified, dated not more than thirty (30)
days prior to the Initial Closing Date, evidence of due incorporation
and good standing of Seller under the laws of New York and of Rockford
under the laws of California, and evidence of Seller's and Rockford's
respective good standing and authority to conduct business under the
laws of California and each other jurisdiction in which the ownership
or leasing of property by such party or the conduct of its business
requires qualification, except for those jurisdictions for which both
of the following are satisfied: (a) the failure to so qualify in such
jurisdiction will not impair the ability of Seller or Rockford to
enforce in such jurisdiction the obligations of the Lessee under any
Lease Contracts covering Equipment located in such jurisdiction, and
(b) the failure to so qualify in such jurisdiction and in all other
jurisdictions in which it is not qualified would not, in the
aggregate, materially adversely affect the assets, liabilities,
financial condition, business or operations of Seller or Rockford or
the ability of either such party to perform its obligations under the
Principal Agreements;
(v) Submission for filing of all UCC-1 financing
statements and UCC-3 assignments prepared by Seller's counsel
described in Exhibit F or other instruments necessary to perfect the
first priority ownership or security interests granted and assigned by
Seller under the Principal Agreements and Sale Assignments to Trustee
for the benefit of the Certificateholders and Bond Insurer in the
Lease Contracts, Equipment and other rights, titles and interests
referred to hereunder (other than UCC-1 financing statements naming
the Lessees under the Lease Contracts as debtors) to be filed or
recorded in all such appropriate places as are required to protect the
Trust's interest in the Lease Contracts, Equipment and such other
rights, titles and interests;
(vi) Evidence of the deposit by Seller into the Investment
Account of any amounts paid on the Lease Contracts since the related
Cut-Off Date;
(vii) An Officer's Certificate of Servicer identifying
Servicing Officers;
(viii) An Officer's Certificate of Servicer stating that the
Lease Contracts and Lease Files have been delivered to Trustee, and
that Servicer has marked the Lease Management System and other
physical records of the Lease Contracts to the effect that, as to the
Lease Contracts, Seller has sold and assigned all of its right, title
and interest therein to the Trust;
(ix) Evidence that Servicer has in effect the fidelity
bond or employee dishonesty policy described in Section 3.07(g) of the
Pooling and Servicing Agreement;
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(x) A properly executed copy of the Equipment and Lease
Purchase Agreement;
(xi) The initial Lease Schedule for the Lease Contracts
and the related Lease Files;
(xii) Secretary's Certificate of Rockford covering the
resolutions adopted by its Board of Directors as to Principal
Agreements, incumbency and signatures of the officers of Rockford
signing the Principal Agreements, and the certificate of incorporation
and bylaws of Rockford;
(xiii) UCC Lien search of recent date issued by the Office
of the Secretary of State of the State of California and the other
states listed on Exhibit J hereto covering Rockford and reflecting no
financing statement filings against the Lease Contracts and related
Equipment other than those to be terminated on or before the Initial
Closing Date;
(xiv) [Intentionally Omitted];
(xv) Secretary's Certificate of Seller covering the
resolutions adopted by its Board of Directors as to Principal
Agreements, the incumbency and signatures of the officers of Seller
signing the Principal Agreements, and the certificate of incorporation
and bylaws of Seller;
(xvi) UCC Lien searches of recent date issued by the
Offices of the Secretaries of State of New York and California
covering Seller and reflecting no financing statement or lien filings
against Seller or any assets of Seller other than those made pursuant
to the Pooling and Servicing Agreement and naming Trustee as secured
party;
(xvii) A Capital Contribution Agreement in the form of
Exhibit G properly executed by Rockford and Seller (the "Capital
Contribution Agreement");
(xviii) Such other documents, Opinions of Counsel and
certificates as Trustee or Bond Insurer may request;
(xix) With respect to Vehicles owned by the Seller, Seller
(A) shall have delivered to Trustee, Certificates of Title or
Applications for Certificates of Title, and (B) shall deliver to
Trustee within ninety (90) days of the Initial Closing Date, original
Certificates of Title for such Vehicles; and
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(xx) With respect to Vehicles in which Seller has a
security interest, Seller (A) shall have delivered to Trustee, vehicle
lien applications necessary to perfect the Trust's security interest
in such Vehicles, and (B) shall deliver to Trustee within ninety (90)
days of the Initial Closing Date Certificates of Title with respect to
such Vehicles naming Trustee as first lienholder.
(b) The Pooling and Servicing Agreement, the Equipment and Lease
Purchase Agreement, the Letter of Credit Reimbursement Agreement, each of the
Lockbox Agreements and the Capital Contribution Agreement shall be in full
force and effect.
(c) Trustee or its agent shall have received, and shall hold in
trust pursuant to the Pooling and Servicing Agreement, all documents,
instruments and other assets required by the Pooling and Servicing Agreement to
be delivered to Trustee with respect to and on behalf of the Trust as of the
Initial Closing Date including an original executed counterpart of each Lease
Contract identified on the Lease Contract Schedule and the related certificates
of acceptance as set forth in clause (d) of the definition of "Lease File".
(d) The representations and warranties of Seller in the Principal
Agreements and in any Officer's Certificate delivered to Trustee, Bond Insurer
or Purchaser in connection therewith shall be true and correct in all material
respects on and as of the Initial 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 and the Capital Contribution
Agreement in all material respects on its part to be performed or satisfied at
or prior to the Initial Closing Date.
(e) The representations and warranties of Rockford in the
Principal Agreements and in any Officer's Certificate delivered to Trustee,
Bond Insurer or Purchaser in connection therewith shall be true and correct in
all material respects on and as of the Initial Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date, and Rockford shall have complied with all the agreements and
satisfied all the conditions under the Principal Agreements and the Capital
Contribution Agreement in all material respects on its part to be performed or
satisfied at or prior to the Initial Closing Date.
(f) Seller and Rockford shall have paid or shall have made
arrangements for payment of all taxes, fees and governmental charges, if any,
in connection with the execution and delivery of the Principal Agreements and
the assignment of other rights and interests by Seller to the Trust under this
Agreement.
(g) There shall have been no occurrence which would, in
Purchaser's or Bond Insurer's reasonable judgment, have a material adverse
effect on (i) the assets, liabilities, financial condition, business or
operations of Rockford or Seller from the facts represented or warranted under
the Principal Agreements, or (ii) the ability of Rockford or Seller to meet its
obligations under the Principal Agreements.
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(h) No change shall have occurred in any law, rule or regulation
that would prohibit the consummation of any transaction contemplated hereby,
that would impose limits on the amount of Certificate Interest that the
Certificateholders may legally receive or that would impose a tax or levy
(other than tax on income generally) on the Certificates or payments received
in respect of the Certificates.
(i) No action, proceeding or investigation shall have been
instituted or threatened, nor shall any order, judgment or decree have been
issued or proposed to be issued by any court, agency or authority to set aside,
restrain, enjoin or prevent the consummation of any transaction contemplated
hereby or seeking material damages against Trustee, the Trust, Purchaser or the
Certificateholders in connection with the transactions contemplated by the
Principal Agreements.
(j) No final judgment shall have been rendered against Rockford or
any of its Affiliates in an amount greater than $100,000 which is not covered
by insurance or which, within 30 days after the entry of such judgment, is not
discharged or execution thereof stayed pending appeal, or which is not
discharged within 60 days after the expiration of such stay.
(k) No event of default (or event which, with the giving of notice
or the lapse of time, or both, would constitute an event of default) shall have
occurred and be continuing under any loan or credit agreement or any other
evidence of indebtedness given by Rockford or any of its Affiliates in
connection with any single credit facility extended to Rockford or any of its
Affiliates which has at the time an outstanding principal balance of $100,000
or more.
(l) Not more than one of the persons who hold the offices of
President or Executive Vice President of Rockford on the date of this Agreement
shall have ceased to be employed on a full-time basis by Rockford.
(m) The Tangible Net Worth Requirement shall be satisfied.
(n) Seller or Rockford shall pay or reimburse Bond Insurer for all
costs and expenses incurred by Bond Insurer in connection with the Principal
Agreements and the transactions contemplated thereby.
(o) The Rating Agencies shall have notified Bond Insurer that the
Rating Agencies have deemed the Certificates an "investment grade risk" to Bond
Insurer.
(p) Bond Insurer shall have delivered the Policy to Trustee.
(q) Evidence of the deposit by Rockford of $58,650.44 into the
Investment Account shall have been delivered to Bond Insurer.
(r) Bond Insurer shall have received evidence that Trustee has
received the Letter of Credit and that the Available LOC Amount equals the
Minimum LOC Amount.
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If any of the conditions specified in this Section 2.02 shall not have been
fulfilled when and as provided by this Agreement, or if any of the opinions,
certificates or other documents mentioned above or elsewhere in this Agreement
shall not be satisfactory in form and substance to Purchaser and Purchaser's
special counsel, and Bond Insurer and Bond Insurer's special counsel, this
Agreement and all Purchaser's obligations hereunder may be canceled by
Purchaser at or at any time prior to, the Initial Closing Date. Notice of such
cancellation shall be given to Seller and Bond Insurer in writing, or by
telephone or telecopy confirmed in writing. Such cancellation shall be without
prejudice to any rights, claims or remedies that Purchaser may have pursuant to
this Agreement or otherwise against Seller or any other person by reason of
such cancellation.
Section 2.03 Subsequent Closings.
(a) Subject to the terms and conditions set forth herein, on each
Subsequent Closing Date (i) Seller shall assign to Trustee, for the benefit of
the Certificateholders and Bond Insurer, the Eligible Lease Contracts and other
rights and interests to be conveyed to the Trust on the Subsequent Closing
Date, (ii) Rockford shall cause the Available Amount to equal or exceed the
Minimum LOC Amount (calculated after giving effect to the conveyance of the
Lease Contracts to be conveyed to the Trust and the issuance of the related
Class A Certificates on such Subsequent Closing Date), (iii) Trustee shall
issue to or upon the order of Seller Class A Certificates having an original
aggregate certificate principal balance equal to the Aggregate Discounted Lease
Contract Balance of such Lease Contracts as of the Subsequent Closing Date,
representing 100% of the Certificates to be issued on the Subsequent Closing
Date, and (iv) Purchaser and/or its designated affiliate shall purchase such
Class A Certificates from Seller for a price equal to the original aggregate
principal amount of such Certificates; provided, however, that such purchase
shall not cause the Class A Certificate Investor Interest to exceed the
Commitment Amount and Trustee shall not accept further Lease Contracts if to do
so would cause the Class A Certificate Investor Interest to exceed the
Commitment Amount. Notwithstanding anything to the contrary contained herein,
all Subsequent Closing Dates must occur no later than the date on which the
Funding Period is terminated. Trustee shall not accept Lease Contracts and
Purchaser shall not purchase Class A Certificates on or after the date on which
the Funding Period is terminated.
(b) Not later than the fifth Business Day preceding a Subsequent
Closing Date, Seller, by personal delivery, telecopy or other means of
delivery, shall give Trustee, Bond Insurer and Purchaser notice (the
"Subsequent Closing Notice") of the proposed Subsequent Closing Date. Each
such notice shall specify the date of the proposed Subsequent Closing Date
(which shall be a Business Day), shall include a copy of the Lease Schedule for
the Lease Contracts to be assigned to Trustee on the Subsequent Closing Date,
and shall specify the weighted average of the remaining terms of such Lease
Contracts, the approximate applicable Treasury Rate under Section 2.05 for such
weighted average (with the precise calculation to be communicated to Trustee,
Bond Insurer and Purchaser one Business Day prior to the proposed Subsequent
Closing Date), and the approximate aggregate principal amount (with the precise
calculation to be communicated to Trustee, Bond Insurer and Purchaser one
Business Day prior to the proposed Subsequent Closing Date) and approximate
applicable Certificate Rates of Certificates to be issued in connection with
such proposed closing (with the precise calculation to be communicated to
Trustee, Bond Insurer and Purchaser one Business Day prior to the proposed
Subsequent Closing Date); provided, in no event shall the Class A Certificate
Investor Interest ever
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exceed the Commitment Amount and in no event shall the aggregate principal
amount of Certificates to be issued in connection with such proposed closing be
less than $3,000,000.
(c) Seller hereby agrees, subject to the terms of this Agreement,
to assign to Trustee for the benefit of the Certificateholders and Bond Insurer
on each Subsequent Closing Date, Eligible Lease Contracts with an Aggregate
Discounted Lease Contract Balance as of the Subsequent Closing Date that is not
less than the aggregate original principal balance of the Certificates to be
issued on such Subsequent Closing Date.
(d) Payment for and delivery of the Certificates to be purchased
by Purchaser from Seller on a Subsequent Closing Date shall be made at a
closing at the offices of Purchaser c/o CoreStates Bank, N.A., 1345 Chestnut
Street, Philadelphia, Pennsylvania 19101 at 12:00 noon Philadelphia time on the
Subsequent Closing Date. Payment of the purchase price for the Certificates
shall be made by Purchaser in federal or other immediately available funds,
against delivery to Purchaser of the Certificates to be purchased on such
Subsequent Closing Date, registered in Purchaser's name or in the name of
Purchaser's nominee.
Section 2.04 Subsequent Closing Conditions. Trustee's obligation
to accept Lease Contracts and issue Certificates to or upon the order of Seller
on a Subsequent Closing Date and Purchaser's obligation to purchase such
Certificates shall be subject to the satisfaction (or waiver by Trustee, Bond
Insurer and Purchaser) on such Subsequent Closing Date of each of the
conditions set forth in Section 2.03 and the following conditions precedent
(references in this Section 2.04 to "Sale Assignment" and "Lease Contracts"
shall be deemed to refer to the Sale Assignment to be executed by Seller in
connection with such Subsequent Closing Date and the Lease Contracts covered by
such Sale Assignment):
(a) On or before each Subsequent Closing Date, Seller and Rockford
shall deliver or cause to be delivered the following documents to Trustee, Bond
Insurer and Purchaser;
(i) An Officer's Certificate of Seller substantially in
the form of Exhibit C and an Officer's Certificate of Rockford
substantially in the form of Exhibit D (or, in either or both cases,
an Officer's Certificate satisfactory to Purchaser and Bond Insurer
stating that the statements made in the Officer's Certificate
delivered in connection with the later of the Initial Closing Date or
the most recent Subsequent Closing are true and complete as if made on
and as of the Subsequent Closing Date, and that the instruments
attached thereto have not been replaced or modified);
(ii) (intentionally left blank)
(iii) (intentionally left blank)
(iv) (intentionally left blank)
(v) (intentionally left blank)
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(vi) The Lease Schedule for the Lease Contracts and the
related Lease Files;
(vii) An Officer's Certificate of Servicer stating that the
Lease Contracts and Lease Files have been delivered to Trustee, and
that Servicer has marked the Lease Management System and other
physical records of the Lease Contracts to the effect that, as to the
Lease Contracts, Seller has sold and assigned all of its right, title
and interest therein to the Trust;
(viii) A Bill of Sale and Assignment properly executed by
Rockford conveying the Lease Contracts and related Equipment to
Seller;
(ix) Releases and UCC-3 termination statements executed by
any existing lender(s) as to the Lease Contracts and Equipment covered
thereby;
(x) A Sale Assignment properly executed by Seller and
conveying the Lease Contracts to Trustee for the benefit of the
Certificateholders and Bond Insurer;
(xi) Secretary's Certificate of Seller covering the
resolutions adopted by its Board of Directors as to the Sale
Assignment and the incumbency and signatures of the officers of Seller
signing the Sale Assignment;
(xii) With respect to Vehicles owned by the Seller, Seller
(A) shall have delivered to Trustee, Certificates of Title or
Applications for Certificates of Title, and (B) shall deliver to
Trustee within ninety (90) days of such Closing Date, original
Certificates of Title for such Vehicles; and
(xiii) With respect to Vehicles in which Seller has a
security interest, Seller (A) shall have delivered to Trustee, vehicle
lien applications necessary to perfect the Trust's security interest
in such Vehicles, and (B) shall deliver to Trustee within ninety (90)
days of such Closing Date Certificates of Title with respect to such
Vehicles naming Trustee as first lienholder.
(b) No Servicer Default shall have occurred as provided (and
defined) in Section 9.01 of the Pooling and Servicing Agreement, other than a
Servicer Default that is waived in writing by Bond Insurer, or Purchaser with
the prior written consent of Bond Insurer.
(c) The Equipment and Lease Purchase Agreement, Pooling and
Servicing Agreement, the Letter of Credit Reimbursement Agreement, the Lockbox
Agreements, the Insurance Agreement and Capital Contribution Agreement shall
remain in full force and effect.
(d) Trustee shall certify that Trustee or its agent shall have
received, and shall hold in trust pursuant to the Pooling and Servicing
Agreement, all documents, instruments and other assets required by the Pooling
and Servicing Agreement to be delivered to Trustee with respect to and on
behalf of the Trust as of the Subsequent Closing Date, including the original
executed counterpart of each Lease Contract identified in the related Lease
Schedule. Such Lease Files shall have been
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delivered to the Trustee for inspection at least three Business Days before the
Subsequent Closing Date.
(e) The representations and warranties of Seller in the Principal
Agreements and in any Officer's Certificate delivered to Trustee, Bond Insurer
or Purchaser in connection therewith 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 and the Capital Contribution
Agreement in all material respects on its part to be performed or satisfied at
or prior to the Subsequent Closing Date.
(f) The representations and warranties of Rockford in the
Principal Agreements and in any Officer's Certificate delivered to Trustee,
Bond Insurer or Purchaser in connection therewith 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 Rockford shall have complied with all the agreements and
satisfied all the conditions under the Principal Agreements and the Capital
Contribution Agreement in all material respects on its part to be performed or
satisfied at or prior to the Subsequent Closing Date.
(g) Seller and Rockford shall have paid or shall have made
arrangements for payment of all taxes, fees and governmental charges, if any,
in connection with the sale of the Lease Contracts and related Equipment by
Rockford to Seller under the Equipment and Lease Purchase Agreement, the
assignment of the Lease Contracts and its interest in the Equipment and other
rights and interests by Seller to the Trust under this Agreement and the
issuance of the Certificates.
(h) There shall have been no occurrence which would, in
Purchaser's or Bond Insurer's reasonable judgment, have a material adverse
effect on (i) the assets, liabilities, financial condition, business or
operations of Rockford or Seller from the facts represented or warranted under
the Principal Agreements, or (ii) the ability of Rockford or Seller to meet its
obligations under the Principal Agreements.
(i) No change shall have occurred in any law, rule or regulation
that would prohibit the consummation of any transaction contemplated hereby,
that would impose limits on the amount of Certificate Interest that the
Certificateholders may legally receive or that would impose a tax or levy
(other than tax on income generally) on the Certificates or payments received
in respect of the Certificates.
(j) No action, proceeding or investigation shall have been
instituted or threatened, nor shall any order, judgment or decree have been
issued or proposed to be issued by any court, agency or authority to set aside,
restrain, enjoin or prevent the consummation of any transaction contemplated
hereby or seeking material damages against Trustee, the Trust, Purchaser, Bond
Insurer or the Certificateholders in connection with the transactions
contemplated by the Principal Agreements.
(k) Seller shall have delivered to Trustee, Bond Insurer and
Purchaser an Officer's Certificate of Seller and Servicer confirming (i) the
deposit in the Investment Account of all funds
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received with respect to the Lease Contracts from the applicable Cut-Off Date
to the Subsequent Closing Date, and (ii) that the Available Amount equals or
exceeds the Minimum LOC Amount (calculated after giving effect to the
conveyance of the Lease Contracts to be conveyed to the Trust and the issuance
of the related Class A Certificates on such Subsequent Closing Date), and
Trustee shall have delivered to Purchaser and Bond Insurer a certificate of a
Responsible Officer confirming the amounts so indicated by Seller and Servicer
in such Officer's Certificate.
(l) No final judgment shall have been rendered against Rockford or
any of its Affiliates in an amount greater than $100,000 which is not covered
by insurance or which, within 30 days after the entry of such judgment, is not
discharged or execution thereof stayed pending appeal, or which is not
discharged within 60 days after the expiration of such stay.
(m) No event of default (or event which, with the giving of notice
or the lapse of time, or both, would constitute an event of default) shall have
occurred and be continuing under any loan or credit agreement or any other
evidence of indebtedness given by Rockford or any of its Affiliates in
connection with any single credit facility extended to Rockford or any of its
Affiliates which has at the time an outstanding principal balance of $100,000
or more.
(n) [Intentionally Omitted.]
(o) The Tangible Net Worth Requirement shall be satisfied.
(p) Seller or Rockford shall pay or reimburse Purchaser and Bond
Insurer for all unreimbursed or unpaid costs and expenses incurred by Purchaser
in connection with the Principal Agreements and the transactions contemplated
thereby.
(q) Purchaser and Bond Insurer shall have received a true and
complete copy of Rockford's and Seller's most recent financial statements
(whether or not audited).
(r) No more than 35% of the Aggregate Discounted Lease Contract
Balance is attributable to Lease Contracts where the business of the Lessee
thereunder is characterized as "non-medical", and no more than 5% of the
Aggregate Discounted Lease Contract Balance is attributable to Lease Contracts
with the Lessee located in Puerto Rico or Canada, and no more than 1% of the
Aggregate Discounted Lease Contract Balance is attributable to Lease Contracts
with the Lessee located in the Province of Quebec.
(s) Neither Seller nor Rockford shall have failed to make any
payment or deposit required to be made by it hereunder or under any of the
Principal Agreements.
(t) An Event of Bankruptcy shall not have occurred with respect to
Seller or Rockford.
(u) A Trigger Event shall not have occurred and the Funding Period
has not ended.
(v) The Class A Certificate Investor Interest shall not be greater
than the Aggregate Discounted Lease Contract Balance.
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(w) Seller and Rockford shall have maintained a first priority
perfected security interest in the Lease Receivables and the Lease Files for
the benefit of Certificateholder and Bond Insurer.
(x) Bond Insurer shall not have determined that the issuance of a
Class A Certificate will impose an adverse regulatory impact on Bond Insurer.
(y) [Intentionally omitted]
(z) The immediately preceding Closing Date shall not have occurred
more than three months prior to the date of such Subsequent Closing Date.
Except with respect to Subsequent Closing Dates occurring in April, May and
June of 1997, the Aggregate Discounted Lease Contract Balances of Lease
Contracts conveyed to the Trust in the calendar quarter immediately preceding
such Subsequent Closing Date shall have equaled at least $10,000,000. The
Aggregate Discounted Lease Contract Balances of the Lease Contracts conveyed to
the Trust during the current calendar quarter, including the Lease Contracts to
be conveyed on the related Subsequent Closing Date shall not exceed
$30,000,000.
(aa) The Available Amount on any three consecutive Deposit Dates
shall not have been less than the Minimum LOC Amount on such Deposit Dates.
(bb) The average of the Annualized Default Rates for any three
consecutive Collection Periods shall not have equaled or exceeded 5.0%.
(cc) The average of the Delinquency Rates for any three consecutive
Collection Periods, for any three consecutive Collection Periods shall not have
equaled or exceeded 6.5%.
(dd) Rockford shall not have defaulted under any other agreement
evidencing indebtedness over $1,000,000 and such default has not been
accelerated.
(ee) Trustee has no actual knowledge that a Servicer Default, a
Funding Period Trigger Event or a Trigger Event has occurred, and has received
the Officer's Certificate set forth in Section 2.04(a)(i).
(ff) Neither the Class A Certificateholders nor Trustee shall have
received a letter from Bond Insurer confirming that the Policy no longer
remains in full force and effect as of the related Closing Date.
(gg) After Servicer has established a Lockbox Account pursuant to
the Pooling and Servicing Agreement, Servicer shall have provided Back-up
Servicer with a signed lockbox letter or its equivalent with respect to any
such Lockbox Account.
(hh) Bond Insurer shall have received evidence of the deposit by
Trustee into the Investment Account of any amounts paid on the Lease Contracts
included since the related Cut-Off Date.
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(ii) Bond Insurer shall have received such other documents,
certificates and opinions as it shall have requested including without
limitation, no more often than semi-annually, Opinions of Counsel, copies of
which shall be delivered to each of the Rating Agencies, with respect to the
treatment of transfers from Rockford to Seller as a "true sale," certain
bankruptcy issues with respect to Seller and its Affiliates and the perfected
first priority security interest of Trustee in Lease Contracts.
(jj) Trustee continues to maintain a first priority perfected
security interest in the Trust Assets on behalf of the Certificateholders and
Bond Insurer consistent with the terms of the Principal Agreements.
(kk) Gerry Ricco and at least one of Larry Hartman or Brian Seigel
are officers of Rockford.
Section 2.05 Determination of Certificate Rates. The Certificate
Rate for the Class A Certificates issued on the Initial Closing Date shall be
7.19% per annum (calculated on the basis of a 360 day year). The Certificate
Rate for the Class A Certificates issued on any Subsequent Closing Date shall
be a per annum rate (calculated in each case on the basis of a 360 day year)
equal to the Treasury Rate plus 0.80%. As used in this Agreement, the term
"Treasury Rate" shall mean, with respect to any Subsequent Closing Date, the
interpolated treasury rate based on the weighted average life of the Class A
Certificates (sold on such Subsequent Closing Date). The treasury rates to be
used in the calculation shall be obtained from Bloomberg's "PX1" screen at
11:00 a.m. New York time three (3) Business Days preceding such Subsequent
Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser and Bond Insurer as
follows:
Section 3.01 Regarding Seller.
(a) Seller was incorporated on March 19, 1997 and has transacted
no business prior to the Initial Closing Date other than in preparation for the
issuance of the Certificates and otherwise as permitted by its organizational
documents.
(b) The representations and warranties made by Seller in the
Equipment and Lease Purchase Agreement, the Insurance Agreement and the Pooling
and Servicing Agreement are true and correct.
(c) The chief executive office and principal place of business of
Seller is located in Rockland County, New York.
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(d) There is no order or action pending, or, to the best knowledge
of Seller, threatened, against Seller that has or if determined adversely might
reasonably be expected to have (x) a material adverse effect on Seller's
ability to perform its obligations under the Principal Agreements or any aspect
of the transactions contemplated thereby, or (y) a material adverse effect on
the Lease Contracts and other rights and interests to be assigned to Trustee
for the benefit of the Certificateholders and Bond Insurer under the terms of
this Agreement and the Pooling and Servicing Agreement.
Section 3.02 Regarding the Trust Assets. As of each Subsequent
Closing Date:
(a) There is no restriction or limitation in any of the Lease
Contracts or otherwise on the assignment or sale of the Lease Contracts and
Equipment to Seller pursuant to the terms of the Equipment and Lease Purchase
Agreement or on the assignment of the Lease Contracts and other rights and
interests to Trustee pursuant to the terms of this Agreement and the Pooling
and Servicing Agreement.
(b) Seller owns, or will own immediately prior to the assignment
of such Lease Contract to Trustee 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 assignment of such Lease Contract to the
Trustee hereunder, a first priority perfected security interest in such
Equipment.
(c) With respect to each Lease Contract, only one original
executed copy of such Lease Contract exists and such original has been
delivered to the Trustee along with the related Lease File.
(d) Each Lease Contract is genuine and in full force and effect in
accordance with its terms, 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.
(e) There does not exist any default or delinquency in excess of
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 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.
Seller has no reason to believe that the Scheduled Payments under any Lease
Contract will not be timely and fully paid.
(f) All requirements of any federal, state or local law, rule or
regulation, including without limitation, usury laws, the Federal
Truth-in-Lending Act, the Fair Credit Reporting Act, the Fair Debt Collections
Practices Act and any other applicable consumer credit, equal opportunity and
disclosure laws, if any, 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
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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.
(g) 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 Seller or Rockford;
(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
Seller or Rockford of any defects therein;
(v) Scheduled Payments due under such Lease Contract on
and after the Cut-Off Date are payable into the Lockbox Account;
(vi) the Lessee under such Lease Contract does not have
any contractual right to prepay the Scheduled Payments due under such
Lease Contract or to cancel the Lease Contract during the term of such
Lease Contract;
(vii) 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; and
(viii) such Lease Contract constitutes "chattel paper" under
the UCC.
(h) Each Lease Contract is a valid, binding and legally
enforceable obligation of the parties thereto, enforceable in accordance with
its terms (subject to bankruptcy, insolvency and other similar laws affecting
creditors' rights in general and the availability of equitable remedies) and
all parties had requisite authority and capacity to execute such Lease
Contract.
(i) Each item of Equipment is subject to a Lease Contract.
(j) 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.
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(k) Each Lease Contract is a lease contract having predetermined
fixed rental payments due on a regular basis (without regard to any guaranteed
purchase options of the respective Lessee), that are not subject to change
based upon a fluctuating index or reference rate; provided, however, that (i)
the Aggregate Discounted Lease Contract Balances of the Lease Contracts that
have step or deferred rental payments does not exceed 50% of the Aggregate
Discounted Lease Contract Balance and (ii) the Aggregate Discounted Lease
Contract Balances of the Lease Contracts that have variable payments or are
Balloon Leases does not exceed 50% of the Aggregate Discounted Lease Contract
Balance. Lease Contracts allowing deferred payments require the related
Lessees to make regular level payments within six months from the origination
of the related Lease Contracts. Lease Contracts allowing step payments require
the related Lessees to make regular, level payments within one year from
origination of the related Lease Contracts. In determining whether to lease
Equipment to any particular Lessee, Rockford considered each Lessee's ability
to pay any increases in the rental payments due under the terms of the related
Lease Contract. No Scheduled Payment with respect to any Lease Contract
exceeds 10% of the original Discounted Lease Contract Balance with respect to
such Lease Contract.
(l) The Lessee under each Lease Contract is personally 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 and unconditionally
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.
(m) None of the Lease Contracts have been modified, amended,
satisfied, canceled, subordinated or extended, in whole or in part 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 otherwise), no indulgences,
releases or waivers have been granted in respect of the obligations or any
portion thereof of any Lessee under any Lease Contract, and none of Seller,
Rockford or any Affiliate of either such party has advanced any monies on
behalf of or to cure any breach or default by any Lessee and each Lease
Contract complies with the Credit and Collection Policies of the Seller.
(n) 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 during the term of such Lease Contract, and to the
best of Seller's knowledge each Lessee is currently in compliance with such
requirement.
(o) Each Lease Contract requires the Lessee thereunder to promptly
pay all fees, taxes (except income taxes), and other charges or liabilities
arising with respect to the Equipment leased
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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 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 in an amount at least equal to the
replacement value of the Equipment and, upon the occurrence of a casualty, to
pay any difference between the proceeds of such insurance and the Discounted
Lease Contract Balance of such Lease Contract.
(p) 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. No item of Equipment has been relocated from the jurisdiction
set forth in the Lease Contract or, if Seller has knowledge of any such
relocation, to the extent such Equipment has a value greater or equal to
$50,000, all UCC filings necessary to continue the first priority security
interest in such Equipment have been made.
(q) 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 Rockford or Seller of their respective right, title
and interest in and to such Lease Contracts and the Equipment covered thereby
and Seller's grant of a security interest in the Equipment.
(r) 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.
(s) As to each Lease Contract in respect of Equipment with an
original value in excess of $50,000, the interest of Seller in respect of such
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. As to each Lease Contract in respect of a Vehicle
or Vehicles, the interest of Seller in respect of such Vehicle or Vehicles has
been duly perfected through delivery of vehicle lien applications necessary
to protect its security interest in a Vehicle or Vehicles naming Trustee as
first lienholder with respect to each Vehicle. All Equipment is located within
the United States.
(t) 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 the case
of any computer software included therein, for which Seller's interest is
limited to a non-exclusive, transferable license.
(u) 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 have been, or by the applicable
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Closing Date will be, accomplished and are, or by the applicable Closing Date
will be, in full force and effect.
(v) 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 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, the Back-up Servicer Fee, the
Bond Insurer Premium, the Trustee Fee and the Servicing Fee applicable to such
Lease Contracts.
(w) 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 as set forth on
Exhibit A). If such Lease Contract was acquired by Rockford, it was acquired
from a broker or leasing company that originated such leases pursuant to
agreed-upon and well-articulated underwriting and documentation standards
acceptable to Bond Insurer and with whom Rockford has regularly dealt in the
past.
(x) Each Lease Contract requires that the Equipment covered
thereby be insured as of the Closing Date 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. On the related Closing Date
Seller shall provide a certificate of insurance that each item of Equipment is
currently insured for such loss or damage under the Servicer's blanket fire and
extended coverage insurance policy and naming Seller and Trustee as loss payee,
as their respective interests may appear; provided, however, that no such
certificate need be provided with respect to Lease Contracts for which the
aggregate original cost of the Equipment covered by such Lease Contracts does
not exceed $75,000.
(y) The sale, transfer and conveyance by Seller of the Lease
Contracts and the security interests of Seller in the related Equipment to
Trustee are not a "bulk transfer" within the meaning of Article 6 of the UCC as
in effect in any applicable jurisdiction.
(z) 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 prevent payment and
performance by any Lessee of any Lease Contract or any other agreement between
such Lessee and Seller or Rockford, or (iii) seeking any determination or
ruling that might adversely affect the validity or enforceability of any Lease
Contract.
(aa) As to each Lease Contract, there are no agreements or
understandings between Seller or Rockford, on the one hand, and the Lessee, on
the other hand, in respect of such Lease Contract or otherwise binding on
Seller or Rockford other than as expressly set forth in the written instruments
contained in the Lease Files.
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(bb) None of the Lessees is a Governmental Authority.
(cc) 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.
(dd) The historical delinquency and loss information set forth in
Exhibit H is true and correct.
(ee) 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 a
first priority security interest in the Equipment, 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. On
or prior to each Closing Date, Seller shall deliver the Lease Contracts to
Trustee and grant or assign a security interest in the Equipment to Trustee, in
each case free and clear of any encumbrances and adverse claims (other than the
rights described in the exception in the immediately preceding sentence), and
neither Rockford nor Seller has received any notice of conflict with respect
thereto that asserts the rights of others.
(ff) None of Rockford, Seller or any of their Affiliates is a party
to any contract for the servicing of the Lease Contracts or related Equipment,
other than the Pooling and Servicing Agreement.
(gg) 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.
(hh) Neither Rockford 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, except for any power of attorney granted to any
service entity that files UCC financing statements on Rockford's or Seller's
behalf.
(ii) Each Lease Contract, when assigned to Trustee, for the benefit
of the Certificateholders and Bond Insurer, and included in the corpus of the
Trust shall have been validly assigned and delivered to Trustee, for the
benefit of the Certificateholders and Bond Insurer, by Seller (who immediately
prior to such assignment shall own full legal and equitable title to each Lease
Contract). Upon delivery to Trustee, for the benefit of the Certificateholders
and Bond Insurer, of the Lease Files, and execution and delivery of Sale
Assignments of all of the Lease Contracts by Seller in favor of Trustee, for
the benefit of the Certificateholders and Bond Insurer, all of Seller's right,
title and interest in and to the Lease Contracts shall be validly and
effectively transferred to the Trust.
(jj) Seller is not selling 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
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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.
(kk) Each Lease Contract constitutes an "eligible account" within
the meaning of Rule 3a-7(b)(1) under the Investment Company Act.
(ll) [Intentionally omitted].
(mm) The Discounted Lease Contract Balance of each Lease Contract
acquired by Rockford from any third party, when added to the aggregate of the
Discounted Lease Contract Balances of all other Lease Contracts acquired by
Rockford from third parties then constituting part of the Trust Assets, does
not exceed 8% of the Aggregate Discounted Lease Contract Balances.
(nn) The Discounted Lease Contract Balance of each Lease Contract,
when added to the aggregate of the Lease Contract Balances of all other Lease
Contracts with the same Lessee or any of its Affiliates then constituting part
of the Trust Assets, does not exceed 1.5% of the Aggregate Discounted Lease
Contract Balance.
(oo) Each Lease Contract has a remaining term that is not less than
12 months and an original term of not greater than 84 months.
(pp) Each Lease Contract covers the leasing of Equipment to be used
in the Lessee's profession, trade or business and such Lessee is in possession
of such Equipment and is the end user of such equipment; provided, however,
that the Aggregate Discounted Lease Contract Balance of the Lease Contracts
with respect to which the related Equipment is Medical Equipment and the
related Lessee is not the end user of the related Equipment and is not
sub-leasing such Equipment to any other user or sub-lessee does not exceed 5%
of the Aggregate Discounted Lease Contract Balance.
(qq) Each Lease Contract meets the criteria for an "A Credit Lease"
as set forth in Exhibit A.
(rr) The Discounted Lease Contract Balance of such Lease Contract
shall not exceed $250,000.
(ss) After the transfer of the Lease Receivable with respect to any
Lease Contract to the Trust (and based upon the Discounted Lease Contract
Balances), (i) the Lessees located in any single state will be obligated with
respect to Lease Contracts accounting for no more than 15% of the Aggregate
Discounted Lease Contract Balance except that Lessees located in New York and
Lessees located in California may in each case be obligated with respect to
Lease Contracts accounting for no more than 25% of the Aggregate Discounted
Lease Contract Balance, (ii) Lease Contracts with respect to Equipment which
consists of each Asset Code included in the definition of Hard Assets will
account for no more than 20% of the Aggregate Discounted Lease Contract
Balance, (iii) Lease Contracts with respect to Equipment which consists of each
Asset Code included in the definition of
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Soft Assets will account for no more than 10% of the Aggregate Discounted Lease
Contract Balance, (iv) Lease Contracts with respect to Equipment which consists
of Computer Equipment will account for no more than 25% of the Aggregate
Discounted Lease Contract Balance, (vi) Lease Contacts with respect to
Equipment which consists of the types of equipment described on Exhibit K
hereto under Asset Code 27 will account for no more than 12% of the Aggregate
Discounted Lease Contract Balance, (vii) Lease Contracts with respect to
Equipment which consists of the types of equipment described on Exhibit K
hereto under Asset Codes 35 or 51 will account for no more than 3% of the
Aggregate Discounted Lease Contract Balance, (vii) Lease Contracts with respect
to Equipment which consists of the types of equipment described on Exhibit K
hereto under Asset Code 80 will account for no more than 15% of the Aggregate
Discounted Lease Contract Balance, (viii) Lease Contracts with the Lessee
located in Puerto Rico or Canada will account for no more than 5% of the
Aggregate Discounted Lease Contract Balance, (ix) Lease Contracts with respect
to Equipment of the same type will not exceed 20% of the Aggregate Discounted
Lease Contract Balance, (x) Lease Contracts with respect to data communications
equipment and telecommunications equipment will not exceed 10% or 5%,
respectively, of the Aggregate Discounted Lease Contract Balance and (xi) the
weighted average of the original terms of the Lease Contracts will not exceed
50 months.
(tt) Each Lease Contract does not permit the substitution, exchange
or addition of any Equipment subject to such Lease Contract.
(uu) No Lease Contract will have been selected on any basis which
would cause such Lease Contract to be more likely to default than Lease
Contracts in Seller's portfolio generally.
(vv) In the case of each Lease Contract which consist of a master
lease and one or more exhibits or schedules thereto, (i) Seller has not
assigned, and will not assign, such master lease in its entirety or in part
(except for the assignment of its rights under such master lease as collateral
in connection with the financing of a schedule issued pursuant to and
incorporating the terms of such master lease and not constituting a Lease
Contract), and has not delivered and will not deliver physical possession of
such master lease, to any Person other than Trustee, (ii) such exhibits or
schedules constitute a separate contract to which all representations and
warranties of this section apply and are not part of any other contract not
sold to the Trust and (iii) no schedule shall be related to an upgrade of
Equipment unless the entire item of Equipment is financed under such schedule.
(ww) 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 Agreement unlawful.
(xx) Seller has no knowledge that any Lessee under a Lease Contract
is a Person involved in the business of selling equipment of the same type as
the Equipment subject to such Lease Contract.
(yy) Seller has duly performed all material obligations on its part
required to be performed by it under or in connection with each Lease Contract,
including, without limitation, giving any notices or consents necessary to
effect the contribution, assignment, transfer and conveyance of the Lease
Contract fromthe Seller to the Trust and has done nothing to materially impair
the rights of Trustee, the Certificateholders or Bond Insurer in the Lease
Contracts or the payments due thereunder.
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(zz) All of the Lease Contracts conform in all material respect to
one of the forms of Lease Contract as set forth in Exhibit D-1, D-2 and D-3 to
the Equipment and Lease Purchase Agreement. As provided in Section 10.17 of
the Pooling and Servicing Agreement, with respect to the Lease Contracts that
conform to Exhibit D-1, an amended certificate of acceptance in the form of
Exhibit E to the Equipment and Lease Purchase Agreement has been included in
the Lease File and delivered to the Trustee.
(aaa) [Reserved]
(bbb) [Reserved]
(ccc) The computer tape from which the selection of the Lease
Contracts was made, was made available to Bond Insurer's auditors by Seller
prior to the Closing Date and was complete and accurate as of its date and
includes a description of the same Lease Contracts that are described in the
Lease Schedule.
(ddd) Seller has not taken any action to convey to any Person any
right to payments received under the Lease Contracts, the insurance policies
insuring the related Equipment, or any other property being conveyed by Seller
pursuant to the Equipment and Lease Purchase Agreement, and Trustee has the
right under each Lease Contract to exercise appropriate remedies with respect
to the related Equipment without obtaining the consent of any third parties.
(eee) Seller and Rockford will cause their records to be marked to
reflect the transfer of the Lease Contracts and Equipment to Seller and the
grant of a first priority perfected security interest, to the extent a first
priority perfected security interest in such Equipment is otherwise required
hereunder, in the Trust Assets to Trustee for the benefit of the
Certificateholders and Bond Insurer.
(fff) Each Lease Contract obligates the related Lessee to make all
Scheduled Payments thereunder in full notwithstanding the collection by the
lessor of a security deposit with respect thereto. The calculation of the
Discounted Lease Contract Balance of each Lease Contract does not include any
security deposits or advance payments collected by or on behalf of the lessor
which are applied to Scheduled Payments.
(ggg) The sale, transfer, assignment and conveyance contemplated by
the Equipment and Lease Purchase Agreement and the Pooling and Servicing
Agreement is not subject to and will not result in any tax, fee or governmental
charge payable by Seller to any federal, state or local government ("Transfer
Taxes") other than Transfer Taxes which have been or will be paid by Seller as
due. In the event that the Seller or Trustee receives actual notice of any
Transfer Taxes arising out of such transfer, assignment and conveyance, on
written demand by Seller or Trustee, or upon Rockford's otherwise being given
notice thereof, Rockford shall pay, and otherwise indemnify and hold Seller,
Trustee, and Bond Insurer harmless on an after-tax basis, from and against any
and all such Transfer Taxes (it being understood that the Certificateholders,
Trustee, and Bond Insurer shall have no obligation to pay such Transfer Taxes.)
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(hhh) None of the Lease Contracts are either "consumer credit
contracts" or "purchase money loans" as such terms are defined in 16 C.F.R.
Section 433.1.
(iii) Liquidity Agent has not notified Seller or Rockford that the
Lease Contract is unacceptable for purchase under the Liquidity Facility.
Section 3.03 Other Representations.
(a) Seller and persons acting on its behalf have offered Class A
Certificates to, or solicited offers to buy Class A Certificates from, or
otherwise approached or negotiated with respect thereto with no prospective
purchasers other than Purchaser. Seller has not sold, offered to sell or
solicited any offer to buy, and agrees that it shall not sell, offer to sell,
or solicit any offer to buy, directly or indirectly, the Certificates or any
similar securities in a manner which would render the issuance or sale of the
Certificates pursuant to the Principal Agreements a violation of Section 5 of
the Securities Act, require registration of the Trust created by the Pooling
and Servicing Agreement under the Investment Company Act, or require
qualification of the Pooling and Servicing Agreement under the Trust Indenture
Act of 1939 as presently in effect (the "1939 Act"), nor has Seller authorized,
nor shall it authorize, any person to act in such manner.
(b) The written information supplied by Seller or Rockford to
Purchaser or Bond Insurer in connection with the transactions contemplated by
the Principal Agreements 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.
(c) No tax, assessment or other governmental charge will become
payable by Purchaser 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 Purchaser as contemplated
hereby (other than taxes imposed upon Purchaser'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 Purchaser becoming subject to taxation or in its being deemed to be
doing business in any jurisdiction in which any Lessee is located.
(d) Neither Seller nor Rockford nor any of their 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 to Purchaser or any Affiliate thereof.
Section 3.04 Reconfirmation. Seller agrees that its participation
in the transactions contemplated herein and in the Equipment and Lease Purchase
Agreement on each Closing Date shall constitute, without further act, a
confirmation that each of its respective representations and warranties
contained herein are 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 conveyed
on such Closing Date and the Equipment covered thereby).
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ROCKFORD
Section 4.01 Representations and Warranties. Rockford hereby
represents and warrants to Purchaser and Bond Insurer as follows:
(a) There has been no change in the business, operations,
financial condition, properties, prospects or assets of Rockford since
September 30, 1996 which would have a material adverse effect on its ability to
perform its obligations under the Principal Agreements.
(b) The representations and warranties made by Rockford in the
Pooling and Servicing Agreement and in Sections 3.01 and 3.03 of the Equipment
and Lease Purchase Agreement are true and correct in all material respects.
The representations and warranties made by Rockford in Section 3.02 of the
Equipment and Lease Purchase Agreement are true and correct in all material
respects.
(c) Rockford and any Affiliates of Rockford who will be servicing
any Lease Contracts pursuant to the Pooling and Servicing Agreement are
qualified to do business, are in good standing and have obtained all necessary
licenses and permits in all jurisdictions in which the conduct of their
respective businesses or their activities in originating or servicing the Lease
Contracts require such qualification or such licenses or permits, except where
the failure to so qualify or to hold such licenses or permits would not have a
material adverse effect on the transactions contemplated by the Principal
Agreements or the Certificates.
(d) Rockford is the beneficial owner of 100% of the shares of the
voting and capital stock of Seller, subject to no claims, liens, encumbrances
or interests of any kind of any person.
(e) The representations and warranties of Seller under Sections
7.01 of the Pooling and Servicing Agreement and under Section 3.02(dd) of this
Agreement are true and correct.
(f) Rockford has the corporate power and authority to execute and
deliver the Principal Agreements and to carry out its terms; and the execution,
delivery and performance of the Principal Agreements have been duly authorized
by Rockford by all necessary corporate action.
(g) The consummation of the transactions contemplated by and the
fulfillment of the terms of the Principal Agreements will not conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under, or require any consent or
approval under (as applicable) the certificate of incorporation or bylaws of
Rockford or any material term of any material indenture, agreement, mortgage,
deed of trust or other instrument to which Rockford is a party or by which it
is bound, or result in the creation or imposition of any material Lien upon any
of its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument or violate any law or any order,
rule or regulation applicable to Rockford of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Rockford or any of its properties
which
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would have a material adverse effect on the ability of Rockford to comply with
the terms of the Principal Agreements.
(h) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any Governmental Authority
having jurisdiction over Rockford or any of its properties or assets is
required to be obtained by or with respect to Rockford in connection with the
execution, delivery and performance by Rockford of the Principal Agreements and
the consummation of the transactions contemplated hereby and thereby.
(i) The Principal Agreements have been duly and validly
authorized, executed and delivered by Rockford and constitutes a valid and
legally binding obligation of Rockford, enforceable against Rockford in
accordance with its terms as such enforceability is subject to bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally and the availability of equitable remedies.
(k) There are no proceedings or investigations pending, or, to the
knowledge of Rockford, 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 or (iii) seeking any determination or ruling that might
materially and adversely affect the performance by Rockford of its obligations
under, or the validity or enforceability, of any of the Principal Agreements.
Section 4.02 Reconfirmation. Rockford agrees that its
participation in the transactions contemplated herein and in the Equipment and
Lease Purchase Agreement on each Closing Date shall constitute, without further
act, a confirmation that each of its respective representations and warranties
contained herein are true and correct on and as of such Closing Date as though
made on and as of such Closing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 5.01 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. 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.
(b) Purchaser is an "accredited investor" within the meaning of
Rule 501 of the Securities Act.
(c) The Certificates to be purchased on each Subsequent Closing
Date will be, purchased by Purchaser hereunder for Purchaser's account for
investment, and not with a view to the resale
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thereof, it being understood, however, that the disposition of Purchaser's
property shall at all times be within Purchaser's control.
ARTICLE VI
COVENANTS OF SELLER AND ROCKFORD
Section 6.01 Generally. So long as any Certificate shall be
outstanding:
(a) Seller shall cause Trustee to make all distributions on or
with respect to such Certificates to Purchaser to the extent of the funds
available in the applicable Accounts pursuant to the instructions attached
hereto as Exhibit I, together with sufficient information (including interest
rate, designation of Certificate and the issuer thereof, total payment and
principal and interest portions of such payment) to identify the source of such
payment including the nominee names in which the Certificate may be held.
While Purchaser has the right, at any time, to change the location of the
account to which payments on the Certificates should be made by giving written
notice of such change to Trustee, Purchaser represents to Trustee that it has
no present intention of changing such account location.
(b) Each of Seller and Rockford shall deliver to Purchaser and
Bond Insurer their consolidated audited annual financial statements and
unaudited quarterly financial statements (prepared for the first three quarters
of each fiscal year on a quarterly basis in the ordinary course of business),
within a reasonable time after such statements have been prepared in final form
and in any event within 45 days after the end of the period covered by such
statement in the case of a quarterly statement, or within 90 days after the end
of the period covered by such statement in the case of an annual statement.
(c) Rockford shall not, prior to the termination of the Trust
pursuant to Section 11.01 of the Pooling and Servicing Agreement, sell, assign,
mortgage, hypothecate, transfer, pledge, create a security interest in or lien
on, encumber, give, place in trust (voting or other) or otherwise dispose of
any or all of or any rights or entitlement deriving from the voting or capital
stock of Seller, or agree to do any of the foregoing, without the prior written
consent of Purchaser and Bond Insurer, which may be given or withheld at their
sole discretion.
(d) Rockford shall maintain its corporate existence and good
standing and shall cause Seller to maintain its corporate existence and good
standing, and Rockford shall not, nor shall it cause or permit Seller to, prior
to the termination of the Trust pursuant to Section 11.01 of the Pooling and
Servicing Agreement, amend Seller's corporate charter, liquidate or dissolve
or, except in compliance with the Pooling and Servicing Agreement, consolidate
with or merge into any other corporation or convey or transfer its properties
and assets substantially as an entirety to any Person without the prior written
consent of Purchaser and Bond Insurer, which may be given or withheld in their
sole discretion.
(e) Seller shall not offer or sell any Certificates or any other
interests of any kind in the Trust to any Person other than Purchaser.
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(f) Seller and Rockford shall comply with the terms of the
Equipment and Lease Purchase Agreement in all material respects, and, in the
event that Rockford shall fail so to comply, Seller agrees that it shall
enforce the Equipment and Lease Purchase Agreement against Rockford to the
fullest extent permitted therein and by applicable law.
(g) Rockford shall cause Seller to comply with the provisions of
Sections 8.01(c) and 8.03 of the Pooling and Servicing Agreement.
(h) As long as no default in payment on the part of any Lessee
exists under any Lease Contract, Seller will do nothing to disturb or impair
such Lessee's use and quiet enjoyment of the Equipment.
(i) Seller will not amend its Certificate of Incorporation or
Bylaws in any manner without the approval of the Bond Insurer.
(j) Seller will keep in full force and effect its existence,
rights and franchises as a corporation under the laws of its jurisdiction of
incorporation and will preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is necessary to
protect the validity and enforceability of any of the Lease Contracts or to
permit performance of Seller's duties under the Principal Agreements. Seller
shall not merge or consolidate with or sell or transfer all or substantially
all of its property to any other Person.
(k) Seller and Rockford will not amend or terminate the Equipment
and Lease Purchase Agreement or any Lease Contract, or waive any rights or
obligations of any party under such agreements.
(l) Seller and Rockford will cause all Collections with respect to
the Trust Assets to be paid directly the Lockbox Account and agree to hold in
trust and promptly pay to the Servicer all amounts received by Seller or
Rockford in respect of the Trust Assets.
(m) Seller and Rockford will each comply, in all material
respects, with all acts, rules, regulations, orders, decrees and directions of
any Governmental Authority applicable to the Lease Contracts or any part
thereof; provided, however, that Seller or Rockford may contest any act,
regulation, order, decree or direction in any reasonable manner which shall not
materially and adversely affect the rights of Trustee, Certificateholders or
Bond Insurer (for the benefit of the Certificateholders and Bond Insurer) in
the Lease Receivables and the Lease Contracts and the related Equipment. Each
of Seller and Rockford will comply, in all material respects, with all
requirements of law applicable to each such party.
(n) Each of Seller and Rockford will not, without providing at
least 30 days notice to the Trustee and Bond Insurer and without filing such
amendments to any previously filed financing statements as the Trustee or Bond
Insurer may require or as may be required in order to maintain the Trustee's
perfected security interest in the Trust Assets (a) change the location of its
principal executive office, or (b) change its name, identity or company
structure in any manner which would make any financing statement or
continuation statement filed by Seller or Rockford in accordance
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with the Pooling and Servicing Agreement or this Agreement seriously misleading
within the meaning of Article 9-402(7) of any applicable enactment of the UCC.
(o) At any time and from time to time upon reasonable notice
during regular business hours, permit Purchaser or Bond Insurer or any of their
agents or representatives, (A) to examine and make copies of and abstracts from
all books, records and documents (including, without limitation, computer tapes
and disks) in the possession or under the control of Seller or Rockford
relating to the Lease Receivables, including, without limitation the related
Lease Contracts and other agreements, and (B) to visit the offices and
properties of Seller and Rockford for the purpose of examining such materials
described above, and to discuss matters relating to Lease Receivables or
Rockford's or Seller's performance hereunder with any of the officers or
employees of Seller or Rockford having knowledge of such matters and from time
to time permit Independent Public Accountants or other auditors acceptable to
Purchaser and Bond Insurer to conduct a review of Seller's and Rockford's books
and records relating to the Lease Receivables and the systems relating thereto.
(p) Seller shall notify Purchaser and Bond Insurer of any change
to the terms of the Lockbox Account or any payment instructions given to any
Lessee.
(q) Rockford shall not make any material change in its credit and
collection policy or the Servicing Procedures and shall comply with such credit
and collection policy and the Servicing Procedures including, without
limitation, the filing of appropriate financing statements against the
Equipment under each Lease Contract.
(r) Seller and Rockford shall maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Lease Receivables in the event of the
destruction of the originals thereof), and keep and maintain, all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Lease Receivables.
(t) Seller and Rockford shall deliver notice to Purchaser and Bond
Insurer of any Funding Period Trigger Event or Trigger Event within 2 days of
such party's knowledge thereof.
(u) Within 10 days after each Subsequent Closing Date, Seller
shall deliver to Trustee, Bond Insurer and Purchaser file-stamped copies of all
UCC-1 financing statements (with any applicable Lease Schedules annexed as
exhibits thereto) and UCC-3 assignments described in Exhibit F or other
instruments necessary to perfect the first priority ownership or security
interests granted and assigned by Seller under the Principal Agreements and
Sale Assignments to Trustee for the benefit of the Certificateholders and Bond
Insurer in the Lease Contracts, Equipment and other rights, titles and
interests referred to hereunder (other than UCC-1 financing statements naming
the Lessees under the Lease Contracts as debtors) to be filed or recorded in
all such appropriate places as are required to protect the Trust's interest in
the Lease Contracts, Equipment and such other rights, titles and interests.
(v) Seller shall promptly deliver to Purchaser and Bond Insurer
copies of all reports and registration statements filed by Seller or any
Affiliate of Seller with the Securities and Exchange Commission.
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ARTICLE VII
REPURCHASE OBLIGATION
Section 7.01 Repurchase Upon Breach of Certain Representations and
Warranties.
(a) The representations and warranties of Seller set forth in
Section 3.02 with respect to each Lease Contract and related Equipment shall
continue so long as such Lease Contract remains outstanding. Upon discovery by
Seller, Rockford, Bond Insurer or Trustee that any of such representations or
warranties with respect to any Lease Contract and related Equipment were
incorrect as of the time made, the party making such discovery shall give
prompt notice to the other parties hereto and Bond Insurer. In the event any
breach of a representation or warranty with respect to any Lease Contract and
related Equipment materially and adversely affects the interest of the
Certificateholders or Bond Insurer in such Lease Contract and related Equipment
or the value of such Lease Contract and related Equipment, as determined by
Rockford, Purchaser, Bond Insurer or the Majority Certificateholders and set
forth in an Officer's Certificate, Seller shall eliminate or cure the
circumstance or condition causing the defect within 30 days (or such longer
period as Trustee may in its discretion consent to) after the discovery thereof
or repurchase such Lease Contract and the security interest in the Equipment
covered by such Lease Contract. The price for such repurchase shall be the
Warranty Purchase Amount for the Lease Contract, and shall be deposited by
Seller in cash in the Investment Account on the date of closing of such
repurchase.
(b) It is understood and agreed that the obligation of Seller to
repurchase any Lease Contract as to which a breach by Seller under Section 3.02
occurred and is continuing and to make the payments which may be required by
this Section 7.01 shall, together with (but without duplication) the
indemnification rights contained in the Principal Agreements, constitute the
sole remedies against Seller respecting such breach available to Servicer, the
Trust, the Certificateholders, Bond Insurer or Trustee on behalf of the
Certificateholders and Bond Insurer.
(c) As used herein, the term "Warranty Purchase Amount" shall
mean, with respect to a Lease Contract repurchased hereunder, the Discounted
Lease Contract Balance of such Lease Contract as of the most recent Payment
Date (adjusted, however, to include the present value of any Scheduled Payments
for which Servicer Advances have been made that Servicer in good faith believes
it would have been able to recoup from subsequent Collections under the Lease
Contract), together with interest, to the extent allowed by law, on such amount
at the Discount Pool Rate for such Lease Contract from and including such
Payment Date to and excluding the next succeeding Payment Date.
Section 7.02 Release of Lease Contract. Upon notification from
Seller and confirmation by Trustee that the Warranty Purchase Amount for a
Lease Contract has been deposited in the Investment Account, Trustee shall
release to Seller the related Lease Files and shall execute and deliver such
instruments of transfer or assignment of such Lease Contract and the security
interest in the 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).
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ARTICLE VIII
GRANT OF SECURITY INTEREST
Section 8.01 Grant of Security Interest. To secure the performance
of Seller's obligations hereunder and in addition, in furtherance of the sale
and transfer contemplated hereunder, Seller, pursuant to each Sale Assignment,
assigns and grants to Trustee, for the benefit of the Certificateholders and
Bond Insurer, a first priority lien and security interest in all right, title
and interest of Seller in and to each item of Equipment subject to each Lease
Contract and certain other collateral described therein.
ARTICLE IX
INDEMNITY
Section 9.01 Indemnities.
(a) Seller shall defend and hold harmless, and hereby indemnifies,
Trustee (except to the extent the following result from the gross negligence or
willful misconduct of Trustee), the Trust, Bond Insurer, Purchaser and the
Certificateholders from and against any taxes that may at any time be asserted
against Trustee, the Trust, Purchaser 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, 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 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,
Trustee, Bond Insurer, the Trust, Purchaser 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; (ii) any action taken or failed to be taken as
required by the terms of the Principal Agreements or the Lease Contracts, by
Seller in respect of any of the Lease Contracts or Equipment, (iii) the
failure of Seller to sell the Class A Certificates designated in a Subsequent
Closing Notice to Purchaser after delivery of such Subsequent Closing Notice,
(iv) the commingling of the funds of the Trust with the funds of any other
party, (v) failure to maintain insurance in accordance with Rockford's policies
or (vi) the failure of Seller or Rockford to pay any taxes when due.
(c) Seller shall defend and hold harmless, and hereby indemnifies,
Trustee, the Trust, Purchaser, 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 or the
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Lease Contracts, (ii) any information certified in any schedule or other
writing delivered by Seller hereunder, being untrue in any respect when any
such representation was made or schedule delivered, (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 became a Trust Asset; provided,
however, that Seller shall not be so required to indemnify Trustee, the Trust,
Purchaser 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 VII, except in respect of claims,
demands and causes of action of Lessees, Governmental Agencies, or other third
parties, (iv) any claim of a Lessee including but limited to any product
liability claim, (v) the early termination, rejection or non-assumption of a
Lease Contract relating to a Lease Receivable or (vi) any dispute, claim,
offset or defense of any Lessee to the payment of any Lease Receivable.
(d) Seller shall also indemnify, defend and hold harmless Trustee,
the Trust, Purchaser, 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 (ii) the failure of Seller to furnish to Purchaser any
information known by any officer or agent of Seller and that was not otherwise
known by any officer or agent of Purchaser or any of its Affiliates.
(e) THE INDEMNITIES OF SELLER UNDER THIS SECTION 9.01 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 9.01 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. Payment of any amounts from the Seller under
this Section 9.01 shall be solely from amounts distributed to the Seller
pursuant to Section 4.08(b)(xv) of the Pooling and Servicing Agreement. If
Seller shall have made any indemnity payments to Trustee, Purchaser, the Trust
and the Certificateholders pursuant to this Section 9.01 and Trustee,
Purchaser, the Trust and the Certificateholders thereafter shall collect any of
such amounts from persons other than Seller, Trustee, Purchaser, the Trust or
the Certificateholders, as the case may be, and shall promptly upon receipt
thereof repay such amounts to Seller, without interest.
ARTICLE X
MISCELLANEOUS
Section 10.01 Expenses. Whether or not the transactions contemplated
by the Principal Agreements shall be consummated, Seller and Rockford shall pay
and reimburse Purchaser for Purchaser's cost and expenses incurred in
connection with such transactions, including without limitation, (i)
Purchaser's reasonable out-of-pocket cost and expenses (other than the fees and
expenses of Purchaser's legal counsel) incurred in preparing and reproducing
the Principal Agreements and the
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Certificates, (ii) the reasonable out-of-pocket cost of Purchaser's performance
of and compliance with all agreements and conditions contained in the Principal
Agreements to be performed or complied with by Purchaser (including collateral
audit fees for up to one year (or thereafter, if a Trigger Event or Funding
Period Trigger Event has occurred)) and (iii) Bond Insurer's actual
out-of-pocket expenses, including attorney's fees and expenses and audit fees.
Payment of any amounts from the Seller under this Section 10.01 shall be solely
from amounts distributed to the Seller pursuant to Section 4.08(b)(xv) of the
Pooling and Servicing Agreement.
Section 10.02 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 parties hereto, notwithstanding any investigation
heretofore or hereafter made by any 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 Certificates. The provisions of this Section
10.02 shall survive any termination or cancellation of this Agreement.
Section 10.03 [Intentionally Omitted.]
Section 10.04 [Intentionally Omitted.]
Section 10.05 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 principles 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 10.06 Amendments. 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 parties hereto and with the prior written consent of
Bond Insurer. Trustee shall promptly provide a copy of any amendment to this
Agreement to each Rating Agency.
Section 10.07 Headings. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
Section 10.08 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 747 Chestnut Ridge Road, Suite
300, Chestnut Ridge, New York 10977, (ii) in the case of Rockford, at 1851 East
First Street, Suite 900, Santa Ana, California 92705, (iii) in the case of
Trustee, at the Corporate Trust Office, (iv) in the case of Purchaser, at c/o
CoreStates Bank, N.A., 1345 Chestnut Street; Philadelphia, Pennsylvania 19101,
Attn.: Conduit Administrator, and (v) in the case of Bond Insurer, at 113 King
Street, Armonk, New York 10504 (fax number (914) 765-3810), Attn.: Insurer
Portfolio Management-Structured Finance (IPM- SF). Any party may alter the
address to which communications are to be sent by giving notice
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of such change of address in conformity with the provisions of this Section
10.08 for giving notice and by otherwise complying with any applicable terms of
this Agreement.
Section 10.09 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 or of the
Certificates or rights of the Certificateholders or Bond Insurer thereof.
Section 10.10 Assignment. This Agreement may not be assigned by
Seller or Rockford without the prior consent of the Majority Certificateholders
and 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 10.11 Further Assurances. Seller and Rockford 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 Trustee, Bond Insurer
or Purchaser 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 Trust Assets for filing under the provisions of the
UCC or other relevant laws of any applicable jurisdiction.
Section 10.12 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of Trustee, Bond Insurer or the
Certificateholders, 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 10.13 Third-Party Beneficiary. Bond Insurer is an express
third party beneficiary of this Agreement and is entitled to enforce this
Agreement as if it were a party hereto.
Section 10.14 Intention of Parties. This 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, Rockford and Purchaser 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.
Section 10.15 Non-Petition Covenant. Seller, Rockford, Bond Insurer,
Trustee and Purchaser each hereby covenants and agrees that, prior to the date
that is one year and one day after the payment in full of the Certificates, it
will not institute against, or join any other Person or entity in instituting
against, the Trust, Seller or Purchaser, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under
any federal or state bankruptcy or similar law.
Section 10.16 Bond Insurer Default. If a Bond Insurer Default
occurs and is continuing, Bond Insurer's right to consent hereunder and to
direct the Trustee shall be suspended until remedied
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and, during such suspension, in all provisions of this Agreement where Bond
Insurer's consent or direction is required or permitted, the consent or
direction of the Majority Certificateholders shall be required or permitted
unless the terms of this Agreement require the consent or direction of a larger
number of Holders.
Section 10.17. Limited Recourse. Purchaser agrees that Certificates
shall be limited recourse obligations of Seller payable solely from Trust
Assets in accordance with the Pooling and Servicing Agreement. Bond Insurer,
Rockford, Seller and Trustee each agree that the obligations of Purchaser
hereunder shall be limited recourse obligations of Purchaser payable solely
from funds payable to Purchaser as holder of the Class A Certificates in
accordance with the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
ROCKFORD LEASE FUNDING CORP.
By: _________________________________
Name: Larry Hartmann
Title: President
ROCKFORD INDUSTRIES, INC.
By: _________________________________
Name: Gerry J. Ricco
Title: President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee
By: _________________________________
Name:
Title:
CENTRE SQUARE FUNDING CORPORATION
By: _________________________________
Name:
Title:
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EXHIBITS
A Description of "A" Credit Lease Criteria
B Form of Sale Assignment
C Form of Officer's Certificate (Seller)
D Form of Officer's Certificate (Rockford)
E Form of Opinions of Counsel for Seller and Rockford
F UCC Filing Requirements
G Capital Contribution Agreement
H Historic Delinquency and Loss Data
I Certificate Payment Instructions
J UCC Searches
K Asset Code List