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Exhibit 10.21
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APPENDIX 1
STANDARD TERMS AND CONDITIONS OF SERVICING
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Dated as of November 1, 1994
ROTHSCHILD ASSET-BACKED FINANCE CONDUIT V
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TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS
Section 1.01 Defined Terms..................................................................... 1
ARTICLE 2 - SERVICER REPRESENTATIONS AND WARRANTIES
Section 2.01 Representations and Warranties.................................................... 3
ARTICLE 3 - ADMINISTRATION AND SERVICING OF LEASE CONTRACTS
Section 3.01 Responsibilities of Servicer...................................................... 5
Section 3.02 Servicer Standard of Care......................................................... 8
Section 3.03 Servicer Remittances.............................................................. 8
Section 3.04 Servicer Advances................................................................. 9
Section 3.05 Financing Statements; Title Filings............................................... 10
Section 3.06 Maintenance of Insurance Policy; Insurance Proceeds............................... 10
Section 3.07 Personal Property and Sales Taxes................................................. 10
Section 3.08 No Offset......................................................................... 10
Section 3.09 Servicing Compensation............................................................ 10
Section 3.10 Substitution or Purchase of Lease Contracts....................................... 11
ARTICLE 4 - ACCOUNTINGS, STATEMENTS AND REPORTS
Section 4.01 Monthly Servicer's Reports........................................................ 12
Section 4.02 Financial Statements; Certification as to Compliance; Notice of Default........... 12
Section 4.03 Annual Independent Accountants' Reports; Annual Federal Tax Lien Search........... 14
Section 4.04 Access to Certain Documentation and Information................................... 15
Section 4.05 Other Necessary Data.............................................................. 16
Section 4.06 Indenture Trustee to Cooperate.................................................... 16
ARTICLE 5 - THE SERVICER AND THE ISSUER
Section 5.01 Servicer Indemnification.......................................................... 17
Section 5.02 Corporate Existence; Reorganizations.............................................. 17
Section 5.03 Limitation on Liability of the Servicer and Others................................ 18
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Section 5.04 The Servicer Not to Resign........................................................ 18
Section 5.05 Issuer Indemnification............................................................ 18
ARTICLE 6 - SERVICING TERMINATION
Section 6.01 Servicer Events of Default........................................................ 19
Section 6.02 Back-up Servicer to Act; Taking of Bids; Appointment of Successor Servicer........ 22
Section 6.03 Notification to Noteholders....................................................... 23
Section 6.04 Waiver of Past Defaults........................................................... 23
Section 6.05 Effects of Termination of Servicer................................................ 24
Section 6.06 No Effect on Other Parties........................................................ 24
ARTICLE 7 - THE BACK-UP SERVICER
Section 7.01 Representations of Back-up Servicer............................................... 25
Section 7.02 Merger or Consolidation of, or Assumption of the Obligations of,
Back-up Servicer................................................................ 26
Section 7.03 Back-up Servicer Resignation...................................................... 26
Section 7.04 Oversight of Servicing............................................................ 26
Section 7.05 Back-up Servicer Compensation..................................................... 27
Section 7.06 Duties and Responsibilities....................................................... 27
ARTICLE 8 MISCELLANEOUS PROVISIONS
Section 8.01 Termination of the Servicing Agreement............................................ 29
Section 8.02 Amendments........................................................................ 29
Section 8.03 Governing Law..................................................................... 30
Section 8.04 Notices........................................................................... 30
Section 8.05 Severability of Provisions........................................................ 30
Section 8.06 Binding Effect.................................................................... 30
Section 8.07 Article Headings and Captions..................................................... 30
Section 8.08 Legal Holidays.................................................................... 30
Section 8.09 Assignment for Security for the Notes............................................. 30
Section 8.10 No Servicing Assignment........................................................... 31
Section 8.11 MBIA Default...................................................................... 31
Section 8.12 Third Party Beneficiary........................................................... 31
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These STANDARD TERMS AND CONDITIONS OF SERVICING (the "Standard Servicing
Terms"), dated as of November 1, 1994, are incorporated by reference and are
intended to form a part of the SPECIFIC TERMS OF SERVICING dated as of
November 1, 1994 (the "Specific Servicing Terms"), to which these Standard
Servicing Terms are appended (together, the "Servicing Agreement").
ARTICLE 1
DEFINITIONS
1.01 DEFINED TERMS. Except as otherwise specified or as the context
may otherwise require, the following terms have the respective meanings set
forth below for all purposes of the Servicing Agreement, and the definitions of
such terms are equally applicable both to the singular and plural forms of such
terms and to the masculine, feminine and neuter genders of such terms.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings assigned to such terms in the Indenture or, if not defined
therein, in the Lease Acquisition Agreement.
"ACH Bank": shall mean the bank, if any, specified in the Specific
Servicing Term so long as such bank meets the requirements of the Indenture
Trustee as set forth in Section 7.08 of the Standard Indenture Terms.
"Back-up Servicer": shall mean the entity identified as such in the
Specific Servicing Terms, until a successor Person shall have become the Back-up
Servicer pursuant to the applicable provisions of this Servicing Agreement, and
thereafter "Back-up Servicer" shall mean such successor Person.
"Company": shall mean the entity identified as such in the Specific
Servicing Terms.
"Initial Net Worth Standard": shall have the meaning set forth in the
Specific Servicing Terms.
"Issuer": shall mean the entity identified as such in the Specific
Servicing Terms.
"Lease Acquisition Agreement": shall mean the agreement between the Company
and the Issuer evidenced by the Specific Terms and Conditions of Lease
Acquisition along with the Standard Terms and Conditions of Lease Acquisition.
"Liquidated Lease Receivable": shall mean a Lease Receivable that has been
liquidated pursuant to Section 3.01(b) hereof.
"Monthly Servicer's Report": shall mean the report prepared by the Servicer
pursuant to Section 4.01 hereof.
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"Nonrecoverable Advance": shall mean a Servicer Advance that the Servicer
determines in good faith, and in accordance with its customary servicing
practices, is unlikely to be eventually repaid from Scheduled Payments made by
or on behalf of the related Customer in accordance with Section 3.04 hereof.
"Officer's Certificate": shall mean a certificate signed by the Chairman of
the Board, the Vice-Chairman of the Board, the President, a Vice President, the
Treasurer or the Secretary of the Servicer.
"Reported Compan(ies)": shall have the meaning set forth in the Specific
Servicing Terms or any successor Servicer, if applicable.
"Reported Company Financial Statements": shall include the Reported
Company's audited consolidating balance sheet and income statement, consolidated
statement of sources and uses/applications of cash, consolidated statement of
change in financial position, auditors opinion letter regarding audited
financial statements, and all notes to the audited financial statements.
"Servicer": shall mean the entity identified as such in the Specific
Servicing Terms until a successor Person shall have become the Servicer pursuant
to the applicable provisions of the Servicing Agreement, and thereafter
"Servicer" shall mean such successor Person.
"Servicer Advance": shall have the meaning set forth in Section 3.04
hereof.
"Servicer Default": shall mean any occurrence or circumstance which with
notice or the lapse of time or both would be a Servicer Event of Default under
this Servicing Agreement.
"Servicer Event of Default": shall mean each of the occurrences or
circumstances enumerated in Section 6.01 hereof.
"Servicer State of Incorporation": means the state of incorporation of the
Servicer, as specified in the Specific Servicing Terms.
"Servicer Termination Notice": means the notice described in Section 6.01
hereof.
"Servicing Agreement": shall mean the Specific Terms and Conditions of
Servicing together with the Standard Terms and Conditions of Servicing.
"Servicing Officer": shall mean those officers of the Servicer involved in,
or responsible for, the administration and servicing of the Lease Contracts, as
identified on the list of Servicing Officers furnished by the Servicer to the
Indenture Trustee, the Back-up Servicer, MBIA and the Noteholders from time to
time.
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ARTICLE 2
SERVICER REPRESENTATIONS AND WARRANTIES
2.01 REPRESENTATIONS AND WARRANTIES.
The Servicer makes the following representations and warranties as of
each Delivery Date, which shall survive such Delivery Date:
(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
incorporated and is validly existing and in good standing as a corporation under
the laws of the Servicer State of Incorporation, with requisite corporate power
and authority to own its properties, perform its obligations under the Servicing
Agreement and to transact the business in which it is now engaged or in which it
proposes to engage.
(b) AUTHORIZATION AND BINDING OBLIGATION. Each of the Servicing Agreement
and the Insurance Agreement has been duly authorized, executed and delivered by
the Servicer and constitutes the valid and legally binding obligation of the
Servicer enforceable against the Servicer in accordance with its terms, subject
as to enforcement to any bankruptcy, insolvency, reorganization and other
similar laws of general applicability relating to or affecting creditors' rights
generally and to general principles of equity regardless of whether enforcement
is sought in a court of equity or law.
(c) NO VIOLATION. The entering into of the Servicing Agreement and the
Insurance Agreement and the performance by the Servicer of its obligations under
the Servicing Agreement and the Insurance Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or result in
a breach of any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
of the property or assets of such Servicer pursuant to the terms of any material
indenture, mortgage, deed of trust or other agreement or instrument to which it
is a party or by which it is bound or to which any of its property or assets is
subject, nor will such action result in any violation of the provisions of its
Certificate of Incorporation or By-laws, or any statute or any order, rule or
regulation of any court or any regulatory authority or other governmental agency
or body having jurisdiction over it or any of its properties; and no consent,
approval, authorization, order, registration or qualification of or with any
court, or any such regulatory authority or other governmental agency or body is
required for the Servicer to enter into the Servicing Agreement and the
Insurance Agreement.
(d) NO PROCEEDINGS. There are no proceedings or investigations pending, or
to the knowledge of the Servicer, threatened against or affecting the Servicer
or any subsidiary in or before any court, governmental authority or agency or
arbitration board or tribunal, including but not limited to any such proceeding
or investigation with respect to any environmental or other liability resulting
from the ownership or use of any of the Equipment, which, individually or in the
aggregate, involve the possibility of materially and adversely affecting the
properties, business, prospects, profits or condition (financial or otherwise)
of the Servicer and its subsidiaries, or the
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ability of the Servicer to perform its obligations under the Servicing Agreement
or the Insurance Agreement. The Servicer is not in default with respect to any
order of any court, governmental authority or agency or arbitration board or
tribunal.
(e) APPROVALS. The Servicer (i) is not in violation of any laws,
ordinances, governmental rules or regulations to which it is subject, (ii) has
not failed to obtain any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its property or to the conduct of
its business, and (iii) is not in violation in any material respect of any term
of any agreement, charter instrument bylaw or instrument to which it is a party
or by which it may be bound, which violation or failure to obtain materially
adversely affect the business or condition (financial or otherwise) of the
Servicer and its subsidiaries.
(f) INVESTMENT COMPANY. The Servicer is not an investment company which is
required to register under the Investment Company Act of 1940, as amended.
(g) NET WORTH. As of the initial Delivery Date, the Initial Net Worth
Standard is met.
(h) STANDARD OF CARE. The Servicer is currently servicing the Lease
Contracts and Equipment in a manner consistent with industry standards for lease
contracts and equipment similar to the Lease Contracts and Equipment, and in any
event in a prudent and commercially reasonable manner, and has conducted its
servicing operations in a manner consistent with industry standards for
servicing of financial portfolios.
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ARTICLE 3
ADMINISTRATION AND SERVICING OF LEASE CONTRACTS
3.01 RESPONSIBILITIES OF SERVICER.
(a) The Servicer, for the benefit of MBIA and the Noteholders, shall be
responsible for, and shall, in accordance with its customary servicing
procedures, pursue the managing, servicing, administering, enforcing and making
of collections on the Lease Contracts, the Equipment and any Insurance Policies,
the enforcement of the Indenture Trustee's security interest in the Lease
Contracts, Lease Receivables and Equipment granted pursuant to the Indenture,
and the sale or the releasing of the Equipment upon the expiration or other
termination of the related Lease Contract (or repossession thereof without
termination), each in accordance with the standards and procedures set forth in
this Servicing Agreement and any related provisions of the Indenture and Lease
Acquisition Agreement. The Servicer's responsibilities shall include collecting
and posting of all payments, responding to inquiries of Customers, investigating
delinquencies, accounting for collections and furnishing monthly and annual
statements to the Back-up Servicer, the Indenture Trustee, MBIA, the Rating
Agencies and the Noteholders with respect to payments, making Servicer Advances,
providing appropriate federal income tax information to the Indenture Trustee
for use in providing information to the Noteholders or MBIA, collecting and
remitting sales and property taxes to taxing authorities, and using its best
efforts to maintain the perfected security interest of the Indenture Trustee in
the Trust Estate. The Servicer (at its expense), acting alone or through a
subservicer, shall have full power and authority, acting at its sole discretion,
to do any and all things in connection with such managing, servicing,
administration, enforcement, collection and such sale of the Equipment that it
may deem necessary or desirable, including the prudent delegation of such
responsibilities. Without limiting the generality of the foregoing, the
Servicer, in its own name or in the name of a subservicer, shall, and is hereby
authorized and empowered by the Indenture Trustee, subject to Section 3.02
hereof to execute and deliver (on behalf of itself, the Noteholders, the
Indenture 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 Lease Contracts and any files or
documentation pertaining to the Lease Assets. The Servicer, acting alone or
through a subservicer, also may, in its sole discretion, waive any late payment
charge or penalty, or any other fees that may be collected in the ordinary
course of servicing any Lease Contract. Notwithstanding the foregoing, neither
the Servicer, nor any subservicer, shall, except pursuant to a judicial order
from a court of competent jurisdiction, or as otherwise expressly provided in
this Servicing Agreement, release or waive the right to collect the Scheduled
Payments or any unpaid balance on any Lease Contract. The Indenture Trustee
shall, at the expense of the Servicer, furnish the Servicer, or at the request
of the Servicer, any subservicer, with any powers of attorney and other
documents necessary or appropriate to enable the Servicer or subservicer to
carry out its servicing and administrative duties hereunder, and the Indenture
Trustee shall not be responsible for the Servicer's or subservicer's application
thereof. Notwithstanding the appointment by the Servicer of a subservicer
hereunder, the Servicer shall remain primarily liable for the full performance
of its obligations hereunder.
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(b) The Servicer (or a subservicer) shall conduct any Lease Contract
management, servicing, administration, collection or enforcement actions in the
following manner:
(i) The Servicer, as agent for and on behalf of the Issuer, with
respect to any Defaulted Lease Contract shall follow such practices
and procedures as are normal and consistent with the Servicer's
standards and procedures relating to its own lease contracts, lease
receivables and equipment that are similar to the Lease Contracts,
Lease Receivables and the Equipment, including without limitation, the
taking of appropriate actions to foreclose or otherwise liquidate any
such Defaulted Lease Contract, together with the related Equipment, to
collect any Guaranty Amounts, and to enforce the Issuer's rights under
the Lease Acquisition Agreement. All Recoveries, Insurance Proceeds or
Residual Proceeds in respect of any such Lease Receivable and the
related Equipment received by the Servicer shall be remitted to the
Indenture Trustee for deposit in the Collection Account pursuant to
Section 3.03(a) hereof;
(ii) The Servicer may sue to enforce or collect upon Lease
Contracts as agent for the Trust. If the Servicer elects to commence a
legal proceeding to enforce a Lease Contract, the act of commencement
shall be deemed to be an automatic assignment of the Lease Contract to
the Servicer for purposes of collection only. If, however, in any
enforcement suit or legal proceeding it is held that the Servicer may
not enforce a Lease Contract on the ground that it is not a real party
in interest or a bolder entitled to enforce the Lease Contract, then
the Indenture Trustee on behalf of the Noteholders and MBIA shall, at
the Servicer's request and expense, take such steps as the Servicer
deems necessary and instructs the Indenture Trustee in writing to take
to enforce the Lease Contract, including bringing suit in its name or
the name of the Issuer, as beneficial owner of the Lease Contract, or
the names of the Noteholders or MBIA, as third party beneficiaries
thereunder, and the Indenture Trustee shall be indemnified by the
Servicer for any such action taken. Any Lease Contract temporarily
released from the custody of the Indenture Trustee to the Servicer or
its agents shall have stamped on it prior to its delivery a legend to
the effect that the Lease Contract is the property of the Issuer and
has been pledged to Norwest Bank Minnesota, National Association as
Indenture Trustee;
(iii) The Servicer shall exercise any rights of recourse against
third parties that exist with respect to any Lease Contract in
accordance with the Servicer's usual practice. In exercising recourse
rights, the Servicer is authorized on the Indenture Trustee's behalf
to reassign the Lease Contract to the person against whom recourse
exists to the extent necessary, and at the price set forth in the
document creating the recourse. The Servicer will not reduce or
diminish such recourse rights, except to the extent that it exercises
such right;
(iv) The Servicer may not allow substitutions of Substitute Lease
Contracts that do not comply with Section 3.10 hereof, Sections 2.04,
3.03 and 3.04
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of the Standard Lease Acquisition Terms and Section 4.04 of the
Standard Indenture Terms;
(v) The Servicer may waive, modify or vary any terms of any Lease
Contract or consent to the postponement of strict compliance with any
such term if in the Servicer's reasonable and prudent determination
such waiver, modification or postponement is not materially adverse to
the Noteholders or MBIA; PROVIDED, HOWEVER, that (A) the Servicer
shall not forgive any payment of rent, and (B) the Servicer shall not
permit any modification with respect to any Lease Contract that would
decrease the Scheduled Payment, defer the payment of any principal or
interest or any Scheduled Payment, reduce the Implicit Principal
Balance (except in connection with actual payments attributable to
such Implicit Principal Balance), or prevent the complete amortization
of the Implicit Principal Balance from occurring by the Calculation
Date preceding the Stated Maturity of the related Notes. The Servicer
shall provide the Back-up Servicer, MBIA and the Indenture Trustee
with an Amended Lease Schedule to the related Series Lease Schedule
reflecting any modification of any Scheduled Payment;
(vi) The Servicer shall not consent to the termination of any
Lease Contract in connection with loss of or damage to the related
Equipment unless the Customer has paid an amount not less than the
Purchase Price for such Lease Contract, or if less, the maximum amount
legally collectible under the related Lease Contract;
(vii) Upon termination of a Lease Contract after payment of the
last Scheduled Payment due thereunder or in the event that the
Servicer or any subservicer in the enforcement of any Lease Contract
otherwise (A) acquires title to any item of Equipment with respect to
which title was held by the Customer or (B) reclaims possession of
Equipment from the Customer, the Servicer shall use its best efforts
to sell or re-lease such item of Equipment promptly and consistent
with the standard of care set forth in Section 3.02 hereof. Any
Insurance Proceeds, Recoveries or Residual Proceeds related thereto
shall be deposited in accordance with Section 3.03(a) hereof, and
(viii) Notwithstanding any provision to the contrary contained in
this Agreement, the Servicer or any subservicer shall exercise any
right under a Lease Contract to accelerate the unpaid Scheduled
Payments, due or to become due thereunder in such a manner as to
maximize the net proceeds available to the Trust Estate; PROVIDED,
HOWEVER, that the Servicer will not accelerate any Scheduled Payment
unless permitted to do so by the terms of the Lease Contract or under
applicable law.
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3.02 SERVICER STANDARD OF CARE.
In managing, administering, servicing, enforcing and making collections on
the Lease Contracts and Equipment pursuant to this Servicing Agreement, the
Servicer will exercise that degree of skill and care consistent with industry
standards for servicing of financial portfolios, and that which the Servicer
customarily exercises with respect to similar lease contracts and equipment
owned or originated by it, and in any event, in a prudent and commercially
reasonable manner. The Servicer shall punctually perform all of its obligations
and agreements under the Servicing Agreement and shall comply with all
applicable federal and state laws and regulations, shall maintain all state and
federal licenses and franchises necessary for it to perform its servicing
responsibilities hereunder, and shall not materially impair the rights of MBIA
or the Noteholders in any Lease Contracts or payments thereunder.
3.03 SERVICER REMITTANCES.
(a) Except as provided in the Specific Servicing Terms, the Servicer, as
agent of the Issuer, shall remit to the Indenture Trustee for deposit in the
Collection Account by 12:00 noon Minneapolis time on each Tuesday and Thursday
that is a Business Day, or if such day is not a Business Day, on the next
Business Day thereafter, the amounts described below that have been collected
through 4:00 p.m. Minneapolis time on the preceding Business Day (or 4:00 p.m.
Minneapolis time on the second preceding Business Day with respect to amounts
collected by the Servicer in a lockbox) so long as such amounts exceed $1,000:
(i) all payments made under the Lease Contracts relating to the Lease
Receivables, including prepayments but excluding taxes, received directly
by the Servicer;
(ii) all Residual Proceeds and Recoveries;
(iii) the Purchase Price of any Lease Contract purchased by the
Company or the Issuer, to the extent received by the Servicer;
(iv) all Guaranty Amounts;
(v) all Servicing Charges, unless otherwise provided in the Specific
Servicing Terms; and
(vi) all Insurance Proceeds.
The Servicer shall hold in trust for the benefit of the Holders of the
Notes and MBIA any payment it receives relating to items (i) through (vi) above
until such time as the Servicer transfers any), such payment to the Indenture
Trustee for deposit in the Collection Account.
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(b) If ACH debits are utilized with respect to a Lease Contract, either
the Servicer shall remit such payments to the Collection Account in accordance
with Section 3.03(a) hereof, or the Servicer will notify the National Automated
Clearing House System to debit the Customer for all payments relating to Lease
Receivables under such Lease Contract and to credit an account (the "ACH
Account") maintained at the ACH Bank in the name of and in the sole control of
the Indenture Trustee for the benefit of the Noteholders and MBIA, and the
Servicer shall not revoke or modify such notifications. In the event (i) a
Customer provides the Servicer or the applicable ACH Bank with written notice of
its termination of such Customer's authorization agreement for ACH debits, (ii)
there are Lease Contracts that do not provide for ACH debits, or (iii) the
Servicer otherwise receives directly moneys with respect to Lease Receivables
that would otherwise involve ACH debits, the Servicer shall deposit all payments
from all such Customers into the Collection Account in accordance with
subsection (a) above. Payments received in the ACH Account representing any
payment listed in Section 3.03(a)(i) through (vi) above, will be transferred by
the Indenture Trustee to the Collection Account on the related Determination
Date.
(c) Except as otherwise provided in the Specific Servicing Terms, on each
Tuesday and Thursday that is a Business Day or if such day is not a Business
Day, on the next Business Day thereafter, the Servicer shall deposit in the
Advance Payment Account, no later than 12:00 noon Minneapolis time, the
aggregate amounts of Advance Payments collected through 4:00 p.m. Minneapolis
time on the preceding Business Day (or 4:00 p.m. Minneapolis time on the second
preceding Business Day with respect to amounts collected by the Servicer in a
lockbox) and not previously deposited. On the Determination Date preceding any
Payment Date, the Indenture Trustee shall withdraw from the Advance Payment
Account and deposit in the Collection Account the sum of (i) Reinvestment Income
on the Advance Payment Account and (ii) Advance Payments related to the Due
Period immediately preceding such Determination Date, both as indicated on the
Monthly Servicer's Report for such Payment Date.
3.04 SERVICER ADVANCES. Not later than 10:00 a.m., Minneapolis time, on the
Determination Date prior to each Payment Date, the Servicer shall make an
advance (a "Servicer Advance") for each Lease Contract which is a Delinquent
Lease Contract on such date by remitting to the Indenture Trustee for deposit in
the Collection Account an amount equal to the Scheduled Payments, or portion
thereof, which were due in the prior Due Period but not received and deposited
in the Collection Account on or prior to such Determination Date; PROVIDED,
HOWEVER, that the Servicer shall not be obligated to make any Servicer Advance
pursuant to this Section 3.04 that the Servicer determines in good faith, and in
accordance with its customary servicing practices, is unlikely to be eventually
repaid from Scheduled Payments made by or on behalf of the related Customer;
FURTHER PROVIDED, that the Servicer may not make a Servicer Advance with respect
to a Lease Contract once it has become a Defaulted Lease Contract. On each
Determination Date, the Servicer shall deliver to the Back-up Servicer, the
Indenture Trustee, MBIA and the Placement Agent the Monthly Servicer's Report,
which shall include a listing of the aggregate amount of Scheduled Payments not
received for the immediately prior Due Period, the amount of Servicer Advances,
and the amounts which it has determined in its sole discretion, and in
accordance with its customary servicing practices, are unlikely to be
recoverable from the related Customers.
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3.05. FINANCING STATEMENTS; TITLE FILINGS. The Servicer will make all
Uniform Commercial Code filings and Department of Motor Vehicles recordings as
maybe required pursuant to the terms of the Indenture. The Servicer shall, in
accordance with its customary servicing procedures and at its own expense, be
responsible for taking such steps as are necessary to maintain perfection of
such security interests. The Indenture Trustee hereby authorizes the Servicer to
re-perfect or to cause the re-perfection of such security interest on its behalf
as Indenture Trustee, as necessary.
3.06 MAINTENANCE OF INSURANCE POLICY; INSURANCE PROCEEDS. The Servicer
shall have the obligation to verify, monitor and enforce the acquisition and
maintenance of a Customer's Insurance Policies. Any Insurance Proceeds shall be
remitted to the Indenture Trustee for deposit in the Collection Account pursuant
to Section 3.03(a).
3.07 PERSONAL PROPERTY AND SALES TAXES. The Servicer shall, on behalf of
the Issuer, pay or cause to be paid all personal property, sales and use taxes
on or with respect to the Equipment, or the acquisition or leasing thereof, as
and when such taxes become due, to the extent a Customer has paid amounts to the
Servicer or into the ACH Account for such taxes. The Servicer shall also cause
to be filed in a timely manner any and all returns and reports required in
connection with the payment of such taxes.
3.08 NO OFFSET. Prior to the termination of the Servicing Agreement, the
obligations of the Servicer under the Servicing Agreement shall not be subject
to any defense, counterclaim or right of offset that the Servicer has or may
have against the Issuer, whether in respect of the Servicing Agreement, any
Lease Contract, Lease Receivable, Equipment or otherwise.
3.09 SERVICING COMPENSATION.
(a) As compensation for the performance of its obligations under the
Servicing Agreement the Servicer shall be entitled to receive the Servicer Fee
and the Additional Servicer Fee, if applicable. The Servicer Fee with respect to
any Lease Contract shall be paid monthly, commencing on the related Initial
Payment Date and terminating on the first to occur of (i) the receipt of the
last Scheduled Payment and related Residual Proceeds with respect to the last
remaining Lease Contract, (ii) the receipt of Recoveries and Insurance Proceeds
with respect to the last remaining Lease Contract, or (iii) the date on which
the Issuer or MBIA purchases the last remaining Lease Contract. The Servicer Fee
shall be paid by the Issuer to the Servicer at the times and in the priority as
set forth in the Indenture. The Servicer shall pay all expenses incurred by it
in connection with its servicing activities hereunder, including, without
limitation, payment of the fees and disbursements of the Independent Accountants
and payment of expenses incurred in connection with distributions and reports to
the Indenture Trustee, the Back-up Servicer, MBIA, the Rating Agencies and
Noteholders and shall not be entitled to reimbursement for such expenses;
provided, however, that the Servicer will be entitled to prompt reimbursement
from the Issuer for reasonable costs and expenses incurred by the Servicer
(including reasonable attorney's fees and out-of-pocket expenses) in connection
with the realization, attempted realization or enforcement of rights and
remedies upon
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Defaulted Lease Contracts, from amounts received as Recoveries from any
Defaulted Lease Contracts.
(b) In connection with any transfer of the servicing obligations to a
successor Servicer in accordance with Section 6.02 hereof, the Back-up Servicer
shall be entitled to reimbursement of Transition Costs as provided therein and
in the Indenture.
3.10 SUBSTITUTION OR PURCHASE OF LEASE CONTRACTS.
(a) The Servicer shall not allow termination of a Lease Contract prior to
the scheduled expiration date or prepayment of any Lease Contract (except from
an Advance Payment or as may be specifically required under such Lease Contract
in connection with a casualty to the related Equipment), unless the Issuer has
(i) pledged to the Indenture Trustee, a Substitute Lease Contract and the
related Equipment and Lease Receivables under such Substitute Lease Contract,
and delivered to the Indenture Trustee the original executed counterpart of the
Substitute Lease Contract or (ii) purchased such prepaid Lease Contract and the
related Equipment from the Indenture Trustee by remittance of the Purchase Price
to the Servicer for deposit in the Collection Account in accordance with Section
3.03(a) hereof, PROVIDED, FURTHER, that purchases and substitutions of Lease
Contracts pursuant to this subparagraph (a) shall comply with the requirements
of Section 4.04 of the Standard Indenture Terms and the criteria set forth in
Section 3.04 of the Lease Acquisition Agreement.
(b) The Servicer shall permit the Issuer to (i) purchase any Defaulted
Lease Contract or Delinquent Lease Contract by remittance by the Issuer to the
Servicer, for deposit in the Collection Account in accordance with Section
3.03(a) hereof, of the Purchase Price for such Lease Contract or (ii) substitute
for any Defaulted Lease Contract or Delinquent Lease Contract, a Substitute
Lease Contract and the related Equipment and Lease Receivables under such
Substitute Lease Contract, upon the delivery to the Indenture Trustee of the
original executed counterpart of the Substitute Lease Contract and the related
Lease Contract File; provided that, purchases and substitutions of Lease
Contracts pursuant to this subparagraph (b) shall comply with the requirements
of Section 4.04 of the Standard Indenture Terms and the criteria set forth in
Section 3.04 of the Lease Acquisition Agreement.
(c) Notwithstanding any other provision contained in the Servicing
Agreement, the Servicer shall not, with respect to a Defaulted Lease Contract
(i) negotiate or enter into a new lease with the Customer relating to the
Equipment or the Customer's obligations under such Defaulted Lease Contract or
(ii) allow the Customer thereunder to resume its rights under such Defaulted
Lease Contract, unless the Issuer has repurchased or made a substitution for
such Defaulted Lease Contract in the manner set forth in subsection (b) hereof.
(d) In the event that the Company is required to repurchase or substitute
a Lease Contract pursuant to Sections 2.04 or 3.03 of the Lease Acquisition
Agreement, the Servicer shall permit such repurchase or substitution only in
accordance with the terms of Sections 3.03 and 3.04 thereof.
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ARTICLE 4
ACCOUNTINGS, STATEMENTS AND REPORTS
4.01 MONTHLY SERVICER'S REPORTS. Prior to the end of the first week of each
month, the Servicer will provide to the Placement Agent and the Note
Administrator a Computer Tape containing the information from which the Servicer
will prepare the Monthly Servicer's Report. No later than 10:00 a.m.,
Minneapolis time, on each Determination Date, the Servicer shall deliver the
Monthly Servicer's Report to the Issuer, the Back-up Servicer, the Indenture
Trustee, and the Placement Agent, and the Indenture Trustee will deliver the
Monthly Servicer's Report to each Noteholder, MBIA, and the Rating Agencies in
the form attached as Exhibit A to the Specific Servicing Terms with respect to
the activity in the immediately preceding Due Period. In the course of preparing
the Monthly Servicer's Report, the Servicer shall seek direction from the Issuer
as to remittance of any funds to be paid pursuant to Section 12.02(d)(xv) of the
Standard Indenture Terms. Lease Contracts which have been substituted for or
purchased by the Company or the Issuer shall be identified by Customer lease
number on the Monthly Servicer's Report. On each Payment Date, the Servicer
shall deliver to the Back-up Servicer and MBIA a Computer Tape in a format
acceptable to the Back-up Servicer containing the information from which the
Servicer prepared the Monthly Servicer's Report, as well as any additional
information reasonably requested by the Back-up Servicer prior to such Payment
Date.
4.02 FINANCIAL STATEMENTS; CERTIFICATION AS TO COMPLIANCE; NOTICE OF
DEFAULT.
(a) The Servicer (and the Company if the initial Servicer is no longer the
Servicer) will deliver to the Indenture Trustee, the Placement Agent, MBIA, the
Back-up Servicer, the Rating Agencies and to each Noteholder of Outstanding
Notes (and, upon the request of any Noteholder, to any prospective transferee of
any Note):
(i) within 120 days after the end of each fiscal year of the Reported
Companies, four copies of the Reported Companies' Financial Statements, all
in reasonable detail and accompanied by an opinion of the Independent
Accountants or a firm of independent certified public accountants of
recognized national standing stating that such financial statements present
fairly the financial condition of the Reported Companies (or, in the case
of a successor Servicer, such successor Servicer's financial condition) and
have been prepared in accordance with generally accepted accounting
principles consistently applied (except for changes in application in which
such accountants concur), and that the examination of such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards, and accordingly included such tests
of the accounting records and such other auditing procedures as were
considered necessary in the circumstances;
(ii) with each set of Reported Companies' Financial Statements
delivered pursuant to subsection (a)(i) above, the Servicer will deliver an
Officer's Certificate stating that such officer has reviewed the relevant
terms of the Indenture, the Lease Acquisition Agreement, the Insurance
Agreement and the Servicing Agreement and has made, or caused
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to be made, under such officer's supervision, a review of the transactions
and conditions of the Reported Companies during the period covered by the
Reported Companies Financial Statements then being furnished, that the
review has not disclosed the existence of any Servicer Default or Servicer
Event of Default or, if a Servicer Default or a Servicer Event of Default
exists, describing its nature and what action the Servicer has taken and is
taking with respect thereto, and that on the basis of such review the
officer signing such certificate is of the opinion that during such period
the Servicer has serviced the Lease Contracts in compliance with the
procedures hereof except as disclosed in such certificate.
(iii) immediately upon becoming aware of the existence of any
condition or event which constitutes a Servicer Default or a Servicer Event
of Default, a written notice describing its nature and period of existence
and what action the Servicer is taking or proposes to take with respect
thereto;
(iv) promptly upon the Servicer's becoming aware of:
(A) any proposed or pending investigation of it or the Issuer by
any governmental authority or agency, or
(B) any pending or proposed court or administrative proceeding
which involves or may involve the possibility of materially and
adversely affecting the properties, business, prospects, profits or
condition (financial or otherwise) of the Servicer or the Issuer,
a written notice specifying the nature of such investigation or proceeding
and what action the Servicer is taking or proposes to take with respect
thereto and evaluating its merits;
(v) with reasonable promptness any other data and information with
respect to the Servicer or the Lease Assets which may be reasonably
requested from time to time, including without limitation any information
required to be made available at any time to any prospective transferee of
any Notes in order to satisfy the requirements of Rule 144A under the
Securities Act of 1933, as amended;
(vi) such other information as may be specified in the Specific
Servicing Terms; and
(vii) unless otherwise provided in the Specific Servicing Terms,
quarterly, unaudited versions of the Reported Company's consolidating
balance sheet and income statement and consolidated statement of sources
and uses of cash.
(b) On or before each April 15, so long as any of the Notes are
outstanding, the Servicer shall furnish to MBIA and the Indenture Trustee an
Officer's Certificate either stating that such action has been taken with
respect to the recording, filing, and rerecording and refiling of any
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financing statements and continuation statements as necessary to maintain the
interest of the Indenture Trustee created by the Indenture with respect to the
Trust Estate and reciting the details of such action or stating that no such
action is necessary to maintain such interest. Such Officer's Certificate shall
also describe the recording, filing, rerecording and refiling of any financing
statements and continuation statements that will be required to maintain the
interest of the Indenture Trustee in the Trust Estate until the date such next
Officer's Certificate is due.
4.03 ANNUAL INDEPENDENT ACCOUNTANTS' REPORTS; ANNUAL FEDERAL TAX LIEN
SEARCH.
(a) Commencing with the fiscal year set forth in the Specific Servicing
Terms, and each fiscal year thereafter, the Servicer at its expense shall cause
the Independent Accountant (who may also render and deliver other services to
the Servicer and its Affiliates) to prepare a statement to the Back-up Servicer,
the Indenture Trustee, the Noteholders, MBIA, the Rating Agencies and the
Placement Agent, dated as of the close of such fiscal year, to the effect that
the Independent Accountant has examined the servicing procedures, manuals,
guides and records of the Servicer, and the accounts and records of the Servicer
relating to the Lease Contracts and any files or documentation pertaining to the
Lease Assets (which procedures, manuals, guides and records shall be described
in one or more schedules to such statement), that such Independent Accountant
has compared the information contained in the Monthly Servicer's Reports
delivered in the relevant period with information contained in the accounts and
records for such period, and that, on the basis of such examination and
comparison, nothing has come to the Independent Accountant's attention to
indicate that the Servicer has not, during the relevant period, serviced the
Lease Contracts in compliance with such servicing procedures, manual and guides
and in the same manner required by the Servicer's standards and with the same
degree of skill and care consistent with that which the Servicer customarily
exercises with respect to similar Lease Contracts owned by it and otherwise in
compliance with the Servicing Agreement, that such accounts and records have not
been maintained in accordance with Section 4.04 hereof, that the information
contained in the Monthly Servicer's Reports does not reconcile with the
information contained in the accounts and records or that such certificates,
accounts and records have not been properly prepared and maintained in all
material respects or in accordance with the requirements of the Servicing
Agreement, except in each case for (a) such exceptions as the Independent
Accountant shall believe to be immaterial and (b) such other exceptions as shall
be set forth in such statement. The Servicer shall deliver to the Back-up
Servicer, the Indenture Trustee, the Noteholders and MBIA a copy of any such
statement within 120 days of the close of the relevant fiscal year.
(b) Promptly after the end of the Servicer's fiscal year, the Servicer, at
its expense, shall cause a search of any and all federal tax liens against the
affiliated group of which the Company and the Issuer are members within the
meaning of Section 1504 of the Code (the "Affiliated Group") as of the end of
such fiscal year to be conducted and shall deliver to the Back-up Servicer, the
Indenture Trustee, the Noteholders and MBIA on or before January 31 of each
year, commencing January 31, 1995, an officer's certificate signed by a
Servicing Officer (i) stating that there are no outstanding federal tax liens
filed against any member of the Affiliated Group or (ii) listing the outstanding
federal tax liens filed against any member of such Affiliated Group. In the
event any
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such certificate shall disclose any such federal tax liens, the Servicer shall
promptly thereafter, satisfy any such federal tax liens.
4.04 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION.
(a) The Servicer shall provide to the Back-up Servicer, MBIA, the
Indenture Trustee, or any Noteholder and their duly authorized representatives,
attorneys or accountants access to any and all documentation regarding the Trust
Estate (including the Series Lease Schedule) that the Servicer may possess, such
access being afforded without charge but only upon reasonable request and during
normal business hours so as not to interfere unreasonably with the Servicer's
normal operations or customer or employee relations, at offices of the Servicer
designated by the Servicer.
(b) At all times during the term hereof, the Servicer shall keep available
at its principal executive office for inspection by Noteholders, the Indenture
Trustee, the Back-up Servicer and MBIA a list of all Lease Contracts then held
as a part of the Trust Estate, together with a reconciliation of such list to
that set forth in the Series Lease Schedules and each of the Monthly Servicer's
Reports, indicating the cumulative addition and removal of Lease Contracts from
the Trust Estate.
(c) The Servicer will maintain accounts and records as to each respective
Lease Contract serviced by the Servicer that are accurate and sufficiently
detailed as to permit (i) the reader thereof to know as of the most recent
Calculation Date the status of such Lease Contract, including any payments,
Insurance Proceeds, Residual Proceeds and Recoveries received or owing (and the
nature of each) thereon and (ii) the reconciliation between payments, Insurance
Proceeds, Residual Proceeds or Recoveries on (or with respect to) each Lease
Contract and the amounts from time to time deposited in the Collection Account
in respect of such Lease Contract.
(d) The Servicer will maintain all of its computerized accounts and
records so that, from and after each Acquisition Date and the grant of the
security interest in the related Lease Contract, Lease Receivables and Equipment
to the Indenture Trustee, the Servicer's accounts and records (including any
back-up computer archives) that refer to any such Lease Contract, Lease
Receivable or Equipment indicate clearly that the Lease Contracts, Lease
Receivables and Equipment are owned by the Issuer and pledged to the Indenture
Trustee for the benefit of the Noteholders. Indication of the Indenture
Trustee's interest in a Lease Contract will be deleted from or modified on the
Servicer's accounts and records when, and only when, the Lease Contract has been
paid in full, replaced with a Substitute Lease Contract or purchased by the
Company or the Issuer or assigned to the Servicer pursuant to the Servicing
Agreement.
(e) Nothing in this Section 4.04 shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Customers, and the failure to provide information otherwise
required by this Section 4.04 as a result of such observance by the Servicer,
shall not constitute a breach of this Section 4.04.
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(f) All information obtained by the Indenture Trustee, the Back-up
Servicer, MBIA or any Noteholder regarding the Customers and the Lease
Contracts, whether upon exercise of its rights under this Section 4.04 or
otherwise, shall be maintained by the Indenture Trustee, the Back-up Servicer,
MBIA or the Noteholder, as applicable, in confidence and shall not be disclosed
to any other Person, unless such disclosure shall not violate any applicable law
or regulation or any proprietary rights of the Company, the Issuer or the
Servicer or unless ordered by a court of applicable jurisdiction; provided that
MBIA may make disclosures with respect to any of the above matters to the Rating
Agencies, reinsurers or any entity having regulatory authority over MBIA.
4.05 OTHER NECESSARY DATA. The Servicer shall, on request of the Back-up
Servicer, Indenture Trustee or MBIA, (i) on reasonable notice, furnish the
Indenture Trustee or MBIA such data necessary for the administration of the
Trust Estate as can be reasonably generated by the Servicer's existing data
processing systems, and (ii) on and after a Servicer Event of Default, within 5
Business Days, provide the Indenture Trustee and the Back-up Servicer with
access to the Servicer's existing data processing systems and any files or
records with respect to the Lease Assets that it may have.
4.06 INDENTURE TRUSTEE TO COOPERATE. Upon payment (including through
application of any prepayment) in full of any Lease Contract, the Servicer will
notify the Indenture Trustee on the next succeeding Determination Date by
written certification (which certification shall include a statement to the
effect that all amounts received in connection with such payments in full which
are required to be deposited in the Collection Account pursuant to Section 3.03
hereof have been so deposited) of a Servicing Officer and shall request delivery
of the Lease Contract to the Servicer. Upon receipt of such delivery request,
the Indenture Trustee shall within 10 days of such request by the Servicer
release such Lease Contract to the Servicer. Upon release of such Lease
Contract, the Servicer is authorized to execute an instrument in satisfaction of
such Lease Contract and to do such other acts and execute such other documents
as it deems necessary to discharge the Customer thereunder and, if applicable,
release any security interest in the Equipment related thereto. The Servicer
shall determine when a Lease Contract has been paid in full. Upon the written
request of a Servicing Officer and subject to the Indenture Trustee's rights to
indemnity contained herein and in the Indenture, the Indenture Trustee shall
perform such other acts as reasonably requested in writing by the Servicer and
otherwise cooperate with the Servicer in enforcement of the Noteholders' rights
and remedies with respect to Lease Contracts.
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ARTICLE 5
THE SERVICER AND THE ISSUER
5.01 SERVICER INDEMNIFICATION.
(a) The Servicer shall indemnify and hold harmless the Indenture Trustee,
the Issuer, the Back-up Servicer, MBIA, and the Trust Estate, for the benefit of
the Noteholders, from and against any loss, liability, claim, expense, damage or
injury suffered or sustained to the extent that such loss, liability, claim,
expense, damage or injury arose out of or was imposed by reason of the failure
by the Servicer to perform its duties under the Servicing Agreement or are
attributable to errors or omissions of the Servicer related to such duties;
PROVIDED, HOWEVER, that the Servicer shall not indemnify any party to the extent
that acts of fraud, gross negligence or breach of fiduciary duty, by such party
contributed to such loss, liability, claim, expense, damage or injury.
(b) Fees and expenses of counsel shall be at the expense of the
indemnified party unless the employment of counsel by such indemnified party has
been authorized by the Servicer. The Servicer shall not be liable for any
settlement of any action or claim effected without its consent. If the Servicer
has made any indemnity payments to MBIA, the Indenture Trustee, the Back-up
Servicer or the Noteholders pursuant to this Section and such party thereafter
collects any of such amounts from others, such party will promptly repay such
amounts collected to the Servicer, without interest. The provisions of this
Section 5.01 shall survive any expiration or termination of the Servicing
Agreement.
5.02 CORPORATE EXISTENCE; REORGANIZATIONS.
(a) The Servicer shall keep in full effect its existence and good standing
as a corporation in the Servicer State of Incorporation and will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to enable the
Servicer to perform its duties under the Servicing Agreement, except where the
failure to so qualify would not have a material adverse effect on the Trust
Estate or the ability of the Servicer to perform its duties hereunder; provided,
however, that the Servicer may reincorporate in another state, if to do so would
be in the best interests of the Servicer and would not have a material adverse
effect upon the Noteholders or MIA.
(b) The Servicer shall not (i) (other than pursuant to one or more
additional lease pool financings) convey, transfer or lease substantially all of
its assets as an entirety to any Person, or (ii) merge or consolidate with
another Person, unless such Person or the merged or consolidated entity acquires
substantially all the assets of the Servicer as an entirety, has adequate
servicing skills and personnel, and executes and delivers to the Issuer, MBIA
and the Indenture Trustee an agreement, in form and substance reasonably
satisfactory to the Issuer, MBIA and the Indenture Trustee, which contains an
assumption by such Person or entity of the due and punctual performance and
observance of each covenant and condition to be performed or observed by the
Servicer under the Servicing Agreement. The Servicer shall provide prompt
written notice of such event to the Rating Agencies.
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5.03 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS. Except as provided
in Section 5.01 hereof, neither the Servicer nor any of the officers, directors,
employees or agents of the Servicer shall be under any liability for any action
taken or for refraining from the taking of any action in its capacity as
Servicer pursuant to the Servicing Agreement; 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 misconduct, bad
faith or gross negligence (which includes negligence with respect to the duties
of the Servicer explicitly set forth in the Servicing Agreement) in the
performance of its duties hereunder. The Servicer and any officer, director,
employee or agent of the Servicer may rely in good faith on any document of any
kind PRIMA FACIE properly executed and submitted by any Person with respect to
any matters arising hereunder. No implied covenants or obligations shall be read
into the Servicing Agreement against the Servicer. In the event the Servicer
performs any activities beyond the requirements of the Servicing Agreement, the
Servicer shall have the option but will not be required to perform such
activities in the future.
5.04 THE SERVICER NOT TO RESIGN.
(a) The Servicer shall not resign from the duties and obligations hereby
imposed on it except upon a determination by its Board of Directors that by
reason of change in applicable legal requirements, with which the Servicer
cannot reasonably comply, the continued performance by the Servicer of its
duties under the Servicing Agreement would cause it to be in violation of such
legal requirements, said determination to be evidenced by a resolution from its
Board of Directors to such effect, accompanied by an Opinion of Counsel to such
effect and reasonably satisfactory to the Indenture Trustee and MBIA.
(b) No such resignation shall become effective until a successor Servicer
shall have assumed the responsibilities and obligations of the Servicer
hereunder.
(c) Except as provided in Sections 5.02 and 6.01, the duties and
obligations of the Servicer under the Servicing Agreement shall continue until
the Servicing Agreement shall have been terminated as provided in Section 8.01
hereof, and shall survive the exercise by the Issuer or the Indenture Trustee of
any right or remedy under the Servicing Agreement, or the enforcement by the
Issuer, MBIA, the Indenture Trustee or any Noteholder of any provision of the
Notes or the Servicing Agreement.
5.05 ISSUER INDEMNIFICATION. The Issuer shall indemnify and hold harmless
the Servicer (but solely from the amounts to be distributed as set forth in
Section 12.02(d)(xii) of the Standard Indenture Terms) from and against any
loss, liability, expense, damage or injury suffered or sustained by the
Servicer, including but not limited to any judgment, award, settlement,
reasonable attorneys' fees and other costs and expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim, which
arises out of the Servicer's activities hereunder; provided, however, that the
Issuer shall not indemnify the Servicer if the Servicer's activities constituted
fraud, willful misconduct gross negligence (which includes negligence with
respect to
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the duties of the Servicer which are explicitly set forth in the Servicing
Agreement) or breach of fiduciary duty by the Servicer.
ARTICLE 6
SERVICING TERMINATION
6.01 SERVICER EVENTS OF DEFAULT.
(a) Any of the following acts or occurrences shall constitute a Servicer
Event of Default:
(i) Any failure by the Servicer to deliver to the Indenture Trustee
for payment to Noteholders any proceeds or payments received from a
Customer or in respect of the Trust Estate and required to be so delivered
under the terms of the Indenture and this Servicing Agreement that
continues unremedied until 10:00 a.m., Minneapolis time, on the second
following Business Day; provided, however, that the Indenture Trustee, upon
receiving actual knowledge of such failure, shall give the Servicer prompt
written, telecopied or telephonic notice of such failure. Notwithstanding
the foregoing, any failure by the Indenture Trustee to deliver such notice
to the Servicer shall not prevent the occurrence of a Servicer Event of
Default; or
(ii) Any failure by the Servicer to deliver a Monthly Servicer's
Report pursuant to Section 4.01 hereof that continues unremedied until
10:00 a.m., Minneapolis time, the following Business Day; provided,
however, that if the Servicer has not delivered the Monthly Servicer's
Report by 12:00 noon, Minneapolis time, on the Determination Date, the
Indenture Trustee shall give the Servicer notice of such failure.
Notwithstanding the foregoing, any failure by the Indenture Trustee to
deliver such notice to the Servicer shall not prevent the occurrence of a
Servicer Event of Default; or
(iii) Any failure by the Servicer to make a Servicer Advance pursuant
to Section 3.04 hereof or to deposit any Purchase Price received by it that
continues unremedied until 10:00 am., Minneapolis time, the following
Business Day; provided, however, that if the Servicer has not made the
Servicer Advance or deposited any Purchase Price received by it by 12:00
noon, Minneapolis time, on the Determination Date and the Indenture Trustee
has received written notification from the Servicer by way of the Monthly
Servicer's Report or otherwise that such Servicer Advance or Purchase Price
is to be paid, the Indenture Trustee shall give the Servicer prompt
written, telecopied or telephonic notice of such failure. Notwithstanding
the foregoing, any failure by the Indenture Trustee to deliver such notice
to the Servicer shall not prevent the occurrence of a Servicer Event of
Default; or
(iv) Any 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
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the Servicing Agreement or the Indenture, as the case may be, or if any
representation or warranty of the Servicer set forth in Section 2.01 of the
Servicing Agreement shall prove to be incorrect, which failure or breach
(A) materially and adversely affects or could affect the interest or rights
of MBIA, the Indenture Trustee, or the Noteholders and (B) continues
unremedied for a period of 30 days after the date on which the Servicer
becomes aware of such failure or breach or written notice of such failure
or breach, requiring the situation giving rise to such breach or
non-conformity to be remedied, shall have been given to a Servicing Officer
of the Servicer by the Indenture Trustee, MBIA, the Issuer, or the Back-up
Servicer, or to a Servicing Officer of the Servicer, MBIA and the Indenture
Trustee by Holders of Notes representing not less than 25% of the
Outstanding Principal Amount of all Series; or
(v) Any assignment by the Servicer to a delegate of its duties or
rights under the Servicing Agreement, except as specifically permitted
hereunder, or any attempt to make such an assignment;
(vi) The entry of a decree or order for relief by a court having
jurisdiction in respect of the Servicer or a petition against the Servicer
in an involuntary case under any federal bankruptcy laws, as now or
hereafter in effect, or any other present or future federal or state
bankruptcy insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official for
the Servicer or for any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Servicer and the
continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days;
(vii) The commencement by the Servicer of a voluntary case under any
federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency, reorganization
or similar law, or the consent by the Servicer to the appointment of or
taking possession by a conservator, receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official in any
insolvency, readjustment of debt, marshalling of assets and liabilities,
bankruptcy or similar proceedings of or relating to the Servicer or
relating to a substantial part of its property, or the making by the
Servicer of an assignment for the benefit of creditors, or the failure by
the Servicer generally to pay its debts as such debts become due or if the
Servicer shall admit in writing its inability to pay its debts as they
become due, or the taking of corporate action by the Servicer in
furtherance of any of the foregoing; or
(viii) The occurrence of a Trigger Event if the initial Servicer is
the Servicer.
(b) So long as a Servicer Event of Default shall not have been remedied
within the period set forth in (i), (ii), (iii), (iv) or (vi) above, as
applicable, or if a Servicer Event of
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Default described in (v), (vii) or (viii) above occurs, the Indenture Trustee,
at the direction of MBIA shall, or if there has been an MBIA Default, the
Indenture Trustee, the Issuer, or the Back-up Servicer may, by notice (the
"Seller Termination Notice") then given in writing to the Servicer and the
Back-up Servicer, terminate all, but not less than all, of the rights and
obligations of the Servicer under this Servicing Agreement. Notwithstanding the
foregoing, a delay in or failure of performance under Section 6.01(a)(iv) hereof
for a period of 30 or more days, shall not constitute a Servicer Event of
Default if such delay or failure could not have been prevented by the exercise
of reasonable diligence by the Servicer and such delay or failure was caused by
acts of declared or undeclared war, public disorder, rebellion or sabotage,
epidemics, landslides, lightning, fire, hurricanes, earthquakes, floods or
similar causes. The preceding sentence shall not relieve the Servicer from using
its best efforts to perform its obligations in a timely manner in accordance
with the terms of the Servicing Agreement, and the Servicer shall provide the
Indenture Trustee, the Back-up Servicer, MBIA, the Issuer and the Noteholders
with prompt notice of such failure or delay by it, together with a description
of its efforts to so perform its obligations.
(c) Upon the occurrence of a Trigger Event, the Indenture Trustee shall,
at the direction of MBIA, or if there has been an MBIA Default, the Indenture
Trustee, the Issuer, or the Back-up Servicer may, by Servicer Termination Notice
then given in writing to the Servicer and the Back-up Servicer, terminate all
but not less than all of the rights and obligations of the Servicer under this
Servicing Agreement.
(d) On or after the receipt by the Servicer of a Servicer Termination
Notice, all authority and power of the Servicer under this Servicing Agreement,
whether with respect to the Notes or the Lease Contracts or otherwise, shall
pass to and be vested in the successor Servicer appointed pursuant to Section
6.02 hereof, and, without limitation, such successor Servicer is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer of
the Lease Contracts and related documents, or otherwise. The Servicer agrees to
cooperate with the Indenture Trustee, the Back-up Servicer and the successor
Servicer in effecting the termination of the responsibilities and rights of the
Servicer hereunder, including, without limitation, the transfer to the successor
Servicer for administration by it of all cash amounts that shall at the time be
held by the Servicer for deposit, or have been deposited by the Servicer, in the
Collection Account or the Advance Payment Account or thereafter received with
respect to any of the Lease Contracts. To assist the successor Servicer in
enforcing all rights under the Lease Contracts and the Insurance Polices to the
extent they relate to the Lease Contracts, the outgoing Servicer, at its own
expense, shall transfer its records (electronic and otherwise) relating to such
Lease Contracts to the successor Servicer in such form as the successor Servicer
may reasonably request and shall transfer the related Lease Contracts and Lease
Contract Files (to the extent not held by the Indenture Trustee) and all other
records, correspondence and documents relating to the Lease Contracts that it
may possess to the successor Servicer in the manner and at such times as the
successor Servicer shall reasonably
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request. In addition to any other amounts that are then payable to the Servicer
under the Servicing Agreement, the Servicer shall be entitled to receive
reimbursements for any unreimbursed Servicer Advance made during the period
prior to the delivery of a Servicer Termination Notice pursuant to this
Section 6.01 which terminates the obligations and right of the Servicer under
the Servicing Agreement.
6.02 BACK-UP SERVICER TO ACT; TAKING OF BIDS; APPOINTMENT OF SUCCESSOR
SERVICER.
(a)(i) Except as provided in Section 6.02(d) hereof, or as otherwise
specified in the Specific Servicing Terms, on and after the time the
Servicer receives a Servicer Termination Notice pursuant to Section 6.01
hereof, the Back-up Servicer shall, unless prevented by law, automatically
and without further action be the successor Servicer. If the Back-up
Servicer cannot serve as successor Servicer, another firm acceptable to
MBIA shall be appointed.
(ii) The successor Servicer shall be the successor in all respects to
the Servicer in its capacity as Servicer under the Servicing Agreement and
the transactions set forth or provided for herein and shall be subject to
all the responsibilities, duties and liabilities relating thereto placed on
the Servicer by the terms and provisions hereof, PROVIDED, HOWEVER, that
the successor Servicer (x) shall not be required to make any Servicer
Advance if such Servicer Advance would be prohibited by applicable law and
(y) shall not be liable for any acts or omissions of the outgoing Servicer
or for any breach by the outgoing Servicer of any of its representations
and warranties contained herein or in any related document or agreement.
With the prior written consent of MBIA (which consent shall not be
unreasonably withheld), the successor Servicer may subcontract with another
firm to act as subservicer so long as the successor Servicer remains fully
responsible and accountable for performance of all obligations of the
Servicer on and after the time the Servicer receives the Servicer
Termination Notice. The successor Servicer shall be entitled to the
Servicer Fee and any Additional Servicer Fee, subject to the taking of bids
as described in subsection (b) below.
(b) Solely for purposes of establishing the fee to be paid to the Back-up
Servicer or such other entity specified in the Specific Servicing Terms, upon
receipt of a Servicer Termination Notice, the Back-up Servicer shall solicit
written bids, with a copy to MBIA (such bids to include a proposed servicer fee
and servicing transfer costs) from not less than three entities experienced in
the servicing of Lease Contracts similar to the Lease Contracts and that are not
affiliates of the Indenture Trustee, the Back-up Servicer, the Servicer or the
Issuer and are reasonably acceptable to MBIA. The Issuer may also solicit
additional bids from other such entities. Any such written solicitation shall
prominently indicate that bids should specify any applicable subservicing fees
required to be paid from the Servicer Fee and that any fees and transfer costs
in excess of the Servicer Fee shall be paid only pursuant to Section 12.02(d)(x)
of the Standard Indenture Terms as the Additional Servicer Fee. The successor
Servicer shall act as Servicer hereunder and shall,
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subject to the availability of sufficient funds in the Collection Account
pursuant to Section 12.02(d)(i) (up to the Servicer Fee) and Section 12.02(d)(x)
(up to any Additional Servicer Fee) of the Standard Indenture Terms, receive as
compensation therefor a fee equal to the fee proposed in the bid so solicited
which provides for the lowest combination of servicer fee and transition costs,
as reasonably determined by MBIA.
(c) The Servicer, the Back-up Servicer, the Issuer, the Indenture Trustee
and such successor Servicer shall take such action, consistent with the
Servicing Agreement, as shall be necessary to effectuate any such succession.
The Back-up Servicer (or the Indenture Trustee or the Noteholders if such
Noteholders have previously reimbursed the Back-up Servicer and the Indenture
Trustee therefor) shall be reimbursed for Transition Costs, if any, incurred in
connection with the assumption of responsibilities of the successor Servicer,
upon receipt of documentation of such costs and expenses and in accordance with
Section 12.02(d)(x) of the Standard Indenture Terms.
(d) Upon written notification to the Indenture Trustee that on any
Determination Date following the solicitation of bids provided for in Section
6.02(b) hereof, the sum of the aggregate Implicit Principal Balance for all
Lease Contracts plus the amount on deposit in the Cash Collateral Account less
the Outstanding Principal Amount of all Series is less than the lesser of (1)
$50,000 or (2) the proposed servicing transfer costs set forth in the lowest bid
solicited pursuant to Section 6.02(b) hereof, then the Back-up Servicer shall be
relieved of its obligation under Section 6.02(a)(i) hereof, and MBIA, or if
there is an MBIA Default, the Issuer shall appoint a successor Servicer. In such
event, MBIA shall be reimbursed for any Transition Costs incurred solely
pursuant to Section 6.02(b) hereof in the manner and to the extent provided for
in Section 12.02(d)(ix) of the Standard Indenture Terms.
6.03 NOTIFICATION TO NOTEHOLDERS. The Servicer shall promptly notify the
successor Servicer (if specified in the Specific Servicing Terms), Back-up
Servicer, MBIA, the Issuer and the Indenture Trustee of any Servicer Event of
Default upon actual knowledge thereof by a Servicing Officer. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article 6, the Indenture Trustee shall give prompt written notice thereof to the
Noteholders at their respective addresses appearing in the Note Register.
6.04 WAIVER OF PAST DEFAULTS. The Indenture Trustee shall, at the direction
of MBIA or at the direction of the Noteholders representing more than 50% of the
Outstanding Principal Amount of all Series, on behalf of all Noteholders, with
the written consent of MBIA, so long as there is no MBIA default, waive any
default by the Servicer in the performance of its obligations hereunder and its
consequences, other than a default with respect to required deposits and
payments in accordance with Article 3 or a default of the type set forth in
clause (vii) or (viii) of Section 6.01 (a) hereof, which waiver shall require
the consent of each Noteholder and MBIA. Upon any such waiver of a past default,
such default shall cease to exist, and any Servicer Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Servicing Agreement. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereon except to the extent expressly
waived.
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6.05 EFFECTS OF TERMINATION OF SERVICER.
(a) Upon the appointment of the successor Servicer, the predecessor
Servicer shall remit any Scheduled Payments, Advance Payments, Overdue Payments
and any other payments or proceeds that it may receive pursuant to any Lease
Contract or otherwise to the successor Servicer after such date of appointment.
(b) After the delivery of a Servicer Termination Notice, the outgoing
Servicer shall have no further obligations with respect to the management,
administration, servicing, enforcement, custody or collection of the Lease
Contracts and the successor Servicer shall have all of such obligations, except
that the outgoing Servicer will transmit or cause to be transmitted directly to
the successor Servicer, promptly on receipt and in the same form in which
received, any amounts held by the outgoing Servicer (properly endorsed where
required for the successor Servicer to collect them) received as payments upon
or otherwise in connection with the Lease Contracts. The outgoing Servicer's
indemnification obligations pursuant to Section 5.0l hereof will survive the
termination of the Servicer but will not extend to any acts or omissions of a
successor Servicer.
6.06 NO EFFECT ON OTHER PARTIES. Upon any termination of the rights and
powers of the Servicer pursuant to Section 6.01 hereof, or upon any appointment
of a successor Servicer, all the rights, powers, duties and obligations of the
other parties under this Servicing Agreement, the Indenture, and the Lease
Acquisition Agreement shall remain unaffected by such termination or appointment
and shall remain in full force and effect thereafter.
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ARTICLE 7
THE BACK-UP SERVICER
7.01 REPRESENTATIONS OF BACK-UP SERVICER. The Back-up Servicer makes the
following representations and warranties:
(a) The Back-up Servicer has been duly organized and is validly existing
as a national banking association in good standing under the laws of the United
States of America, with power and authority to own its properties and to conduct
its business as such properties shall be currently owned and such business is
presently conducted.
(b) The Back-up Servicer has the power and authority to execute and
deliver the Servicing Agreement and the Insurance Agreement and to carry out its
terms; and the execution, delivery, and performance of the Servicing Agreement
and the Insurance Agreement shall have been duly authorized by the Back-up
Servicer by all necessary corporate action.
(c) The Servicing Agreement and the Insurance Agreement shall constitute a
legal, valid, and binding obligation of the Back-up Servicer enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights in general and by general principles of equity,
regardless of whether such enforceability shall be considered in a proceeding in
equity or at law.
(d) The consummation of the transactions contemplated by the Servicing
Agreement and the Insurance Agreement and the fulfillment of the terms thereof
shall not conflict with, result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or by-laws of the Back-up Servicer, or any
indenture, agreement, or other instrument to which the Back-up Servicer is a
party or by which it shall be bound; nor result in the creation or imposition of
any lien upon any of its properties pursuant to the terms of any such indenture,
agreement, or other instrument; nor violate any law or any order, rule, or
regulation applicable to the Back-up Servicer of any court or of any Federal or
state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Back-up Servicer or its properties.
(e) There are no proceedings or investigations pending or, to the Back-up
Servicer's best knowledge, threatened before any court, regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over the Back-up Servicer or its properties (i) asserting the invalidity of the
Servicing Agreement or the Insurance Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by the Servicing Agreement
or the Insurance Agreement, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Back-up Servicer of its
obligations under, or the validity or enforceability of, the Servicing Agreement
or the Insurance Agreement.
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7.02 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF,
BACK-UP SERVICER. Any Person (a) into which the Back-up Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Back-up Servicer shall be a party, or (c) which may succeed to the
properties and assets of the Back-up Servicer substantially as a whole, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Back-up Servicer hereunder, shall be the
successor to the Back-up Servicer under the Servicing Agreement without further
act on the part of any of the parties to the Servicing Agreement. In the event
that the resulting entity does not meet the eligibility requirements for the
Indenture Trustee set forth in the Indenture, the Back-up Servicer, upon the
written request of MBIA, shall resign from its obligations and duties under this
Servicing Agreement.
7.03 BACK-UP SERVICER RESIGNATION. The Back-up Servicer shall not resign
from its obligations and duties under this Servicing Agreement or the Insurance
Agreement except (i) as provided in Section 7.02 above, or (ii) upon
determination that the performance of its duties shall no longer be permissible
under applicable law (any such determination permitting the resignation of the
Back-up Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered to the Indenture Trustee and MBIA). Upon the Back-up Servicer's
resignation or termination pursuant to Sections 7.02 or 7.03 hereof, the Back-up
Servicer shall comply with the provisions of this Servicing Agreement until the
acceptance of a successor servicer.
7.04 OVERSIGHT OF SERVICING.
(a) Prior to each Payment Date, the Back-up Servicer shall review the
Monthly Servicer's Report related thereto and shall determine the following:
(i) that such Monthly Servicer's Report is complete on its face;
(ii) that the amount credited to and withdrawn from any ACH Account
maintained with the Back-up Servicer is the same as the amount set forth in
the Monthly Servicer's Report as so credited; and
(iii) that the amounts credited to and withdrawn from the Collection
Account, Advance Payment Account and the Cash Collateral Account, and the
balance of such account, as set forth in the records of the Indenture
Trustee, are the same as the amount set forth in the Monthly Servicer's
Report.
(b) The Back-up Servicer shall, within 30 days of the receipt thereof,
load the Computer Tape received from the Servicer pursuant to Section 4.01
hereof, make sure such Computer Tape is in readable form and shall calculate and
check the following:
(i) the Aggregate IPB as of the most recent Calculation Date;
(ii) the Principal Distribution Amount for the most recent Payment
Date; and
(iii) the Annualized Default Rate and the Delinquency Rate for the
related Due Period as set forth in the most recent Monthly Servicer's
Report.
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In addition, the Back-up Servicer shall confirm that the items set forth in the
Monthly Servicer's Report, other than the items listed in the section entitled
"Amounts Remitted by Servicer" are accurate based solely on a comparison to the
Computer Tape referred to above.
(c) In the event of any discrepancy between the information set forth in
subparagraphs; (a) and (b) as calculated by the Servicer from that determined or
calculated by the Back-up Servicer, the Back-up Servicer shall promptly notify
the Servicer, the Indenture Trustee and MBIA of such discrepancy. If within 30
days of such notice being provided to the Servicer, the Back-up Servicer and the
Servicer are unable to resolve such discrepancy, the Back-up Servicer shall
promptly notify the Rating Agencies and the Holders of the Notes of such
discrepancy.
(d) Based solely on the information included in the Series Lease Schedule
delivered on the Acquisition Date and the computer disks or tapes provided each
Payment Date thereafter, the Back-up Servicer shall determine that any
Substitute Lease Contracts delivered under Section 3.10 hereof satisfy the
substitution criterion set forth in Section 3.04(b) of the Lease Acquisition
Agreement and that the acquisition of such Substitute Lease Contracts do not
violate the Concentration Limits set forth in the Specific Lease Acquisition
Terms.
(e) The Back-up Servicer will make a site visit to the offices of the
Servicer within 60 days of the end of each calendar year for the purpose of
reviewing the operations of the Servicer, commencing December 31, 1994. The
reasonable out-of-pocket costs and expenses of the Back-up Servicer incurred in
connection with the Servicing Agreement, including without limitation, the site
visit referred to in the preceding sentence will be reimbursed to the Back-up
Servicer by the Issuer or the Servicer.
(f) Other than as specifically set forth elsewhere in the Servicing
Agreement, the Back-up Servicer shall have no obligation to supervise, verify,
monitor or administer the performance of the Servicer and shall have no
liability for any action taken or omitted by the Servicer.
(g) The Back-up Servicer shall consult fully with the Servicer as may be
necessary from time to time to perform or carry out the Back-up Servicer's
obligations hereunder, including the obligation to succeed at any time to the
duties and obligations of the Servicer as servicer under Section 6.02 hereof.
7.05 BACK-UP SERVICER COMPENSATION. As compensation for the performance of
its obligations as Back-up Servicer under the Servicing Agreement the Back-up
Servicer shall be entitled to receive the Back-up Servicer Fee.
7.06 DUTIES AND RESPONSIBILITIES.
(a) The Back-up Servicer shall perform such duties and only such duties as
are specifically set forth in this Servicing Agreement, and no implied covenants
or obligations shall be read into this Servicing Agreement against the Back-up
Servicer; and
(b) In the absence of bad faith or negligence on its part, the Back-up
Servicer may conclusively rely as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Back-up Servicer and conforming to the
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requirements of this Servicing Agreement; but in the case of any such
certificates or opinions, which by any provision hereof are specifically
required to be furnished to the Back-up Servicer, the Back-up Servicer shall be
under a duty to examine the same and to determine whether or not they conform to
the requirements of this Servicing Agreement.
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ARTICLE 8
MISCELLANEOUS PROVISIONS
8.01 TERMINATION OF THE SERVICING AGREEMENT.
(a) Except with respect to a particular party under Sections 5.02, 5.04,
6.01, 7.02 or 7.03 hereof, the respective duties and obligations of the
Servicer, the Issuer, the Back-up Servicer and the Indenture Trustee created by
the Servicing Agreement shall terminate upon the discharge of the Indenture in
accordance with its terms; and the respective duties and obligations of the
Indenture Trustee shall terminate with respect to the Indenture Trustee in the
event the Indenture Trustee resigns or is replaced under Section 7.09 of the
Standard Indenture Terms; provided, however, that no resignation or removal of
the Indenture Trustee and no appointment of a successor Indenture Trustee shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 7. 10 of the Standard Indenture Terms. Upon the
termination of the Servicing Agreement pursuant to this Section 8.01(a), the
Servicer shall pay all monies with respect to the Lease Assets held by the
Servicer and to which the Servicer is not entitled to the Issuer or upon the
Issuer's order.
(b) The Servicing Agreement shall not be automatically terminated as a
result of an Event of Default under the Indenture or any action taken by the
Indenture Trustee thereafter with respect thereto, and any liquidation or
preservation of the Trust Estate by the Indenture Trustee thereafter shall be
subject to the rights of the Servicer to service the Lease Receivables and to
collect servicing compensation as provided hereunder.
8.02 AMENDMENTS.
(a) The Servicing Agreement may be amended from time to time by the
Issuer, the Servicer, the Back-up Servicer, and the Indenture Trustee, with the
consent of MBIA but without the consent of any of the Noteholders, to cure any
ambiguity, to correct or supplement any provisions herein that may be
inconsistent with any other provisions herein and therein, as the case may be,
or to add or amend any other provisions with respect to matters or questions
arising under this Servicing Agreement; PROVIDED, HOWEVER, that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder.
(b) The Servicing Agreement may also be amended from time to time by the
Issuer, the Servicer and the Back-up Servicer, with the consent of the Indenture
Trustee, MBIA and the Holders of not less than 50% of the Outstanding Principal
Amount of all Series, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of the Servicing Agreement;
PROVIDED, HOWEVER, that no such amendment shall, without the consent of each
Noteholder, (i) alter the priorities with which any allocation of funds shall be
made under the Servicing Agreement; (ii) permit the creation of any lien on the
Trust Estate (other than the lien of the Indenture) or any portion thereof or
deprive any such Noteholder of the benefit of this Servicing Agreement with
respect to the Trust Estate or any portion thereof; or (iii) modify this Section
8.02 or Sections 3.03, 5.02, 5.04 or 6.01 hereof.
(c) Promptly after the execution of any amendment, the Servicer shall send
to the Indenture Trustee, MBIA, each Holder of the Notes and each Rating Agency
a conformed copy of each such amendment.
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(d) It shall not be necessary, in any consent of Noteholders under this
Section 8.02, to 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 consent and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable regulations
as the Indenture Trustee may prescribe.
(e) Any amendment or modification effected contrary to the provisions of
this Section 8.02 shall be void.
8.03 GOVERNING LAW. The Servicing Agreement shall be construed in
accordance with the internal laws of the State of New York without regard to
conflict of laws principles and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
8.04 NOTICES. All demands, notices and communications hereunder shall be in
writing and shall be delivered or mailed by registered or certified United
States mail, postage prepaid, and addressed, in each case as provided in the
Specific Servicing Terms. All notices and demands shall be deemed to have been
given either at the time of the delivery thereof to any officer of the Person
entitled to receive such notices and demands at the address of such Person for
notices hereunder, or on the third day after the mailing thereof to such
address, as the case may be.
8.05 SEVERABILITY OF PROVISIONS. If one or more of the provisions of the
Servicing Agreement shall be for any reason whatever held invalid, such
provisions shall be deemed severable from the remaining covenants and provisions
of the Servicing Agreement, and shall in no way affect the validity or
enforceability of such remaining provisions, the rights of any parties hereto,
or the rights of the Indenture Trustee, MBIA or any Noteholder. To the extent
permitted by law, the parties hereto waive any provision of law which renders
any provision of the Servicing Agreement prohibited or unenforceable in any
respect.
8.06 BINDING EFFECT. All provisions of the Servicing Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of the parties hereto, and all such provisions shall inure to the benefit of the
Noteholders. The Servicing Agreement may not be modified except by a writing
signed by all parties hereto.
8.07 ARTICLE HEADINGS AND CAPTIONS. The article headings and captions in
the Servicing Agreement are for convenience of reference only, and shall not
limit or otherwise affect the meaning hereof.
8.08 LEGAL HOLIDAYS. In the case where the date on which any action
required to be taken, document required to be delivered or payment required to
be made is not a Business Day, such action, delivery or payment need not be made
on such date, but may be made on the next succeeding Business Day.
8.09 ASSIGNMENT FOR SECURITY FOR THE NOTES. The Servicer and the Back-up
Servicer understand that the Issuer will assign to and grant to the Indenture
Trustee a security interest in all its right, title and interest to this
Servicing Agreement. The Servicer and the Back-up Servicer consent to such
assignment and grant and further agree that all representations, warranties,
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covenants and agreements of the Servicer and the Back-up Servicer made herein
shall also be for the benefit of and inure to the Indenture Trustee and all
Holders from time to time of the Notes.
8.10 NO SERVICING ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 5.02 and 5.04 hereof, this
Servicing Agreement may not be assigned by the Issuer or the Servicer (except
with respect to the appointment of a subservicer) without the prior written
consent of MBIA and the Holders of Notes representing not less than 50% of the
Notes Outstanding.
8.11 MBIA DEFAULT. If an MBIA Default occurs, MBIA's right to consent
hereunder and to direct the Indenture Trustee shall be voided and, in such
event, in all provisions of the Servicing Agreement wherein MBIA's consent or
direction is required or permitted, the consent or direction of the Holders of
Notes representing more than 50% of aggregate Notes Outstanding shall be
required or permitted.
8.12 THIRD PARTY BENEFICIARY. MBIA is an express third party beneficiary to
the Servicing Agreement.
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