EXHIBIT 10.10
MUNICIPAL TAX-EXEMPT TRUST LEAF 2005
POOLING AND SERVICING AGREEMENT
THIS POOLING AND SERVICING AGREEMENT dated as of July 13, 2005, by and
among LEAF FUNDING, INC., a Delaware corporation, as originator of the Trust and
as seller of the Contracts (as defined below) (the "Seller"), LEAF FINANCIAL
CORPORATION, a Delaware corporation, as servicer of the Contracts ("LFC" or the
"Servicer"), Merrill Lynch, Pierce, Fenner & Smith Incorporated, a Delaware
corporation (the "Initial Purchaser"), and The Bank of New York, a New York
banking corporation, as trustee (in such capacity, the "Trustee") of the
Municipal Tax-Exempt Trust LEAF 2005 (the "Trust").
In consideration of the premises and of the mutual agreements herein
contained, each party agrees on its own behalf, and on behalf of the
Beneficiaries as third-party beneficiaries under this Agreement, as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accrued Interest": For any Contract as of the close of business on the
last day of any calendar month (the "determination month"), the aggregate amount
of interest (calculated for each month at one-twelfth of the Contract Rate and
for partial months in a fractional amount based upon actual days elapsed in such
partial month (not to exceed 30), divided by 30) that has accrued for each
calendar month (or partial month) from and including the Initial Month, to and
including the determination month on the Outstanding Principal Balance as of the
opening of business on the first day of the Collection Period beginning in the
Initial Month.
"Addition Date": Any Business Day on which Additional Contracts are
transferred to the Trustee pursuant to Section 2.01, which shall not occur more
frequently than twice in each calendar month.
"Additional Contract": Any Contract transferred to the Trustee on an
Addition Date pursuant to Section 2.01.
"Additional Cut-Off Date": Each date as of which an Additional Contract
is to be transferred to the Trustee pursuant to Section 2.01, as specified in
the related Assignment.
"Additional Funds": Means the sum of (i) fifty percent (50%) of any
late payment fees, Breakage Fees or other incidental charges or fees collected
with respect to the Contracts and deposited into the Certificate Account
pursuant to the provisions of this Agreement during a particular Collection
Period, plus (ii) upon the occurrence and during the continuance of an Event of
Default, all Eligible Investments Earnings with respect to a particular
Collection Period.
"Advance": The payment required to be made by the Servicer with respect
to any Distribution Date pursuant to Section 3.05, the amount of any such
payment being equal to the aggregate of Scheduled Payments due on the Contracts
during the related Collection Period but not received by the Servicer during the
related Collection Period, other than the aggregate amount of any such
delinquent payments that the Servicer, in its good faith judgment, has
determined would not be ultimately recoverable from the related Contracts.
"Affiliate": With respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person (including, with respect to the
Initial Purchaser, any Entity established by it or its Affiliates). For purposes
of this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement as originally
executed and as amended, restated, modified or supplemented from time to time.
"Applicable Margin": For any Contract, a per annum rate equal to 1.50%.
"Assignment": An instrument of assignment substantially in the form
attached to this Agreement as Exhibit A pursuant to which the Seller transfers
Contracts to the Trustee.
"Available Funds": For any Collection Period, the funds deposited into
the Certificate Account pursuant to Sections 3.01(a)(i), 3.03, 3.05, 3.06 and
10.02 with respect to such Collection Period, net of any Payaheads.
"Beneficiaries": The Certificateholders.
"Book-Entry Certificate": Means each Certificate owned by a
Certificateholder in book-entry form representing a beneficial interest in a
Certificate pursuant to the provisions of Section 6.06.
"Breakage Fees": Any fees, penalties, charges, premiums or other
amounts (other than outstanding principal and accrued interest) required to be
paid by an Obligor with respect to a Contract as a result of its prepayment or
other early termination for any reason.
"Business Day": A day other than (a) a Saturday or Sunday, or (b) a day
on which banking institutions in the city of New York, New York are authorized
or obligated by law, regulation, executive order or governmental decree to
close.
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"Certificate": A certificate representing a fractional undivided
Interest in the assets of the Trust, including, without limitation, the
Contracts. Each Certificate will be issued either as a Book-Entry Certificate
or, if the conditions for issuance thereof are met, a Definitive Certificate.
Definitive Certificates will be issued substantially in the form attached as
Exhibit B hereto.
"Certificate Account": The account established and maintained by the
Trustee pursuant to Section 3.02 in the name of the Trustee for the benefit of
the Certificateholders and designated "Certificate Account, The Bank of New
York, as trustee for the registered holders of Municipal Tax-Exempt Trust LEAF
2005, Adjustable Asset-Backed Certificates - Series A."
"Certificateholder": The Person in whose name a Certificate is
registered in the Certificate Register on the applicable Record Date, except
that, solely for the purposes of giving any consent, waiver, request or demand
pursuant to this Agreement, any Certificate owned by the Seller, the Servicer or
any Affiliate of any of them shall not have any right to participate in giving
any such consent, request, waiver or demand and the Interest evidenced thereby
shall not be taken into account in determining whether the requisite Interest
necessary to effect any such consent, request, waiver or demand has been
obtained; provided, however, that in determining whether the Trustee shall be
protected in relying upon any such consent, waiver, request or demand, only
Certificates which a Responsible Officer of the Trustee knows to be so owned
shall be so disregarded.
"Certificate Interest Rate": With respect to any Collection Period, a
per annum interest rate equal to the weighted average of the Minimum Contract
Rates of all Contracts during the related Collection Period.
"Certificate Owner": For purposes of Section 2.04 and 4.02, the
beneficial owner of any Certificate (including an Entity, the assets of which
include any Certificate, but not including a holder of a beneficial interest in
such Entity).
"Certificate Register": The register maintained pursuant to Section
6.02(a).
"Claim Notice": The meaning ascribed to such term in Section
2.04(a)(iv).
"Closing Date": The Initial Closing Date and each Addition Date.
"Code": Internal Revenue Code of 1986, as amended.
"Collection Period": With respect to any Distribution Date, the period
commencing on the first day of the calendar month preceding the calendar month
in which such Distribution Date occurs, and ending on the last day of the
calendar month preceding the calendar month in which such Distribution Date
occurs (or, with respect to the first Collection Period, commencing on the
Initial Closing Date and ending on the last day of the calendar month in which
the Initial Closing Date occurs).
"Collections": All payments made by or on behalf of Obligors and
Insurers under the Contracts (including, without limitation, payments in respect
of Monthly Interest, Monthly Principal, Retained Items, Additional Funds,
Payaheads and any recoupments and payments in respect of Physical Damage
Insurance Policies or other insurance covering the Equipment).
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"Contract Files": The documents pertaining to a Contract and delivered
to the Trustee in accordance with Section 2.01 or otherwise held by the Servicer
or its agents, as custodian, or the Trustee or its agents, including all
documents relating to the Contract delivered by the Seller to either the
Servicer or its agents, as custodian, or the Trustee or its agents in connection
with the purchase of the Contract from the Seller.
"Contract Rate": The rate stated in a Contract (and/or certified to by
the Seller to the Trustee in a Sale Certificate prior to each Contract being
purchased by the Trust) at which interest accrues on the Outstanding Principal
Balance of the Contract pursuant to the terms thereof. The Contract Rate shall
be expressed as a percentage rate per annum.
"Contracts": The rights and benefits (but not the obligations) of the
Seller under certain (i) state and local government installment payment master
agreements, (ii) term lease master agreements and (iii) certain state and local
government financing agreements or similar contracts, in each case relating to
Equipment to be acquired and used by the Obligor, transferred and assigned to
the Trustee pursuant to Section 2.01 and from time to time held as a part of the
Trust (other than those rights and benefits under Contracts which are Purchased
Contracts as of the last day of the Collection Period in which they so become
Purchased Contracts). The Contracts proposed to be sold to the Trust on each
Closing Date will be listed in both the Sale Certificate and the computer
diskette or electronic spreadsheet file relating to such Contracts and delivered
by the Seller to the Trustee on or before each Closing Date.
"Corporate Trust Office": The office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered. At the date of the execution of this Agreement, such
office is located at 101 Barclay Street, 8W, New York, NY 10286, Attention:
Asset Backed Securities Group. The Trustee may notify the Certificateholders and
the Servicer of a change of address from time to time hereafter.
"Credit Rating": The rating of an Obligor's long term, unsecured and
unsubordinated indebtedness or deposits as provided by Moody's or S&P, as
applicable, from time to time.
"Cut-Off Date": With respect to the Initial Contracts, the Initial
Cut-Off Date and with respect to each Additional Contract, the related
Additional Cut-Off Date.
"Defaulted Contract": For any Collection Period, a Contract with
respect to which, as of or prior to the last day of such Collection Period, both
(a) any of the following has occurred: (i) such Contract is more than
one-hundred twenty (120) days delinquent, (ii) a Nonappropriation has occurred
or (iii) an Insolvency Event has occurred with respect to the Obligor on such
Contract, and (b) the Servicer, after exercising reasonable commercial efforts,
at least consistent with Servicer's then current policies and procedures, to
collect all amounts due under such Contract, has terminated such Contract in
accordance with its terms after determining that no further amounts will be
recoverable with respect to such Contract; provided that in no event shall a
Purchased Contract be deemed a Defaulted Contract.
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"Definitive Certificate": Each Certificate owned by a Certificateholder
in definitive, fully registered form without interest coupons as set forth in
Section 6.01 and Section 6.06.
"Determination Date": The twelfth day of each month, or if such day is
not a Business Day, the next succeeding Business Day, commencing in the month
following the month in which the Initial Closing Date occurs.
"Distribution Date": The twenty-fifth day of each month, or if such day
is not a Business Day, the next succeeding Business Day, commencing in the month
following the month in which the Initial Closing Date occurs.
"Distribution Date Statement": The written statement relating to each
Distribution Date prepared by the Servicer and verified in part by the Trustee
as described in Section 4.02.
"Eligibility Criteria": The criteria set forth in Exhibit D hereto
which each Contract must meet in order to be eligible for purchase by the Trust,
unless in each specific instance where a Contract does not meet one or more of
the Eligibility Criteria at the time of purchase, the written consent of the
Majority Certificateholders to such failure to meet each criterion not being met
by such Contract is obtained prior to purchase of such Contract by the Trust.
"Eligible Investments": Book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence:
(a) obligations of the United States or any agency thereof,
provided such obligations are guaranteed as to the timely payment of
principal and interest by the full faith and credit of the United
States;
(b) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia then assigned
the highest rating by Moody's and S&P;
(c) interests in any money market fund (including, without
limitation, a tax-exempt money market fund) which at the date of
investment in such fund has the highest fund rating by Moody's and a
rating of AAAm or AAAmg by S&P (which may include money market funds
for which the Trustee may receive a fee as advisor, transfer agent,
administrator or for performing a similar function);
(d) commercial paper which at the date of investment has the
highest unsecured short-term debt rating by each of Moody's and S&P
(including, without limitation, commercial paper meeting the foregoing
criteria issued by any of the Seller, the Servicer or the Trustee);
(e) certificates of deposit, demand or time deposits, federal
funds or banker's acceptances issued by any depository institution or
trust company incorporated under the laws of the United States or of
any state thereof (or any U.S. branch or agency of a foreign bank) and
subject to supervision and examination by federal or state banking
authorities, provided that the short-term unsecured deposit obligations
of such depository institution or trust company are then rated at least
P-1 by Moody's and A-1 by S&P;
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(f) demand or time deposits of, or certificates of deposit
issued by, any bank, trust company, savings bank or other savings
institution, which deposits are fully insured by the Federal Deposit
Insurance Corporation, provided that the long-term unsecured debt
obligations of such bank, trust company, savings bank or other savings
institution are rated at the date of investment at least Aa2 by Moody's
and AA- by S&P;
(g) repurchase obligations with respect to any security
described in clauses (a), (b) or (h) hereof or any other security
issued or guaranteed by the Federal National Mortgage Association or
any agency or instrumentality of the United States which is backed by
the full faith and credit of the United States, in either case entered
into with a federal agency or a depository institution or trust company
(acting as principal) described in clause (e) above;
(h) interests in any open-end or closed-end management type
investment company or investment trust (x) registered under the
Investment Company Act of 1940, (y) the portfolio of which is limited
to the obligations of, or guaranteed by, the United States and to
agreements to repurchase such obligations, which agreements, with
respect to principal and interest, are at least 100% collateralized by
such obligations marked to market on a daily basis and (z) the
investment company or investment trust shall take delivery of such
obligations either directly or through an independent custodian
designated in accordance with the Investment Company Act of 1940;
(i) bonds or other obligations of any state of the United
States of America or of any agency, instrumentality or local
governmental unit of any such state (x) which are not callable at the
option of the obligor or otherwise prior to maturity or as to which
irrevocable notice has been given by the obligor to call such bonds or
obligations on the date specified in the notice, (y) timely payment of
which is fully secured by a fund consisting only of cash or obligations
of the character described in paragraph (a) or (b) of this definition
of "Eligible Investments," which fund may be applied only to the
payment when due of such bonds or other obligations and (z) rated in
the highest long-term rating categories by Moody's, S&P and Fitch (if
rated by Fitch) and one of the two highest short-term rating categories
by Moody's, S&P and Fitch (if rated by Fitch); and
(j) such other investments as are acceptable to the Majority
Certificateholders.
Eligible Investments, if otherwise satisfying the criteria set forth above, may
be obligations of, or may be purchased by or through, the Trustee or its
Affiliates.
"Eligible Investments Earnings": With respect to any Collection Period,
any income and gain, less the amount of any losses, realized on all Eligible
Investments in the Certificate Account.
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"Entity": A pass-through entity for federal income tax purposes (such
as a grantor trust or partnership).
"Equipment": To the extent subject to a Contract, the computer
equipment or other property which is financed by an Obligor under any Contract,
together with all additions, modifications or upgrades thereto and all
substitutions and replacements thereof.
"Equipment Modification": The meaning ascribed to such term in Section
3.01(a)(i).
"Event of Default": An event described in Section 8.01(a).
"Final Maturity Date": The meaning ascribed to such term in Section
10.01(a).
"Fitch": Fitch, Inc.
"Gross-Up Amount": The amount calculated pursuant to Section
2.04(b)(iii).
"Indemnity Amount": The amount payable by the Seller as provided in
Section 2.04(b)(i) and (ii).
"Initial Closing Date": The first date on which Contracts are purchased
by the Trust pursuant to this Agreement.
"Initial Contracts": The Contracts transferred to the Trustee on the
Initial Closing Date pursuant to Section 2.01.
"Initial Cut-Off Date": The Initial Closing Date.
"Initial Month": For any Contract as of the last day of any calendar
month (the "determination month"), the later of (a) the calendar month in which
a Scheduled Payment was last due on the Contract, but not earlier than July,
2005, and (b) the calendar month following the month in which a Prepayment was
last deemed to have been collected with respect to such Contract (unless such
following calendar month is the determination month, in which case clause (a)
shall apply), but not earlier than July, 2005.
"Initial Purchaser": Merrill Lynch, Pierce, Fenner & Smith
Incorporated, a Delaware corporation.
"Insolvency Event": The occurrence of any of the following: (i) an
Obligor ceases to be able to, or admits in writing its inability to, pay its
debts when and as they become due; (ii) an Obligor files, or consents by answer
or otherwise to the filing against it or any substantial portion of its assets
of, a petition for relief or reorganization or arrangement or any other petition
in bankruptcy or for liquidation, or takes advantage of any bankruptcy,
insolvency, reorganization, moratorium or other similar law of any jurisdiction;
(iii) an Obligor makes an assignment for the benefit of its creditors; (iv) the
entry of a decree or order by a court of competent jurisdiction for the
appointment of a custodian, receiver, trustee, liquidator or other officer with
similar powers with respect to the Obligor or with respect to any substantial
part of the Obligor's assets, or for the winding up or liquidation of the
Obligor's affairs, and either (A) the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days, or (B) the Obligor's
consent to any such decree or order; or (v) an Obligor is adjudicated as
insolvent or to be liquidated.
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"Insurers": Insurers issuing Physical Damage Insurance Policies or
other insurance covering the Equipment.
"Interest": Each Certificateholder's (or, for purposes of Section 2.04,
each Certificate Owner's) fractional undivided interest in the Contracts. A
Certificateholder's (or, for purposes of Section 2.04, a Certificate Owner's)
Interest equals the Outstanding Principal Amount of the Certificate held by such
Certificateholder (or Certificate Owner) divided by the aggregate Outstanding
Principal Amount of all Certificates.
"Interest Components of Scheduled Payments": The portion of Scheduled
Payments that, according to the Servicer's customary procedures (including,
without limitation, calculation based upon a 360-day year made up of twelve
30-day months), and based on the accrual method, is allocable to interest on the
related Contract.
"Interest Distribution Amount": With respect to the Certificates and
any Distribution Date, the sum of (i) the aggregate amount of interest accrued
at the Certificate Interest Rate during the Collection Period ending immediately
prior to such Distribution Date on an amount equal to the aggregate Pool Balance
as of the first day of such Collection Period, minus (ii) the sum of (A) the
amount paid to the Trustee on such Distribution Date pursuant to Section
3.09(b)(ii) and (B) the amounts distributed pursuant to Section 3.09(b)(iii) and
(iv) on such Distribution Date, plus (iii) any Unpaid Interest Amount. The
Interest Distribution Amount will be calculated based upon a 360-day year made
up of twelve 30-day months.
"Interest Portion": The portion of any Prepayment that, according to
the Servicer's customary procedures (including, without limitation, calculation
based upon a 360-day year made up of twelve 30-day months), and based on the
accrual method, is allocable to interest on the related Contract. Pursuant to
the Servicer's customary procedures, any Prepayment, including a partial
Prepayment, is required to include accrued but unpaid interest on the entire
Outstanding Principal Balance of the Contract through the date such Prepayment
is collected.
"Interest Shortfall": With respect to the Certificates and any
Distribution Date, the amount by which the amount calculated in accordance with
clauses (i) and (ii) of the definition of Interest Distribution Amount exceeds
the amount of interest actually distributed on the Certificates on such
Distribution Date (whether out of the Certificate Account or out of the Reserve
Account).
"Investment Notice": The document described as such in Section
5.02(a)(i).
"LFC": LEAF Financial Corporation, a Delaware corporation.
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"Lien": Any mortgage, lien, pledge, charge, security interest or other
encumbrance of any kind. For the purpose hereof, a Person shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Lockbox": The post office box to which payments representing
Collections (other than Wire Payments) are to be mailed as set forth in Section
3.03(a).
"Lockbox Account": The account described as such in Section 3.03(b).
"Majority Certificateholders": Certificateholders representing more
than 50% of the aggregate Outstanding Principal Amount of the Certificates.
"Merrill Lynch": Merrill Lynch, Pierce, Fenner & Smith Incorporated, a
Delaware corporation.
"Minimum Contract Rate": For each Contract proposed to be purchased by
the Trust on each Closing Date, a per annum rate of interest equal to (a) with
respect to each Contract with an Original Principal Balance less than $100,000,
the Municipal Index Rate applicable to the average life of such Contract as of
the first day of the calendar month in which the Closing Date occurs, plus (i)
the Applicable Margin and (ii) the Premium Margin (if any), (b) with respect to
each Contract with an Original Principal Balance of $100,000 or more, the
Municipal Index Rate applicable to the average life of such Contract as of such
Closing Date, plus (i) the Applicable Margin and (ii) the Premium Margin (if
any), or (c) notwithstanding the foregoing, if the Seller and the Majority
Certificateholders have previously agreed in writing to a specific Minimum
Contract Rate with respect to a Contract, the Minimum Contract Rate for such
specified Contract shall be such previously agreed amount, so long as any
expiration date provided for in such agreement has not passed as of the date
that the Minimum Contract Rate is being determined; provided, however, that the
Majority Certificateholders may notify the Trustee and Servicer of a revised
Minimum Contract Rate, or the method of determining same, at any time and from
time to time in order to reflect the occurrence of unusual market conditions or
excess volatility, and such revised Minimum Contract Rate or method of
determining same shall be effective as of the first day of the calendar month
immediately following the month in which the Trustee and Servicer have received
written notice thereof from the Majority Certificateholders; provided, further,
that if the Majority Certificateholders subsequently determine (in their sole
discretion) that the unusual market conditions or excess volatility resulting in
the revised Minimum Contract Rate or method of determining same have ceased,
they shall give notice thereof to the Trustee and Servicer, and the Minimum
Contract Rate and/or method of determining same shall thereupon return to the
original Minimum Contract Rate as of the first day of the calendar month
immediately following the month in which the Trustee and Servicer have received
written notice thereof from the Majority Certificateholders.
"Monthly Interest": For any Distribution Date and each
Contract, the sum without duplication of (a) the Interest Component of any
Scheduled Payment due and received by the Servicer on such Contract during the
related Collection Period, including any Advances with respect thereto, plus (b)
the Interest Component of any Scheduled Payments due on such Contract during
prior Collection Periods, but unpaid by the Obligor and not advanced against by
the Servicer, and received by the Servicer during the related Collection Period,
plus (c) the Interest Portion of Prepayments received by the Servicer during the
related Collection Period (but in the case of any amounts described in clauses
(a), (b) and (c), only to the extent that the aggregate of such amounts does not
exceed the Accrued Interest in respect of such Contract as of the last day of
the calendar month immediately preceding the month in which such Distribution
Date occurs).
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"Monthly Principal": For any Distribution Date and each Contract, the
sum without duplication of (a) the Principal Component of the Scheduled Payment
due on such Contract during the related Collection Period and received by the
Servicer during the related Collection Period, including any Advances with
respect thereto, plus (b) the Principal Component of Scheduled Payments due on
such Contract, but unpaid by the Obligor and not advanced against by the
Servicer, during prior Collection Periods and received by the Servicer during
the related Collection Period, plus (c) the Principal Portion of Prepayments
received by the Servicer during the related Collection Period.
"Moody's": Moody's Investors Service, Inc.
"Municipal Index Rate": With respect to any Contract for which the
Minimum Contract Rate is being determined, the yield, expressed as a percentage,
as of the date of determination for a high grade municipal bond with a maturity
equal to the remaining average life of the Contract for which a Minimum Contract
Rate is being determined, as set forth in the Municipal Market Data Line
published on page {MMDL} by Bloomberg Financial Services, Inc. on the page
entitled "AAA Municipal Yields" and in the row for a maturity equal to the
remaining average life of the Contract for which a Minimum Contract Rate is
being determined.
In the event Municipal Market Data no longer announces or publishes the
"AAA Municipal Yields" yield curve rate, the Municipal Index Rate shall be
determined by using the Consensus Scale Rate for a maturity equal to the
remaining average life of the Contract for which a Minimum Contract Rate is
being determined. The Consensus Scale yield curve is published daily by
Municipal Market Advisors on their web site (http://www.theconsensus.com/). The
yield curve used for determining the Municipal Index Rate will be the "Median"
of "The Consensus Mid-Market" curve. In the event Municipal Market Advisors no
longer announces or publishes the Consensus Scale, the Municipal Index Rate
shall be determined in good faith by the Majority Certificateholders and
provided in writing to the Trustee and the Seller.
"Nonappropriation": The failure of the governing body of any Obligor to
appropriate funds sufficient for such Obligor to make all or any portion of the
Scheduled Payments pursuant to the related Contract as provided in such
Contract.
"Nonappropriation Provision": A provision in a Contract which permits
the Obligor to terminate the Contract as a direct result of the occurrence of a
Nonappropriation.
"Obligors": The original obligors under the Contracts and their
successors and assigns.
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"Officer's Certificate": A certificate signed by a Responsible Officer
of the Servicer, the Trustee, the Seller, or by any Certificateholder, as
applicable.
"Opinion of Counsel": A written opinion signed by legal counsel
satisfactory to the Trustee, which counsel may be an employee of or counsel to
the Trustee, the Servicer, the Seller or a Certificateholder.
"Original Certificate": The meaning ascribed to such term in Section
5.01(a).
"Original Pool Balance": The sum of (a) the aggregate Outstanding
Principal Balance of the Initial Contracts transferred to the Trust as of the
Initial Cut-Off Date, plus (b) the aggregate Outstanding Principal Balance of
all Additional Contracts transferred to the Trust as of their respective
Additional Cut-Off Dates.
"Original Principal Amount": Means, with respect to a Definitive
Certificate, the amount shown on the face thereof, and with respect to a
Book-Entry Certificate, the amount recorded as such with respect to the
Certificateholder in the Certificate Register.
"Outstanding Advances": With respect to any Contract, from time to
time, the aggregate amount calculated as such pursuant to Section 3.05.
"Outstanding Principal Amount": For any Certificate on any date of
determination, the outstanding principal amount of such Certificate after giving
effect to both: (a) all principal payments allocable thereto made with (i)
distributions of Monthly Principal, (ii) payments out of the Reserve Account as
provided by Section 3.09(d) and (iii) payments out of the Pre-Funding Account as
provided by Section 5.04(d), as well as (b) the writing-off of a portion of such
principal as provided in Section 3.09(d)(ii), all as provided by Servicer and
verified as to mathematical accuracy by the Trustee, in its capacity as
calculation agent hereunder. The Outstanding Principal Amount on any date of
determination for any Certificate shall be as reflected on the books and records
of the Trustee.
"Outstanding Principal Balance": With respect to any Contract and any
date of determination, 100% of the aggregate amount of all Principal Components
of Scheduled Payments due after such date and remaining unpaid.
"Payahead": For any Contract, any payment by the Obligor of one or more
Scheduled Payments (or any portion thereof) due after the date on which such
payment is made, which, in accordance with the Servicer's customary procedures,
is applied to make the Scheduled Payment(s) on the date(s) due.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
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"Physical Damage Insurance Policy": Any fire, property damage or other
hazard insurance policy or program maintained by any Person (including the
Seller or the Obligor) with respect to any Equipment.
"Pool Balance": As of the opening of business on any date of
determination, the sum of the Outstanding Principal Balances of each Contract as
of such date, determined after taking into account, without duplication, (a) the
Principal Components of Scheduled Payments collected in preceding Collection
Periods, (b) the Principal Portion of Prepayments collected in preceding
Collection Periods, and (c) the writing-off of the Outstanding Principal Balance
of Defaulted Contracts which are not Purchased Contracts.
"Pool Factor": As of the opening of business on the first day of any
Collection Period, the decimal number equal to the Pool Balance as of such day
divided by the Original Pool Balance as of such day, rounded to seven decimal
places, with 0.00000005 or higher being rounded up to 0.0000001.
"Pre-Funding Account": The account established and maintained by the
Trustee pursuant to Section 5.04 in the name of the Trustee for the benefit of
the Certificateholders and designated "Pre-Funding Account, The Bank of New
York, as trustee for the registered holders of Municipal Tax-Exempt Trust LEAF
2005, Adjustable Asset-Backed Certificates - Series A."
"Pre-Funding Account Earnings": With respect to any Collection Period,
any income and gain, less the amount of any losses, realized on all Eligible
Investments in the Pre-Funding Account.
"Premium Amount": For any purchase of Contracts from the Seller by the
Trust on a Closing Date, an amount provided by the Seller to the Trustee in the
Sale Certificate relating to such Closing Date equal to, with respect to each
Contract, the amount (if any) to be paid by the Seller to the vendor(s) of
Equipment relating to such Contract on the date of purchase in excess of the
purchase price of such Equipment. The Premium Amount relating to each Contract
shall be reduced on each Distribution Date by any Premium Interest Amount paid
to the Certificateholders on such date. Notwithstanding anything herein to the
contrary, the Premium Amount relating to each Contract on any Closing Date shall
not exceed two percent (2%) of the Outstanding Principal Balance of such
Contract as of such Closing Date.
"Premium Interest Amount": With respect to each Distribution Date, an
amount equal to the amount of accrued interest on the Certificates actually paid
to the Certificateholders on such Distribution Date pursuant to Sections
3.09(b)(v) and 3.09(d), minus the excess of (a) the Interest Distribution Amount
with respect to such Distribution Date over (b) an amount equal to the Interest
Distribution Amount with respect to such Distribution Date, assuming the
Certificate Interest Rate with respect to such Collection Period was calculated
as the weighted average of the Minimum Contract Rates of all Contracts during
such Collection Period, excluding the Premium Margin from each Minimum Contract
Rate.
"Premium Margin": For any Contract, a per annum interest rate on the
Outstanding Principal Balance of such Contract determined by the Servicer as of
the date such Contract is acquired by the Trust such that, over the period from
the Closing Date when such Contract is acquired by the Trust, to the expiration
of the term of such Contract, and based upon scheduled payments of principal
thereunder, any Premium Amount paid by the Trust to the Seller for such Contract
will be fully amortized.
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"Prepayment": For any Contract, (a) any payment by the Obligor of a
Scheduled Payment or Payments (or a portion thereof) due after the date on which
such payment is made, other than a Payahead, and (b) in the case of a Purchased
Contract, the payment of the Purchase Amount.
"Principal Components of Scheduled Payments": The portion of Scheduled
Payments that, according to the Servicer's customary procedures and based on the
accrual method, is allocable to the principal balance of the related Contract.
"Principal Portion": The portion of any Prepayment that, according to
the Servicer's customary procedures and based on the accrual method, is
allocable to the principal balance of the related Contract.
"Purchase Amount": The amount set forth as such pursuant to Section
2.01(e).
"Purchase Date": The meaning ascribed to such term in Section 5.03.
"Purchased Contract": Any Contract repurchased by the Seller pursuant
to Section 2.01, 2.03, 2.04 or 10.02, or purchased by the Servicer pursuant to
Section 3.01.
"Ramp-up Period": The period from the date hereof through July 31,
2006.
"Record Date": The close of business on the last Business Day of the
calendar month preceding the month of the related Distribution Date.
"Related Documents": With respect to a Contract, the material
documents, if any, delivered to the Seller or Servicer in connection therewith,
including, without limitation, financial statements, governing board resolutions
or minutes of a governing board and opinions of counsel.
"Relevant Distribution Date": The Distribution Date specified in
Section 2.04(c).
"Required Deposit Rating": A rating on short-term deposits of at least
A-1 from S&P, P-1 from Moody's or F-1 from Fitch.
"Reserve Account": The account established and maintained by the
Trustee pursuant to Section 3.04 in the name of the Trustee for the benefit of
the Certificateholders and designated "Reserve Account, The Bank of New York, as
trustee for the registered holders of Municipal Tax-Exempt Trust LEAF 2005,
Adjustable Asset-Backed Certificates - Series A."
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"Responsible Officer": When used with respect to the Servicer or the
Seller, the chairman of the board of directors, any vice chairman of the board
of directors, the chairman of the executive committee, any vice chairman of the
executive committee, the president, any vice president (whether or not
designated by numbers or words added before or after the title "vice
president"), the secretary, the treasurer, any assistant vice president, any
assistant secretary, any assistant treasurer, or any other officer or assistant
officer of the Servicer or the Seller customarily performing functions similar
to those performed by the Persons who at the time shall be such officers,
respectively, and when used with respect to the Trustee, any officer in its
Corporate Trust Department - Structured Finance Unit, including any Vice
President, Managing Director, Assistant Vice President, Secretary, Assistant
Secretary, Corporate Trust Officer or any other officer performing functions
similar to those performed by such officers or any Person to whom any corporate
trust matter is referred to by the Trustee because of such Person's knowledge of
and familiarity with the particular subject, in each case to the extent such
officer or Person has responsibility for performance of any of the Trustee's
obligations hereunder.
"Retained Item": With respect to a Contract, (i) any principal amount
due on such Contract prior to the related Cut-Off Date and any interest accrued
on such Contract prior to the day immediately preceding the related Cut-Off
Date, (ii) any amounts described in Section 3.08 and (iii) fifty percent (50%)
of any late payment fee, Breakage Fee or other incidental charge or fee
collected with respect to such Contract; provided, however, that the amount of
Retained Items calculated pursuant to this clause (iii) may be reduced on one or
more Distribution Dates as provided in Section 3.09(a)(ii).
"S&P": Standard & Poor's Ratings Group, a Division of The McGraw-Hill
Companies, Inc.
"Sale Certificate": A certificate executed by a duly authorized officer
of the Seller on or prior to each Closing Date in a format and containing the
information approved in writing by the Majority Certificateholders from time to
time, but including, without limitation, the following information with respect
to each Contract proposed to be purchased by the Trust on the applicable Closing
Date, determined as of such Closing Date: (i) date of execution and Contract
number, (ii) final maturity date, (iii) average life, (iv) Obligor, (v)
Outstanding Principal Balance, (v) Contract Rate, (vi) payment frequency, (vii)
Equipment related to the Contract, (viii) vendor of Equipment, (ix) Obligor
address and (if different) location to which Equipment will be delivered, (x)
Premium Amount, (xi) purchase price to be paid for such Contract by the Trust
calculated in accordance with Section 2.01, (xii) Applicable Margin, (xiii)
Premium Margin, (xiv) Minimum Contract Rate and (xv) a certification that such
Contract fully satisfies all of the Eligibility Criteria, or if it does not, an
express statement that certain Eligibility Criteria are not met by the Contract
and a specific listing of all such Eligibility Criteria not met by the Contract.
"Scheduled Payment": With respect to a Contract, any payment required
to be made by the Obligor.
"Seller": LEAF Funding Inc., a Delaware corporation.
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"Servicer": LFC, or its successor in interest or any Successor Servicer
appointed as herein provided.
"Servicer Breaches": The meaning ascribed to such term in Section
7.01(b).
"Service Transfer": The termination of the Servicer as servicer
hereunder as described in Section 8.01(b).
"Servicing Fee": The fee payable to the Servicer as provided in Section
3.11(a).
"Servicing Fee Rate": A rate equal to 0.50% per annum.
"Servicing Functions": The functions of the Servicer hereunder as
described in Section 8.01(b).
"Servicing Officer": Any officer of the Servicer or any agent of the
Servicer involved in, or responsible for, the administration or servicing of the
Contracts whose name appears on a list of servicing officers furnished to the
Trustee by the Servicer in an Officer's Certificate, as such list may from time
to time be amended.
"Subservicer": Any Person to which the Servicer from time to time may
delegate all or any part of its servicing obligations hereunder.
"Successor Servicer": The successor to the Servicer as defined in
Section 8.01(c).
"Tax Rate": With respect to any Certificate Owner for any calendar
month, the lesser of (a) the highest stated statutory marginal corporate federal
income tax rate on taxable income in effect during the calendar year (or portion
thereof) in which such calendar month occurs, expressed as a decimal
(disregarding the effect of disallowed deductions or similar items on such
marginal rate) and (b) 0.35.
"Tax Return Preparer": The Initial Purchaser or such other Person as
may be designated as such by the Servicer by notice to the Trustee.
"Transition Expenses": All reasonable costs and expenses incurred by a
Successor Servicer in connection with a transfer of servicing pursuant to
Section 8.02 to the extent not paid by the outgoing Servicer pursuant to Section
8.01(d).
"Trust": The Municipal Tax-Exempt Trust LEAF 2005 created by this
Agreement, the corpus of which consists of the items listed in Section 2.01.
"Trust Corpus" The meaning ascribed to such term in Section 2.01(a).
"Trustee": The Bank of New York, a New York banking corporation, as
Trustee hereunder, or its successor in interest or any successor trustee
appointed as herein provided.
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"Unpaid Interest Amount": With respect to the Certificates and any
Distribution Date, the sum of the Interest Shortfalls for the Certificates from
each prior Distribution Date, plus interest on the amount of each such Interest
Shortfall from the Distribution Date where it was initially determined until the
Distribution Date on which it was ultimately paid at the applicable Certificate
Interest Rate(s) during such period(s), minus amounts paid to the Certificates
with respect to the Unpaid Interest Amount (as part of the Interest Distribution
Amount) on all previous Distribution Dates.
"Wire Payments": The meaning ascribed to such term in Section 3.03(a).
SECTION 1.02. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography and other means of reproducing words in a
permanent visible form; references to agreements and other contractual
instruments include all subsequent amendments thereto or changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including " means "including without limitation".
SECTION 1.03. Calculation of Interest. All calculations of interest
accruing on both the Contracts and the Certificates provided for herein shall be
made on the basis of a 360-day year made up of twelve 30-day months.
ARTICLE II
Conveyance of the Contracts;
Original Issuance of the Certificates;
SECTION 2.01. Conveyance of the Contracts.
(a) The Seller shall sell, transfer, assign, deliver, set over
and convey to the Trustee, in trust for the sole benefit of the
Certificateholders, finally without recourse or reversion, all right, title and
interest of the Seller in and to (i) on the Initial Closing Date, the Initial
Contracts as of the Initial Cut-Off Date, and on each Addition Date, the
Additional Contracts as of the related Additional Cut-Off Date, and all moneys
due and to become due thereunder on or after the Initial Cut-Off Date or
Additional Cut-Off Date, as the case may be, (ii) the Equipment, (iii) any
proceeds with respect to the Contracts from claims on any Physical Damage
Insurance Policy or other insurance covering the Equipment and (iv) the proceeds
of any and all the foregoing (collectively, the "Trust Corpus"). The sale by the
Seller will not constitute and is not intended to result in an assumption by the
Trustee or any Certificateholder of any obligation of the Seller to the Obligors
or any other Person in connection with the Contracts, the Contract Files, any
Physical Damage Insurance Policy or other insurance covering the Equipment or
under any agreements or instruments relating to any of the foregoing. In
consideration for each such sale of the Trust Corpus, the Trustee, as paying
agent, shall pay to the Seller on the Closing Date, cash in an amount equal to
the sum of (i) 100% of the Outstanding Principal Balance of the Contracts
transferred to the Trust on such Closing Date and (ii) the Premium Amount.
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Notwithstanding the foregoing, however, the Trust shall not be
obligated to purchase any Contracts on any Closing Date, and the Trustee shall
not purchase them, unless a Responsible Officer of the Trustee has confirmed
each of the following:
(i) the Trustee has received all documents and
materials from the Seller, the Servicer and their counsel described in
Section 2.01(b) which are required to be delivered to the Trustee
including, without limitation, the Sale Certificate from the Seller
with respect to the proposed purchase of Contracts on such Closing
Date;
(ii) the Trustee has given the Certificateholders
written notice (together with a copy of the Sale Certificate (and
attachments thereto) and computer diskette or electronic spreadsheet
file provided to the Trustee by the Seller with respect to such
Contracts) of its intent to purchase such Contracts on such Closing
Date at least two (2) Business Days' prior to such Closing Date (unless
this requirement is waived by the Majority Certificateholders);
(iii) if the Sale Certificate expressly states that
any of the Contracts proposed to be purchased by the Trust on such
Closing Date do not meet one or more of the Eligibility Criteria, the
Trustee has received the prior written consent of the Majority
Certificateholders to the purchase of each such Contract not meeting
all of the Eligibility Criteria, including, with respect to each such
Contract being consented to, a specific reference in such consent to
each of the Eligibility Criteria not being met by such Contract;
(iv) if the Sale Certificate proposes the purchase of
Contracts with an aggregate Outstanding Principal Balance in excess of
$1,000,000 on such Closing Date, the Trustee has received the prior
written consent of the Majority Certificateholders to the purchase of
all such Contracts; and
(v) no Responsible Officer of the Trustee has
received written notice from the Majority Certificateholders that they
wish to liquidate and withdraw all funds on deposit in the Pre-Funding
Account as provided in Section 5.04(d) on a date earlier than the
earliest date set forth on any of the purchase orders received from the
Seller with respect to the Equipment relating to such Contract, and
either
(A) the purchase price to be paid for such
Contracts set forth in the Sale Certificate does not exceed
the balance on deposit in the Pre-Funding Account as of the
Closing Date or
(B) if additional Certificates are being
purchased on such Closing Date, (1) the purchase price to be
paid for such Contracts set forth in the Sale Certificate does
not exceed the balance on deposit in the Pre-Funding Account
as of the Closing Date plus the aggregate Outstanding
Principal Amount of all Certificates to be purchased on such
Closing Date and (2) the Trust has received the full amount of
the purchase price for all Certificates being purchased on
such Closing Date.
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(b) In connection with the transfer and assignment of the
Contracts on each Closing Date, on or prior to each Closing Date, the Seller,
the Servicer and their counsel shall deliver to the Trustee (or in the case of
(iv), to the Servicer (or its Subservicer) as custodian on behalf of the
Trustee, to be returned to the Trustee upon its written request) with respect to
the Contracts proposed to be sold to the Trust on such Closing Date:
(i) an executed Sale Certificate (and, if applicable,
attached thereto copies of any written agreement(s) among the Seller
and the Majority Certificateholders setting forth the Minimum Contract
Rates(s) of any Contracts(s) determined pursuant to clause (b) of the
definition of "Minimum Contract Rate");
(ii) a computer diskette or electronic spreadsheet
file providing information with respect to each of the Contracts as
described in the definition of "Contracts" above, including, without
limitation, all information appearing in the Sale Certificate;
(iii) an executed Assignment;
(iv) the Contract Files, including the original
executed Contracts (with photocopies of same and a written
certification that such photocopies represent a true and
complete copy of all such Contract Files being provided to the
Trustee), which Contracts shall identify the related Equipment
by, at a minimum, model number and serial number;
(v) on the Initial Closing Date only, filed stamped
copies of the UCC-1 financing statements described in Sections
2.01(c) and 11.15;
(vi) on the Initial Closing Date only, an executed
opinion from counsel for the Seller, addressed to the Initial
Purchaser and the Trustee and dated the Initial Closing Date,
satisfactory in form and substance to the Initial Purchaser,
regarding the true sale of the Contracts by the Seller to the
Trust, for the benefit of Certificateholders, on such Initial
Closing Date and each subsequent Closing Date (with an
original execution copy of such opinion also being delivered
to the Initial Purchaser on the Initial Closing Date);
(vii) a certificate of each of the Seller and
Servicer, signed by an executive officer thereof, dated the
applicable Closing Date, to the effect that:
(A) the representations and warranties of
the Seller and Servicer in this Agreement are true and correct
in all material respects on and as of the Closing Date with
the same effect as if made on such date, and each of the
Seller and Servicer has complied with all the agreements,
performed all the obligations and satisfied all the conditions
on its part to be complied with, performed or satisfied under
this Agreement at or prior to the Closing Date; and
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(B) since the date of the Servicer's most
recent audited financial statements, there has been no
material adverse change, or any development respecting a
prospective change, in the condition (financial or other) of
the Servicer or the Seller, whether or not arising from
transactions in the ordinary course of business; and
(C) (solely in the Servicer's certificate),
no event with respect to the Servicer has occurred and is
continuing which would constitute an Event of Default or an
event that with notice or lapse of time or both would become
an Event of Default under this Agreement.
(viii) photocopies of all purchase orders issued by
the Seller to all vendors of the Equipment relating to such
Contracts, together with a written certification that such
photocopies represent a true and complete copy of all such
purchase orders; and
(ix) such other documents as the Trustee may
reasonably request.
(c) Prior to the Initial Closing Date, the Seller, for the
benefit of the Trustee, shall, in connection with the conveyance described in
Section 2.01(a), deliver to the Servicer, the financing statements described in
Exhibit C. The Seller shall also arrange for the delivery to the Servicer or its
assignee, as applicable, of any appropriate Uniform Commercial Code continuation
statements as may be necessary in connection with the financing statements
referenced in the foregoing sentence. The Servicer shall cause such UCC-1
financing statements to be filed or recorded in all such appropriate places, and
shall take all other actions necessary to perfect (i) the first priority
ownership interests granted by the Seller to the Trustee in the Trust Corpus
pursuant to Section 2.01 and (ii) the first priority security interests granted
by the Seller to the Trustee in the Trust Corpus pursuant to Section 11.15. The
Servicer shall provide file stamped copies of all such UCC-1 financing
statements to the Trustee. The Servicer shall arrange for filing any appropriate
Uniform Commercial Code continuation statements or other appropriate forms,
notices or documents in connection with the ownership interests and security
interests granted by the Seller to the Trustee hereunder, and shall provide file
stamped copies of same to the Trustee. The Trustee shall have no obligation to
file or record any instrument or other document, including any UCC-1 financing
statement or continuation statement, and shall have no liability for the failure
to perfect or the loss of perfection of any security interest in the Trust
Corpus.
(d) All other documents or records delivered by the Seller in
connection with the sale, transfer or assignment of the Contracts will be
retained by or on behalf of the Servicer (or its Subservicer), as custodian on
behalf of the Trustee, and will be delivered to the Trustee upon written request
of the Trustee.
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(e) If any document or documents constituting a part of a
Contract File are defective with respect to any Contract in any respect which
materially and adversely affects the interests of the Certificateholders, then
the Trustee or the Servicer, after the Servicer or a Responsible Officer of the
Trustee obtains knowledge of such defect, shall promptly notify the Seller,
whereupon the Seller shall have a period of three months, or such longer period
as the Trustee, acting at the direction of the Majority Certificateholders, may
consent to, within which to correct or cure any such defect. If any such
material defect has not been corrected or cured in all material respects,
notwithstanding any other provision of this Agreement (except as provided in
this sentence) including the restrictions or limitations set forth in this
Section 2.01, the Seller will, as of the last day of the third calendar month
after the month in which the Trustee or the Servicer so notifies the Seller with
respect to such defect (or earlier if the Seller elects), repurchase the related
Contract from the Trustee at a price equal to, without duplication, the sum of
(i) the Outstanding Principal Balance of such Contract plus, without
duplication, the aggregate amount of all Principal Components of Scheduled
Payments on such Contract due prior to the last day of the Collection Period as
of which such repurchase occurs not previously made by the Obligor or advanced
by the Servicer; (ii) the amount of any Outstanding Advances made in respect of
such Contract; (iii) the aggregate amount of all Interest Components of
Scheduled Payments on such Contract due prior to the last day of such Collection
Period not previously made by the Obligor or advanced by the Servicer, (iv) the
amount that would constitute Accrued Interest with respect to the Contract
(calculated as of the last day of such Collection Period) and (v) an amount
equal to the Premium Amount relating to such Contract as of the last day of such
Collection Period (collectively, the "Purchase Amount"); provided, however, that
any such material defect in respect of a Contract shall not cause the Seller to
repurchase such Contract pursuant to this paragraph so long as the Obligor
continues to make its Scheduled Payments or the Servicer is making Advances in
respect thereof, it being understood that if the Obligor ceases to continue
making its Scheduled Payments and the Servicer fails to make Advances in respect
thereof the Seller will, if at that time such defect with respect to such
Contract has not been corrected or cured and such defect materially and
adversely affects the interests of the Certificateholders, repurchase such
Contract. The Purchase Amount shall be deposited by the Seller in the
Certificate Account in immediately available funds at least one (1) Business Day
prior to the Distribution Date which relates to the Collection Period in which
such repurchase occurs and shall be distributed as provided herein on such
Distribution Date and, upon receipt by the Trustee of written notification of
such deposit signed by a Responsible Officer of the Seller and verification by
the Trustee of the receipt of such deposit, the related Contract Files shall be
deemed to be released to the Seller and the related Contract shall be deemed
transferred and assigned back to the Seller, without recourse, representation or
warranty. The Trustee shall promptly reimburse the Servicer for any Outstanding
Advances made in respect of such Contract upon the funds deposited in respect of
the Purchase Amount becoming available. It is understood and agreed that the
enforcement of the obligation of the Seller to repurchase any Contract as to
which a material defect in a constituent document exists and to make the
payments described in this Section 2.01(e) and Section 2.04 shall constitute the
sole remedy against the Seller with respect to such defect available to the
Trust, the Certificateholders or the Trustee on behalf of the
Certificateholders.
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SECTION 2.02. Acceptance by Trustee; Servicer. The Trustee hereby
acknowledges its acceptance on behalf of the Trust of all right, title and
interest to the Contracts and other property conveyed to the Trustee from time
to time by the Seller in accordance with Section 2.01. The Trustee hereby
declares that it holds and will hold such property and the documents
constituting a part of the Contract Files delivered to it as trustee and the
remainder of the corpus of the Trust in trust, upon the terms herein set forth,
for the sole use and benefit of the Certificateholders. The Trustee hereby
appoints the Servicer as custodian to hold the Contract Files in safekeeping for
the benefit of the Certificateholders. The Trustee shall not be responsible for
any of the duties or obligations of the Servicer, or for any action or inaction,
including any misconduct or negligence, on the part of the Servicer.
The Servicer, by execution and delivery hereof, accepts its appointment
as custodian of, and acknowledges receipt of, the Contract Files. The Servicer
shall indicate in its computer files that the Contracts have been sold to the
Trust for the benefit of all present and future Certificateholders and shall
maintain accurate records pertaining to each Contract as will enable the
Servicer and the Trustee to comply with the terms and conditions of this
Agreement. The Servicer shall make the Contract Files available to the Trustee
and the Certificateholders for inspection by the Trustee at such times as the
Trustee or any Certificateholder shall reasonably request. The Trustee agrees
that the Servicer shall be entitled to rely and act upon advice of counsel with
respect to its performance as custodian of the Contract Files and shall be
without liability for any action reasonably taken in good faith pursuant to such
advice, provided that such action is not in violation of applicable federal or
state law. The Servicer agrees to return the Contract Files to the Trustee upon
its written request.
SECTION 2.03. Representations and Warranties of the Seller and
Servicer.
(a) The Seller hereby represents and warrants to the Trustee
that as of the date hereof and as of each Closing Date, unless expressly stated
otherwise:
(i) Corporate Existence and Power. The Seller (A) is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, (B) has all corporate power and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and (C) is duly qualified to transact business
as a foreign corporation in each jurisdiction where the nature of its business
requires the same except where the failure to so qualify would not have a
material adverse effect on its ability to perform its obligations hereunder or
on the enforceability by it of a material amount of Contracts.
(ii) Authorization of Seller. The execution, delivery
and performance by the Seller of this Agreement are within the Seller's
corporate powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any governmental body,
agency or official (except such as have been taken or made), do not require the
consent or approval of any Person under any Contract or other agreement or
instrument to which the Seller is a party (except such as have been obtained),
and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
of the Seller or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Seller.
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(iii) Binding Effect on Seller. This Agreement
constitutes a legal, valid and binding agreement of the Seller enforceable in
accordance with its terms except as (A) the enforceability thereof may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (B) the availability of equitable remedies may
be limited by equitable principles of general applicability.
(iv) Contracts.
(A) The Seller owns the Contracts free and
clear of all Liens and has full right to transfer the Contracts and its
interest in the related Equipment and the proceeds of any Physical
Damage Insurance Policies or other insurance covering the Equipment to
the Trustee, and the conveyance of the Contracts hereunder constitutes
a valid sale, transfer and assignment to the Trustee of all right,
title and interest of the Seller in the Contracts, including any rights
in the Equipment subject thereto and in the Physical Damage Insurance
Policies or other insurance covering such Equipment created thereby,
free and clear of all Liens.
(B) Each Contract constitutes a legal, valid
and binding obligation of the applicable Obligor, in each case
enforceable in accordance with its terms in all material respects
except as (w) the enforceability thereof may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
or other similar laws affecting creditors' rights generally from time
to time in effect; (x) the availability of equitable remedies may be
limited by equitable principles of general applicability; (y) certain
remedies may not be enforceable in certain jurisdictions, provided,
however, that the remedies which are enforceable are adequate to make
the Contract enforceable against the Obligor and (z) certain
undertakings with respect to non-substitution by the Obligor may not be
enforceable in certain jurisdictions.
(C) The information provided with respect to
the Contracts in the Sale Certificate and the computer diskette or
electronic spreadsheet file delivered by the Seller to the Trustee on
the related Closing Date is true and correct in all material respects.
(D) The Equipment covered by an installment
payment master agreement with the Seller or the Servicer is subject to
a Lien for the benefit of the Seller or the Servicer, as applicable,
except as noted in the Contract Files.
(E) (i) Interest in respect of each of the
Contracts is eligible for the exclusion from gross income under Section
103 of the Code and does not constitute an item of tax preference for
purposes of the alternative minimum tax provisions of the Code
(collectively, "Tax-Exempt Eligibility") and (ii) payment of any
Premium Amount with respect to the Contracts to any person or entity
will not adversely affect the Tax-Exempt Eligibility of any Contract.
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(F) No provision of any Contract has been
waived, altered or modified in any material respect, other than through
waiver of payment delinquencies, except by instruments or documents
identified in the Contract File.
(G) No Contract is subject to any right of
rescission, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Contract or the exercise
of any right thereunder will not subject the Contract to the right of
rescission, counterclaim or defense, including the defense of usury,
and no such right of rescission, counterclaim or defense has been
asserted with respect thereto.
(H) No Contract was originated in or is
subject to the laws of any jurisdiction the laws of which would make
the transfer of the Contract or any interest therein (including any
interest in the Equipment) to the Trustee under this Agreement or
pursuant to transfers of the Certificates unlawful.
(I) All requirements of any federal, state
or local law, including, without limitation, usury laws, applicable to
each Contract have been complied with in all material respects.
(J) Each of the Contracts complies with all
of the Eligibility Criteria set forth in Exhibit D hereto, except to
the extent that both (i) any failure of a specified Contract to meet
any of the Eligibility Criteria has been noted and explained in the
Sale Certificate relating to such Contract and (ii) the Majority
Certificateholders have consented in writing to the purchase by the
Trust of such Contract notwithstanding its failure to meet any of the
Eligibility Criteria described in the applicable Sale Certificate after
being provided with a copy of such Sale Certificate.
(K) For each Contract that by its terms
requires the Seller to obtain consent to assignment, the Seller has
obtained such consent.
(b) It is understood and agreed that the representations and
warranties set forth in this Section 2.03 shall survive the delivery of the
Contract Files. Upon discovery by the Seller, the Servicer or a Responsible
Officer of the Trustee of a breach of any of the foregoing representations and
warranties with respect to any Contract, which breach materially and adversely
affects the interests of the Certificateholders, or a breach of the
representations and warranties set forth in Section 2.03(a)(iv)(A), (B), (E),
(J) or (K), the party discovering such breach shall give prompt written notice
to the other parties hereto. If as of the last day of the third calendar month
after the month in which such notice of breach is given (or earlier if the
Seller elects or is required pursuant to Section 2.04) or, with the prior
written consent of a Responsible Officer of the Trustee, such later date as is
specified in such consent, the Seller has not cured such breach in all material
respects, notwithstanding any other provision of this Agreement (except as
provided in this sentence) including the restrictions or limitations set forth
in Section 2.01, the Seller shall repurchase each affected Contract from the
Trustee; provided, however, that any breach of the representations and
warranties contained in this Section 2.03, except with respect to Sections
2.03(a)(iv)(A), (B), (E), (J) and (K), in respect of a Contract shall not cause
the Seller to repurchase such Contract pursuant to this paragraph so long as the
Obligor continues to make its Scheduled Payments or the Servicer is making
Advances in respect thereof, it being understood that if the Obligor ceases to
continue making its Scheduled Payments and the Servicer elects not to make
Advances in respect thereof the Seller will, if at that time such breach with
respect to such Contract has not been cured and such breach materially and
adversely affects the interests of the Certificateholders, repurchase such
Contract.
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(c) Any such repurchase of a Contract by the Seller shall be
accomplished in the manner set forth in Section 2.01(e) and at a price equal to
the Purchase Amount. It is understood and agreed that the enforcement of the
obligation of the Seller to repurchase any Contract as to which a breach by the
Seller under this Section 2.03 occurred and is continuing and to make the
payments which may be required by this Section 2.03 and Section 2.04 shall
constitute the sole remedy against the Seller respecting such breach available
to the Trust, the Certificateholders or the Trustee on behalf of the
Certificateholders.
(d) (i) In addition to the representations and warranties made
by LFC in its capacity as the Servicer herein, LFC hereby represents and
warrants to the Trustee that all of the representations and warranties of the
Seller set forth in this Agreement are true and accurate in all respects.
(ii) LFC hereby covenants that it shall comply with the
obligations of the Seller to pay (A) the Purchase Amount with respect to
Contracts required to be repurchased by the Seller pursuant to Sections 2.01(e)
and 2.03, (B) the Indemnity Amount pursuant to Section 2.04, (C) the amount to
be deposited to the Certificate Account upon an Equipment Modification as
provided in Section 3.01(a)(i) and (D) all other financial obligations of the
Seller under this Agreement, in the event that the Seller defaults on its
performance of such obligations.
(iii) In the event that, with respect to any Distribution
Date, the Seller failed to perform any of its payment obligations as described
in Section 2.03(d)(ii), that was required to have been deposited or paid, as the
case may be, on or prior to such Distribution Date, the Trustee shall notify LFC
in writing on or promptly following such Distribution Date that LFC will be
required to make a payment pursuant to Section 2.03(d) with respect to such
Distribution Date and the amount of any such payment. The amount of any such
payment shall equal the aggregate amount of payments owed by the Seller under
this Agreement and remaining unpaid as of such Distribution Date. The Trustee
shall deposit promptly any and all funds paid to it by LFC pursuant to this
Section 2.03(d) directly into the Certificate Account for the benefit of the
Certificateholders.
(iv) Upon the payment by LFC of all amounts required to be
paid pursuant to this Section 2.03(d) in respect of a Contract which the Seller
is required to repurchase pursuant to this Agreement, the Trustee shall, as of
the last day of the Collection Period during which such Contract became was
required to be repurchased, be deemed to have transferred and assigned all its
right, title and interest in such Contract to the Seller (for treatment in
accordance with paragraph (v) below), without recourse, representation or
warranty.
(v) The Servicer shall have the right to be reimbursed for
any Outstanding Advances with respect to Purchased Contracts in respect of which
a payment is made by LFC pursuant to this Section 2.03(d) from the amount of any
such payment. The Outstanding Advances shall be reduced by the amount by which
the Servicer is so reimbursed.
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SECTION 2.04. Tax Indemnification.
(a) This Section 2.04 shall apply if each of the following
conditions is satisfied:
(i) a Certificate Owner or the Trust receives written
notice from the Internal Revenue Service of its intent to assert a
claim for taxes due;
(ii) such claim is to be based on the assertion that
either (1) as of the related Cut-Off Date, interest on any Contract was
not eligible for the exclusion from gross income under Section 103 of
the Code or constituted an item of tax preference for purposes of the
alternative minimum tax provisions of the Code or (2) payment of
Premium Amount on one or more Contracts to any person or entity
adversely affected the Tax-Exempt Eligibility of the Contracts;
(iii) such notice is received prior to the
termination of the Trust;
(iv) the Certificate Owner or the Trust, as
applicable, (a) after receiving such notice and prior to the
termination of the Trust, provides the Seller with a copy of such
notice or written notice thereof (the "Claim Notice"), and (b) if the
Seller elects to contest the claim, the Certificate Owner or the Trust,
as applicable, at its option, either (x) permits the Seller at its own
expense to contest the claim through administrative or judicial
procedures, or (y) contests the claim at its own expense
(administratively and through the courts) and permits the Seller to
participate in such contest at its own expense, and in the case of (x)
and (y) agrees not to enter into any settlement of the claim with the
relevant taxing authority without the Seller's prior written consent,
such consent not to be unreasonably withheld; and
(v) either the Seller elects not to contest the
claim, or, if the Seller elects to contest the claim, the claim is
upheld. For the avoidance of doubt, if Seller does not provide written
notice to the Certificate Owner or the Trust, as applicable, of its
intent to contest a claim within 30 days after receiving the Claim
Notice, Seller will be deemed to have elected not to contest the claim.
If any Certificate Owner or the Trust provides a Claim Notice to the Seller as
described in clause (iv) above, the requirements in clauses (iii) and (iv) for
notice prior to termination of the Trust shall be deemed satisfied for all
Certificate Owners and the Trust with respect to claims arising from the
Contract(s) giving rise to the claim described in such notice. The Seller shall
promptly (but in no event later than 30 calendar days) after receipt of any
written notice for indemnification provide copies thereof to the Servicer, the
Trustee and all Certificateholders.
(b) (i) If each of the conditions of Section 2.04(a) is
satisfied, the Seller will pay an amount (the "Indemnity Amount") to such
Certificate Owners as and to the extent provided herein. In addition, interest
will be paid on the Indemnity Amount as so determined, at the rate of interest
payable on tax deficiencies to the relevant taxing authority, for the period
from the date 30 days after the Servicer receives from the Certificate Owner or
the Trust written notice of the proposed claim of such taxing authority to the
date 10 days before the Seller pays the Indemnity Amount.
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(ii) The "Indemnity Amount" will equal the sum of the
Gross-Up Amounts with respect to such Contract for each calendar month in which
the Certificate Owner owned the relevant Certificates in the period from the
Closing Date to and including the first month in which the Contract was
repurchased by the Seller or matured.
(iii) The "Gross-Up Amount" with respect to such Contract
for any month is the amount determined by dividing (A) the product of (1)
interest that would accrue for such month on the Outstanding Principal Balance
of such Contract as of the first day of the Collection Period beginning in such
month at one-twelfth of the Contract Rate multiplied by the Certificate Owner's
Interest in such Contract and (2) the applicable Tax Rate in effect for such
month, by (B) one minus such Tax Rate.
(iv) The Indemnity Amount will not include any interest
(except as provided above) or penalties assessed against the Certificate Owner
or the Trust, or any taxes other than federal income taxes payable by the
Certificate Owner, or any alternative minimum taxes payable by the Certificate
Owner, or any taxes payable by the Trust, or any taxes arising from the fact
that the Certificate Owner or the Trust is not the owner of the Contracts for
federal income tax purposes, and in any event will not take into account any
special tax situation of the Certificate Owner. The Indemnity Amount will be
paid to a Certificate Owner only if the Certificate Owner and the Trust provide
the Seller and the Servicer all information required to calculate the Indemnity
Amount in respect of such Certificate Owner.
(c) If the Trust is still in existence when each of the
conditions for payment of an Indemnity Amount is satisfied, the Indemnity Amount
will be payable by the Seller for distribution to the relevant Certificate Owner
no later than the Distribution Date relating to the second Collection Period
after that in which the claim is upheld or the Seller decides not to contest the
claim, but in any case not later than the final Distribution Date for the Trust
(the "Relevant Distribution Date"). In such event, the Seller shall notify the
Servicer of the outcome of the claim and the Servicer shall promptly after
receipt of such notice calculate the Indemnity Amount and give notice thereof to
the Seller and the Trustee. The Seller shall deposit the Indemnity Amount in the
Certificate Account no later than the Relevant Distribution Date. The Trustee
will distribute to the Certificate Owner the Indemnity Amount so deposited at
the written direction of the Servicer. Alternatively, if the Trust is no longer
in existence when each of the conditions for the payment of the Indemnity Amount
is satisfied, the Indemnity Amount will be payable by the Seller directly to the
Certificate Owner within 60 days after the claim is upheld or the Seller decides
not to contest the claim.
(d) If the Seller is required to pay an Indemnity Amount to
any Certificate Owner, then the Seller will repurchase the related Contract or
Contracts as of the last day of the Collection Period relating to the Relevant
Distribution Date, if the Contract has not been previously repurchased pursuant
to Section 2.03. Any such repurchase shall be accomplished in the manner set
forth in Section 2.01(e) and at a price equal to the Purchase Amount(s). This
Section 2.04 shall not in any manner limit the obligation, if any, of the Seller
pursuant to Section 2.03(b) and (c) to repurchase any Contract.
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(e) It is understood and agreed that the enforcement of the
obligation of the Seller to repurchase the affected Contract and pay the
Purchase Amount and the Indemnity Amount shall constitute the sole remedy
against the Seller available to the Trust, the Certificate Owners or the Trustee
on behalf of the Certificate Owners or the Trust in the event of the
determination of the taxability of interest on a Contract.
(f) The Seller may, but shall not be obligated to, pay an
Indemnity Amount to any Certificate Owner prior to the latest date required
under this Section 2.04 and/or repurchase the related Contract prior to the last
day of the Collection Period relating to the Relevant Distribution Date if, in
the Seller's discretion, it appears that any relevant taxing authority intends
to send or has sent to any Certificate Owner or the Trust a notice of the type
described in Section 2.04(a).
(g) If the Certificate Owner is an Entity, a direct or
indirect holder of an equity interest in the Entity that is taxable on the
income of the Entity (but not the Entity itself) shall be eligible for payment
of an Indemnity Amount under this Section 2.04 if the conditions of this Section
are satisfied as to such holder as if such holder were a Certificate Owner;
provided that (1) the Gross-up Amount shall be based on such holder's share of
the income of the Entity, (2) no Indemnity Amount shall be paid to any such
holder unless the Entity (as well as any intermediate Entity and such holder)
complies with Section 2.04(a)(iv), (3) an Indemnity Amount will only be payable
to any such holder if such holder would be entitled to an indemnity payment if
it directly held the entire interest in an underlying Certificate and (4) this
paragraph (g) (except for clause (3)) shall not apply to an Entity that is a
regulated investment company under Section 851 of the Code or a partnership
subject to partnership-level audits under Section 6221 et seq. of the Code.
ARTICLE III
Administration and Servicing of the Contracts
SECTION 3.01. Servicing of the Contracts; Distribution Date Statement.
(a) The Servicer or any Person that may serve as Subservicer
shall service, administer and enforce the Contracts in accordance with its
customary servicing procedures for servicing installment payment, lease,
financing agreement and similar obligations similar to the Contracts held in its
own portfolio or otherwise serviced by it, and shall have full power and
authority to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable including, but not
limited to, waiving nonpayment defaults, late payment charges or any other
similar fees that may be collected in the ordinary course of servicing the
Contracts; provided that:
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(i) the Servicer shall not permit any modification or
waiver with respect to any Contract that would make it fail to comply
with all of the Eligibility Criteria or which would reduce the Contract
Rate, reduce the Outstanding Principal Balance (except for actual
payments of principal), extend the due date of any payment on such
Contract or the final maturity date of such Contract, waive or reduce
any Breakage Fees with respect to such Contract or release the
Trustee's interest in the Trust Corpus (including, without limitation,
the Equipment related to such Contract), except in connection with a
payment in full of such Contract; provided that if the Obligor on a
Contract and the vendor of the Equipment relating to that Contract
agree to a return, replacement, modification, upgrade or similar change
to the Equipment relating to such Contract either (A) as permitted by
the standard provisions of the Contract or (B) with prior written
notice to the Majority Certificateholders and no objection from the
Majority Certificateholders within three (3) days after receipt of such
notice (in either case, an "Equipment Modification"), Servicer may
permit a modification of that Contract solely to change the Equipment
specified as relating to such Contract following such Equipment
Modification and, if applicable, (i) if all Equipment relating to the
Contract is being returned and not replaced, the Outstanding Principal
Balance of such Contract shall be reduced to zero or (ii) if the
Equipment Modification results in a reduction in the value of the
Equipment relating to such Contract, the Outstanding Principal Balance
of such Contract shall be reduced by the amount of reduction in
Equipment Value; provided further, that in the event any Equipment
Modification results in any reduction to the Outstanding Principal
Balance of a Contract, prior to the end of the Collection Period in
which such Equipment Modification takes place, the Seller shall deposit
an amount to the Certificate Account equal to the sum of (A) the amount
of such reduction in Outstanding Principal Balance of the applicable
Contract plus (B) any remaining Premium Amount relating to such
Contract, and the full amount of such deposit shall be deemed the
Principal Portion of a Prepayment of such Contract, so that it will be
paid directly to the Certificateholders on the Distribution Date in the
month following such Collection Period pursuant to Section 3.09(c).
(ii) the Servicer shall not take any action or permit
any action (including modifying the terms of a Contract) which is
within its control to be taken which would adversely affect the
Tax-Exempt Eligibility of the Contract in any manner; and
(iii) the Servicer shall take any additional action,
including making any additional filings, which it has taken in respect
of all other installment payment, lease, financing agreement and
similar obligations similar to the Contracts held in its own portfolio
or otherwise serviced by it which may be necessary pursuant to changes
in the applicable law of certain jurisdictions in order to perfect the
interest of the Trustee in the Trust Corpus.
(b) As of the last day of the calendar month in which occurs
the discovery by or notice to the Servicer of (x) a breach of clause (a)(iii)
above with respect to any Contract which breach materially and adversely affects
the interests of the Certificateholders, or (y) a breach of clause (a)(i) or
(a)(ii) with respect to any Contract, the Servicer, unless it cures the breach
in all material respects, will purchase the Contract from the Trustee in the
manner set forth in Section 2.01(e) with respect to repurchases by the Seller
and at a price equal to the Purchase Amount (calculated without giving effect to
any modification of the Contract giving rise to such obligation to repurchase);
provided, however, that any breach of the covenant contained in clause (a)(iii)
above in respect of a Contract shall not cause the Servicer to purchase such
Contract pursuant to this Section 3.01 so long as the Obligor continues to make
its Scheduled Payments or the Servicer is making Advances in respect thereof, it
being understood that if the Obligor ceases to continue making its Scheduled
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Payments and the Servicer elects not to make Advances in respect thereof the
Servicer will, if at that time such breach with respect to such Contract has not
been cured and such breach materially and adversely affects the interests of the
Certificateholders, repurchase such Contract. It is understood and agreed that
the enforcement of the obligation of the Servicer to repurchase any Contract as
to which a breach by the Servicer under this Section 3.01 has occurred and is
continuing and to make the payments which may be required by this Section 3.01
shall, except as otherwise expressly provided in Article VIII, constitute the
sole remedy against the Servicer respecting such breach available to the Trustee
on behalf of any Beneficiaries.
(c) The Servicer shall remain fully responsible for its duties
hereunder notwithstanding the appointment of a Subservicer. The Servicer or any
Subservicer may perform its obligation to service the Contracts either directly
or through agents or independent contractors. Without limiting the generality of
the foregoing, and except as otherwise provided herein, or unless otherwise
directed by the Trustee, the Servicer is hereby authorized and empowered by the
Trustee to execute and deliver, on behalf of itself, the Certificateholders and
the Trustee, or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments with respect to the Contracts and with respect to the
Equipment. The Trustee or the Certificateholders shall furnish the Servicer with
any powers of attorney and other documents necessary or appropriate to enable
the Servicer to implement its servicing and administrative duties hereunder.
(d) Not later than 10:00 a.m. on the Determination Date
immediately preceding each Distribution Date, the Servicer shall deliver to the
Trustee a proposed Distribution Date Statement with respect to such Distribution
Date as provided in Sections 4.02(a) and 4.03.
(e) The relationship of the Servicer (and any Successor
Servicer) to the Trustee under this Agreement is intended by the parties to be
that of an independent contractor and not that of a joint venturer, partner or
agent.
SECTION 3.02. The Certificate Account.
(a) The Certificate Account shall be a separate trust account
established and maintained by the Trustee. Should a successor Trustee be
appointed, then the Servicer shall, with the Trustee's assistance as may be
reasonably necessary, cause the Certificate Account to be moved to the successor
Trustee. Except as provided in paragraph (b) below, all funds deposited in the
Certificate Account shall be held in trust for the benefit of the
Certificateholders until applied in accordance with Section 3.09.
(b) Funds on deposit in the Certificate Account shall be
invested at the written direction of the Servicer (which may be in the form of
standing instructions) by the Trustee in Eligible Investments maturing on or
before the Business Day preceding the following Distribution Date. All such
Eligible Investments shall be made in the name of the Trustee, for the benefit
of the Certificateholders. So long as no Event of Default shall have occurred
and be continuing, all Eligible Investments Earnings on deposit in the
Certificate Account shall be for the benefit of the Servicer as servicing
compensation and shall be remitted to it monthly as provided herein. If an Event
of Default has occurred and is continuing, all Eligible Investments Earnings
shall be deposited into the Certificate Account for distribution as part of
Additional Funds pursuant to Section 3.09(b) on each Distribution Date. The
amount of any realized losses in the Certificate Account in respect of any such
investments shall promptly be deposited by the Servicer (from its own funds) in
the Certificate Account. The Trustee in its fiduciary capacity shall not be
liable for the amount of any loss incurred in respect of any investment or lack
of investment of funds held in the Certificate Account and made in accordance
with this Section 3.02(b).
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(c) The Trustee shall keep and maintain appropriate accounting
records relating to deposits to and withdrawals from the Certificate Account.
SECTION 3.03. Collections; Lockbox; Lockbox Account; Collections
Reporting.
(a) Neither the Seller nor the Servicer is to collect or
receive Collections in respect of the Contracts. Rather, the Seller and Servicer
have instructed all existing Obligors and Insurers, and will instruct all future
Obligors and Insurers, to make all payments representing Collections only (A) by
check or money order made payable to "The Bank of New York, as trustee of
Municipal Tax-Exempt Trust LEAF 2005," and mailed to The Bank of New York - Lock
Box Department, Leaf Financial Corporation/Box #11341A, 101 Barclay Street, 3rd
Floor, New York, NY 10286 (the "Lockbox"), or (B) by wire transfer directly to
the Certificate Account ("Wire Payments").
(b) On each Business Day, the Trustee shall collect all
checks, money orders and other instruments received in the Lockbox and shall
endorse (and, to the extent necessary, the Seller and/or Servicer shall endorse)
all such checks, money orders and other instruments so that the same can be
deposited by the Trustee into a lockbox account maintained by the Trustee in the
name of the Trust (the "Lockbox Account"), in the form so received (with all
necessary endorsements), no later than the next Business Day after the Business
Day on which they are received. Once the funds representing each such deposit
have cleared, the Trustee shall, no later than the next Business Day, withdraw
all such cleared funds out of the Lockbox Account and deposit them in the
Certificate Account. In addition, notwithstanding that Collections should be
made by the applicable payors either (i) via Wire Payment into the Certificate
Account or (ii) via check, money order or other instrument mailed to the
Lockbox, the Seller and Servicer each hereby covenants and agrees to send wired
funds representing Collections and received by either of them or any of their
Affiliates for deposit to the Certificate Account via wire transfer, and to mail
checks, money orders or other instruments representing Collections received by
either of them or their Affiliates, in the form so received (with all necessary
endorsements), not later than the close of business on the Business Day
following the date a Responsible Officer thereof shall have actual notice of
such receipt. The Trustee is hereby authorized to establish the Lockbox and the
Lockbox Account.
(c) In the event that for any reason a successor Trustee is
appointed and a new Certificate Account is established with such successor
Trustee, then the Trustee, Seller and Servicer shall promptly notify all
relevant Obligors and Insurers to send Collections payments to the new Lockbox,
and to make all future Wire Payments to the new Certificate Account, established
by the successor Trustee. The Trustee shall not close any Lockbox or Certificate
Account unless it shall have (i) received the prior written consent of the
Majority Certificateholders, (ii) established a new lockbox, corresponding
lockbox account and/or certificate account, (iii) (whereupon, for all purposes
of this Agreement and the Related Documents, such new lockbox shall become the
Lockbox, such new corresponding lockbox account shall become the Lockbox Account
and such new certificate account shall become the Certificate Account, and (iv)
taken all such action as the Majority Certificateholders shall require to grant
and perfect a first priority security interest in any new Certificate Account to
the Trustee for the benefit of the Certificateholders.
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(d) The Seller and the Servicer hereby grant to the Trustee a
durable power of attorney to endorse to the Trust on their behalf any checks,
instruments, money orders or other payments representing Collections received in
the Lockbox or otherwise received by the Trustee, and to take any other actions
on their behalf as may be necessary or desirable in connection with the deposit
of Collections to the Lockbox Account and/or the Certificate Account. Such power
of attorney is irrevocable being a power coupled with an interest.
(e) On each Business Day, the Trustee shall make available to
the Servicer via its Internet web-based programs, CASH-Register Plus, Onsite and
Inform (or any successor programs thereto): (i) information with respect to (A)
each check, money order or other instrument received in the Lockbox and (B) each
Wire Payment received in the Certificate Account, promptly following receipt of
such Collections; such information to include the date of such payment, its
amount and the name of the payor making such payment, and (ii) following the
deposit by the Trustee of each check, money order or other instrument received
in the Lockbox into the Lockbox Account, information as to whether the funds
represented by each such deposit have cleared or whether any such check, money
order or other instrument has been refused for insufficient funds.
SECTION 3.04. The Reserve Account.
(a) The Reserve Account shall be a separate trust account
established and maintained by the Trustee. Should a successor Trustee be
appointed, then the Servicer shall, with the Trustee's assistance as may be
reasonably necessary, cause the Reserve Account to be moved to the successor
Trustee. Except as provided in paragraph (d) below, all funds deposited in the
Reserve Account shall be held in trust for the benefit of the Certificateholders
until applied in accordance with Section 3.09.
(b) Funds on deposit in the Reserve Account shall be invested
at the written direction of the Majority Certificateholders (which may be in the
form of standing instructions) by the Trustee in Eligible Investments maturing
on or before the Business Day preceding the following Distribution Date. All
such Eligible Investments shall be made in the name of the Trustee, for the
benefit of the Certificateholders. All income and gain net of any losses
realized from Eligible Investments made with funds on deposit in the Reserve
Account shall be deposited into the Reserve Account. The Trustee in its
fiduciary capacity shall not be liable for the amount of any loss incurred in
respect of any investment or lack of investment of funds held in the Reserve
Account and made in accordance with this Section 3.04(b).
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(c) The Trustee shall keep and maintain appropriate accounting
records relating to deposits to and withdrawals from the Reserve Account.
(d) Upon termination of the Trust, after all accrued interest
and unpaid principal on the Certificates has been paid in full, any amounts
remaining in the Reserve Account shall be distributed by the Trustee, as paying
agent, to the Servicer as additional servicing compensation.
SECTION 3.05. Advances. The Servicer shall determine on or before each
Determination Date whether it is required to make Advances pursuant to the
definition thereof. If the Servicer determines it is required to make Advances,
it shall, on or before the Determination Date, deposit into the Certificate
Account an amount equal to such Advances in immediately available funds. With
respect to each Contract, the Advance shall increase Outstanding Advances.
Outstanding Advances shall be reduced by amounts applied to reimburse the
Servicer for Outstanding Advances pursuant to Section 3.09(a).
SECTION 3.06. Additional Deposits. The Servicer shall deposit in the
Certificate Account the Purchase Amount for the purchase of a Contract pursuant
to Section 3.01. The Seller (or, as provided in Section 2.03(d), LFC) shall
deposit in the Certificate Account the Purchase Amount for the repurchase of a
Contract by the Seller pursuant to Section 2.01, 2.03, 2.04 or 10.02 and any
Indemnity Amount pursuant to Section 2.04. The Servicer, the Seller or LFC, as
the case may be, shall make all such deposits not later than one Business Day
prior to the relevant Distribution Date.
SECTION 3.07. Additional Collection Procedures. The Servicer shall make
reasonable efforts to ensure that all payments due with respect to the Contracts
are paid into the Certificate Account in a timely fashion, and shall, in a
manner consistent with this Agreement, continue such normal collection
procedures as it follows with respect to other contracts similar to the
Contracts held in its own portfolio or otherwise serviced by it.
SECTION 3.08. Recovery of Certain Moneys by the Servicer. The Servicer
shall be entitled to receive (as a Retained Item) any amounts rebated pursuant
to any payment of premiums by the Servicer for any Physical Damage Insurance
Policy on behalf of an Obligor.
SECTION 3.09. Permitted Application of Funds on Distribution Dates. The
Trustee, in its capacity as paying agent hereunder, shall apply and remit or
cause to be applied and remitted (i) the Available Funds and Eligible Investment
Earnings in the Certificate Account, (ii) the amount on deposit in the Reserve
Account and (iii) any amounts to be distributed to Certificateholders out of the
Pre-Funding Account pursuant to Section 5.04(d), on each Distribution Date in
accordance with the Distribution Date Statement prepared by the Servicer and
verified by the Trustee as provided in Section 4.02(a), for the purposes set
forth below in the following priority, and for no other purpose:
(a) From Available Funds and from Eligible Investments
Earnings for the relevant Collection Period in the Certificate Account,
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(i) first, to the Certificateholders, in an amount
equal to the lesser of (A) the aggregate remaining Premium Amount
relating to all Contracts that terminated early for any reason during
the Collection Period to which such Distribution Date relates and (B)
50% of the total amount of Breakage Fees received during such
Collection Period with respect to the Contracts described in clause (A)
hereof, as an additional payment of interest on the Certificates; and
(ii) second, to the Servicer, (A) first, in an amount
equal to the Retained Items received in respect of the Collection
Period to which such Distribution Date relates; provided, that the
amount of Retained Items payable to the Servicer pursuant to this
clause (A) shall be reduced dollar for dollar by the amount paid to the
Certificateholders pursuant to Section 3.09(a)(i) on such Distribution
Date, (B) second, in reimbursement of Outstanding Advances, such right
of reimbursement pursuant to this clause (a)(ii) being limited to
(x)amounts received on the Contracts in respect of which such
Outstanding Advances were made during the Collection Period to which
such Distribution Date relates, excluding any Purchase Amount proceeds
received from the Trustee pursuant to Section 2.01 and (y) Outstanding
Advances made and not yet reimbursed with respect to Contracts that
became Defaulted Contracts (excluding Purchased Contracts) during the
Collection Period to which such Distribution Date relates, and (iii)
third, in payment of any Eligible Investments Earnings (except upon the
occurrence and during the continuance of an Event of Default, when
Eligible Investments Earnings will be distributed as part of Additional
Funds).
(b) From Monthly Interest and Additional Funds for the
relevant Collection Period in the Certificate Account:
(i) first, to the extent the amount paid to the
Certificateholders pursuant to Section 3.09(a)(i) above was not
sufficient to pay all remaining Premium Amount relating to all
Contracts that terminated early for any reason during the Collection
Period to which such Distribution Date relates, to the
Certificateholders, in an amount equal to the lesser of (A) the
aggregate remaining Premium Amount relating to all Contracts that
terminated early for any reason during the Collection Period to which
such Distribution Date relates, after taking into account any payment
made to the Certificateholders on such Distribution Date pursuant to
Section 3.09(a)(i) and (B) 50% of the total amount of Breakage Fees
received during such Collection Period with respect to the Contracts
described in clause (A) hereof, as an additional payment of interest on
the Certificates;
(ii) second, to the Trustee (including any
predecessor Trustee) in payment of accrued and unpaid fees, indemnities
and expenses (including in reimbursement of Transition Expenses) owing
to it in each of its capacities under this Agreement; provided, that
payments pursuant to this subclause (ii) on such Distribution Date
shall not exceed $30,000 in the aggregate; provided further, that on
any Distribution Date occurring during the period from the date hereof
through July 31, 2006 (the "Ramp-up Period"), if Monthly Interest and
Additional Funds for the Collection Period relating to such
Distribution Date are not sufficient to pay the full amount owed to the
Trustee pursuant to this Section 3.09(b)(ii) in accordance with the
priorities of payment set forth herein, any remaining amount owed to
the Trustee pursuant to this Section 3.09(b)(ii) (up to a maximum
amount equal to the net investment earnings that have accrued on
amounts on deposit in the Pre-Funding Account since the last
Distribution Date (or, in the case of the first Distribution Date,
since the date hereof) shall be withdrawn from the Pre-Funding Account
and paid to the Trustee. After expiration of the Ramp-up Period,
amounts due to the Trustee shall only be paid out of available funds in
the Certificate Account in accordance with the priorities of payment
set forth herein;
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(iii) third, to the Servicer in an amount equal to
fifty percent (50%) of the Servicing Fee that accrued during the
Collection Period to which such Distribution Date relates;
(iv) fourth,
(A) if the aggregate amount deposited in the
Reserve Account pursuant to this Section 3.09(b)(iv)(A) on all prior
Distribution Dates does not equal at least 1.00% of the aggregate
Original Pool Balance of all Contracts purchased by the Trust from the
date of this Agreement to such Distribution Date (the "Required Deposit
Amount"), (1) first, to the Reserve Account in an amount equal to the
lesser of (x) fifty percent (50%) of the Servicing Fee that accrued
during the Collection Period to which such Distribution Date relates
and (y) the amount necessary to make the aggregate amount deposited in
the Reserve Account pursuant to this Section 3.09(b)(iv)(A) on all
prior Distribution Dates and on such Distribution Date equal to the
Required Deposit Amount; and (2) second, to the Servicer in an amount
equal to the excess, if any, of the amount calculated in accordance
with subclause (1)(x) over the amount calculated in accordance with
subclause (1)(y) of this Section 3.09(b)(iv)(A); or
(B) if the aggregate amount deposited in the
Reserve Account pursuant to Section 3.09(b)(iv)(A) on all prior
Distribution Dates equals or exceeds the Required Deposit Amount, to
the Servicer in an amount equal to fifty percent (50%) of the Servicing
Fee that accrued during the Collection Period ending immediately prior
to such Distribution Date;
(v) fifth, to the payment of the Interest
Distribution Amount with respect to the Certificates in accordance with
Section 4.01;
(vi) sixth, to pay the Servicer any overdue Servicing
Fees that were payable on previous Distribution Dates and remain
unpaid, but excluding those used to make deposits to the Reserve
Account;
(vii) seventh, to the Trustee in payment of any
amounts payable to it in each of its capacities under this Agreement
pursuant to Section 3.09(b)(ii) above but remaining unpaid due to the
proviso contained therein; and
(viii) eighth, the remainder to the Servicer as
additional servicing compensation.
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(c) Monthly Principal for the relevant Collection Period in
the Certificate Account shall be paid to the Certificateholders as a repayment
of principal on their Certificates in accordance with Section 4.01.
(d) (i) first, to the extent the amount of Monthly Interest
and Additional Funds available on any Distribution Date is not sufficient to pay
the Interest Distribution Amount to the Certificateholders pursuant to Section
3.09(b)(v) on such Distribution Date in accordance with the payment priorities
set forth in Section 3.09(b), an amount sufficient to make such payment in full
(or any lesser amount on deposit in the Reserve Account) shall be withdrawn from
the Reserve Account and used to make such payment; and
(ii) second, with respect to any Contracts that became
Defaulted Contracts during the Collection Period to which such Distribution Date
relates, an amount equal to the lesser of (A) the aggregate Outstanding
Principal Balance of such Contracts immediately prior to their being declared
Defaulted Contracts and (B) the remaining amount on deposit in the Reserve
Account as of such Distribution Date, shall be withdrawn from the Reserve
Account and paid to the Certificateholders as a repayment of principal on their
Certificates in accordance with Section 4.01. To the extent the amount
determined pursuant to clause (A) (the "Clause A Amount") is greater than the
amount pursuant to clause (B) (the "Clause B Amount") of this Section
3.09(d)(ii), the Outstanding Principal Amount of each Certificate shall be
written down by a pro rata portion (based on its Outstanding Principal Amount
compared to the aggregate Outstanding Principal Amount of all Certificates) of
an amount equal to the excess of the Clause (A) Amount over the Clause (B)
Amount. For the avoidance of doubt, the Servicer shall calculate and set forth
all amounts described in this Section 3.09(d)(ii) in its monthly Distribution
Date Statement, and the Trustee, in its capacity as calculation agent, shall
verify all such calculations as to mathematical accuracy.
In addition, upon termination of the Trust, any Eligible
Investments in the Reserve Account shall be sold and the cash balance in the
Reserve Account shall be applied in the following order of priority (i) to
payment of any accrued Interest Distribution Amount on the Certificates
remaining unpaid after application of Monthly Interest and Additional Funds
pursuant to Section 3.09(b), (ii) to payment of the Outstanding Principal Amount
of the Certificates (if any) after application of Monthly Principal and any
amounts received out of the Pre-Funding Account pursuant to Section 5.04(d)(ii)
and (iii) the remainder to the Servicer as additional servicing compensation.
(e) Pre-Funding Account Earnings (if any) for the relevant
Collection Period shall be withdrawn from the Pre-Funding Account and paid to
the Certificateholders as an additional payment of interest on their
Certificates in accordance with Section 5.4(d)(i).
SECTION 3.10. Release of Contract Files. Upon the payment in full of
any Contract by the Obligor or in the case of a Purchased Contract, the Servicer
shall, and is hereby authorized by the Certificateholders to, promptly release
the Contract Files with respect to any such Contract from the Trust. Upon any
such payment, or the receipt of such notification, the Servicer is authorized to
release the related Contract.
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SECTION 3.11. Servicing Compensation; Payment of Certain Expenses by
the Servicer.
(a) As compensation for acting as Servicer hereunder and for
the expenses set forth in paragraph (b) below, the Servicer shall be entitled to
receive a monthly Servicing Fee from the Certificate Account for each Collection
Period. The Servicing Fee on each Distribution Date shall equal the product of
(A) one-twelfth (or for any Collection Period, or any portion of a Collection
Period during which the Servicer was acting in such capacity hereunder, less
than a full calendar month, one-twelfth, divided by 30, multiplied by the actual
number of days in such Collection Period), (B) the Servicing Fee Rate and (C)
the Pool Balance as of the first day of the Collection Period to which such
Distribution Date relates; provided, however, that any portion of the Servicing
Fee otherwise payable to the Servicer that is deposited into the Reserve Account
as required by Section 3.09 shall reduce the Servicing Fee payable to the
Servicer on such Distribution Date by an equivalent amount. The Servicing Fee
shall be calculated by the Servicer on the Determination Date immediately
preceding each Distribution Date and shall be payable to the extent funds are
available in the Certificate Account in accordance with the priorities of
payment set forth in Section 3.09. Any portion of the Servicing Fee not paid to
the Servicer on a particular Distribution Date (excluding amounts deposited to
the Reserve Account as provided in Section 3.09) due to the unavailability of
funds therefor in accordance with the payment priorities set forth in Section
3.09, shall continue to be due and owing to the Servicer and shall be paid on
the next Distribution Date when funds are available therefor in accordance with
the payment priorities set forth in Section 3.09. Any such Servicing Fees that
have their payment deferred shall not accrue interest. The Servicer shall also
be entitled to additional servicing compensation separate from the Servicing Fee
under the circumstances described in Section 3.09.
(b) The Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder, including,
without limitation, taxes imposed on the Servicer, the fees and disbursements of
its attorneys and independent accountants, outside auditor fees, data processing
costs, and other related expenses incurred in connection with administering the
Contracts) and shall not be entitled to reimbursement therefor except as
specifically provided herein. The Servicer agrees to perform all its duties and
obligations under this Agreement, regardless of its receipt of servicing
compensation hereunder.
SECTION 3.12. Annual Statement as to Compliance.
(a) The Servicer will deliver to the Trustee, on or before
March 31 of each year, beginning March 31, 2006, an Officer's Certificate
stating that (i) a review of the activities of the Servicer during the preceding
calendar year (or portions thereof or, in the case of the first such
certificate, during the period from the date of this Agreement to December 31,
2005) and of its performance under this Agreement has been made under such
officer's supervision and (ii) to the best of such officer's knowledge, based on
such review, the Servicer has fulfilled all its obligations under this Agreement
throughout such period, or if there has been a material default in the
fulfillment of any such obligations, specifying each such material default known
to such officer and the nature and status thereof.
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(b) The Servicer will deliver to the Trustee, promptly upon
any Servicing Officer's becoming aware of any material default in the
fulfillment of any of its obligations under this Agreement, an Officer's
Certificate specifying such material default and the nature and status thereof.
SECTION 3.13. Annual Independent Public Accountants' Report. On or
before March 31 of each year, beginning March 31, 2006, the Servicer at its own
expense shall cause a firm of independent public accountants (who may also
render other services to the Servicer or the Seller or any agent or Affiliate of
either) to furnish a report to the Servicer and Trustee summarizing the results
of certain procedures performed with respect to certain documents and records
relating to the servicing of the Contracts during the preceding calendar year
(or portions thereof or, in the case of the first such report, during the period
from the date of this Agreement to December 31, 2005) which documents and
records shall include the reports furnished to Certificateholders pursuant to
Section 4.02 and the reports prepared by the Servicer and furnished to the
Trustee pursuant to Section 4.03 during the preceding calendar year or other
period. The procedures to be performed and reported upon by the independent
public accountants shall be those agreed to by the Servicer and the Majority
Certificateholders. In the event such firm requires the Trustee to agree to the
procedures performed by such firm, the Servicer and Majority Certificateholders
shall jointly direct the Trustee in writing to so agree; it being understood and
agreed that the Trustee will deliver such letter of agreement in conclusive
reliance upon the direction of the Servicer, and shall make no independent
inquiry or investigation as to, and shall have no obligation or liability in
respect of, the sufficiency, validity or correctness of such procedures.
SECTION 3.14. Access to Certain Documentation and Certain Information
Regarding the Contracts. The Servicer will provide to the Trustee access to the
documentation in its possession regarding the Contracts, such access being
afforded without charge but only during normal business hours and upon
reasonable notice at the offices of the Servicer designated by it. The Trustee
shall, and is hereby authorized by the Certificateholders to, cooperate with the
Servicer in effecting such access.
ARTICLE IV
Payments and Reports to Certificateholders
SECTION 4.01. Distributions; Calculations; Prepayments.
(a) On each Distribution Date, the Trustee, in its capacity as
paying agent hereunder, shall withdraw and distribute from (i) the Available
Funds in the Certificate Account, (ii) the amount on deposit in the Reserve
Account and (iii) any amounts to be distributed to Certificateholders out of the
Pre-Funding Account pursuant to Section 5.04(d), to the Certificateholders of
record on the applicable Record Date (other than as provided in Section 10.01
respecting the final distribution), in the order of priority set forth in
Section 3.09, the amount which represents payments on the Certificates, such
distribution to be made on a pro rata basis in accordance with the respective
Outstanding Principal Amounts of the Certificates on the preceding Determination
Date (before giving effect to any distribution to be made on such Distribution
Date). All monthly payments to Certificateholders shall be made either by check
mailed to each Certificateholder of record on the preceding Record Date at its
address appearing on the Certificate Register, or, so long as there are 25 or
fewer Certificateholders, upon the provision of all necessary account
information by each Certificateholder to receive payments by wire transfer, by
wire transfer of immediately available funds. Concurrently with or reasonably
promptly after the final payment on the Certificates, the Trustee shall notify
the Certificateholders that such payment represents the final payment on the
Certificates and shall require the Certificateholders to surrender the
Certificates to the Trustee at the Corporate Trust Office for cancellation
reasonably promptly after such request; provided that the Trustee shall have no
liability if any Certificateholder fails to surrender a Certificate for
cancellation.
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(b) The Trustee, in its capacity as paying agent hereunder, is
authorized and directed to comply with all requirements of the Code applicable
to it in its capacity as paying agent hereunder at such times as it is acting as
paying agent hereunder with respect to information reporting and back-up
withholding for payments made to Certificateholders in connection with the
Trust, including the deduction of withholding tax where applicable. Upon
becoming a Certificateholder, each Certificateholder will promptly provide to
the Trustee a duly completed Substitute Form W-9 or comparable form (including
tax payer identification number), and such other information as shall be
necessary, evidencing that such Certificateholder is exempt from backup
withholding on payments made with respect to the Certificates and containing the
certifications required thereby. Each Certificateholder acknowledges its
responsibility to file in a timely manner a Form 1099 with the Internal Revenue
Service.
(c) Monthly Interest, Monthly Principal and the Servicing Fee
in respect of any Distribution Date shall be calculated by the Servicer on the
Determination Date immediately preceding such Distribution Date based on all
information available to the Servicer at that time. The Pool Balance and the
Pool Factor in respect of the first day of any Collection Period shall be
calculated by the Servicer on the Determination Date immediately following such
Collection Period based on all information available to the Servicer at that
time. All calculations to be made by the Servicer hereunder shall be made in
accordance with its customary procedures.
SECTION 4.02. Reports to Certificateholders.
(a) The Trustee, in its capacity as calculation agent
hereunder, shall make available to each Certificateholder of record and each
Certificate Owner, on each Distribution Date, a statement prepared by the
Servicer setting forth the information described in Exhibit E hereto (as the
same may be modified from time to time upon the prior written consent of the
Majority Certificateholders) (the "Distribution Date Statement"). Prior to
making each Distribution Date Statement available to the Certificateholders,
however, the Trustee, in its capacity as calculation agent hereunder, shall
recalculate and verify the mathematical accuracy of all amounts set forth in the
"Distributions" section of the Distribution Date Statement, representing the
amounts proposed to be distributed and paid on such Distribution Date to each of
the Trustee, the Servicer, the Certificateholders and the Reserve Account by the
Trustee as paying agent pursuant to Section 3.09. If the Trustee, in its
capacity as calculation agent, determines that any of such amounts is incorrect
or otherwise conflicts with its calculation of such amounts, the Trustee, as
calculation agent, shall notify the Servicer of such determination and the
Trustee, as calculation agent, and Servicer shall work together to resolve all
such discrepancies prior to finalizing and circulating the statement to
Certificateholders and making distributions of funds on the applicable
Distribution Date.
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(b) Within a reasonable period of time after the end of each
calendar year, but not later than the latest date permitted by law, the Trustee
shall furnish to each Person who at any time during the calendar year was a
Certificateholder a statement supplied by the Tax Return Preparer pursuant to
paragraph (c) below containing information for the purposes of the
Certificateholder's preparation of federal, state and local income tax returns.
(c) The Tax Return Preparer shall furnish to the Trustee, at
least five Business Days prior to the date of mailing or posting, and the
Trustee shall then make available to the Certificateholders and Certificate
Owners, a copy of the statement required to be provided by the Trustee to the
Certificateholders pursuant to paragraph (b) above.
(d) The Trustee may make available to Certificateholders and
each Certificate Owner, via the Trustee's internet website, all statements
required to be made available by the Trustee to the Certificateholders and the
Certificate Owners by this Section 4.02 each month and, only with the consent or
at the direction of the Seller and the Initial Purchaser, such other information
regarding the Certificates and/or the Contracts as the Trustee may have in its
possession, but only with the use of a password provided by the Trustee or its
agents to such Person upon receipt by the Trustee from such Person of a
certification in the form of Exhibit F; provided, however, that the Trustee or
its agent shall provide such password to the parties to this Agreement without
requiring such certification. The Trustee will make no representation or
warranties as to the accuracy or completeness of such documents and will assume
no responsibility therefor. The Trustee's Internet Website shall be initially
located at www.absreporting.com or at such other address as shall be specified
by the Trustee from time to time in writing to the parties hereto and the
Certificateholders. In connection with providing access to the Trustee's
Internet Website, the Trustee may require registration and the acceptance of a
disclaimer. The Trustee shall not be liable for the dissemination of information
in accordance with this Agreement. The provisions of this paragraph (e) will
apply to the tax information described in paragraph (c) above only to the extent
permitted by law.
SECTION 4.03. Reports to the Trustee. The Servicer shall furnish to the
Trustee, no later than 10:00 a.m. (New York time) on the Determination Date
immediately preceding each Distribution Date, the Distribution Date Statement
proposed to be provided to Certificateholders and Certificate Owners on the next
Distribution Date. The Distribution Date Statement shall be signed by a
Servicing Officer. In addition, the Servicer shall, upon request of the Trustee,
furnish the Trustee such data as may be reasonably requested, including, without
limitation, the identity, by reference to machine type/serial number, of all
Contracts that became Purchased Contracts or Defaulted Contracts and Prepayments
during the Collection Period ending immediately prior to such Determination
Date. Copies of all statements and reports furnished to the Trustee may be
obtained by Certificateholders and Certificate Owners by written request to the
Trustee at its Corporate Trust Office, provided that so long as the Initial
Purchaser, its Affiliates or an Entity established by the Initial Purchaser or
its Affiliates collectively own all the Certificates, copies of such statements
and reports shall be furnished to the Initial Purchaser on each Determination
Date by the Servicer.
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ARTICLE V
PURCHASES OF CERTIFICATES
SECTION 5.01. Issuance and Sale of Certificates to Initial Purchaser.
(a) Subject to the terms and conditions of this Agreement, and
in reliance on the representations and warranties herein set forth, as of the
date hereof the Trust agrees to sell to the Initial Purchaser, and the Initial
Purchaser agrees to purchase from the Trust, a Certificate in the Original
Principal Amount of $5,000,000 (the "Original Certificate"), for a purchase
price equal to the Original Principal Amount thereof. The Original Certificate
will represent a one hundred percent (100%) Interest in the Trust as of its date
of issuance.
(b) The Original Certificate shall represent the Initial
Purchaser's entire Interest in the Trust. With respect to any purchase by the
Initial Purchaser of an additional Interest in the Trust following the initial
issuance of the Original Certificate, on the effective date of the Initial
Purchaser's purchase of an additional Interest in the Trust, either (i) if the
Original Certificate is a Book-Entry Certificate, the Trustee will reflect an
increase in the Outstanding Principal Amount thereof equal to the purchase price
paid by the Initial Purchaser for such additional Interest or (ii) if the
Original Certificate is a Definitive Certificate, the Initial Purchaser shall
deliver its existing Certificate to the Trustee for cancellation, and in
replacement thereof the Trustee shall issue a new Definitive Certificate to the
Initial Purchaser to reflect an increase in the Outstanding Principal Amount
thereof equal to the purchase price paid by the Initial Purchaser for such
additional Interest.
(c) Delivery of and payment for the Original Certificate (or
any replacement thereof or additional Interest to be reflected thereby)
purchased by the Initial Purchaser shall be made on each Closing Date at a time
and location agreed upon by the parties hereto. Delivery of the Original
Certificate (or any replacement thereof or additional Interest to be reflected
thereby) shall be made to the Initial Purchaser against payment by the Initial
Purchaser of the purchase price thereof to the Trust by wire transfer in
immediately available funds (unless alternate arrangements are agreed to by the
Seller, the Trust and the Initial Purchaser). The Original Certificate shall be
registered in such name as the Initial Purchaser may request. The Trustee agrees
to have the Original Certificate and any replacement thereof (if a Definitive
Certificate) available for inspection by the Initial Purchaser in New York, New
York not later than 1:00 p.m. (New York time) on the Business Day prior to each
Closing Date.
(d) The Trust shall use all purchase proceeds received from
the Initial Purchaser in connection with the sale of each Certificate (or any
replacement Certificate or additional Interests to be reflected thereby) to
purchase Contracts on each Closing Date. Pending application to the purchase of
Contracts, such purchase proceeds shall be deposited by the Trustee into the
Pre-Funding Account and invested by the Trustee in Eligible Investments as
provided in Section 5.04(c).
- 40 -
(e) So long as the Initial Purchaser owns any Interest in the
Trust, the Seller, Servicer and Trustee agree to furnish to the Initial
Purchaser, from time to time, any information concerning the Trust, the
Contracts, the Seller or the Servicer as may be reasonably requested by the
Initial Purchaser.
SECTION 5.02. Subsequent Issuances of Certificates; Purchases of
Additional Interests.
(a) In the event investors other than the Initial Purchaser
wish to purchase Interests in the Trust, the Trust will comply with the
following procedure:
(i) The Trustee shall provide written notice (the
"Investment Notice") to all current Certificateholders of the identity
of such proposed purchasers of Certificates (or proposed purchasers of
any additional Interest (for purposes of this Article V referred to
collectively as "Certificates")), the Original Principal Amount of
Certificates each of them wishes to purchase, and the Outstanding
Principal Amount of Certificates each of them will own after such
purchase.
(ii) The Trustee shall seek to obtain the written
consent of the Majority Certificateholders to the terms of the
Investment Notice (and if such consent is not provided, no Interests
shall be issued in such instance).
(iii) Each proposed purchaser of a Certificate shall
execute an investment letter containing such proposed purchaser's
agreement to purchase a Certificate on the terms set forth in the
Investment Notice, and such representations and warranties and other
provisions as are mutually agreed upon by the Trustee and the Majority
Certificateholders.
(iv) Subject to any requirements contained in the
Investment Notice, the proposed purchasers set forth in the Investment
Notice approved by the Majority Certificateholders shall purchase
Certificates on the terms set forth in such Investment Notice on a date
and at a time and location as may be mutually agreed upon by the
Trustee and the purchasers of such Certificates.
(b) Each Certificateholder shall be issued a single
Certificate representing such Certificateholder's entire Interest in the Trust.
In the event an existing Certificateholder wishes to purchase an additional
Interest in the Trust, on the effective date of such Certificateholder's
purchase of an additional Interest in the Trust, either (i) if such
Certificateholder's Certificate is a Book-Entry Certificate, the Trustee will
reflect an increase in the Outstanding Principal Amount thereof equal to the
purchase price paid by such Certificateholder for such additional Interest or
(ii) if such Certificateholder's Certificate is a Definitive Certificate, the
Certificateholder shall deliver its existing Certificate to the Trustee for
cancellation, and in replacement thereof the Trustee shall issue a new
Definitive Certificate to the Certificateholder to reflect an increase in the
Outstanding Principal Amount thereof equal to the purchase price paid by such
Certificateholder for such additional Interest.
- 41 -
SECTION 5.03. Conditions to Purchase Obligation. The obligations of the
Initial Purchaser and any subsequent purchaser of a Certificate to purchase any
Certificate shall be subject to the accuracy of the representations and
warranties on the part of the Seller, Servicer and Trustee contained herein as
of the date on which Certificates are being purchased (the "Purchase Date") (and
all such representations and warranties shall be deemed made as of each such
Purchase Date), to the accuracy of the statements of the Seller, Servicer and
Trustee made in any certificates pursuant to the provisions hereof, to the
performance by each of the Seller, Servicer and Trustee of its obligations
hereunder and to the following additional conditions:
(a) With respect to the purchase of the Original Certificate,
the Initial Purchaser shall have received an opinion of counsel to the Seller
and Servicer, addressed to the Initial Purchaser and Trustee and dated the date
hereof, to the effect that:
(i) Each of the Seller and Servicer is a corporation
organized and validly existing under the laws of the state of its
incorporation with all corporate power and authority necessary to own
or hold its properties, to conduct its business and to enter into and
perform its obligations under this Agreement and is duly qualified to
do business where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to
be so qualified would not have a material adverse effect on its ability
to perform its obligations hereunder.
(ii) This Agreement has been duly authorized,
executed and delivered by, and constitutes a legal, valid and binding
instrument enforceable against each of the Seller and Servicer in
accordance with its terms (subject to applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other
laws affecting creditors' rights generally from time to time in
effect).
(iii) The Original Certificate has been duly
authorized and, when executed and authenticated in accordance with the
provisions of this Agreement and delivered to and paid for by the
Initial Purchaser pursuant to this Agreement, will be validly issued
and outstanding and will be entitled to the benefits of this Agreement.
(iv) To the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Seller, the Servicer, any of their subsidiaries or the Trust which
could reasonably be expected to have a material adverse effect on any
of such entities, the ability of any of such entities to perform their
respective obligations under this Agreement, the Contracts or the
Certificates.
(v) This Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended, and neither the
Seller nor the Trust is required to be registered under the Investment
Company Act of 1940, as amended.
(vi) No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any
court or governmental agency or body is required for the consummation
of the transactions contemplated herein except such as have already
been obtained.
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(vii) Neither the execution and delivery of this
Agreement, the issue and sale of the Certificates, nor the consummation
of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach
of, or constitute a default under the charter or by-laws of the Seller
or Servicer, or the terms of any indenture or other agreement or
instrument to which the Seller, Servicer or the Trust is a party or
bound, or any law, order or regulation applicable to the Seller,
Servicer or Trust of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Seller,
Servicer or the Trust.
(viii) To the best knowledge of such counsel, no
default exists and no event has occurred which, with notice, lapse of
time or both, would constitute a default in the due performance and
observance of any term, covenant or condition of any agreement to which
the Seller, Servicer or the Trust is a party or by which any of them is
bound, which default is or would have a material adverse effect on the
financial condition, earnings, prospects, business or properties of the
Seller, Servicer or Trust, taken as a whole.
(ix) The Seller and Servicer have obtained all
material licenses, permits and other governmental authorizations that
are necessary to the conduct of their respective businesses; such
licenses, permits and other governmental authorizations are in full
force and effect, and the Seller and Servicer are in all material
respects complying therewith; and the Seller and Servicer are otherwise
in compliance with all laws, rules, regulations and statutes of any
jurisdiction to which either of them is subject, except where
non-compliance would not have a material adverse effect on either of
them.
(x) Based on the representations, warranties and
covenants in this Agreement and assuming compliance with the transfer
restrictions herein, the offer and sale of the Original Certificate by
the Trust to the Initial Purchaser does not require registration under
the Securities Act.
(b) With respect to the purchase of the Original Certificate,
the Initial Purchaser shall have received from counsel to the Trustee an
opinion, addressed to the Initial Purchaser, dated the date hereof and
satisfactory in form and substance to the Initial Purchaser.
(c) With respect to the purchase of the Original Certificate,
the Initial Purchaser shall have received from each of the Seller, Servicer and
Trustee an Officer's Certificate dated the date hereof, certifying to the
incumbency of the officer or officers of such entity executing this Agreement
and any other documents contemplated hereby to which it is a party, and
attaching and certifying true and complete copies of each of the following
documents: (i) with respect to the Seller and Servicer, a good standing
certificate with respect to such entity issued by its state of incorporation or
organization as of a date not more than 15 calendar days prior to the date of
this Agreement, (ii) with respect to the Seller and Servicer, the certificate of
incorporation and bylaws or other governing documents of such entities and, with
respect to the Trustee, an extract of its bylaws, and (iii) with respect to the
Seller and Servicer, resolutions passed by the governing body of such entities
and, with respect to the Trustee, an extract of its bylaws, which in each case
remain in full force and effect and which have not been modified or rescinded as
of the date of such certificate, approving or otherwise authorizing the
execution, delivery and performance of this Agreement and the transactions
contemplated hereunder, and the execution, delivery and performance of any other
documents contemplated hereby to which it is a party.
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(d) With respect to the purchase of the Original Certificate,
the Trustee and Initial Purchaser shall have received from the Servicer an
Officer's Certificate listing the Servicing Officers of the Servicer.
(e) The representations and warranties in this Agreement shall
be true and correct on and as of the date hereof and each subsequent Purchase
Date with the same effect as though such representations and warranties had been
made on and as of such date, and the purchasers of Certificates on the
applicable date shall have been furnished a certificate of each of the Seller
and Servicer, signed by an executive officer thereof and by the principal
financial or accounting officer of the Seller and Servicer, respectively, dated
the applicable Purchase Date, to the effect that:
(i) the representations and warranties of the Seller
and Servicer in this Agreement are true and correct in all material
respects on and as of the Purchase Date with the same effect as if made
on such date, and each of the Seller and Servicer has complied with all
the agreements, performed all the obligations and satisfied all the
conditions on its part to be complied with, performed or satisfied
under this Agreement at or prior to the Purchase Date; and
(ii) since the date of the Servicer's most recent
audited financial statements, there has been no material adverse
change, or any development respecting a prospective change, in the
condition (financial or other) of the Servicer or the Seller, whether
or not arising from transactions in the ordinary course of business;
and
(iii) (solely in the Servicer's certificate), no
event with respect to the Servicer has occurred and is continuing which
would constitute an Event of Default or an event that with notice or
lapse of time or both would become an Event of Default under this
Agreement.
(f) Prior to each Purchase Date, the Seller, Servicer and the
Trust shall have furnished to the purchasers of Certificates on such date such
further information, certificates and documents as the purchasers may reasonably
request.
(g) Subsequent to the date of the most recent audited
financial statements of the Servicer, there shall not have been any change, or
any development involving a prospective change, which has not been disclosed to
the purchasers of Certificates on or before the applicable Purchase Date in or
affecting the condition, financial or otherwise, of the Seller, Servicer or the
Trust the effect of which, in the reasonable judgment of the purchasers of
Certificates on such Purchase Date, represents a material adverse effect on any
of such entities.
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If any of the conditions specified in this Section 5.03 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the purchasers of Certificates (including the Initial
Purchaser) on the applicable Purchase Date, all obligations of the purchasers of
Certificates (including the Initial Purchaser) on the applicable Purchase Date
under this Agreement and any investor letters they may have executed may be
canceled at, or at any time prior to, the applicable Purchase Date by such
purchasers. Notice of such cancellation shall be given to the Seller, Servicer
and Trustee in writing or by telephone confirmed in writing.
SECTION 5.04. The Pre-Funding Account.
(a) On the date hereof, the Trustee shall establish and
maintain in its name, in trust and for the benefit of the Certificateholders,
the Pre-Funding Account and deposit therein the purchase price paid by the
Initial Purchaser for the Original Certificate, less the amount (if any) paid to
the Seller on such date as the purchase price for any Contracts purchased by the
Trust on such date. The full purchase price paid on each subsequent Purchase
Date in connection with the sale and issuance of any additional Certificates (or
additional Interests to be reflected by existing Certificates) by the Trust
(less any portion of such amount used by the Trust to purchase Contracts on such
Purchase Date) shall also be deposited into the Pre-Funding Account. Should a
successor Trustee be appointed, then the Servicer shall, with the Trustee's
assistance as may be reasonably necessary, cause the Pre-Funding Account to be
moved to the successor Trustee.
(b) Amounts on deposit in the Pre-Funding Account (as well as
any investment earnings thereon) shall be held in trust for the benefit of the
Certificateholders until applied to make purchases of Contracts on each Closing
Date. Subject to the requirements of Section 2.01, on each Closing Date, the
Trustee, as paying agent, is authorized to withdraw an amount from the
Pre-Funding Account equal to the purchase price to be paid by the Trust for
Contracts purchased from the Seller on such date.
(c) Funds on deposit in the Pre-Funding Account shall be
invested by the Trustee in Eligible Investments designated by the Majority
Certificateholders (which may be in the form of standing instructions). All such
Eligible Investments shall be (i) made in the name of the Trustee, for the
benefit of the Certificateholders and (ii) able to be converted to cash within
one (1) Business Day of making demand therefor. The Trustee in its fiduciary
capacity shall not be liable for the amount of any loss incurred in respect of
any investment or lack of investment of funds held in the Pre-Funding Account
and made in accordance with this Section 5.04(c). The Trustee shall keep and
maintain appropriate accounting records relating to deposits to and withdrawals
from the Pre-Funding Account.
(d) (i) All Pre-Funding Account Earnings on deposit in the
Pre-Funding Account shall be for the benefit of the Certificateholders as
additional interest payable on their Certificates and shall be remitted to the
Certificateholders on each Distribution Date as provided herein. The Trustee
shall ensure that on the Business Day immediately preceding each Distribution
Date, sufficient cash is available in the Pre-Funding Account in order to pay
any Pre-Funding Account Earnings due to the Certificateholders on such
Distribution Date.
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(ii) Upon termination of the Trust, any amounts
remaining in the Pre-Funding Account shall be distributed by the Trustee, as
paying agent, to the Certificateholders as an additional principal payment with
respect to their Certificates. In addition, at any time upon at least five (5)
Business Days' prior written notice to the Trustee, the Majority
Certificateholders may require the Trustee, as paying agent, to (i) liquidate
all Eligible Investments in the Pre-Funding Account and (ii) pay the full amount
contained in the Pre-Funding Account to the Certificateholders as an additional
principal payment with respect to their Certificates.
ARTICLE VI
The Certificates
SECTION 6.01. The Certificates. The Certificates shall be available in
minimum denominations of $50,000 Original Principal Amount and integral
multiples of $1,000 in excess thereof, except one Certificate may be issued in a
denomination which includes any residual amount, and shall in the aggregate
reflect a 100% Interest in the Contracts. Except as provided in Section 6.06
hereof, all Certificates issued under this Agreement shall be issued as
Book-Entry Certificates. If, pursuant to the provisions of Section 6.06, the
Certificates are issued as Definitive Certificates, the Certificates shall be
substantially in the form set forth in Exhibit B hereto and shall, on original
issue, be delivered to the Trustee for registration, authentication and
redelivery to or upon the order of the purchaser(s) thereof. No Certificates
shall be issued under this Agreement until the Trustee shall have received the
documents specified in Section 2.01. Upon each issuance of Certificates pursuant
to Section 2.05, the Trustee shall deliver to or upon the order of the
purchasers thereof a confirmation substantially in the form of Exhibit G. Upon
written request of each purchaser of a Certificate for a Definitive Certificate,
such Definitive Certificate shall be executed by manual or facsimile signature
on behalf of the Trustee by a Responsible Officer of the Trustee and attested by
the manual or facsimile signature of a Responsible Officer of the Trustee.
Definitive Certificates bearing the signatures of individuals who were at any
time Responsible Officers of the Trustee shall bind the Trustee notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Certificates or did not hold such
offices at the date of such Certificates. No Definitive Certificate shall be
valid or become obligatory for any purpose or shall be entitled to any benefit
under this Agreement unless and until there appears on the Definitive
Certificate a certificate of authentication substantially in the form provided
for in Exhibit B executed by the Trustee by manual signature, and such
certificate of authentication upon the Definitive Certificate shall be
conclusive evidence, and the only evidence, that the Definitive Certificate has
been duly authenticated and delivered hereunder and is entitled to the benefit
of this Agreement. Each Definitive Certificate shall be dated the date of its
authentication.
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SECTION 6.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee will keep at the Corporate Trust Office a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee will provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. All Certificates
shall be so registered. At all reasonable times and upon reasonable notice such
register or registers shall be open for inspection by the Servicer and the
Certificateholders.
(b) Upon surrender for registration of transfer of any
Definitive Certificate at the Corporate Trust Office and compliance with such
other rules and regulations of the Trustee, the Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, a new Definitive Certificate or Definitive Certificates in
authorized denominations of a like Original Principal Amount dated the date of
execution by the Trustee. Promptly following any recording of a transfer of a
Book-Entry Certificate, the Trustee shall send to each transferee and transferor
a confirmation of the Transfer (the confirmation to be substantially in the form
of Exhibit G. The Trustee shall promptly notify the Servicer of any registration
of transfer of a Certificate.
(c) At the option of a Certificateholder, Definitive
Certificates may be exchanged for other Definitive Certificates of authorized
denominations of a like aggregate Original Principal Amount upon surrender of
the Definitive Certificates to be exchanged at the Corporate Trust Office.
Whenever any Definitive Certificates are so surrendered for exchange, the
Trustee shall execute and authenticate the Definitive Certificates which the
Certificateholder making the exchange is entitled to receive.
(d) Every Certificate presented for registration of transfer
or exchange shall be duly endorsed by, or be accompanied by a written instrument
or instruments of transfer in form satisfactory to the Trustee, duly executed by
the holder thereof or his attorney duly authorized in writing, and shall also be
accompanied by a duly completed transferee certificate in the form of Exhibit
H-1 or H-2.
(e) The Trustee may require payment by the Certificateholder
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any exchange or transfer of Certificates. No service
charge to the Certificateholder will be made for any such transaction.
(f) Each Definitive Certificate surrendered to the Trustee for
registration of transfer or for exchange shall be canceled by it; and no
Definitive Certificate shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Trustee shall promptly
destroy the canceled Definitive Certificate held by it in accordance with its
customary procedures.
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SECTION 6.03. Mutilated, Destroyed, Lost or Stolen Definitive
Certificates. If (i) any mutilated Definitive Certificate is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Definitive Certificate, and (ii) there is
delivered to the Trustee such security or indemnity (or, if required by the
Trustee, an indemnity bond), at the expense of the holder of such Definitive
Certificate, as may be required by the Trustee to save it harmless, then in the
absence of notice to the Trustee that such Definitive Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Definitive Certificate, a new Definitive Certificate of like Original
Principal Amount. Upon the issuance of any new Definitive Certificate under this
Section 6.03, the Trustee may require the payment by the Certificateholder of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith. Any duplicate Definitive Certificate issued
pursuant to this Section 6.03 shall constitute complete and indefeasible
evidence of ownership of an Interest in the Trust, as if originally issued,
whether or not the mutilated, destroyed, lost or stolen Definitive Certificate
shall be found at any time.
SECTION 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Trustee and any
agent of the Servicer or the Trustee may deem and treat the Person in whose name
any Certificate shall be registered upon the Certificate Register on the
applicable Record Date as the absolute owner of such Certificate
(notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving distributions pursuant to Section 4.01 and for all other
purposes, and neither the Servicer nor the Trustee nor any agent of the Servicer
or the Trustee shall be affected by any notice to the contrary.
SECTION 6.05. Transfer Restrictions. Notwithstanding anything herein to
the contrary, no Certificate or any portion thereof may be offered, resold,
pledged or otherwise transferred except (i) to an "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3), (7) or (8) of Regulation D under the
Securities Act of 1933 (the "Securities Act"), or (ii) to a person who the
transferor reasonably believes is a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act purchasing for its own account or
for the account of a qualified institutional buyer and that is aware that the
offer, resale, pledge or transfer is being made in reliance on Rule 144A. Each
Definitive Certificate shall bear the legend set forth in Exhibit B and each
Book-Entry Certificate shall be deemed to bear the legend set forth in
Exhibit B.
SECTION 6.06. Book-Entry Certificates.
(a) Unless Definitive Certificates have been issued in
accordance with subsection (c) below, on each date of issuance pursuant to
Section 6.01, Book-Entry Certificates will be issued, and the Trustee shall
cause the Certificate Register to reflect such issuance of Certificates in such
amounts as have been issued, and such Book-Entry Certificates shall be
registered on the Certificate Register in the name of the Certificateholder
thereof. No Certificateholder will receive a Definitive Certificate representing
such Certificateholder's interest in the Certificate, except as provided above
and in subsection (c) below. Unless and until Definitive Certificates have been
issued pursuant to subsection (c) below:
(i) the provisions of this Section 6.06 shall be in
full force and effect;
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(ii) the Trustee may deal with the Certificateholders
of record in the Certificate Register for all purposes (including the
making of distributions on the Certificates);
(iii) to the extent that the provisions of this
Section 6.06 conflict with any other provisions of this Agreement, the
provisions of this Section 6.06 shall control;
(iv) unless and until Definitive Certificates are
issued pursuant to subsection (c) below, the Trustee will make
book-entry transfers among the Certificateholders in the Certificate
Register that shall be open for inspection during regular business
hours and shall contain a record of the name, address and taxpayer
identification number of each Certificateholder;
(v) the Trustee shall not register such transfers in
the Certificate Register except upon satisfaction of the conditions set
forth in Section 6.05;
(vi) each Certificateholder shall bear all of the
expenses it incurs in connection with any sale, transfer or exchange of
its Book-Entry Certificates;
(vii) no service charge may be made for any
registration of transfer or exchange of Book-Entry Certificates, but
the Trustee may require payment of a sum to effect a transfer or
exchange of Certificates under Section 6.02(c);
(viii) on the Business Day following any recording of
a transfer of a Book-Entry Certificate, the Trustee shall send to each
transferee and transferor a confirmation of the transfer (the
confirmation to be substantially in the form of Exhibit G hereto); and
(ix) notwithstanding anything herein to the contrary,
unless and until Definitive Certificates are issued pursuant to
subsection (c) below, the Trustee shall transmit payments in respect of
the Certificates, in accordance with the procedures set forth in
Section 4.01, on such Distribution Date to the Certificateholders of
record in the Certificate Register on the Record Date by wire transfer
of immediately available funds in accordance with such instructions as
have been previously provided in writing to the Trustee, or by bank
check posted by first class mail to such other address or account as
each such Certificateholder has previously designated in writing to the
Trustee at least two days prior to the applicable Distribution Date.
(b) Whenever notice or other communication to the
Certificateholders is required under this Agreement, unless and until Definitive
Certificates have been issued pursuant to subsection (c) below, the Trustee
shall promptly give all such notices and communications specified herein to be
given to Certificateholders to the Certificateholders.
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(c) If, with respect to the Certificates, the Majority
Certificateholders advise the Trustee in writing that the continuation of a
book-entry system through the Trustee is no longer in the best interests of the
Certificateholders, then the Trustee shall notify all Certificateholders of the
occurrence of any such event and of the availability of Definitive Certificates.
Upon delivery of registration instructions from the Certificateholders regarding
the transfer of all Book-Entry Certificates registered on the Certificate
Register for Definitive Certificates to be registered on the Certificate
Register in connection with the registration of Definitive Certificates in the
names of Certificateholders, the Trustee shall issue and deliver the Definitive
Certificates in accordance with the instructions of the Certificateholders. The
Trustee shall not be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
registration instructions. Upon the issuance of Definitive Certificates, the
Trustee shall recognize the Certificateholders in whose names such Definitive
Certificates are registered on the Certificate Register as Certificateholders
hereunder.
(d) As to any Book-Entry Certificate, the Certificateholder
shown on the Certificate Register from time to time shall be deemed the absolute
owner thereof for all purposes.
ARTICLE VII
The Servicer
SECTION 7.01. Liability of the Servicer.
(a) The Servicer shall be liable in accordance herewith only
to the extent of the obligations specifically undertaken by the Servicer herein.
Nothing in this Section 7.01 shall affect the Servicer's obligations under
Section 9.06(b).
(b) Neither the Servicer nor any of its directors, officers,
employees or agents shall be under any liability to the Trustee, the Trust or
the Certificateholders for taking any action or for refraining from taking any
action pursuant to this Agreement or for errors in judgment; provided, however,
that this provision shall not protect the Servicer or any such Person against
any liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in the performance of the Servicer's obligations and
duties hereunder or by reason of reckless disregard of the Servicer's
obligations and duties hereunder (collectively, "Servicer Breaches").
(c) The Servicer and its directors, officers, employees or
agents may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer will defend and indemnify the Trustee and the Certificateholders
against any and all costs, expenses, losses, damages, claims and liabilities in
respect of (i) any Servicer Breach and (ii) any action or omission with respect
to its servicing obligations regarding any Contract constituting willful
misfeasance, bad faith, negligence or reckless disregard of the Seller's or
Servicer's obligations and duties under such Contract.
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SECTION 7.02. Merger, Consolidation or Removal of the Servicer. Any
Person into which the Servicer may be merged or consolidated, or any Person
resulting from any merger or consolidation to which the Servicer shall be a
party, or any Person succeeding to the business of the Servicer or any
corporation more than 50% of the voting stock of which is, directly or
indirectly, owned by LFC, which executes an agreement of assumption to perform
every obligation of the Servicer hereunder, or any successor servicer as
selected by the Certificateholders upon removal of the Servicer for just cause
or otherwise as provided herein, shall be the successor of the Servicer
hereunder, without the execution or filing of any paper (except as aforesaid) or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
SECTION 7.03. Servicer Not To Resign. Subject to the provisions of
Sections 7.02 and 7.05, the Servicer shall not resign from the obligations and
duties hereby imposed on it without the consent of the Trustee, except upon a
determination that the performance of its duties hereunder is no longer
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. No resignation by the Servicer shall become
effective until a successor servicer (which may be the Trustee upon its
agreement in writing to act as a successor servicer) shall have assumed the
responsibilities and obligations of the Servicer in accordance with
Section 8.02.
SECTION 7.04. Maintenance of Office or Agency. The Servicer will
maintain an office or agency in the United States, where notices and demands to
or upon the Servicer in respect of the Certificates and of this Agreement may be
served. The Servicer will give to the Trustee written notice of the location of
such office or agency and of any change of location thereof. The Servicer hereby
initially designates its office at 1845 Walnut Street, 10th Floor, Philadelphia,
PA 19103, as the office or agency for such purposes.
SECTION 7.05. Delegation of Duties. The Servicer may at any time, with
the prior consent of the Majority Certificateholders, delegate any duties
hereunder to any corporation, including, without limitation, any corporation
more than 50% of the stock of which is owned, directly or indirectly, by LFC.
Such delegation shall not, however, relieve the Servicer of its responsibilities
with respect to such duties.
ARTICLE VIII
Default
SECTION 8.01. Events of Default.
(a) The occurrence of any of the following events shall
constitute an Event of Default:
(i) failure on the part of the Servicer duly to
observe or perform any of its obligations under Section 3.03, which
failure continues unremedied by the Servicer for a period of two (2)
Business Days after the date upon which any such obligation was
required to be performed;
(ii) failure on the part of the Servicer to pay into
the Certificate Account any amount required to be deposited therein
pursuant to Section 3.05 or 3.06, which failure continues unremedied by
the Servicer for a period of two (2) Business Days after the date upon
which such payment was due;
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(iii) failure on the part of the Servicer duly to
observe or perform in any material respect any other covenants or
agreements of the Servicer set forth in the Certificates or in this
Agreement, which failure with respect to such covenants and agreements
continues unremedied for a period of 10 calendar days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, or to
the Servicer and the Trustee, by the Majority Certificateholders;
(iv) the entry of a decree or order by a court of
competent jurisdiction for the appointment of a conservator, receiver
or liquidator for the Servicer in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60
consecutive days;
(v) the Servicer shall consent to the appointment of
a conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer or of or relating to substantially all
of its property, or admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors or voluntarily suspend payment of its
obligations; or
(vi) any failure of the Servicer to make any Advance
in the manner and at the time required to be made pursuant to Section
3.05 which continues unremedied for a period of one (1) Business Day
after the date of such failure.
The party discovering the existence of an Event of Default shall promptly
provide notice thereof to the other parties hereto.
(b) If an Event of Default has occurred and is continuing, the
Trustee (acting at the written direction of the Majority Certificateholders), by
notice in writing to the Servicer, shall terminate all the Servicer's
management, administrative, servicing, custodial and collection functions under
this Agreement (such termination being herein called a "Service Transfer" and
such functions being hereinafter referred to as "Servicing Functions") and all
such Servicer's rights to further Servicing Fees (except with respect to
servicing compensation which is owing to the Servicer but which such Servicer
had not received prior to such termination); provided, however, that the
Servicer shall not be relieved of any liability which has arisen prior to such
termination.
(c) Upon the receipt by the Servicer of such written notice,
and except as limited below, all Servicing Functions of the Servicer under this
Agreement, whether with respect to the Certificates or the Contracts or
otherwise, shall, automatically without further action by any Person, pass to
and be vested in, pursuant to and under this Section 8.01, a successor servicer
(the "Successor Servicer") appointed under Section 8.02.
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(d) Without limiting the generality of the foregoing, the
Successor Servicer is hereby authorized and empowered to execute and deliver on
behalf of the outgoing Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination. The outgoing Servicer agrees to cooperate with the Successor
Servicer in effecting the termination of the responsibilities and rights of the
outgoing Servicer to conduct Servicing Functions hereunder, including, without
limitation, the transfer to the Successor Servicer for administration by it of
all cash and other property which shall at the time be held by the outgoing
Servicer and as to which the Certificateholders shall be entitled hereunder or
which represent collections of taxes, assessments, Physical Damage Insurance
Policy premiums and comparable items for the account of the Obligors, all
amounts thereafter received with respect to the Contracts, and copies of all
documents and records necessary to enable the Successor Servicer to assume the
Servicing Functions hereunder. The outgoing Servicer shall transfer its
electronic records relating to the Contracts to the Successor Servicer in such
electronic form as the Successor Servicer may reasonably request and shall
transfer the Contract Files and all other records, correspondence and documents
relating to the Contracts to the Successor Servicer in the manner and at such
times as the Successor Servicer shall reasonably request. All reasonable costs
and expenses incurred by the Successor Servicer, including allocable
compensation of employees and overhead costs, in connection with the transfer of
servicing by the outgoing Servicer to the Successor Servicer shall be paid by
the outgoing Servicer upon presentation of reasonable documentation of such
costs and expenses such as bills, invoices and time records, but the outgoing
Servicer shall not be responsible for any costs or expenses of any subsequent
Service Transfer.
SECTION 8.02. Trustee To Act; Appointment of Successor Servicer. On and
after the time the Servicer receives notice of termination pursuant to Section
8.01, subject to the third to last sentence of this Section 8.02, the Trustee
(or, at the election of the Trustee, an affiliate of the Trustee designated by
the Trustee) shall automatically be appointed Successor Servicer in respect of
all Servicing Functions under this Agreement unless another Successor Servicer
is appointed; provided, however, that, notwithstanding anything contained in
this Agreement to the contrary, (i) the Trustee shall have no obligation
whatsoever in respect of any liability incurred by the Servicer at or prior to
the time of receipt by the Servicer of said notice; (ii) the Trustee as
Successor Servicer shall have no duty, responsibility, obligation or liability
for the acts and omissions of any prior Servicer; (iii) the Trustee shall have
no obligation to repurchase any Contract or make any Advance; (iv) the Trustee
shall have no obligation to pay any taxes or any other amounts required to be
paid by the Servicer; (v) the Trustee shall have no obligation to pay any of the
fees and expenses of any other party involved in this transaction; and (vi) the
Trustee shall have no liability or obligation with respect to any
indemnification obligations of any prior Servicer including the original
Servicer. The indemnification obligations of the Trustee, upon becoming a
Successor Servicer are expressly limited to those instances of gross negligence,
bad faith or willful misconduct of the Trustee in its role as Successor
Servicer. The Trustee shall be entitled to compensation therefor as provided in
Section 3.11, in addition to its compensation as Trustee as provided for in
Section 9.06. However, if the Trustee is unable or unwilling to act as Successor
Servicer hereunder, or if the Majority Certificateholders indicate they wish to
appoint a Successor Servicer other than the Trustee, the Trustee shall appoint a
Person specified by the Majority Certificateholders, and if the Majority
Certificateholders fail to specify a Person within seven (7) Business Days, the
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Trustee shall have the right to appoint a Person (so long as such Person has a
net worth of at least $50,000,000 and a regular business that includes the
servicing of installment payment obligations similar to the Contracts) as the
Successor Servicer hereunder in the assumption of all or part of the Servicing
Functions hereunder. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such Successor
Servicer from payments on the Contracts as the Trustee, the Majority
Certificateholders and such Successor Servicer shall reasonably agree. The
Trustee and such Successor Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
SECTION 8.03. Notification to Certificateholders. Upon any termination
of the Servicer or appointment of a successor to the Servicer, the Trustee shall
give prompt written notice thereof to each Certificateholder at its respective
address appearing in the Certificate Register.
SECTION 8.04. Effect of Service Transfer.
(a) After the Service Transfer, the outgoing Servicer shall
not have any further rights or obligations with respect to the Servicing
Functions and the Successor Servicer shall have all such rights and obligations,
except as provided in paragraph (b) below and except that the outgoing Servicer
will transmit or cause to be transmitted directly to the Successor Servicer,
promptly upon receipt and in the same form in which received, any amounts
received as payments upon or otherwise in connection with the Contracts and that
the outgoing Servicer shall continue to cooperate in the transfer of Servicing
Functions by providing information.
(b) A Service Transfer shall not affect the rights and duties
of the parties hereunder other than the Servicing Functions, obligations
expressly stated to be those of the Servicer and any changes required to provide
for the Successor Servicer's compensation. A Service Transfer shall not affect
the rights or obligations of LFC or any other outgoing Servicer other than
Servicing Functions, including LFC's and such outgoing Servicer's obligation, as
Servicer, to repurchase certain Contracts pursuant to Section 3.01 to the extent
such obligations arise prior to the Service Transfer (the Successor Servicer
being responsible for such obligations arising on and after the date of the
Service Transfer). The Successor Servicer shall, upon its appointment pursuant
to Section 8.02 and as part of its duties and responsibilities under this
Agreement, promptly take all action it deems necessary or appropriate so that
LFC and any other outgoing Servicer is paid or reimbursed all amounts it is
entitled to receive under this Agreement on each Distribution Date subsequent to
the date of the Service Transfer and upon termination of this Agreement. The
Successor Servicer shall also provide LFC and any other outgoing Servicer with a
copy of the report distributed pursuant to Section 4.02 on each Distribution
Date subsequent to the date of the Service Transfer and of any notices received
from the Trustee or the Certificateholders.
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ARTICLE IX
Concerning the Trustee
SECTION 9.01. Representations and Warranties of Trustee. The Trustee
represents and warrants that:
(a) The Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
(b) The Trustee has full power, authority and legal right to
execute, deliver and perform this Agreement, and, in its capacity as Trustee,
each other document to which it is or is to become a party, and is authorized to
execute, deliver and perform, in its respective capacities, this Agreement, and
such other documents.
(c) This Agreement has been duly authorized, executed and
delivered by the Trustee and constitutes a valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its terms, except as
the enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally, as such laws would apply in the event of a bankruptcy,
insolvency or reorganization or similar occurrence affecting the Trustee, and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(d) There is no legal action, suit, proceeding or
investigation before any court, agency or other governmental body pending or
threatened against it, and there is no order, writ, judgment or decree entered
by any court, agency or other governmental body against it, which either, in one
instance or in the aggregate, draws into question the validity of, seeks to
prevent the consummation of any of the transactions contemplated by or would
impair materially its ability to perform its obligations under, this Agreement
or any other document it is or becomes a party to in connection with this
Agreement.
SECTION 9.02. Duties and Responsibilities of Trustee Prior to Default
and During Default.
(a) The Trustee, prior to the occurrence of an Event of
Default under Section 8.01 hereof and after the remedying or waiving of all such
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement. When an Event
of Default has occurred and is known to a Responsible Officer of the Trustee
(which has not been remedied or waived), the Trustee shall exercise such of the
rights and powers vested in it by this Agreement and use the same degree of care
and skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform as to form to the requirements of this Agreement.
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(c) No provision of this Agreement shall be construed to
relieve the Trustee, in its capacity as Trustee hereunder, from liability for
its own bad faith, gross negligence or willful misconduct; provided, however,
that:
(i) prior to the occurrence of an Event of Default
known to a Responsible Officer of the Trustee under Section 8.01 hereof
and after the remedying of all such Events of Default which may have
occurred:
(A) the duties and obligations of the Trustee shall
be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable for, and shall have
no duties or obligations, except for the performance of such
duties and obligations as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be
read into this Agreement against the Trustee; and
(B) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) the Trustee shall not be personally liable for
an error of judgment made in good faith by a Responsible Officer of the
Trustee, unless it shall be proved that the Trustee was grossly
negligent in ascertaining the pertinent facts or in performing its
duties;
(iii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the Servicer or the
Majority Certificateholders; and
(iv) the Trustee shall not be charged with knowledge
of any Event of Default or failure by the Servicer to comply with the
obligations of the Servicer under this Agreement, unless a Responsible
Officer of the Trustee obtains actual knowledge of such Event of
Default or failure or the Trustee receives written notice of such Event
of Default or failure from the Servicer or the Certificateholders.
(d) None of the provisions contained in this Agreement shall
in any event require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the Successor Servicer
and be vested with the Servicing Functions in accordance with the terms of this
Agreement or as otherwise provided by law.
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SECTION 9.03. Certain Rights of Trustee. Subject to the provisions of
Section 9.02:
(a) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, Officers'
Certificate, certificate of Servicing Officer, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(b) the Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(c) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the request, order
or direction of any of the Certificateholders pursuant to this Agreement, unless
such Certificateholders shall have offered to the Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses and liabilities which
may be incurred therein or thereby; provided, however, that nothing contained
herein shall relieve the Trustee of the obligations, upon the occurrence of an
Event of Default (which has not been cured or waived) of which a Responsible
Officer of the Trustee has actual knowledge, to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs;
(d) the Trustee shall not be personally liable for any action
taken, suffered or omitted to be taken by it in good faith and believed by it to
be authorized or within the discretion, rights or powers conferred upon it by
this Agreement;
(e) prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or document
unless requested in writing to do so by the Majority Certificateholders;
provided, however, that if the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this Agreement,
the Trustee may require indemnity or security reasonably satisfactory to it
against such cost, expense or liability as a condition to so proceeding. The
reasonable expense of every such examination shall be paid to the Trustee
pursuant to Section 3.09 hereof or, if paid by the Trustee, shall be reimbursed
to the Trustee upon demand pursuant to Section 3.09 hereof (provided that such
examinations shall not be made more frequently than once in any 12-month period
unless as of the date of any such examination an Event of Default shall have
occurred since the immediately preceding examination);
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(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ (but excluding the Seller, the
Servicer and any of their respective Affiliates), and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent or
attorney appointed with due care by it hereunder;
(g) whenever in the administration of this Agreement the
Trustee or its agents shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, the
Trustee or its agents (unless other evidence herein specifically prescribed) may
require an Officer's Certificate or Opinion of Counsel from the Servicer
reasonably satisfactory to it; and
(h) no provision of this Agreement, other than Section
9.02(d), shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of its duties hereunder.
SECTION 9.04. Trustee Not Liable for Certificates or Contracts.
(a) The Trustee assumes no responsibility for the correctness
of the recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates). The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication of the Certificates)
or of any Contract or Related Document. The Trustee shall not be accountable for
the use or application by the Seller of the proceeds of the Contracts sold to
the Trust or for the use or application of any funds paid to the Servicer.
(b) Without limiting the generality of this subsection (b),
the Trustee shall have no duty (i) to see to any recording, filing or depositing
of this Agreement or any financing statements evidencing a security interest in
the Contracts or the Equipment, or to see to the maintenance of any such
recording or filing, (ii) to see to any insurance of the Equipment or to the
maintenance of any such insurance, (iii) to see to the payment or discharge of
any tax, assessment or other governmental charge or any lien or encumbrance of
any kind owing with respect to, assessed or levied against, any part of the
Trust, (iv) to confirm or verify the contents of any reports or certificates of
the Servicer delivered to the Trustee pursuant to this Agreement believed by the
Trustee to be genuine and to have been signed or presented by the proper party
or parties, or (v) to inspect the Contract Files and the property securing the
Contracts at any time or ascertain or inquire as to the performance or
observance of any of the Servicer's representations, warranties or covenants
contained herein or the Servicer's duties and obligations as Servicer, except as
set forth in Section 2.03. The Trustee shall not be responsible for any
misconduct or negligence attributable to the acts or omissions of the Servicer
in its capacity as Servicer of the Contracts or custodian of the Contract Files
or in any other capacity.
SECTION 9.05. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Trustee.
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SECTION 9.06. Compensation and Indemnification of Trustee.
(a) The Trustee shall be entitled to compensation (payable in
accordance with the provisions of Section 3.09) as agreed upon by the Majority
Certificateholders and the Trustee from time to time and the Trustee shall be
reimbursed by the Trust for all reasonable expenses, disbursements and advances
incurred or made by or on behalf of it in the administration of or in connection
with any of the provisions of this Agreement (including the reasonable
compensation and the expenses and disbursements of its counsel and of all agents
and other Persons not regularly in its employ), except any such expense,
disbursement or advance as may arise from its bad faith, gross negligence or
willful misconduct.
(b) The Trustee shall be entitled to indemnification (payable
in accordance with the provisions of Section 3.09) for, and shall be held
harmless against, any loss, liability or expense incurred by it in connection
with this Agreement, including the administration of the Trust and its duties
hereunder, including the reasonable expenses and attorneys' fees of defending
itself against any claim of liability arising hereunder, by the Trust; provided,
however, that the Seller shall provide such indemnification to the Trustee if
such loss, liability or expense results from a breach of any of the Seller's
representations or warranties set forth herein. The Trustee shall notify the
Seller, Servicer and Certificateholders promptly of any claim asserted against
the Trustee for which it may seek indemnity to the extent not prohibited by law.
However, failure by the Trustee to provide such notice shall not relieve the
Trust or the Seller, as applicable, of its obligations hereunder. Neither the
Trust nor the Seller need pay for any settlement made without its written
consent which consent shall not be unreasonably withheld. Notwithstanding
anything to the contrary contained herein, neither the Trust nor the Seller need
reimburse any expense or indemnify against any loss or liability incurred by the
Trustee as a result of the Trustee's own bad faith, gross negligence or willful
misconduct. In no event shall any officer of the Trustee have any personal
liability hereunder.
(c) The provisions of this Section 9.06 shall survive the
termination of this Agreement or the resignation or removal of the Trustee.
SECTION 9.07. Persons Eligible for Appointment as Trustee. The Trustee
hereunder shall at all times be a corporation organized and doing business under
the laws of the United States of America or of any state or the District of
Columbia which (a) has a combined capital and surplus of at least $50,000,000,
(b) is authorized under such laws to exercise corporate trust powers, (c) is
subject to supervision or examination by federal, state or District of Columbia
authority and the deposits of which are insured to the full extent permitted by
law by the Federal Deposit Insurance Corporation and (d) has the Required
Deposit Rating. If such corporation publishes reports of conditions at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 9.07, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 9.07, the Trustee shall resign
immediately in the manner and with the effect specified in Section 9.08.
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SECTION 9.08. Resignation and Removal; Appointment of Successor
Trustee.
(a) The Trustee may at any time resign and be discharged from
the trusts hereby created by giving written notice thereof to the Seller, the
Servicer and the Certificateholders. Upon receiving such notice of resignation,
the Majority Certificateholders shall promptly appoint a successor trustee, by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted appointment
within 60 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.
(b) If at any time (i) the Trustee shall cease to be eligible
in accordance with the provisions of Section 9.07 and shall fail to resign after
written request therefor by the Majority Certificateholders; or (ii) the Trustee
shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conversion or liquidation, then the
Majority Certificateholders may remove the Trustee. If the Trustee is removed
under the authority of the immediately preceding sentence, the Majority
Certificateholders shall promptly appoint a successor trustee, by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section 9.08
shall not become effective until acceptance of appointment by the successor
trustee as provided in Section 9.09.
(d) The Trustee shall be paid all amounts owed to it hereunder
upon its resignation or removal.
SECTION 9.09. Acceptance of Appointment by Successor Trustee.
(a) Any successor trustee appointed as provided in Section
9.08 shall execute, acknowledge and deliver to the Servicer, the
Certificateholders and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective, and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee herein. The Trustee ceasing to act
shall pay over to the successor trustee all moneys at the time held by it
hereunder and shall deliver and assign without recourse to the successor trustee
the Contract Files and Related Documents and statements held by it hereunder.
The Servicer and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may be reasonably required for more
fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
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(b) No successor trustee shall accept appointment as provided
in this Section 9.09 unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 9.07.
SECTION 9.10. Merger, Consolidation or Succession to Business of
Trustee. Any Person into which the Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any Person
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder; provided that such Person shall be eligible
under the provisions of Section 9.07, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 9.11. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust or property securing the Trust may at the time be located,
the Majority Certificateholders and the Trustee acting jointly shall have the
power and shall execute and deliver all instruments required to appoint one or
more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 9.11, such powers, duties, obligations, rights and
trusts as the Majority Certificateholders and the Trustee may consider necessary
or desirable. If the Majority Certificateholders shall not have joined in such
appointment within 60 days after the receipt by them of a request to do so, or
in case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. Each co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee hereunder, unless such co-trustee or separate trustee is a
natural Person.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations
conferred upon the Trustee in respect of the receipt, custody and
payment of moneys shall be exercised solely by the Trustee;
(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Trustee, to the extent also imposed upon
such separate trustee or co-trustee, shall be conferred or imposed upon
and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act) except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the corpus of the Trust
or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
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(iii) neither the Trustee nor any separate trustee or
co-trustee hereunder shall be personally liable by reason of any act or
omission of any other separate trustee or co-trustee hereunder; and
(iv) the Majority Certificateholders and the Trustee
acting jointly may at any time accept the resignation of or remove any
separate trustee or co-trustee, or if an Event of Default has occurred
and is continuing, the Trustee alone shall have the power to accept
such resignation or effect such removal..
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article IX.
(d) Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer and the Certificateholders.
(e) Any separate trustee or co-trustee may, at any time,
constitute the Trustee its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
(f) The Trust shall pay the reasonable compensation of any
separate or co-trustee.
(g) The Trustee may also appoint agents (not including the
Seller, Servicer or any of their respective Affiliates) to perform any of the
responsibilities of the Trustee, which agents shall have any or all the rights,
powers, duties and obligations of the Trustee conferred on them by such
appointment; provided that the Trustee shall continue to be responsible for its
duties and obligations under this Agreement.
SECTION 9.12. Access to List of Certificateholders. Upon written
request of the Servicer, the Trustee shall provide to the Servicer, within 15
days after receipt of such request, a list of the names and addresses of all
Certificateholders of record of the Trust as of the most recent Record Date.
Upon written request by three or more Certificateholders or by Persons holding
Certificates evidencing not less than 25% of the aggregate Principal Amount
thereof, the Trustee shall make available to such Certificateholders access
during business hours to a current list of Certificateholders, for purposes of
communicating with other Certificateholders with respect to their rights under
this Agreement. Every Certificateholder, by receiving and holding a Certificate,
agrees with the Trustee that none of the Seller, the Servicer or the Trustee
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Certificateholders hereunder, regardless of
the source from which such information was derived.
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SECTION 9.13. Rights of Certificateholders To Direct Trustee. The
Majority Certificateholders shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided, however, that,
subject to Section 9.02, the Trustee shall have the right to decline to follow
any such direction if the Trustee, being advised by counsel, determines that the
action so directed may not lawfully be taken, or if the Trustee in good faith
shall, by a Responsible Officer or Officers of the Trustee, determine that the
proceedings so directed may be illegal or involve the Trustee in personal
liability or be unduly prejudicial to the rights of Certificateholders not
parties to such direction; and provided further that nothing in this Agreement
shall impair the right of the Trustee to take any action deemed proper by the
Trustee and which is not inconsistent with such direction by the
Certificateholders.
SECTION 9.14. Tax Returns and Elections.
(a) The Tax Return Preparer, at its expense, shall prepare or
shall cause to be prepared any tax or information returns required to be filed
by the Trust and shall remit such returns to the Trustee for signature at least
five days before such returns are due to be filed. The Trustee shall execute
such returns. The Trustee, upon request, will furnish the Tax Return Preparer
with all information known to the Trustee as may be reasonably requested by the
Tax Return Preparer in connection with the preparation of such returns.
(b) The Servicer will make reasonable efforts to assist the
Tax Return Preparer in carrying out its obligations under Sections 4.02(b) and
9.14(a). However, the Servicer will have no obligation to provide data to the
Tax Return Preparer (or to create, assemble, aggregate, or disaggregate data)
except to the extent that such information already exists as a result of its
servicing activities.
(c) If the Trust is a partnership for federal income tax
purposes, (i) the Tax Return Preparer shall make the election under Section
761(a) of the Code to exclude the Trust from the partnership provisions of the
Code and (ii) if the trust is subject to the partnership audit provisions of the
Code, and the Tax Return Preparer is so eligible, the Tax Return Preparer shall
be the "tax matters partner." The Tax Return Preparer may make such additional
tax elections with respect to the Trust or on the tax returns of the Trust as it
may choose in its discretion. Any Certificate Owner, by acquiring a Certificate,
agrees to any tax election that has been or may in the future be made by the Tax
Return Preparer. However, the Tax Return Preparer shall not cause or permit the
Trust to elect to be treated as a corporation for any tax purpose.
SECTION 9.15. No Liability for Special Damages. In no event shall the
Trustee be liable for any special, punitive, indirect or consequential loss or
damage of any kind whatsoever (including, but not limited to, lost profit) even
if the Trustee had been advised of the likelihood of such loss or damage and
regardless of the form of action.
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SECTION 9.16. Force Majeure. The Trustee shall not be responsible or
liable for any failure or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances
beyond its reasonable control, including, without limitation, acts of God,
earthquakes, fire, floods, wars, civil or military disturbances, sabotage,
epidemics, riots, terrorist acts, loss or malfunctions of utilities, labor
disputes and acts of civil or military authority or governmental actions.
SECTION 9.17. Calculation Agent and Paying Agent.
(a) The Majority Certificateholders shall appoint a paying
agent for the purposes set forth in Section 2.01(a), 3.03(b), 3.03(d), 3.04(d),
3.09, 4.01, 5.04(b), 5.04(d) and any other provision hereof requiring a payment
to be made by the Trust, and a calculation agent for the purposes set forth in
Section 3.03(e) and 4.02. The Initial Purchaser, as sole Certificateholder,
hereby initially appoints the Trustee as paying agent and calculation agent. The
Trustee accepts such appointments and shall be entitled to compensation therefor
pursuant to Section 9.06.
(b) The Majority Certificateholders may remove any paying
agent or calculation agent upon written notice to the paying agent or
calculation agent, as applicable, the Seller, the Servicer and the Trustee;
provided that no such removal shall become effective until acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Majority Certificateholders and such successor paying agent or
calculation agent, as the case may be, and delivered to the Seller, Servicer and
the Trustee. The paying agent or calculation agent may resign at any time upon
written notice to the Seller, Servicer and the Trustee; provided that the
Trustee may resign as paying agent or calculation agent only if the Trustee also
resigns as Trustee in accordance with Section 9.08.
(c) All rights, benefits, immunities, privileges and
indemnities provided to the Trustee under this Article IX shall extend to and
apply for the benefit of the Trustee in each other capacity in which it shall
act hereunder, including in its capacities as paying agent and calculation
agent, as applicable.
ARTICLE X
Termination
SECTION 10.01. Termination upon Maturity or Liquidation of All
Contracts.
(a) Except for the obligations of the Trustee to make the
final payments to the Certificateholders as hereafter set forth, the obligations
of the Trustee and Servicer to furnish the statements referred to in Sections
4.02 and 4.03 with respect to the final year of the Trust's existence and the
obligation of the Servicer to indemnify the Trustee as provided in Section 9.04,
the respective obligations and responsibilities of the Seller, the Servicer and
the Trustee under this Agreement and the Trust shall terminate upon the earliest
of (i) the payment to Certificateholders of all amounts required to be paid to
them pursuant to this Agreement, (ii) if all the Contracts have matured or have
been otherwise liquidated, the Distribution Date that occurs in the month that
is six months following the completion of all collection efforts with respect to
any unpaid amounts under the Contracts, and (iii) the Distribution Date on which
the Seller purchases all the Contracts pursuant to Section 10.02 (the "Final
Maturity Date"). The Final Maturity Date is expected to occur no later than July
1, 2045.
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(b) Notice of termination shall be given by the Trustee by
registered mail, postage prepaid, at least five Business Days but not more than
60 days prior to the date fixed for the final distribution to the
Certificateholders appearing in the Certificate Register. Such notice of
termination shall specify: (i) the Distribution Date upon which final payment of
the Certificates will be made upon presentation and surrender of the
Certificates; (ii) the amount of any such final payment; (iii) that the Record
Date otherwise applicable to such Distribution Date is not applicable, payments
being made only upon surrender and cancellation of the Certificate at the
Corporate Trust Office; and (iv) the location of the office or agency then
maintained by the Trustee at which presentation and surrender of the
Certificates shall be made.
(c) In the event that a Certificateholder shall not surrender
its Certificate for final payment within six months after the time specified in
the above-mentioned notice, the Servicer shall give a second notice by mail to
the Certificateholder. If within one year after the second notice the
Certificate shall not have been surrendered for final payment, the Servicer
shall publish notice concerning surrender of the Certificate in a newspaper of
general circulation in the City of New York, New York, printed in the English
language and customarily published on each Business Day, which notice may state
a date, at least 30 days and not more than 60 days from the date of such notice,
after which (if any outstanding Certificate is not by then surrendered) the
remaining corpus of the Trust will be paid to the Servicer as additional
servicing compensation, and the trusts created by this Agreement and all the
obligations and responsibilities of the Seller, the Servicer and the Trustee
hereunder shall terminate. Thereafter, any future claim for payment by a
Certificateholder shall be referred to the Servicer; provided, however, that
neither the Servicer, the Trustee or the Seller shall be liable to any
Certificateholder for any moneys paid to a public official pursuant to any
applicable abandoned property, escheat or similar law. The cost of such notice
shall be recoverable by the Servicer from the Certificate Account.
(d) Upon termination of the obligations and responsibilities
of the Seller, the Servicer and the Trustee as set forth in this Agreement, and
the Certificateholders' respective surrender of their Certificates to the
Trustee, the Trustee shall thereupon deliver to each surrendering
Certificateholder, in the order and manner set forth in Sections 3.09 and 4.1
hereof, on the final Distribution Date an amount equal to the Outstanding
Principal Amount of such Certificateholder's Certificate plus all accrued but
unpaid interest thereon at the Certificate Interest Rate.
SECTION 10.02. Liquidation. The Seller may, at its option, repurchase
all (but not less than all) the Contracts remaining in the Trust as of the last
day of any calendar month with respect to which the Pool Factor on the first day
of the Collection Period beginning in the preceding calendar month is less than
..1000000, at a price equal to the aggregate Purchase Amount of each of the
Contracts, calculated as of the last day of the calendar month as of which such
repurchase occurs, so long as the Seller shall have given the Trustee and the
Servicer written notice of its intention to repurchase all such Contracts not
later than the second Business Day preceding the Determination Date occurring
immediately following the last day of the calendar month as of which such
repurchase occurs. The Seller shall on the day before the Distribution Date
immediately following such Determination Date deposit in the Certificate Account
the purchase price for all such Contracts in immediately available funds,
whereupon the Trustee will sell all such Contracts to the Seller without
recourse, representation or warranty, and will make all required distributions
to Certificateholders as provided in Section 10.01.
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ARTICLE XI
Miscellaneous Provisions
SECTION 11.01. Amendment.
(a) This Agreement may be amended from time to time by the
Seller, the Servicer and the Trustee, with the consent of the Majority
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Certificateholders; provided, however,
if any party to this Agreement is unable to sign any amendment due to its
dissolution, winding up or comparable circumstances, then the consent of the
Majority Certificateholders shall be sufficient to amend this Agreement without
such party's signature; provided, further, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, collection of
payments on Contracts or distributions which are required to be made on any
Certificate without the consent of each affected Certificateholder or (ii)
reduce the aforesaid percentage of Interests required to consent to any such
amendment, without the consent of the holders of all Certificates then
outstanding. Any such amendment and any such consent by the holder of a
Certificate shall be conclusive and binding on such holder and upon all future
holders of such Certificate and of any Certificate issued in exchange or in lieu
therefor whether or not notation thereof is made on such Certificate.
(b) The Seller, the Servicer and the Trustee may each decline
to enter into any amendment hereto, if, in its respective reasonable judgment,
its own duties, rights or immunities shall be adversely affected thereby.
(c) Promptly after the execution of any amendment or consent
pursuant to Section 11.01(a), the Trustee shall furnish written notification of
the substance of such amendment to each Certificateholder.
(d) It shall not be necessary for the consent of
Certificateholders under this Section 11.01 that Certificateholders approve the
particular form of any proposed amendment, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
- 66 -
(e) In connection with any amendment pursuant to this Section,
the Trustee shall be entitled to receive an Opinion of Counsel addressed and
delivered to the Trustee to the effect that such amendment is authorized or
permitted by this Agreement and that all conditions precedent contained in this
Agreement have been satisfied.
SECTION 11.02. Limitation on Rights of the Certificateholders.
(a) The death, incapacity, insolvency or dissolution of any
Certificateholder shall not operate to terminate this Agreement or the Trust,
nor entitle the Certificateholder's legal representatives or heirs to claim an
accounting or take any action or proceeding in any court for a partition or
winding-up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
(b) Except as provided herein, no Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of the Trust or the obligations of the parties hereto.
(c) No Certificateholder shall have any right by virtue or by
availing itself of any provision of this Agreement to institute any suit, action
or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Certificateholder previously shall have given to the
Trustee a written notice of default and of the continuance thereof, as
hereinbefore provided, and (i) the Event of Default has arisen from the
Servicer's failure to deposit amounts required to be deposited to the
Certificate Account when due and (ii) Certificateholders evidencing not less
than 25% of the Certificateholders' Interests have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity or
security as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 30 days after its receipt of
such notice, request and offer of indemnity, shall have failed or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Certificateholders shall
have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb, or prejudice
the rights of any other Certificateholders, or to obtain or seek to obtain
priority over or preference to any other such Certificateholder, or to enforce
any right under this Agreement, except in the manner herein provided and for the
equal, ratable, and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 11.02, the Certificateholders
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
SECTION 11.03. GOVERNING LAW. THIS AGREEMENT AND EACH CERTIFICATE SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, BUT INCLUDING, WITHOUT
LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK.
- 67 -
SECTION 11.04. Notices. (a) All demands, requests, directions, notices
and communications hereunder shall be in writing and shall be deemed to have
been duly given if (i) personally delivered, (ii) sent by priority or certified
mail, postage prepaid, (iii) by recognized overnight courier or (iv) by fax with
confirmation of transmission, to the parties hereto at the following address
respective addresses:
If to the Seller:
LEAF Funding Inc.
110 S. Poplar Street, Suite 101
Wilmington, DE 19801
Facsimile No.: (212) 640-6330
Attention: Chairman/CEO
If to the Servicer:
LEAF Financial Corporation
1845 Walnut Street, 10th Floor
Philadelphia, PA 19103
Facsimile No.: 215-640-6363
Attention: President/COO
If to the Trustee:
The Bank of New York
101 Barclay Street, 8W
New York, NY 10286
Facsimile No.: (212) 815-3883
Attn: Asset Backed Securities Group
If to the Initial Purchaser:
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
4 World Financial Center
250 Vesey Street, 9th Floor
Municipal Capital Markets
New York, NY 10080
Facsimile No.: (212) 449-9856
Attention: Eric Zoller
or at such other address as the party may designate by notice to the other
parties hereto, which shall be effective when received. Any notice to or demand
upon the Trustee with respect to the Certificates or this Agreement may be
served upon the Trustee at its address above. The Trustee will provide each
Certificateholder with prior written notice of any change in the address of such
office.
- 68 -
(b) All demands, requests, directions, notices and
communications among any of the Seller, the Servicer, the Trustee and the
Certificateholders shall be deemed to have been given (i) on the date of receipt
by any officer of the party entitled to receive the same at the address of such
party for notices if sent by personal delivery, overnight courier or fax (and,
in the case of the Trustee, receipt of such fax is confirmed by telephone), or
(ii) in the case of the Seller, the Servicer and the Certificateholders, on the
third Business Day after the mailing thereof to such address if sent by priority
or certified mail or, in the case of the Certificateholders, U.S. mail, postage
prepaid. When a Certificateholder is a Person or entity other than the Trustee
or the Initial Purchaser, any notice required or permitted to be mailed to a
Certificateholder shall be given by U.S. mail, postage prepaid, at the address
of such holder as shown in the Certificate Register. Any notice so mailed within
the time prescribed in this Agreement shall be conclusively presumed to have
been given, whether or not every Certificateholder receives such notice.
SECTION 11.05. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of any Certificate
or the rights of the holder thereof.
SECTION 11.06. Obligation To Recognize Only the Trustee.
Notwithstanding any other provision of this Agreement or of the Certificates, it
is understood and agreed that (a) the Trustee hereunder shall retain legal title
to the Contracts and (b) the Obligors shall not have any obligation to recognize
or deal with anyone other than the Trustee as assignee of the Contracts, or the
Servicer as agent of such assignee, and their respective successors and assigns,
with respect to the rights, benefits and obligations of the assignee.
SECTION 11.07. Certificates Nonassessable and Fully Paid. It is
intended that Certificateholders shall not be personally liable for obligations
of the Trust and that the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever. Full payment for the
purchase of the Certificates shall be deemed to have been made upon
authentication thereof by the Trustee pursuant to Section 2.05.
SECTION 11.08. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
SECTION 11.09. Intention of Parties. The execution and delivery of this
Agreement shall constitute an acknowledgment by the Seller, the Servicer and the
Trustee on behalf of the Certificateholders that (a) the Trust will not be
classified as an entity taxable as a corporation, (b) for periods during which
all the Certificates of the Trust are owned by a single Certificate Owner, the
Trust will be disregarded as a separate entity from such Certificate Owner and
all the assets and obligations of the Trust will be treated as assets and
obligations of the Certificate Owner, and (c) for all other periods, the Trust
will be classified as a partnership, or, if the election is made under section
761(a) of the Code, will be subject to the rules of that section. The powers
granted and obligations undertaken in this Agreement shall be construed so as to
further such intent.
- 69 -
SECTION 11.10. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 11.11. Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
SECTION 11.12. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Beneficiaries (to the
extent provided in this Agreement) and their respective successors and permitted
assigns. Except as otherwise provided in this Article XI, no other Person will
have any right or obligation hereunder.
SECTION 11.13. Non-Petition Covenant. The Seller, the Servicer and the
Trustee each agrees that it will not institute against, or join any other Person
or entity in instituting against, the Trust any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under any
federal or state bankruptcy or similar law for one calendar year and a day after
the Certificates are paid in full.
SECTION 11.14. Actions by Certificateholders.
(a) Wherever in this Agreement a provision is made that an
action may be taken or a notice, demand or instruction given by
Certificateholders, such action, notice or instruction must be taken or given by
all Certificateholders, unless such provision requires a specific Interest of
Certificateholders.
(b) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by Certificateholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Certificateholders in
Person or by an agent duly appointed in writing; and except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where required, to the Servicer.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Agreement and (subject to
Section 9.02) conclusive in favor of the Trustee, the Servicer and the Seller,
if made in the manner provided in this Section 11.14.
(c) The fact and date of the execution by any
Certificateholder of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Certificateholder shall bind every holder of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, or omitted to
be done by the Trustee or the Servicer in reliance thereon, whether or not
notation of such action is made upon such Certificate.
- 70 -
SECTION 11.15. True Sale.
It is the express intent of the parties hereto that the
conveyance of the Trust Corpus by the Seller to the Trustee pursuant to Article
II of this Agreement be, and be construed as, an absolute sale thereof to the
Trustee. It is, further, not the intention of the parties that such conveyance
be deemed a pledge thereof by the Seller to the Trustee to secure a borrowing by
the Seller from the Trustee. However, in the event that, notwithstanding the
intent of the parties, the assets constituting the Trust Corpus are held to be
the property of the Seller, or if this Agreement is held or deemed to constitute
or have created a loan, lending transaction or an extension of credit by the
Trustee to the Seller, then and only then (i) this Agreement shall be deemed,
effective as of the date hereof, to be a security agreement within the meaning
of the Uniform Commercial Code of the State of New York and (ii) the conveyance
by the Seller to the Trustee provided for in this Agreement shall be deemed,
effective as of each Closing Date, to be an assignment and a grant by the Seller
to the Trustee, and the Seller does hereby grant and assign to the Trustee, for
the benefit of the Certificateholders, a security interest in, and lien upon,
all of the assets that constitute the Trust Corpus, whether now owned or
hereafter acquired.
The Seller, for the benefit of the Trustee and the
Certificateholders, shall, in connection with the perfection of the security
interest described in the preceding paragraph of this Section 11.15, on or
before the Closing Date file the financing statements described in Exhibit C and
deliver to the Trustee a copy of such filed financing statements. The Seller
shall also arrange for the filing of any appropriate Uniform Commercial Code
continuation statements as may be necessary or appropriate to continue the
perfection of the security interest of the Trustee in the Trust Corpus, and all
of the proceeds thereof, whether now owned or hereafter acquired and shall
promptly deliver to the Trustee a copy of such continuation statements. The
Seller, for the benefit of the Trustee and the Certificateholders, shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement is held or deemed to constitute or have created a
loan, lending transaction or an extension of credit by the Trustee to the
Seller, then and only then (i) this Agreement shall be deemed, effective as of
the date hereof, to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance by the Seller
to the Trustee provided for in this Agreement shall be deemed, effective as of
each Closing Date, to be an assignment and a grant by the Seller to the Trustee,
and the Seller does hereby grant and assign to the Trustee, for the benefit of
the Certificateholders, a security interest in, and lien upon, all of the assets
that constitute the Trust Corpus, whether now owned or hereafter acquired, such
security interest shall be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
- 71 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, all as of the
day and year first above written.
LEAF FUNDING, INC., as Seller
By: /s/ MILES HERMAN
-----------------------------------
Name: Miles Herman
Title: Senior Vice President
LEAF FINANCIAL CORPORATION, as Servicer
By: /s/ MILES HERMAN
-----------------------------------
Name: Miles Herman
Title: President, COO
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED, as Initial Purchaser
By: /s/ EDWARD SISK
-----------------------------------
Name: Edward Sisk
Title: Managing Director
THE BANK OF NEW YORK, in its capacity as Trustee,
paying agent and calculation agent
By: /s/ JONATHAN FARNER
-----------------------------------
Name: Jonathan Farber
Title: Assistant Vice President
- 72 -
EXHIBIT A
FORM OF ASSIGNMENT
LEAF FUNDING INC.
MUNICIPAL TAX-EXEMPT TRUST LEAF 2005
Assignment
FOR VALUE RECEIVED, LEAF Funding Inc., a Delaware corporation
("Seller"), does hereby sell, transfer, assign, deliver, set over and convey to
The Bank of New York, as Trustee under the Pooling and Servicing Agreement dated
as of July 13, 2005 (the "Pooling and Servicing Agreement"), among Seller, as
originator of the Municipal Tax-Exempt Trust LEAF 2005 (the "Trust") and Seller
of the Contracts, LEAF Financial Corporation, as Servicer, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as Initial Purchaser, and The Bank of New
York, as Trustee, all right, title and interest of the Seller in and to: (a) the
Contract(s) listed on the Sale Certificate dated ____________, _____, delivered
by the Seller to the Trustee (collectively, the "Purchased Contracts") and all
moneys due and to become due thereunder on or after the date hereof (the
"Cut-Off Date"); (b) the Equipment financed by the Purchased Contracts; (c) any
proceeds with respect to the Purchased Contracts from claims on any Physical
Damage Insurance Policy or other insurance covering the Equipment financed by
the Purchased Contracts; and (d) the proceeds of any and all of the foregoing.
The foregoing assignment does not constitute and is not intended to result in an
assumption by the Trustee or any Certificateholder of any obligation of the
Seller or Servicer to the Obligors or any other Person in connection with the
Purchased Contracts, the Contract Files, any Physical Damage Insurance Policy or
other insurance covering the Equipment, or under any agreements or instruments
relating to any of the foregoing.
This Assignment is made pursuant to and upon the
representations and warranties on the part of the undersigned contained in the
Pooling and Servicing Agreement.
Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment
to be duly executed as of the [ ] day of [ ], 20___.
LEAF FUNDING INC.
By:_______________________
Name:
Title:
A-1
EXHIBIT B
[Form of Definitive Certificate]
[Face of Definitive Certificate]
THIS CERTIFICATE IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE
HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES FOR THE BENEFIT OF THE
TRUST THAT NEITHER THIS CERTIFICATE NOR ANY PORTION HEREOF MAY BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (I) TO AN "ACCREDITED INVESTOR"
WITHIN THE MEANING OF RULE 501(A)(1), (2), (3), (7) OR (8) OF REGULATION D UNDER
THE SECURITIES ACT, OR (II) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER AND THAT IS AWARE THAT THE OFFER, RESALE, PLEDGE OR TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A.
REGISTERED CUSIP NO.
Certificate Number R-1 Original Principal Amount $
Dated Date:
Final Maturity Date: July 1, 2045
Distribution Date: The 25th calendar day of each month (or if the 25th is not a
business day, the next business day), commencing August 25, 2005
MUNICIPAL TAX-EXEMPT TRUST LEAF 2005
ADJUSTABLE ASSET-BACKED CERTIFICATES - SERIES A
Evidencing an undivided fractional interest in a Trust,
the property of which includes a portfolio of interests in
state and local government installment payment master
agreements, term lease master agreements, financing
agreements or similar contracts sold to the Trust by
LEAF FUNDING, INC.
THE ORIGINAL PRINCIPAL AMOUNT EVIDENCED BY THIS CERTIFICATE WILL BE REDUCED BY
DISTRIBUTIONS ON THIS CERTIFICATE ALLOCABLE TO PRINCIPAL AND BY WRITEDOWNS OF
PRINCIPAL IN ACCORDANCE WITH THE POOLING AND SERVICING AGREEMENT GOVERNING THE
TRUST. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE
ORIGINAL PRINCIPAL AMOUNT SHOWN ABOVE. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT OUTSTANDING PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE. On
the date of the initial issuance of the Certificates, the Trustee is The Bank of
New York.
B-1
THIS CERTIFIES THAT [ ] is the registered owner of an
undivided fractional interest (the "Interest") in the percentage obtained by
dividing the Outstanding Principal Amount of this Certificate by the aggregate
Outstanding Principal Amount of all Adjustable Asset-Backed Certificates -
Series A (the "Certificates"), issued by Municipal Tax-Exempt Trust LEAF 2005
(the "Trust"). The Trust has been created pursuant to a Pooling and Servicing
Agreement dated as of July 13, 2005 (as amended, restated, modified or
supplemented from time to time, the "Agreement"), among LEAF Funding Inc., as
originator of the Trust and Seller of the Contracts (the "Seller"), LEAF
Financial Corporation, as Servicer of the Contracts (the "Servicer"), Merrill
Lynch, Pierce, Fenner & Smith Incorporated (the "Initial Purchaser") and The
Bank of New York, as Trustee of the Trust (the "Trustee"). The assets of the
Trust include the rights and benefits (but not the obligations) of the Seller
under certain state and local government installment payment agreements and term
lease master agreements and under certain financing agreements or similar
contracts (including, without limitation, all moneys due and to become due
thereunder after the applicable Cut-Off Date), certain benefits under certain
insurance policies and the benefits of certain accounts to be maintained for the
benefit of the Trust.
To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement.
Subject to the terms and conditions of the Agreement
(including the availability of funds for monthly distributions), and until the
obligations created by the Agreement shall have terminated in accordance
therewith, the Trustee shall distribute on the twenty-fifth (25th) calendar day
of each month (or if such twenty-fifth (25th) day is not a Business Day, the
next succeeding Business Day) (the "Distribution Date"), commencing August 25,
2005, to the person in whose name this Certificate is registered at the close of
business on the last day of the calendar month immediately preceding the month
of such distribution (the "Record Date"), the Certificateholder's Interest of
all amounts required to be paid to Certificateholders pursuant to Section 3.09
of the Agreement, but only from certain funds available in the Certificate
Account (and, in certain instances, the Reserve Account and Pre-Funding Account)
on such Distribution Date. The funds deposited in the Certificate Account and
Reserve Account are limited to certain amounts paid on or with respect to the
Contracts, all as more specifically set forth in the Agreement. Under the
Agreement, any funds advanced with respect to the Contracts, proceeds of
repurchases and purchases respecting the Contracts and (under certain
circumstances) certain amounts in the Reserve Account and Pre-Funding Account
are also required to be made available for monthly distributions to
Certificateholders.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement, as amended, restated, modified
or supplemented from time to time, the Certificateholder by virtue of the
acceptance hereof assents and is bound. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee, at its principal corporate trust office, 101
Barclay Street, 8W, New York, NY 10286.
Each Certificateholder agrees, by its acceptance hereof, that
it will not institute against, or join any other Person or entity in instituting
against, the Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other proceeding under any federal or state
bankruptcy or similar law for one calendar year and a day after the Certificates
are paid in full.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
B-2
The Agreement permits, at any time under certain circumstances
and with certain exceptions therein provided, the amendment thereof and the
modification of the rights and obligations of the Seller, the Servicer, the
Certificateholders and the Trustee by the Seller, the Servicer, the Trustee and
the Certificateholders. Any such amendment and any such consent by the holder of
this Certificate shall be conclusive and binding on such holder and upon all
future holders of this Certificate and of any Certificate issued in exchange
hereof or in lieu hereof whether or not notation thereof is made upon this
Certificate.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register kept by the Trustee upon surrender of this
Certificate for registration of transfer at the Corporate Trust Office, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by, the Certificateholder or such
Certificateholder's attorney duly authorized in writing, and thereupon one or
more new Definitive Certificates of authorized denominations and for the same
aggregate Original Principal Amount will be issued to the designated transferee
or transferees.
Definitive Certificates are issuable only as registered
Certificates without coupons in minimum denominations of $50,000 Original
Principal Amount, or integral multiples of $1,000 in excess thereof (except that
a single Certificate may be issued in a denomination that includes any residual
amount). As provided in the Agreement and subject to certain limitations therein
set forth, Definitive Certificates are exchangeable for new Definitive
Certificates evidencing a like aggregate Original Principal Amount, as requested
by the Certificateholder surrendering the same.
No service charge may be imposed for any such registration of
transfer or exchange but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
The Seller, the Servicer and the Trustee and any agent of any
of them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Servicer, the Trustee
or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement, with certain
exceptions set forth therein, shall terminate upon the earliest of (i) the
payment to Certificateholders of all amounts required to be paid to them
pursuant to the Agreement, (ii) if all the Contracts have matured or have been
otherwise liquidated, the Distribution Date that occurs in the month that is six
months following the completion of all collection efforts with respect to any
unpaid amounts under the Contracts, and (iii) the Distribution Date on which the
Seller purchases all the Contracts in accordance with the Agreement.
[Remainder of page intentionally left blank]
B-3
IN WITNESS WHEREOF, the Trust has caused this Certificate to
be duly executed by the signature of a duly authorized officer of the Trustee as
of the date first set forth above.
Dated: MUNICIPAL TAX-EXEMPT TRUST LEAF 2005
By: The Bank of New York, not in its individual
capacity, but solely as Trustee,
By:_____________________________________________
Authorized Officer
Trustee's Certificate of Authentication:
The Bank of New York, as Trustee, certifies that this is one of the Definitive
Certificates referred to in the Agreement.
THE BANK OF NEW YORK,
as Trustee,
By:____________________________
Authorized Officer
B-4
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto (name and address including zip code and taxpayer I.D. or Social
Security Number of assignee)
__________________________________________________________
__________________________________________________________ the within
Certificate and does hereby irrevocably constitute and appoint
____________________________________ to transfer the said Certificate on the
books kept for registration thereof with full power of substitution in the
premises.
Dated: ____________________ ________________________ (1)
Signature Guaranteed:
_________________________
- -----------------
(1) NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Certificate in every
particular, without alteration, enlargement or any change whatsoever.
B-5
EXHIBIT C
UCC FINANCING STATEMENTS
(See Attached)
C-1
============================
- ----------------------------
- ----------------------------
============================
File: Secretary of State of the State of Delaware
UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS (front and back) CAREFULLY
- -------------------------------------------------------------------------
A. NAME & PHONE OF CONTACT AT FILER [optional]
- -------------------------------------------------------------------------
B. SEND ACKNOWLEDGMENT TO: (Name and Address)
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
- ------------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name (1a or 1b) - do not abbreviate or combine names
-----------------------------------------------------------------------------------------------------------------------------
OR 1a. ORGANIZATION'S NAME
Leaf Funding, Inc.
-----------------------------------------------------------------------------------------------------------------------------
1b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
- ----------------------------------------------------------------- --------------------------------- ------- -------------- ---------
1c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
110 S. Poplar Street, Suite 101 Wilmington DE 19801 USA
- ----------------------------------------------------------------- --------------------------------- ------- -------------- ---------
1d. TAX ID #: SSN OR ADD'L INFO 1e. TYPE OF 1f. JURISDICTION OF 1g. ORGANIZATIONAL ID #, if any
EIN RE ORGANIZATION ORGANIZATION
ORGANIZATION
DEBTOR
Corporation Delaware 3642642
NON
- ------------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name (2a or 2b) - do not abbreviate or combine names
-----------------------------------------------------------------------------------------------------------------------------
2a. ORGANIZATION'S NAME
OR
-----------------------------------------------------------------------------------------------------------------------------
2b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
- ----------------------------------------------------------------- --------------------------------- ------- -------------- ---------
2c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
- ----------------------------------------------------------------- --------------------------------- ------- -------------- ---------
2d. TAX ID #: SSN OR ADD'L INFO 2e. TYPE OF 2f. JURISDICTION OF 2g. ORGANIZATIONAL ID #, if any
EIN RE ORGANIZATION ORGANIZATION
ORGANIZATION
DEBTOR
NON
- ------------------------------------------------------------------------------------------------------------------------------------
3. SECURED PARTY'S NAME (of NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) insert only one secured party name (3a or 3b)
-----------------------------------------------------------------------------------------------------------------------------
3a. ORGANIZATION'S NAME The Bank of New York, as Trustee for the benefit of the Certificateholders of the Municipal
Tax-Exempt Trust LEAF 2005
OR
-----------------------------------------------------------------------------------------------------------------------------
3b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
- ----------------------------------------------------------------- --------------------------------- ------- -------------- ---------
3c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
101 Barclay Street, 8W New York NY 10286 USA
- ----------------------------------------------------------------- --------------------------------- ------- -------------- ---------
4. This FINANCING STATEMENT covers the following collateral:
All right, title and interest of Debtor, whether now owned or hereafter acquired, in, to and under all of the assets that
constitute the Trust Corpus under that certain Pooling and Servicing Agreement among Seller, Buyer, and the other signatories
thereto, dated as of July 13, 2005, as the same may be amended from time to time, all as further described on EXHIBIT A attached
hereto.
THIS FINANCING STATEMENT IS FILED TO EVIDENCE THE SALE, TRANSFER, CONVEYANCE AND ASSIGNMENT TO BUYER OF ALL SELLER'S
RIGHT, TITLE AND INTEREST IN, TO AND UNDER THE ASSETS DESCRIBED ABOVE, AND TO PERFECT THE BUYER'S OWNERSHIP INTEREST THEREIN.
- ------------------------------------------------------------------------------------------------------------------------------------
5. ALTERNATIVE DESIGNATION [if applicable]: LESSEE/LESSOR CONSIGNEE/CONSIGNOR BALIEE/BAILOR SELLER/BUYER AG. LIEN NON-UCC FILING
- ------------------------------------------------------------------------------------------------------------------------------------
6. This FINANCIAL STATEMENT is to be filed [for record] (or 7. Check to REQUEST SEARCH REPORT(S) on Debtors(s) All Debtors
recorded) in the REAL ESTATE RECORDS. Attach Addendum Debtor 1 Debtor 2 [ADDITION FEE] [optional]
[if applicable]
- ------------------------------------------------------------------------------------------------------------------------------------
8. OPTIONAL FILLER REFERENCE DATA 182332-0004
- ------------------------------------------------------------------------------------------------------------------------------------
C-2
EXHIBIT A
TO
UCC-1 FINANCING STATEMENT
SELLER: Leaf Funding, Inc.
BUYER: The Bank of New York, as Trustee for the benefit of the
Certificateholders of the Municipal Tax-Exempt Trust LEAF 2005
- --------------------------------------------------------------------------------
All right, title and interest of Seller, whether now owned or
hereafter acquired, in, to and under the all of the assets that constitute the
Trust Corpus.
Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in that certain Pooling and
Servicing Agreement among Seller, Buyer and the other
signatories thereto, dated as of July 13, 2005, as the same
may be amended from time to time (the "Pooling and Servicing
Agreement"). A copy of the Pooling and Servicing Agreement and
the related Assignments are on file with the Seller and Buyer.
The following terms used herein shall have the following
meanings:
"Addition Date": Any Business Day on which Additional
Contracts are transferred to the Trustee pursuant to Section
2.01 of the Pooling and Servicing Agreement.
"Additional Contract": Any Contract transferred to the Trustee
on an Addition Date pursuant to Section 2.01 of the Pooling
and Servicing Agreement.
"Additional Cut-Off Date": Each date as of which an Additional
Contract is to be transferred to the Trustee pursuant to
Section 2.01 of the Pooling and Servicing Agreement, as
specified in the related Assignment.
"Assignment": An instrument of assignment substantially in the
form attached to the Pooling and Servicing Agreement as
Exhibit A pursuant to which the Seller transfers Contracts to
the Trustee.
"Business Day": A day other than (a) a Saturday or Sunday, or
(b) a day on which banking institutions in the city of New
York, New York are authorized or obligated by law, regulation,
executive order or governmental decree to close.
"Collection Period": With respect to any Distribution Date,
the period commencing on the first day of the calendar month
preceding the calendar month in which such Distribution Date
occurs, and ending on the last day of the calendar month
preceding the calendar month in which such Distribution Date
occurs (or, with respect to the first Collection Period,
commencing on the Initial Closing Date and ending on the last
day of the calendar month in which the Initial Closing Date
occurs).
"Contracts": The rights and benefits (but not the obligations)
of the Seller under certain (i) state and local government
installment payment master agreements, (ii) term lease master
agreements and (iii) certain state and local government
financing agreements or similar contracts, in each case
relating to Equipment to be acquired and used by the Obligor,
transferred and assigned to the Trustee pursuant to Section
2.01 of the Pooling and Servicing Agreement and from time to
time held as a part of the Trust (other than those rights and
benefits under Contracts which are Purchased Contracts as of
the last day of the Collection Period in which they so become
Purchased Contracts).
C-3
"Determination Date": The twelfth day of each month, or if
such day is not a Business Day, the next succeeding Business
Day, commencing in the month following the month in which the
Initial Closing Date occurs.
"Distribution Date": The twenty-fifth day of each month, or if
such day is not a Business Day, the next succeeding Business
Day, commencing in the month following the month in which the
Initial Closing Date occurs.
"Equipment": To the extent subject to a Contract, the computer
equipment or other property which is financed by an Obligor
under any Contract, together with all additions, modifications
or upgrades thereto and all substitutions and replacements
thereof.
"Initial Closing Date": The first date on which Contracts are
purchased by the Trust pursuant to the Pooling and Servicing
Agreement.
"Initial Contracts": The Contracts transferred to the Trustee
on the Initial Closing Date pursuant to Section 2.01 of the
Pooling and Servicing Agreement.
"Initial Cut-Off Date": The Initial Closing Date.
"LFC": LEAF Financial Corporation, a Delaware corporation.
"Obligors": The original obligors under the Contracts and
their successors and assigns.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or
any agency or political subdivision thereof.
"Physical Damage Insurance Policy": Any fire, property damage
or other hazard insurance policy or program maintained by any
Person (including the Seller or the Obligor) with respect to
any Equipment.
"Purchased Contract": Any Contract repurchased by the Seller
pursuant to Section 2.01, 2.03, 2.04 or 10.02 of the Pooling
and Servicing Agreement, or purchased by the Servicer pursuant
to Section 3.01 of the Pooling and Servicing Agreement.
"Servicer": LFC, or its successor in interest or any Successor
Servicer appointed as provided in the Pooling and Servicing
Agreement.
"Successor Servicer": The successor to the Servicer as defined
in Section 8.01(c) of the Pooling and Servicing Agreement.
"Trust": The Municipal Tax-Exempt Trust LEAF 2005 created by
the Pooling and Servicing Agreement, the corpus of which
consists of the items listed in Section 2.01 of the Pooling
and Servicing Agreement.
"Trust Corpus": All right, title and interest of the Seller in
and to (i) on the Initial Closing Date, the Initial Contracts
as of the Initial Cut-Off Date, and on each Addition Date, the
Additional Contracts as of the related Additional Cut-Off
Date, and all moneys due and to become due thereunder on or
after the Initial Cut-Off Date or Additional Cut-Off Date, as
the case may be, (ii) the Equipment, (iii) any proceeds with
respect to the Contracts from claims on any Physical Damage
Insurance Policy or other insurance covering the Equipment and
(iv) the proceeds of any and all the foregoing.
"Trustee": The Bank of New York, a New York banking
corporation, as Trustee under the Pooling and Servicing
Agreement, or its successor in interest or any successor
trustee appointed as provided in the Pooling and Servicing
Agreement.
C-4
============================
- ----------------------------
- ----------------------------
============================
File: Secretary of State of the State of Delaware
UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS (front and back) CAREFULLY
- -------------------------------------------------------------------------
A. NAME & PHONE OF CONTACT AT FILER [optional]
- -------------------------------------------------------------------------
B. SEND ACKNOWLEDGMENT TO: (Name and Address)
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
- ------------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name (1a or 1b) - do not abbreviate or combine names
-----------------------------------------------------------------------------------------------------------------------------
OR 1a. ORGANIZATION'S NAME
Leaf Funding, Inc.
-----------------------------------------------------------------------------------------------------------------------------
1b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
- ----------------------------------------------------------------- --------------------------------- ------- -------------- ---------
1c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
110 S. Poplar Street, Suite 101 Wilmington DE 19801 USA
- ----------------------------------------------------------------- --------------------------------- ------- -------------- ---------
1d. TAX ID #: SSN OR ADD'L INFO 1e. TYPE OF 1f. JURISDICTION OF 1g. ORGANIZATIONAL ID #, if any
EIN RE ORGANIZATION ORGANIZATION
ORGANIZATION
DEBTOR
Corporation Delaware 3642642
NON
- ------------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name (2a or 2b) - do not abbreviate or combine names
-----------------------------------------------------------------------------------------------------------------------------
2a. ORGANIZATION'S NAME
OR
-----------------------------------------------------------------------------------------------------------------------------
2b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
- ----------------------------------------------------------------- --------------------------------- ------- -------------- ---------
2c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
- ----------------------------------------------------------------- --------------------------------- ------- -------------- ---------
2d. TAX ID #: SSN OR ADD'L INFO 2e. TYPE OF 2f. JURISDICTION OF 2g. ORGANIZATIONAL ID #, if any
EIN RE ORGANIZATION ORGANIZATION
ORGANIZATION
DEBTOR
NON
- ------------------------------------------------------------------------------------------------------------------------------------
3. SECURED PARTY'S NAME (of NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) insert only one secured party name (3a or 3b)
-----------------------------------------------------------------------------------------------------------------------------
3a. ORGANIZATION'S NAME The Bank of New York, as Trustee for the benefit of the Certificateholders of the Municipal
Tax-Exempt Trust LEAF 2005
OR
-----------------------------------------------------------------------------------------------------------------------------
3b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
- ----------------------------------------------------------------- --------------------------------- ------- -------------- ---------
3c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
101 Barclay Street, 8W New York NY 10286 USA
- ----------------------------------------------------------------- --------------------------------- ------- -------------- ---------
4. This FINANCING STATEMENT covers the following collateral:
All right, title and interest of Debtor, whether now owned or hereafter acquired, in, to and under all of the assets that
constitute the Trust Corpus under that certain Pooling and Servicing Agreement among Seller, Buyer, and the other signatories
thereto, dated as of July 13, 2005, as the same may be amended from time to time, all as further described on EXHIBIT A attached
hereto.
- ------------------------------------------------------------------------------------------------------------------------------------
5. ALTERNATIVE DESIGNATION [if applicable]: LESSEE/LESSOR CONSIGNEE/CONSIGNOR BALIEE/BAILOR SELLER/BUYER AG. LIEN NON-UCC FILING
- ------------------------------------------------------------------------------------------------------------------------------------
6. This FINANCIAL STATEMENT is to be filed [for record] (or 7. Check to REQUEST SEARCH REPORT(S) on Debtors(s) All Debtors
recorded) in the REAL ESTATE RECORDS. Attach Addendum Debtor 1 Debtor 2 [ADDITION FEE] [optional]
[if applicable]
- ------------------------------------------------------------------------------------------------------------------------------------
8. OPTIONAL FILLER REFERENCE DATA 182332-0004
- ------------------------------------------------------------------------------------------------------------------------------------
C-5
EXHIBIT A
TO
UCC-1 FINANCING STATEMENT
DEBTOR: Leaf Funding, Inc.
SECURED PARTY: The Bank of New York, as Trustee for the benefit of the
Certificateholders of the Municipal Tax-Exempt Trust LEAF 2005
- --------------------------------------------------------------------------------
All right, title and interest of Debtor, whether now owned or
hereafter acquired, in, to and under the all of the assets that constitute the
Trust Corpus.
Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in that certain Pooling and
Servicing Agreement among Debtor, Secured Party and the other
signatories thereto, dated as of July 13, 2005, as the same
may be amended from time to time (the "Pooling and Servicing
Agreement"). A copy of the Pooling and Servicing Agreement and
the related Assignments are on file with the Debtor and
Secured Party.
The following terms used herein shall have the following
meanings:
"Addition Date": Any Business Day on which Additional
Contracts are transferred to the Trustee pursuant to Section
2.01 of the Pooling and Servicing Agreement.
"Additional Contract": Any Contract transferred to the Trustee
on an Addition Date pursuant to Section 2.01 of the Pooling
and Servicing Agreement.
"Additional Cut-Off Date": Each date as of which an Additional
Contract is to be transferred to the Trustee pursuant to
Section 2.01 of the Pooling and Servicing Agreement, as
specified in the related Assignment.
"Assignment": An instrument of assignment substantially in the
form attached to the Pooling and Servicing Agreement as
Exhibit A pursuant to which the Seller transfers Contracts to
the Trustee.
"Business Day": A day other than (a) a Saturday or Sunday, or
(b) a day on which banking institutions in the city of New
York, New York are authorized or obligated by law, regulation,
executive order or governmental decree to close.
"Collection Period": With respect to any Distribution Date,
the period commencing on the first day of the calendar month
preceding the calendar month in which such Distribution Date
occurs, and ending on the last day of the calendar month
preceding the calendar month in which such Distribution Date
occurs (or, with respect to the first Collection Period,
commencing on the Initial Closing Date and ending on the last
day of the calendar month in which the Initial Closing Date
occurs).
"Contracts": The rights and benefits (but not the obligations)
of the Seller under certain (i) state and local government
installment payment master agreements, (ii) term lease master
agreements and (iii) certain state and local government
financing agreements or similar contracts, in each case
relating to Equipment to be acquired and used by the Obligor,
transferred and assigned to the Trustee pursuant to Section
2.01 of the Pooling and Servicing Agreement and from time to
time held as a part of the Trust (other than those rights and
benefits under Contracts which are Purchased Contracts as of
the last day of the Collection Period in which they so become
Purchased Contracts).
C-6
"Determination Date": The twelfth day of each month, or if
such day is not a Business Day, the next succeeding Business
Day, commencing in the month following the month in which the
Initial Closing Date occurs.
"Distribution Date": The twenty-fifth day of each month, or if
such day is not a Business Day, the next succeeding Business
Day, commencing in the month following the month in which the
Initial Closing Date occurs.
"Equipment": To the extent subject to a Contract, the computer
equipment or other property which is financed by an Obligor
under any Contract, together with all additions, modifications
or upgrades thereto and all substitutions and replacements
thereof.
"Initial Closing Date": The first date on which Contracts are
purchased by the Trust pursuant to the Pooling and Servicing
Agreement.
"Initial Contracts": The Contracts transferred to the Trustee
on the Initial Closing Date pursuant to Section 2.01 of the
Pooling and Servicing Agreement.
"Initial Cut-Off Date": The Initial Closing Date.
"LFC": LEAF Financial Corporation, a Delaware corporation.
"Obligors": The original obligors under the Contracts and
their successors and assigns.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or
any agency or political subdivision thereof.
"Physical Damage Insurance Policy": Any fire, property damage
or other hazard insurance policy or program maintained by any
Person (including the Seller or the Obligor) with respect to
any Equipment.
"Purchased Contract": Any Contract repurchased by the Seller
pursuant to Section 2.01, 2.03, 2.04 or 10.02 of the Pooling
and Servicing Agreement, or purchased by the Servicer pursuant
to Section 3.01 of the Pooling and Servicing Agreement.
"Seller": The Debtor.
"Servicer": LFC, or its successor in interest or any Successor
Servicer appointed as provided in the Pooling and Servicing
Agreement.
"Successor Servicer": The successor to the Servicer as defined
in Section 8.01(c) of the Pooling and Servicing Agreement.
"Trust": The Municipal Tax-Exempt Trust LEAF 2005 created by
the Pooling and Servicing Agreement, the corpus of which
consists of the items listed in Section 2.01 of the Pooling
and Servicing Agreement.
"Trust Corpus": All right, title and interest of the Seller in
and to (i) on the Initial Closing Date, the Initial Contracts
as of the Initial Cut-Off Date, and on each Addition Date, the
Additional Contracts as of the related Additional Cut-Off
Date, and all moneys due and to become due thereunder on or
after the Initial Cut-Off Date or Additional Cut-Off Date, as
the case may be, (ii) the Equipment, (iii) any proceeds with
respect to the Contracts from claims on any Physical Damage
Insurance Policy or other insurance covering the Equipment and
(iv) the proceeds of any and all the foregoing.
"Trustee": The Bank of New York, a New York banking
corporation, as Trustee under the Pooling and Servicing
Agreement, or its successor in interest or any successor
trustee appointed as provided in the Pooling and Servicing
Agreement.
C-7
EXHIBIT D
ELIGIBILITY CRITERIA FOR CONTRACTS
(See Attached)
D-1
EXHIBIT D
ELIGIBILITY CRITERIA FOR CONTRACTS
Capitalized terms used but not otherwise defined in this Exhibit D
shall have the meanings ascribed to such terms in the Pooling and Servicing
Agreement (the "Agreement") to which this Exhibit D is attached as an exhibit.
1. CONCENTRATION LIMITS. On and after the date on which the Pool
Balance exceeds $5,000,000, and at all times thereafter until termination of the
Trust, the purchase of each Contract by the Trust, assuming it was included with
all other Contracts previously purchased by the Trust, either (i) if the
Concentration Limits are being met prior to such purchase, must not cause a
violation of the Concentration Limits, or (ii) if the Concentration Limits are
not being met prior to such purchase, must either maintain or improve the
Trust's compliance with each of clauses (a), (b), (c) and (d) in the
Concentration Limits. For purposes of this Exhibit D, "Concentration Limits"
means, as of any date of determination, the following limits apply:
(a) the aggregate Outstanding Principal Balance of all Contracts of any
one Obligor and its Affiliates as of such date shall be no greater than five
percent (5.0%) of the Pool Balance as of such date;
(b) the aggregate Outstanding Principal Balance of all Contracts of any
five (5) Obligors and their respective Affiliates taken together as of such date
shall be no greater than fifteen percent (15.0%) of the Pool Balance as of such
date;
(c) the aggregate Outstanding Principal Balance of all Contracts
involving Equipment from each single vendor or manufacturer and its Affiliates
as of such date shall not exceed (i) in the case of Gateway Inc., seventy
percent (70%) of the Pool Balance as of such date, and (ii) in the case of any
other single vendor or manufacturer, fifty percent (50%) of the Pool Balance as
of such date; and
(d) the aggregate Outstanding Principal Balance of all Contracts
providing for scheduled payments on a monthly basis shall be no less than sixty
percent (60%) of the Pool Balance as of such date.
2. WEIGHTED AVERAGE REMAINING TERM. The acquisition of each Contract,
assuming it was purchased by the Trust and included with all other Contracts
previously purchased by the Trust, must not cause the weighted average remaining
term of all of the Contracts as of such date to exceed forty-eight (48) months.
D-2
3. "ELIGIBLE CONTRACT." No Contract shall be eligible for sale to the
Trust unless it meets each of the following criteria:
(a) the Contract (i) has been originated, and the Equipment relating
thereto has been acquired, via the Seller's ordinary course of business and
standard policies and procedures and (ii) shall have similar characteristics to
other Contracts originated by the Seller and its Affiliates and no procedures
adverse to the interests of the Trust or the Certificateholders shall have been
used by the Seller in selecting such Contract from other Eligible Contracts
originated by the Seller;
(b) such Contract contains a "Hell or High Water" clause that
unconditionally obligates the Obligor to make periodic Contract payments
(including taxes), notwithstanding damage to or destruction of the Equipment, or
any other event, including obsolescence thereof; provided, however, that each
Contract may contain a Nonappropriation Provision;
(c) (i) such Contract is non-cancelable by the Obligor, (ii) does not
contain any early termination option and (iii) all payments payable under such
Contract are absolute, unconditional obligations of the Obligor without right to
offset for any reason; provided, however, that each Contract may contain a
Nonappropriation Provision;
(d) such Contract contains a provision requiring the Obligor to pay the
lessor a Breakage Fee in the event of early termination of the Contract for any
reason, in an amount at least sufficient to pay any remaining Premium Amount
relating to such Contract at the time of such early termination;
(e) such Contract is denominated in United States dollars, all payments
thereunder are payable in U.S. dollars and there is no option to change the
currency or country in which such payments are made;
(f) each Contract was originated in, and all Equipment is located in,
the United States, including its territories and possessions, the Commonwealth
of Puerto Rico and the Commonwealth of the Northern Mariana Islands;
(g) such Contract requires the Obligor to maintain the Equipment in
good working order, to bear all the costs of operating the Equipment, including
the taxes, maintenance and insurance relating thereto;
(h) such Contract provides for periodic Contract payments, which are
due and payable either on a monthly, calendar quarterly or annual basis;
(i) subject to any Nonappropriation Provision, such Contract provides
that the Servicer may accelerate all Contract payments if the Obligor is in
default under such Contract;
(j) subject to any Nonappropriation Provision, such Contract provides
that in the event of a casualty loss, the Servicer may require the Obligor, at
the Obligor's expense, to pay Servicer the sum of all unpaid rents and other
payments due under such Contract, all accelerated future payments due under such
Contract (discounted to a present value payoff amount);
D-3
(k) (i) such Contract provides that the Obligor may not elect to
utilize any security deposit thereunder to offset any payment thereunder and
(ii) the Outstanding Principal Balance and any other valuation information with
respect to such Contract does not include the amount of any security deposits
held by the Seller or the Servicer;
(l) such Contract shall not be modified, waived, or amended in any way
which would make it fail to comply with all of the Eligibility Criteria or which
could otherwise adversely affect the lessor, its assigns or obligees (provided
that a Contract may be modified or amended as expressly provided in Section
3.01(a)(i) of the Agreement);
(m) (i) the maximum remaining term of such Contract shall not exceed
eighty-four (84) months and (ii) the term of such Contract shall expire (without
any party having the right to further extend the term), and the final payment
from the Obligor on such Contract shall be due, on or prior to May 31, 2044;
(n) the applicable vendor or manufacturer of all Equipment related to
such Contract will be paid in full for such Equipment out of the purchase price
paid by the Trust, and no amounts will remain payable to such vendor or
manufacturer, as of close of business on the Closing Date when such Contract is
acquired by the Trust;
(o) such Contract was created in compliance with, and, on the date it
is purchased by the Trust, does not contravene in any material respect, any
applicable law;
(p) subject to any Nonappropriation Provision, such Contract will at
all times be the legal, valid and binding payment obligation of the Obligor,
enforceable against such Obligor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights generally, and
except as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
(q) such Contract has not been satisfied, subordinated or rescinded;
(r) neither such Contract nor the Seller is subject to any provision
prohibiting or restricting the transfer of the Seller's interests in such
Contract to the Trust;
(s) such Contract is either (i) not subject to any foreign withholding
tax or (ii) provides for a "gross-up" or indemnity of any payments upon the
imposition of any such tax;
(t) with respect to any Contract that is a finance lease, such Contract
is secured by a first priority perfected security interest in the Equipment;
(u) at the time of initial purchase of such Contract by the Trust (i)
the Obligor thereunder is not subject to an Insolvency Event and (ii) such
Contract is not a Defaulted Contract;
(v) the Contract does not have an Outstanding Principal Balance in
excess of $400,000;
D-4
(w) the Obligor on the Contract has a current Credit Rating of at least
(i) "BBB" by S&P and (ii) "Baa2" by Moody's (for the avoidance of doubt, the
failure to maintain the Credit Rating by either Moody's or S&P (or both) at the
required level will result in failure to meet the Eligibility Criteria unless
Certificateholder consent is obtained as provided in this paragraph (w));
(x) the Contract Rate must be a fixed rate equal to at least the
Minimum Contract Rate relating thereto based upon (i) the remaining average life
of such Contract as of the first day of the calendar month in which the Contract
is being acquired by the Trust, (ii) the Applicable Margin and (iii) any Premium
Margin applicable thereto;
(y) at the time of initial purchase of such Contract by the Trust, the
Outstanding Principal Balance of such Contract must be at least $50,000; and
(z) each Contract provides for payments which fully amortize the amount
financed.
D-5
EXHIBIT E
FORM OF DISTRIBUTION DATE REPORT
(See Attached)
E-1
EXHIBIT F
INVESTOR CERTIFICATION
Date:
The Bank of New York, as Trustee
101 Barclay Street, 8W
New York, NY 10286
Attn: Asset Backed Securities Group
In accordance with Section 4.02 of the Pooling and Servicing
Agreement dated as of July 13, 2005 (the "Agreement"), among LEAF Funding Inc.,
as the originator of the Trust and as seller, LEAF Financial Corporation, as the
servicer of the Contracts, Merrill Lynch, Pierce, Fenner & Smith Incorporated
and The Bank of New York, as the trustee (the "Trustee") with respect to the
Adjustable Asset-Backed Certificates - Series A (the "Certificates"), the
undersigned hereby certifies and agrees as follows:
1. The undersigned is the record or beneficial owner of
$________ in Original Principal Amount of the Certificates.
2. The undersigned is requesting a password pursuant to
Section 4.02 of the Agreement for access to certain information (the
"Information") on the Trustee's website.
3. In consideration of the Trustee's disclosure to the
undersigned of the Information, or the password in connection therewith, the
undersigned will keep the Information and the password confidential and such
Information and the password will not, without the prior written consent of the
Trustee, be otherwise disclosed by the undersigned or by its officers,
directors, partners, employees, agents or representatives (collectively, the
"Representatives") in any manner whatsoever, in whole or in part; provided, that
the undersigned may provide the Information and the password to (i) persons to
whom the undersigned has sold or assigned beneficial or participation interests
in the Certificates, (ii) outside persons as are assisting the undersigned in
connection with the Certificates, (iii) the undersigned's accountants and
attorneys and (iv) governmental, banking or other regulatory authorities to
which the undersigned is subject.
4. The undersigned will not use or disclose the Information or
the password in any manner which could result in a violation of any provision of
the Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended, or would require registration of any
Certificate pursuant to Section 5 of the Securities Act.
5. The undersigned shall be fully liable for any breach of
this agreement by itself or any of its Representatives and shall indemnify the
Trustee for any loss, liability or expense incurred thereby with respect to any
such breach by the undersigned or any of its Representatives.
6. Capitalized terms used by not defined herein shall have the
respective meanings assigned thereto in the Agreement.
F-1
IN WITNESS WHEREOF, the undersigned has caused its name to be
signed hereby by its duly authorized officer, as of the day and year written
above.
___________________________________
Beneficial Owner
By:________________________________
Title:_____________________________
Company:___________________________
Phone:_____________________________
F-2
EXHIBIT G
FORM OF CONFIRMATION OF REGISTRATION
[Date]
[Certificateholder]
[Address]
Re: Confirmation of Registration of Book-Entry Adjustable
Asset-Backed Certificates - Series A, Representing an Interest
in Municipal Tax-Exempt Trust LEAF 2005 (the "Trust")
--------------------------------------------------------------
Ladies and Gentlemen:
This will confirm that as of the date appearing above, you (the
"Certificateholder") are recorded on the books of the undersigned Trustee
maintained for such purpose as the holder of a book-entry Certificate in the
aggregate Original Principal Amount of $__________ (the "Book-Entry
Certificate") issued by the Trust under that certain Pooling and Servicing
Agreement (the "Agreement") dated as of July 13, 2005 among LEAF Funding Inc.,
as originator of the Trust and seller of the Contracts, LEAF Financial
Corporation, as servicer of the Contracts, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and The Bank of New York, as trustee (the "Trustee"), which
Book-Entry Certificate is registered in your name as Certificateholder on the
books of the undersigned Trustee, in its capacity as such under the Agreement.
Capitalized terms appearing but not otherwise expressly defined herein
shall have the meanings assigned therein in the Agreement.
This letter is for your information only. THIS CONFIRMATION IS NEITHER
A NEGOTIABLE INSTRUMENT NOR A SECURITY. Delivery of this letter, in of itself,
confers no rights on the recipient. This letter is merely a record of the
registration of the above-noted interest of the Certificateholder on the books
of the Trustee on the date hereof, and such confirmation is made only as of the
date hereof.
The records of the Trustee maintained for such purpose are the sole and
exclusive evidence of ownership of beneficial interests in the Book-Entry
Certificate. Any transfers of interests in the Book-Entry Certificate are
subject to the restrictions and requirements set forth on the Book-Entry
Certificate and, by reference therein, under the Agreement. Reference is hereby
generally made to the Agreement, as though fully set forth herein. No
Certificateholder shall be entitled to receive a Definitive Certificate except
under the circumstances described in Sections 6.06 of the Agreement.
The duties of the Trustee in respect of the Book-Entry Certificate are
limited to those expressly set forth in the Agreement, and the Trustee is
entitled, among other things, to the protections and benefits set forth therein.
The Trustee in no way warrants or makes any representations as to the
validity, sufficiency or enforceability of the Book-Entry Certificate. The
Book-Entry Certificate does not represent an obligation of, and is not in any
respect guaranteed by, the Trustee under the Agreement.
G-1
Each Certificateholder, by accepting its interest in the Book-Entry
Certificate, accepts the terms and conditions set forth in the Agreement.
Very truly yours,
THE BANK OF NEW YORK, in its capacity as
Trustee under the Agreement
By:_____________________________________
Name:
Title:
G-2
EXHIBIT H-1
FORM OF TRANSFEREE CERTIFICATE
____________, 200_
The Bank of New York, as Trustee
101 Barclay Street, 8W
New York, NY 10286
Attn: Asset Backed Securities Group
Re: Adjustable Asset-Backed Certificates - Series A (the "Certificates")
--------------------------------------------------------------------
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by ______________ (the "Transferor") to __________________ (the
"Transferee") of a Certificate (the "Transferred Certificate") having an
Original Principal Amount as of its date of issuance of $________. The
Certificates were issued pursuant to the Pooling and Servicing Agreement dated
as of July 13, 2005 (the "Agreement"), among LEAF Funding Inc., as originator of
the Trust and as seller, LEAF Financial Corporation, as servicer of the
Contracts, Merrill Lynch, Pierce, Fenner & Smith Incorporated and The Bank of
New York, as trustee. All terms used herein and not otherwise defined shall have
the meanings set forth in the Agreement. The Transferee hereby certifies,
represents and warrants to you, as Trustee, that:
1. The Transferee is acquiring the Transferred Certificate for
its own account for investment and not with a view to or for sale or transfer in
connection with any distribution thereof, in whole or in part, in any manner
which would violate the Securities Act of 1933, as amended (the "Securities
Act"), or any applicable state securities laws.
2. The Transferee understands that (a) the Certificates have
not been and will not be registered under the Securities Act or registered or
qualified under any applicable state securities laws, (b) neither the Seller nor
the Trustee is obligated so to register or qualify the Certificates and (c) the
Certificates may not be resold or transferred unless they are (i) registered
pursuant to the Securities Act and registered or qualified pursuant to any
applicable state securities laws or (ii) sold or transferred in transactions
which are exempt from such registration and qualification and the Trustee has
received either (A) certifications from both the Transferor and the Transferee
(substantially in the forms attached to the Agreement) setting forth the facts
surrounding the transfer or (B) an Opinion of Counsel satisfactory to the
Trustee delivered by counsel to the Transferor and/or the Transferee with
respect to the availability of such exemption, together with copies of the
certification(s) from the Transferor and/or Transferee setting forth the facts
surrounding the transfer upon which such opinion is based.
3. The Transferee understands that it may not sell or
otherwise transfer any portion of its interest in the Transferred Certificate
except in compliance with the provisions of Sections 6.02 and 6.05 of the
Agreement, which provisions it has carefully reviewed, and that the Transferred
Certificate will bear a legend substantially to the following effect:
THIS CERTIFICATE IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE
HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES FOR THE BENEFIT OF THE
TRUST THAT NEITHER THIS CERTIFICATE NOR ANY PORTION HEREOF MAY BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (I) TO AN "ACCREDITED INVESTOR"
WITHIN THE MEANING OF RULE 501(A)(1), (2), (3), (7) OR (8) OF REGULATION D UNDER
THE SECURITIES ACT, OR (II) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER AND THAT IS AWARE THAT THE OFFER, RESALE, PLEDGE OR TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A.
H-1-1
4. Neither the Transferee nor anyone acting on its behalf has
(a) offered, pledged, sold, disposed of or otherwise transferred any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicited any offer to buy or accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) made any general solicitation by means of general advertising or in any
other manner, or (e) taken any other action, that (in the case of any of the
acts described in clauses (a) through (d) hereof) would constitute a
distribution of any Certificate under the Securities Act, would render the
disposition of any Certificate a violation of Section 5 of the Securities Act or
any state securities law or would require registration or qualification of any
Certificate pursuant thereto. The Transferee will not act, nor has it authorized
or will it authorize any person to act, in any manner set forth in the foregoing
sentence with respect to any Certificate.
5. The Transferee has been furnished with all information
regarding (a) the Seller, the Servicer and the Trustee, (b) the Certificates and
distributions thereon, (c) the Agreement, and (d) all related matters, that it
has requested.
6. The Transferee is an "accredited investor" as defined in
Rule 501(a)(1), (2), (3), (7) or (8) under the Securities Act and has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Certificates; the
Transferee has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision; and the Transferee is able to
bear the economic risks of such an investment and can afford a complete loss of
such investment.
Very truly yours,
(Transferee)
By:________________________________
Name:______________________________
Title:_____________________________
H-1-2
EXHIBIT H-2
FORM OF TRANSFEREE CERTIFICATE
FOR QIBs
_____________ __, 200_
The Bank of New York, as Trustee
101 Barclay Street, 8W
New York, NY 10286
Attn: Asset Backed Securities Group
Re: Adjustable Asset-Backed Certificates - Series A (the "Certificates")
--------------------------------------------------------------------
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by _______________ the "Transferor") to _____________________ (the
"Transferee") of a Certificate (the "Transferred Certificate") having an
Original Principal Amount as of its date of issuance of $________. The
Certificates were issued pursuant to the Pooling and Servicing Agreement dated
as of July 13, 2005 (the "Agreement"), among LEAF Funding Inc., as originator of
the Trust and as seller, LEAF Financial Corporation, as servicer of the
Contracts, Merrill Lynch, Pierce, Fenner & Smith Incorporated and The Bank of
New York, as trustee. All terms used herein and not otherwise defined shall have
the meanings set forth in the Agreement. The Transferee hereby certifies,
represents and warrants to you, as Trustee, that:
1. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") under the Securities Act of 1933, as
amended (the "Securities Act"), and has completed one of the forms of
certification to that effect.
2. The Transferee is aware that the sale to it is being made
in reliance on Rule 144A. The Transferee is acquiring the Transferred
Certificate for its own account or for the account of a qualified institutional
buyer, and understands that such Certificate may be resold, pledged or
transferred only (i) to a person who the transferor reasonably believes is a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act purchasing for its own account or for the account of a qualified
institutional buyer and that is aware that the offer, resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Securities Act.
3. The Transferee understands that it may not sell or
otherwise transfer any portion of its interest in the Transferred Certificate
except in compliance with the provisions of Sections 6.02 and 6.05 of the
Agreement, which provisions it has carefully reviewed, and that the Transferred
Certificate will bear a legend substantially to the following effect:
THIS CERTIFICATE IS NOT BEING REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES OR "BLUE
SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES FOR THE
BENEFIT OF THE TRUST THAT NEITHER THIS CERTIFICATE NOR ANY PORTION HEREOF MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (I) TO AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3), (7) OR (8) OF
REGULATION D UNDER THE SECURITIES ACT, OR (II) TO A PERSON WHO THE TRANSFEROR
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER AND THAT IS AWARE THAT THE OFFER,
RESALE, PLEDGE OR TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A.
H-2-1
4. The Transferee has been furnished with all information
regarding (a) the Seller, the Servicer and the Trustee, (b) the Certificates and
distributions thereon, (c) the Agreement, and (d) all related matters, that it
has requested.
Very truly yours,
(Transferee)
By:________________________________
Name:______________________________
Title:_____________________________
H-2-2