EXHIBIT 10.41
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement"), dated as of August 28, 1997, is
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entered into by and among ROCKFORD LIMITED I, a New York corporation ("Seller"),
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ROCKFORD INDUSTRIES, INC., a California corporation ("Rockford"), SUNAMERICA
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LIFE INSURANCE COMPANY, an Arizona corporation ("Purchaser"), and TEXAS COMMERCE
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BANK NATIONAL ASSOCIATION, a national banking association organized and existing
under the laws of the United States of America (the "Trustee"), in its capacity
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as trustee under the trust created pursuant to the Pooling and Servicing
Agreement described below.
RECITALS
Contemporaneously with the execution of this Agreement, Seller (in its own
capacity and as successor in interest to each of Seller's Predecessors through
the merger thereof into Seller), as seller, Rockford, as servicer and Trustee,
as trustee and back-up servicer, and Purchaser have executed the Amended,
Restated and Consolidated Pooling and Servicing Agreement dated of even date
herewith (the "Pooling and Servicing Agreement"). Seller proposes, subject to
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the terms and conditions stated herein, to sell to Purchaser Class A
Certificates and Class B Certificates issued pursuant to the Pooling and
Servicing Agreement, in exchange for Purchaser's transfer of the Existing
Certificates to Seller on the Initial Closing Date and in exchange for cash
consideration on each Subsequent Closing Date. As to all Certificates other
than the Consolidated Certificates to be issued under the Pooling and Servicing
Agreement on the Initial Closing Date, the aggregate initial principal balance
of such Certificates shall not exceed $200,000,000, as such amount may be
increased in Purchaser's sole discretion in accordance with Section 2.03(a)
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hereof. Capitalized terms used in this Agreement have the meanings provided in
Article I below. The Certificates described below evidence fractional undivided
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interests in a Trust with a corpus consisting of a pool of Lease Contracts
serviced by Rockford.
Purchaser desires to purchase from Seller the Class A Certificates and
Class B Certificates to be issued from time to time by the Trust, and Seller
desires to sell the Class A Certificates and Class B Certificates to Purchaser,
subject to the terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties agree as follows.
ARTICLE I
DEFINITIONS
Section 1.01 Certain Definitions. The following terms shall have the
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meanings given them below:
"Available Commitment Amount" shall have the meaning given such term
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in the Equipment and Lease Purchase Agreement.
"Bill of Sale and Assignment" shall have the meaning given such term
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in the Equipment and Lease Purchase Agreement.
"Commitment Expiration Date" shall mean AUGUST 28, 2000, or such later
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date as Purchaser may elect in its sole discretion.
"Deferred Lease" means any Lease Contract under which the Lessee is
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not required to make any Scheduled Payment (or the Scheduled Payments are each
zero) for at least four months (but not more than six months) immediately
following the commencement date of such Lease Contract.
"Eligible Lease Contract" shall mean, as of the relevant date, a Lease
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Contract:
(a) which, if included in the Trust, would not cause any
representation or warranty of Seller contained in Section 3.02 hereof
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to be untrue or incorrect; and
(b) with respect to which Purchaser has not notified Seller that
such Lease Contract is unacceptable for purchase.
"Event of Bankruptcy" shall be deemed to have occurred with respect to
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a Person if either:
(a) (i) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up, or
composition or readjustment of debts of such Person, the appointment of a
trustee, receiver, custodian, liquidator, assignee, sequestrator (or other
similar official) for such Person or all or substantially all of its
assets, or any similar action with respect to such Person under any law
relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, and such case or proceeding shall
continue unstayed or undismissed for a period of 15 days; or (ii) an order
for relief in respect of such Person shall be entered in an involuntary
case under the federal bankruptcy laws or other similar laws now or
hereafter in effect; or
(b) such Person (i) shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or (ii) shall consent to
the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official) for,
such Person or for any substantial part of its property, or (iii) shall
make any general assignment for the benefit of creditors, or shall fail to,
or admit in writing its inability to, pay its debts generally as they
become due, or, if a corporation or similar entity, its board of directors
shall vote to implement any of the foregoing.
"Final Scheduled Payment" shall mean the final Scheduled Payment under
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a Lease Contract, excluding any purchase option payment or other residual
payment.
"Funding Period" shall mean, initially, the period commencing on the
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Initial Closing Date through (and including) FEBRUARY 28, 1999; provided,
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however, that the Funding Period shall automatically be extended through (and
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including) the Commitment Expiration Date unless, on or before AUGUST 28, 1998,
Bond Insurer or Purchaser notifies the other and Seller of such party's election
not to so extend the Funding Period; provided, further, that each Rating Agency
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receives notice of such automatic extension on or before FEBRUARY 28, 1999.
"Sale Assignment" shall mean a Sale Assignment in the form attached
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hereto as Exhibit "B-1" (with respect to the Existing Trust Assets) or "B-2"
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(with respect to other Eligible Lease Contracts). Such assignment shall be
without recourse to Seller, but subject to Seller's covenants, representations,
warranties and indemnities specifically provided herein.
"Step Lease" means any Lease Contract (other than a Deferred Lease)
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under which either (a) the requirement that the Lessee make equal Scheduled
Payments thereunder does not begin until the thirteenth (13th) month immediately
following the commencement date of such Lease Contract, or (b) the Lessee is not
required to make any Scheduled Payment for up to three months immediately
following the commencement date of such Lease Contract and is not required to
made equal Scheduled Payments thereunder during the first 18 months immediately
following the commencement date of such Lease Contract.
"Subsequent Closing Notice" has the meaning given to such term in
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Section 2.03(b).
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"Treasury Rate" shall have the meaning given such term in Section
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2.05.
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"Warranty Purchase Amount" shall have the meaning given such term in
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Section 7.01(c).
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Section 1.02 Other Definitions. Other capitalized terms used, but not
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defined herein, shall have the meanings given them in the Pooling and Servicing
Agreement.
ARTICLE II
PURCHASE AND SALE OF CERTIFICATES
Section 2.01 [Intentionally Omitted]
Section 2.02 Initial Closing Date Conditions. Trustee's obligations
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hereunder shall be subject to the satisfaction (or waiver by Trustee, Bond
Insurer and Purchaser) on the Initial Closing Date of each of the following
conditions precedent:
(a) On or before the Initial Closing Date, Seller and Rockford shall
deliver or cause to be delivered the following documents to Trustee, Purchaser
and Bond Insurer:
(i) An Officer's Certificate of Seller substantially in the form of
Exhibit "C" and an Officer's Certificate of Rockford substantially in the
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form of Exhibit "D";
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(ii) Opinions of Counsel for Seller and Rockford substantially in the
form of Exhibit "E" with respect to the treatment of the transfer from
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Rockford to Seller as a "true sale," certain bankruptcy issues with respect
to Seller, tax and securities issues and the first priority perfected
security interest of Trustee in the Trust Assets;
(iii) Copies of resolutions of the board of directors of Seller
approving the execution, delivery and performance by Seller of the
Principal Agreements and the transactions contemplated hereunder and
thereunder, certified by the secretary or any assistant secretary of
Seller, and copies of resolutions of the board of directors of Rockford
approving the execution, delivery and performance by Rockford of the
Principal Agreements and the transactions contemplated thereunder,
certified by the secretary or any assistant secretary of Rockford;
(iv) Officially certified, dated not more than thirty (30) days prior
to the Initial Closing Date, evidence of due incorporation and good
standing of Seller under the laws of New York and of Rockford under the
laws of California, and evidence of Seller's and Rockford's respective good
standing and authority to conduct business under the laws of California and
each other jurisdiction in which the ownership or leasing of property by
such party or the conduct of its business requires qualification, except
for those jurisdictions for which both of the following are satisfied: (a)
the failure to so qualify in such jurisdiction will not impair the ability
of Seller or Rockford to enforce in such jurisdiction the obligations of
the Lessee under any Lease Contracts covering Equipment located in such
jurisdiction, and (b) the failure to so qualify in such jurisdiction and in
all
other jurisdictions in which it is not qualified would not, in the
aggregate, materially adversely affect the assets, liabilities, financial
condition, business or operations of Seller or Rockford or the ability of
either such party to perform its obligations under the Principal
Agreements;
(v) Submission for filing of all UCC-1 financing statements and
UCC-3 assignments prepared by Seller's counsel described in Exhibit "F" or
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other instruments necessary to perfect, upon submission for filing by
Seller, the first priority ownership or security interests granted and
assigned by Seller under the Principal Agreements and Sale Assignments to
Trustee for the benefit of the Certificateholders and Bond Insurer in the
Lease Contracts, Equipment and other rights, titles and interests referred
to hereunder (other than UCC-1 financing statements naming the Lessees
under the Lease Contracts as debtors) to be filed or recorded in all such
appropriate places as are required to protect the Trust's interest in the
Lease Contracts, Equipment and such other rights, titles and interests;
(vi) [Intentionally Omitted];
(vii) An Officer's Certificate of Servicer identifying Servicing
Officers;
(viii) An Officer's Certificate of Servicer stating that the original
executed counterpart of each Lease Contract identified in the related Lease
Schedule, and the related Lease Files, have each been delivered to
Trustee, and that Servicer has marked the Lease Management System and other
physical records of the Lease Contracts to the effect that, as to the Lease
Contracts, Seller has sold and assigned all of its right, title and
interest therein to the Trust;
(ix) Evidence that Servicer has in effect the fidelity bond or
employee dishonesty policy described in Section 3.07(g) of the Pooling and
Servicing Agreement;
(x) A properly executed copy of the Equipment and Lease Purchase
Agreement;
(xi) The initial Lease Schedule for the Lease Contracts and the
related Lease Files;
(xii) Secretary's Certificate of Rockford covering the resolutions
adopted by its Board of Directors as to Principal Agreements, incumbency
and signatures of the officers of Rockford signing the Principal
Agreements, and the certificate of incorporation and bylaws of Rockford;
(xiii) UCC Lien search of recent date issued by the Office of the
Secretary of State of the State of California and the other states listed
on Exhibit "J" hereto covering Rockford and reflecting no financing
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statement filings against the Lease Contracts and related Equipment other
than those to be terminated on or before the Initial Closing Date;
(xiv) [Intentionally Omitted];
(xv) Secretary's Certificate of Seller covering the resolutions
adopted by its Board of Directors as to Principal Agreements, the
incumbency and signatures of the officers of Seller signing the Principal
Agreements, and the certificate of incorporation and bylaws of Seller;
(xvi) UCC Lien searches of recent date issued by the Offices of the
Secretaries of State of New York and California covering Seller and
reflecting no financing statement or lien filings against Seller or any
assets of Seller other than those made pursuant to the Pooling and
Servicing Agreement and naming Trustee as secured party;
(xvii) A Capital Contribution Agreement in the form of Exhibit "G"
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properly executed by Rockford and Seller (the "Capital Contribution
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Agreement");
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(xviii) Such other documents, Opinions of Counsel and certificates as
Trustee, Purchaser or Bond Insurer may reasonably request;
(xix) With respect to Vehicles owned by the Seller, Seller (A) shall
have delivered to Trustee, Certificates of Title or Applications for
Certificates of Title, and (B) shall deliver to Trustee within ninety (90)
days of the Initial Closing Date, original Certificates of Title for such
Vehicles; and
(xx) With respect to Vehicles in which Seller has a security
interest, Seller (A) shall have delivered to Trustee, vehicle lien
applications necessary to perfect the Trust's security interest in such
Vehicles, and (B) shall deliver to Trustee within ninety (90) days of the
Initial Closing Date Certificates of Title with respect to such Vehicles
naming Trustee as first lienholder.
(b) The Pooling and Servicing Agreement, the Equipment and Lease Purchase
Agreement, the Letter of Credit Reimbursement Agreement, each of the Lockbox
Agreements and the Capital Contribution Agreement shall be in full force and
effect.
(c) Trustee or its agent shall have received, and shall hold in trust
pursuant to the Pooling and Servicing Agreement, all documents, instruments and
other assets required by the Pooling and Servicing Agreement to be delivered to
Trustee with respect
to and on behalf of the Trust as of the Initial Closing Date including an
original executed counterpart of each Lease Contract identified on the Lease
Contract Schedule and the related certificates of acceptance as set forth in
clause (d) of the definition of "Lease File".
(d) The representations and warranties of Seller in the Principal
Agreements and in any Officer's Certificate delivered to Trustee, Bond Insurer
or Purchaser in connection therewith shall be true and correct in all material
respects on and as of the Initial Closing Date with the same effect as though
such representations and warranties had been made on and as of such date, and
Seller shall have complied with all the agreements and satisfied all the
conditions under the Principal Agreements and the Capital Contribution Agreement
in all material respects on its part to be performed or satisfied at or prior to
the Initial Closing Date.
(e) The representations and warranties of Rockford in the Principal
Agreements and in any Officer's Certificate delivered to Trustee, Bond Insurer
or Purchaser in connection therewith shall be true and correct in all material
respects on and as of the Initial Closing Date with the same effect as though
such representations and warranties had been made on and as of such date, and
Rockford shall have complied with all the agreements and satisfied all the
conditions under the Principal Agreements and the Capital Contribution Agreement
in all material respects on its part to be performed or satisfied at or prior to
the Initial Closing Date.
(f) Seller and Rockford shall have paid or shall have made arrangements
for payment of all taxes, fees and governmental charges, if any, in connection
with the execution and delivery of the Principal Agreements and the assignment
of other rights and interests by Seller to the Trust under this Agreement.
(g) There shall have been no occurrence which would, in Purchaser's or the
Controlling Party's reasonable judgment, have a material adverse effect on (i)
the assets, liabilities, financial condition, business or operations of Rockford
or Seller from the facts represented or warranted under the Principal
Agreements, or (ii) the ability of Rockford or Seller to meet its obligations
under the Principal Agreements.
(h) No change shall have occurred in any law, rule or regulation that
would prohibit the consummation of any transaction contemplated hereby, that
would impose limits on the amount of Certificate Interest that the
Certificateholders may legally receive or that would impose a tax or levy (other
than tax on gross or net income, franchise tax or tax with respect to the
ownership of the Certificates or the Trust Assets) on the Certificates or
payments received in respect of the Certificates.
(i) No action, proceeding or investigation shall have been instituted or
threatened, nor shall any order, judgment or decree have been issued or proposed
to be issued by any court, agency or authority to set aside, restrain, enjoin or
prevent the consummation of any transaction contemplated hereby or seeking
material damages
against Trustee, the Trust, Purchaser or the Certificateholders in connection
with the transactions contemplated by the Principal Agreements.
(j) No final judgment shall have been rendered against Rockford or any of
its Affiliates in an amount greater than $100,000 which is not covered by
insurance or which, within 30 days after the entry of such judgment, is not
discharged or execution thereof stayed pending appeal, or which is not
discharged within 60 days after the expiration of such stay.
(k) No event of default (or event which, with the giving of notice or the
lapse of time, or both, would constitute an event of default) shall have
occurred and be continuing under any loan or credit agreement given by Rockford
or any of its Affiliates in connection with any single credit facility extended
to Rockford or any of its Affiliates which has at the time an outstanding
principal balance of $100,000 or more.
(l) Not more than one of the persons who hold the offices of President or
Executive Vice President of Rockford on the date of this Agreement shall have
ceased to be employed on a full-time basis by Rockford.
(m) The Net Worth Requirement shall be satisfied.
(n) Seller or Rockford shall pay or reimburse Bond Insurer for all costs
and expenses incurred by Bond Insurer in connection with the Principal
Agreements and the transactions contemplated thereby.
(o) The Rating Agencies shall have notified Bond Insurer that the Rating
Agencies have deemed the Certificates an "investment grade risk" to Bond
Insurer.
(p) Bond Insurer shall have delivered the Policy to Trustee.
(q) Bond Insurer shall have received evidence that Trustee has received
the Letter of Credit and that the Available LOC Amount equals the Minimum LOC
Amount.
If any of the conditions specified in this Section 2.02 shall not have been
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fulfilled when and as provided by this Agreement, or if any of the opinions,
certificates or other documents mentioned above or elsewhere in this Agreement
shall not be satisfactory in form and substance to Purchaser and Purchaser's
special counsel, and Bond Insurer and Bond Insurer's special counsel, this
Agreement and all Purchaser's obligations hereunder may be canceled by Purchaser
at or at any time prior to, the Initial Closing Date. Notice of such
cancellation shall be given to Seller and Bond Insurer in writing, or by
telephone or telecopy confirmed in writing. Such cancellation shall be without
prejudice to any rights, claims or remedies that Purchaser may have pursuant to
this Agreement or otherwise against Seller or any other person by reason of such
cancellation.
Section 2.03 Closings.
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(a) Subject to the terms and conditions set forth herein, on the Initial
Closing Date (with respect to the Existing Trust Assets) and on each Subsequent
Closing Date (with respect to the other Eligible Lease Contracts and other
rights and interests to be conveyed to the Trust on such Subsequent Closing
Date): (i) Seller shall assign to Trustee (or, with respect to the Eligible
Lease Contracts constituting Existing Trust Assets, reconfirm its prior
assignment to Trustee), for the benefit of the Certificateholders and Bond
Insurer, the Eligible Lease Contracts and other rights and interests to be
conveyed or reconveyed to the Trust on such Closing Date, (ii) Rockford shall
cause the Available Amount to equal or exceed the Minimum LOC Amount (calculated
after giving effect to the conveyance of the Lease Contracts to be conveyed to
the Trust and the issuance of the related Class A Certificates and Class B
Certificates on such Closing Date), (iii) Trustee shall issue to or upon the
order of Seller Class A Certificates and Class B Certificates having an original
aggregate certificate principal balance equal to the Aggregate Discounted Lease
Contract Balance of such Lease Contracts as of such Closing Date, representing
100% of the Certificates to be issued on such Closing Date, and (iv) Purchaser
and/or its designated affiliate shall purchase such Class A Certificates and
Class B Certificates from Seller for a price equal to the original aggregate
principal amount of such Certificates, except that the Consolidated Certificates
to be issued on the Initial Closing Date shall be issued solely in exchange for
the transfer and assignment of the Existing Certificates to Seller; provided,
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however, that (A) the purchase of Certificates on any Subsequent Closing Date
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other than the Consolidated Certificates to be issued on the Initial Closing
Date (collectively, the "New Certificates") shall not result in the sum of (1)
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aggregate initial principal balance of all New Certificates issued on such
Subsequent Closing Date, plus (2) the aggregate initial principal balance of all
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New Certificates issued on each prior Subsequent Closing Date, to exceed the
Available Commitment Amount, unless Purchaser consents thereto in writing (in
its sole discretion), and (B) the purchase of such New Certificates shall not
cause the then Class A Certificate Investor Interest (after giving effect to the
issuance of Class A Certificates on such Subsequent Closing Date) to exceed
$250,000,000. Trustee shall not accept further Lease Contracts if to do so
would result in a violation of clause (A) or (B) of this Section 2.03(a). If
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Purchaser elects (in its sole discretion) to increase the Available Commitment
Amount, then Purchaser shall provide written notice to such effect (which notice
shall state the increased Available Commitment Amount) to Bond Insurer, Trustee,
Seller and Rockford, and the term "Available Commitment Amount" shall thereafter
be deemed changed to such increased amount. The Existing Certificates
transferred and assigned to Seller in exchange for the Consolidated Certificates
be issued on the Initial Closing Date shall thereafter be deemed canceled, void
and of no further force or effect. The Consolidated Certificates shall be
issued by the Trust in order to amend, consolidate and completely restate, and
to evidence the indebtedness outstanding under and be a substitute and
replacement for, the Existing Certificates, but shall not intended and shall not
be deemed or construed to be a payment, satisfaction, cancellation or novation
of any of the liabilities or obligations of the Trust or any of the Existing
Trusts under the Existing Certificates. Notwithstanding anything to the
contrary contained herein, all Subsequent Closing Dates must occur no later than
the date on which the Funding Period
is terminated. Trustee shall not accept Lease Contracts and Purchaser shall not
purchase Certificates on or after the date on which the Funding Period is
terminated.
(b) Not later than the 11:00 a.m. Houston Time, on the third Business Day
preceding a Subsequent Closing Date, Seller, by personal delivery, telecopy or
other means of delivery, shall give Trustee, the Controlling Party and Purchaser
notice (the "Subsequent Closing Notice") of the proposed Subsequent Closing
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Date. Each such notice shall specify the date of the proposed Subsequent
Closing Date (which shall be a Business Day), shall include a copy of the Lease
Schedule for the Lease Contracts to be assigned to Trustee on the Subsequent
Closing Date, and shall specify the weighted average life of such Lease
Contracts, the approximate applicable Treasury Rate under Section 2.05 for such
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weighted average (with the precise calculation to be communicated to Trustee,
the Controlling Party and Purchaser one Business Day prior to the proposed
Subsequent Closing Date), and the approximate aggregate principal amount (with
the precise calculation to be communicated to Trustee, the Controlling Party and
Purchaser one Business Day prior to the proposed Subsequent Closing Date) and
approximate applicable Certificate Rates of Certificates to be issued in
connection with such proposed closing (with the precise calculation to be
communicated to Trustee, the Controlling Party and Purchaser one Business Day
prior to the proposed Subsequent Closing Date); provided, however, that (i) the
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issuance of New Certificates on any Subsequent Closing Date shall be subject to
the limitations imposed by clauses (A) and (B) of Section 2.3(a) hereof, (ii) in
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no event shall the aggregate principal amount of the New Certificates to be
issued in connection with such proposed closing be less than $1,000,000, and
(iii) in no event shall the aggregate principal amount of all New Certificates
issued during any calendar quarter be less than $10,000,000 or greater than
$35,000,000.
(c) Seller hereby agrees, subject to the terms of this Agreement, to
assign to Trustee for the benefit of the Certificateholders and the Controlling
Party on each Subsequent Closing Date, Eligible Lease Contracts with an
Aggregate Discounted Lease Contract Balance as of the Subsequent Closing Date
that is not less than the aggregate original principal balance of the
Certificates to be issued on such Subsequent Closing Date.
(d) Payment for and delivery of the Certificates to be purchased by
Purchaser from Seller on a Subsequent Closing Date shall be made at a closing at
the offices of Purchaser at 700 Louisiana, Suite 3905, Houston, Texas 77002 at
10:00 a.m. local time on the Subsequent Closing Date. Payment of the purchase
price for the Certificates shall be made by Purchaser in federal or other
immediately available funds, against delivery to Purchaser of the Certificates
to be purchased on such Subsequent Closing Date, registered in Purchaser's name
or in the name of Purchaser's nominee.
Section 2.04 Subsequent Closing Conditions. Trustee's obligation to
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accept Lease Contracts and issue Certificates to or upon the order of Seller on
a Subsequent Closing Date and Purchaser's obligation to purchase such
Certificates shall be subject to
the satisfaction (or waiver by Trustee, the Controlling Party and Purchaser) on
such Subsequent Closing Date of each of the conditions set forth in Section 2.03
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and the following conditions precedent (references in this Section 2.04 to "Sale
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Assignment" and "Lease Contracts" shall be deemed to refer to the Sale
Assignment to be executed by Seller in connection with such Subsequent Closing
Date and the Lease Contracts covered by such Sale Assignment):
(a) On or before each Subsequent Closing Date, Seller and Rockford shall
deliver or cause to be delivered the following documents to Trustee, the
Controlling Party and Purchaser;
(i) An Officer's Certificate of Seller substantially in the form of
Exhibit "C" and an Officer's Certificate of Rockford substantially in the
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form of Exhibit "D" (or, in either or both cases, an Officer's Certificate
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satisfactory to Purchaser and the Controlling Party stating that the
statements made in the Officer's Certificate delivered in connection with
the later of the Initial Closing Date or the most recent Subsequent Closing
are true and complete as if made on and as of the Subsequent Closing Date,
and that the instruments attached thereto have not been replaced or
modified);
(ii) [Intentionally Omitted];
(iii) [Intentionally Omitted];
(iv) [Intentionally Omitted];
(v) [Intentionally Omitted];
(vi) The Lease Schedule for the Lease Contracts and the related
Lease Files;
(vii) An Officer's Certificate of Servicer stating that the Lease
Contracts and Lease Files have been delivered to Trustee, and that Servicer
has marked the Lease Management System and other physical records of the
Lease Contracts to the effect that, as to the Lease Contracts, Seller has
sold and assigned all of its right, title and interest therein to the
Trust;
(viii) A Bill of Sale and Assignment properly executed by Rockford
conveying the Lease Contracts and related Equipment to Seller;
(ix) Releases and UCC-3 termination statements executed by any
existing lender(s) as to the Lease Contracts and Equipment covered thereby;
(x) A Sale Assignment properly executed by Seller and conveying the
Lease Contracts to Trustee for the benefit of the Certificateholders and
Bond Insurer (or, with respect to the Existing Trust Assets, reconfirming
the prior conveyance of the Existing Trust Assets to the Trust);
(xi) Secretary's Certificate of Seller covering the resolutions
adopted by its Board of Directors as to the Sale Assignment and the
incumbency and signatures of the officers of Seller signing the Sale
Assignment;
(xii) With respect to Vehicles owned by the Seller, Seller (A) shall
have delivered to Trustee, Certificates of Title or Applications for
Certificates of Title, and (B) shall deliver to Trustee within ninety (90)
days of such Closing Date, original Certificates of Title for such
Vehicles; and
(xiii) With respect to Vehicles in which Seller has a security
interest, Seller (A) shall have delivered to Trustee, vehicle lien
applications necessary to perfect the Trust's security interest in such
Vehicles, and (B) shall deliver to Trustee within ninety (90) days of such
Closing Date Certificates of Title with respect to such Vehicles naming
Trustee as first lienholder.
(b) No Servicer Default on the part of Rockford shall have occurred and be
continuing as provided (and defined) in Section 9.01 of the Pooling and
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Servicing Agreement, other than a Servicer Default that is waived in writing by
the Controlling Party and Purchaser.
(c) The Equipment and Lease Purchase Agreement, Pooling and Servicing
Agreement, the Letter of Credit Reimbursement Agreement, the Lockbox Agreements,
the Insurance Agreement and Capital Contribution Agreement shall remain in full
force and effect.
(d) Trustee shall certify that Trustee or its agent shall have received,
and shall hold in trust pursuant to the Pooling and Servicing Agreement, all
documents, instruments and other assets required by the Pooling and Servicing
Agreement to be delivered to Trustee with respect to and on behalf of the Trust
as of the Subsequent Closing Date, including the original executed counterpart
of each Lease Contract identified in the related Lease Schedule. Such Lease
Files shall have been delivered to the Trustee for inspection at least three
Business Days before the Subsequent Closing Date.
(e) The representations and warranties of Seller in the Principal
Agreements and in any Officer's Certificate delivered to Trustee, the
Controlling Party or Purchaser in connection therewith shall be true and correct
in all material respects on and as of the
Subsequent Closing Date, with the same effect as though such representations and
warranties had been made on and as of such date, and Seller shall have complied
with all the agreements and satisfied all the conditions under the Principal
Agreements and the Capital Contribution Agreement in all material respects on
its part to be performed or satisfied at or prior to the Subsequent Closing
Date.
(f) The representations and warranties of Rockford in the Principal
Agreements and in any Officer's Certificate delivered to Trustee, the
Controlling Party or Purchaser in connection therewith shall be true and correct
in all material respects on and as of the Subsequent Closing Date, with the same
effect as though such representations and warranties had been made on and as of
such date, and Rockford shall have complied with all the agreements and
satisfied all the conditions under the Principal Agreements and the Capital
Contribution Agreement in all material respects on its part to be performed or
satisfied at or prior to the Subsequent Closing Date.
(g) Seller and Rockford shall have paid or shall have made arrangements
for payment of all taxes, fees and governmental charges, if any, in connection
with the sale of the Lease Contracts and related Equipment by Rockford to Seller
under the Equipment and Lease Purchase Agreement, the assignment of the Lease
Contracts and its interest in the Equipment and other rights and interests by
Seller to the Trust under this Agreement and the issuance of the Certificates.
(h) There shall have been no occurrence which would, in Purchaser's or the
Controlling Party's reasonable judgment, have a material adverse effect on (i)
the assets, liabilities, financial condition, business or operations of Rockford
or Seller from the facts represented or warranted under the Principal
Agreements, or (ii) the ability of Rockford or Seller to meet its obligations
under the Principal Agreements.
(i) No change shall have occurred in any law, rule or regulation that
would prohibit the consummation of any transaction contemplated hereby, that
would impose limits on the amount of Certificate Interest that the
Certificateholders may legally receive or that would impose a tax or levy (other
than tax on gross or net income, franchise tax or tax with respect to the
ownership of the Certificates or the Trust Assets) on the Certificates or
payments received in respect of the Certificates.
(j) No action, proceeding or investigation shall have been instituted or
threatened, nor shall any order, judgment or decree have been issued or proposed
to be issued by any court, agency or authority to set aside, restrain, enjoin or
prevent the consummation of any transaction contemplated hereby or seeking
material damages against Trustee, the Trust, Purchaser, Bond Insurer or the
Certificateholders in connection with the transactions contemplated by the
Principal Agreements.
(k) Seller shall have delivered to Trustee, the Controlling Party and
Purchaser an Officer's Certificate of Seller and Servicer confirming (i) the
deposit in the Investment Account of all funds received with respect to the
Lease Contracts from the applicable
Cut-Off Date to the Subsequent Closing Date, and (ii) that the Available Amount
equals or exceeds the Minimum LOC Amount (calculated after giving effect to the
conveyance of the Lease Contracts to be conveyed to the Trust and the issuance
of the related Class A Certificates and Class B Certificates on such Subsequent
Closing Date), and Trustee shall have delivered to Purchaser and the Controlling
Party a certificate of a Responsible Officer confirming the amounts so indicated
by Seller and Servicer in such Officer's Certificate.
(l) No final judgment shall have been rendered against Rockford or any of
its Affiliates in an amount greater than $100,000 which is not covered by
insurance or which, within 30 days after the entry of such judgment, is not
discharged or execution thereof stayed pending appeal, or which is not
discharged within 60 days after the expiration of such stay.
(m) No event of default (or event which, with the giving of notice or the
lapse of time, or both, would constitute an event of default) shall have
occurred and be continuing under any loan or credit agreement given by Rockford
or any of its Affiliates in connection with any single credit facility extended
to Rockford or any of its Affiliates which has at the time an outstanding
principal balance of $100,000 or more.
(n) The cumulative Discounted Lease Contract Balance of all Lease
Contracts under which the Equipment consists of Vehicles shall not exceed 7% of
the Aggregate Discounted Lease Contract Balance.
(o) The Net Worth Requirement shall be satisfied.
(p) Seller or Rockford shall pay or reimburse Purchaser and Bond Insurer
for all unreimbursed or unpaid costs and expenses incurred by Purchaser in
connection with the Principal Agreements and the transactions contemplated
thereby.
(q) Purchaser and the Controlling Party shall have received a true and
complete copy of Rockford's and Seller's most recent financial statements
(whether or not audited).
(r) No more than 2.5% of the Aggregate Discounted Lease Contract Balance
is attributable to Lease Contracts with Lessees located in Puerto Rico, and no
more than 2.0% of the Aggregate Discounted Lease Contract Balance is
attributable to Lease Contracts with Lessees located in Canada.
(t) An Event of Bankruptcy shall not have occurred with respect to Seller
or Rockford.
(u) A Servicer Default with respect to Rockford shall not have occurred
and be continuing (unless such Servicer Default has been waived in writing by
the
Controlling Party, or by Purchaser with the prior written consent of the
Controlling Party), and the Commitment Expiration Date shall not have occurred.
(v) The sum of the Class A Certificate Investor Interest and Class B
Certificate Investor Interest shall not be greater than the Aggregate Discounted
Lease Contract Balance.
(w) Seller and Rockford shall have maintained a first priority perfected
security interest in the Lease Receivables and the Lease Files for the benefit
of Certificateholder and Bond Insurer.
(z) Neither the Certificateholders nor Trustee shall have received a
letter from the Controlling Party confirming that the Policy no longer remains
in full force and effect as of the related Closing Date.
(aa) There shall have been no downgrading of the rating of the Class B
Certificates by any Rating Agency.
(bb) The Controlling Party shall have received such other documents,
certificates and opinions as it shall have requested including without
limitation, no more often than semi-annually, Opinions of Counsel, copies of
which shall be delivered to each of the Rating Agencies, with respect to the
treatment of transfers from Rockford to Seller as a "true sale," certain
bankruptcy issues with respect to Seller and its Affiliates and the perfected
first priority security interest of Trustee in Lease Contracts.
(cc) Not more than one of the persons who hold the offices of President or
Executive Vice President of Rockford on the Initial Closing Date shall have
ceased to be employed on a full-time basis by Rockford.
Section 2.05 Determination of Certificate Rates. The Certificate Rate for
----------------------------------
the Class A Certificates issued on the Initial Closing Date shall be 7.703895%
per annum (calculated on the basis of a 360 day year). The Certificate Rate for
the Class B Certificates issued on the Initial Closing Date shall be 8.353885
per annum (calculated on the basis of a 360 day year). The Certificate Rate for
the Class A Certificates issued on any Subsequent Closing Date shall be a per
annum rate (calculated in each case on the basis of a 360 day year) equal to the
Treasury Rate plus 1.10%. The Certificate Rate for the Class B Certificates
issued on any Subsequent Closing Date shall be a per annum rate (calculated in
each case on the basis of a 360 day year) equal to the Treasury Rate plus 1.75%.
As used in this Agreement, the term "Treasury Rate" shall mean, with respect to
-------------
any Closing Date, the average of the rates shown in the "Treasury Bonds, Notes &
Bills" section of the then most recently published edition of The Wall Street
Journal under the column "Ask Yld." for United States Treasury bonds and notes
maturing during the month (the "Reference Month") corresponding to the end of
---------------
the weighted average life (based on the Lease
Contract Balances of the Lease Contracts assigned on such Closing Date as of the
Cut-Off Date applicable to such Closing Date) of the remaining terms of the
Lease Contracts assigned to the Trust on the Subsequent Closing Date; provided,
--------
however, that if there are no quotes for bonds and notes with such maturity,
- -------
then the Treasury Rate shall be one-half of the sum of (a) the average of such
rates for bonds and notes maturing in the first month following the Reference
Month for which such rates are published in such edition of The Wall Street
Journal, plus (b) the average of such rates for bonds and notes maturing in the
first month preceding the Reference Month for which such rates are published in
such edition of The Wall Street Journal. Quotes for bonds and notes callable
prior to maturity shall not be included in determining the Treasury Rate. The
weighted average of the remaining terms of the Lease Contracts to be assigned to
the Trust on the Closing Date and the applicable Treasury Rate shall be
specified by the Seller in its Subsequent Closing Notice; provided, however,
-------- -------
that such weighed average life shall not be less than 24 months or greater than
36 months.
Section 2.06 Intent of the Parties. Except as provided in and subject to
---------------------
Section 10.14, it is the intention of the parties to this Agreement that the
- -------------
conveyance of Seller's right, title and interest in and to the Lease Contracts
pursuant to this Agreement shall constitute a purchase and sale and not a loan.
If, notwithstanding the foregoing, the conveyance of the Lease Contracts to
Trustee for the benefit of the Certificateholders is characterized by any third
party as a pledge, the parties intend that Seller shall be deemed hereunder to
have granted to Trustee, for the benefit of the Certificateholders, a first
priority perfected security interest in all of Seller's right, title and
interest in, to and under the Lease Contracts, Equipment and other rights,
titles and interests covered by the Sale Assignments and all monies due or to
become due with respect thereto after the Cut-Off Date, and all proceeds of any
of the foregoing and that this Agreement shall constitute a security agreement
under applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser and Bond Insurer as
follows:
Section 3.01 Regarding Seller.
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(a) Seller was incorporated on January 25, 1995 and has transacted no
business prior to the Initial Closing Date other than in preparation for the
issuance of the Certificates and otherwise as permitted by its organizational
documents.
(b) The representations and warranties made by Seller in the Equipment and
Lease Purchase Agreement, the Insurance Agreement and the Pooling and Servicing
Agreement are true and correct.
(c) The chief executive office and principal place of business of Seller
is located in Bergen County, New Jersey.
(d) There is no order or action pending, or, to the best knowledge of
Seller, threatened, against Seller that has or if determined adversely might
reasonably be expected to have (x) a material adverse effect on Seller's ability
to perform its obligations under the Principal Agreements or any aspect of the
transactions contemplated thereby, or (y) a material adverse effect on the Lease
Contracts and other rights and interests to be assigned to Trustee for the
benefit of the Certificateholders and Bond Insurer under the terms of this
Agreement and the Pooling and Servicing Agreement.
Section 3.02 Regarding the Trust Assets. As of each Subsequent Closing
--------------------------
Date:
(a) There is no restriction or limitation in any of the Lease Contracts or
otherwise on the assignment or sale of the Lease Contracts and Equipment to
Seller pursuant to the terms of the Equipment and Lease Purchase Agreement or on
the assignment of the Lease Contracts and other rights and interests to Trustee
pursuant to the terms of this Agreement and the Pooling and Servicing Agreement.
(b) Seller owns, or will own immediately prior to the assignment of such
Lease Contract to Trustee hereunder, the Equipment covered by each Lease
Contract (except for any computer software included therein, for which Seller's
interest is limited to a non-exclusive, transferable license) or has, or will
have immediately prior to the assignment of such Lease Contract to the Trustee
hereunder, a first priority perfected security interest in such Equipment.
(c) With respect to each Lease Contract, only one original executed copy
of such Lease Contract exists and such original has been delivered to the
Trustee along with the related Lease File.
(d) Each Lease Contract is genuine and in full force and effect in
accordance with its terms, and nothing has occurred or failed to be performed
which would or might permit any Lessee to terminate such Lease Contract or
suspend or reduce any payments or obligations due or to become due in respect of
such Lease Contract by reason of default by the lessor party under such Lease
Contract. No Lessee in respect of a Lease Contract is the subject of a
bankruptcy, insolvency or other similar proceeding.
(e) There does not exist any default or delinquency in the payment of any
Scheduled Payments due under any Lease Contract in excess of 30 days and there
does not exist any other material default, breach, violation or event permitting
acceleration, termination or repossession under any Lease Contract or any event
which, with notice and
the expiration of any applicable grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration, termination or
repossession under such Lease Contract. Seller has no reason to believe that
the Scheduled Payments under any Lease Contract will not be timely and fully
paid.
(f) All requirements of any federal, state or local law, rule or
regulation, including without limitation, usury laws and any other applicable
consumer credit, equal opportunity and disclosure laws, if any, applicable to
each Lease Contract (including the origination, acquisition and servicing
thereof) have been complied with in all material respects, and no party to any
Lease Contract is in violation of any such law, rule or regulation. No Lease
Contract violates any other agreement between Seller or any of its Affiliates
and the Lessee thereunder.
(g) Each Lease Contract has the following characteristics:
(i) such Lease Contract was originated in the United States, Canada
or Puerto Rico and the Scheduled Payments thereunder are payable in U.S.
dollars by a Lessee domiciled in the United States, Canada or Puerto Rico;
(ii) [Intentionally Omitted];
(iii) no Lessee in respect of such Lease Contract is an Affiliate of
Seller or Rockford;
(iv) the Lessee under such Lease Contract has unconditionally
accepted the Equipment covered by such Lease Contract;
(v) Scheduled Payments due under such Lease Contract on and after
the Cut-Off Date are payable into the Lockbox Account;
(vi) the Lessee under such Lease Contract does not have any
contractual right to prepay the Scheduled Payments due under such Lease
Contract;
(vii) such Lease Contract is an Eligible Lease Contract and complies
with all applicable laws, rules and regulations for the purposes for which
the Equipment covered thereby is permitted to be used thereunder; and
(viii) such Lease Contract constitutes "chattel paper" under the UCC.
(h) Each Lease Contract is in full force and effect and constitutes the
legal, valid, binding and legally enforceable obligation of the parties thereto,
enforceable in
accordance with its terms (subject to bankruptcy, insolvency and other similar
laws affecting creditors' rights in general and the availability of equitable
remedies).
(i) Each item of Equipment is subject to a Lease Contract.
(j) Other than financing statements or similar statements or instruments
of registration under the law of any jurisdiction on file or registered in any
public office covering any interest of any kind in the Lease Contracts or
Equipment which (i) are to be terminated, released or assigned to Trustee on or
prior to the Closing Date hereunder, or (ii) are to be filed pursuant to this
Agreement or the Pooling and Servicing Agreement, there are no such statements
or instruments on file.
(k) Except as permitted by the following proviso, each Lease Contract is a
lease contract having predetermined fixed rental payments due on a regular basis
(without regard to any guaranteed purchase options of the respective Lessee),
that are not subject to change based upon a fluctuating index or reference rate;
provided, however, that: (i) not more than 15% of the Aggregate Discounted
- -------- -------
Lease Contract Balance may be Deferred Leases; (ii) not more than 10% of the
Aggregate Discounted Lease Contract Balance may be Step Leases under which the
Lessee is not required to begin to make equal Scheduled Payments thereunder
until the thirteenth (13th) month immediately following the commencement date
thereof; (iii) not more than 50% of the Aggregate Discounted Lease Contract
Balance may be Deferred Leases and Step Leases; (iv) with respect to the Lease
Contracts relating to any particular increase in the outstanding principal
balance of the Class A Certificates, (A) the Aggregate Discounted Lease Contract
Balance of all Deferred Leases relating to such increase may not exceed 20% of
the Aggregate Discounted Lease Contract Balance of all Lease Contracts relating
to such increase, and (B) the Aggregate Discounted Lease Contract Balance of all
Step Leases relating to such increase may not exceed 30% of the Aggregate
Discounted Lease Contract Balance of all Lease Contracts relating to such
increase; and (vi) not less than 80% of the Aggregate Discounted Lease Contract
Balance shall consist of Lease Contracts under which at least one Scheduled
Payment (including, without limitation, any advance rental payment or other
initial up-front payment, or any billed payment) has been made under such Lease
Contract, in an amount equal to the first "non-zero" payment thereunder.
(l) The Lessee under each Lease Contract is personally liable for the
payment and performance of its obligations in respect of such Lease Contract.
Pursuant to the terms of each Lease Contract, as of the Cut-Off Date the Lessee
under each Lease Contract will be absolutely required to make to Trustee all
payments (including, without limitation, all Scheduled Payments under such Lease
Contract in respect of periods on and after the Cut-Off Date) and perform all
obligations under such Lease Contract without abatement, deferment or defense of
any kind or for any reason. No Lease Contract is subject to any right of claim,
rescission, set-off, counterclaim, recoupment, abatement or defense, including
(without limitation) any defense of usury, nor will the operation of any of the
terms of any Lease Contract or the exercise of any right or remedy
thereunder render such Lease Contract or the obligations thereunder
unenforceable, or subject the same to any right of claim, rescission, set-off,
counterclaim, abatement or defense. No Lessee has asserted any such right of
claim, rescission, set-off, counterclaim, abatement or defense to its
obligations under its Lease Contract.
(m) None of the Lease Contracts have been modified, amended or extended at
any time (in the manner of an extension in the maturity date, a change in the
amount or time of payment of any installment of rent or otherwise), no
indulgences or waivers have been granted in respect of the obligations or any
portion thereof of any Lessee under any Lease Contract, and none of Seller,
Rockford or any Affiliate of either such party has advanced any monies on behalf
of or to cure any breach or default by any Lessee.
(n) Each Lease Contract requires the Lessee thereunder at its own cost and
expense to maintain the Equipment leased thereunder in good repair, condition
and working order during the term of such Lease Contract, and to the best of
Seller's knowledge each Lessee is currently in compliance with such requirement.
(o) Each Lease Contract requires the Lessee thereunder to promptly pay all
fees, taxes (except income taxes), and other charges or liabilities arising with
respect to the Equipment leased thereunder or the use thereof, to keep the
Equipment free and clear of any and all liens, security interests and other
encumbrances, to hold harmless the lessor thereunder and its successors and
assigns against the imposition of any such fees, charges, liabilities and
encumbrances, to bear all risk of loss associated with the Equipment covered by
or securing the obligations under such Lease Contract during the term of such
Lease Contract and to maintain at the cost of the Lessee public liability and
casualty insurance in respect of such Equipment covered by such Lease Contract.
(p) Each Lease Contract prohibits without the lessor's prior written
consent any relocation of the Equipment covered by such Lease Contract and
requires the Lessee thereunder to execute such agreements and documents
(including without limitation any UCC-1 financing statements or amendments
thereto) as may reasonably be requested by the lessor in connection with any
such relocation.
(q) Each of the Lease Contracts is freely assignable and none of the Lease
Contracts (or any other agreement between Rockford and any Lessee) requires the
consent or approval of any Lessee with respect to the sale, assignment and
transfer by Rockford or Seller of their respective right, title and interest in
and to such Lease Contracts and the Equipment covered thereby and Seller's grant
of a security interest in the Equipment.
(r) All federal, state and local sales, use, property and other similar
taxes and assessments (and any fines, fees, penalties and interest thereon and
other related liabilities) in respect to the Lease Contracts, any Equipment
covered by or securing the obligations under the Lease Contracts, or any
payments on the Lease Contracts, that have become due and payable have been paid
to every applicable Governmental Authority.
(s) As to each Lease Contract in respect of Equipment with an original
value in excess of $50,000, the interest of Seller in respect of such Equipment
covered by or securing the obligations under such Lease Contract has been duly
perfected by the filing or recording in applicable jurisdictions of UCC
financing statements or other documents sufficient to perfect Seller's interest
in such Equipment. As to each Lease Contract in respect of a Vehicle or
Vehicles, the interest of Seller in respect of such Vehicle or Vehicles has been
duly perfected through delivery of vehicle lien applications necessary to
protect its security interest in a Vehicle or Vehicles naming Trustee as first
lienholder with respect to each Vehicle. All Equipment is located within the
United States, Canada or Puerto Rico.
(t) Each Lease Contract involves the lease of tangible personal property
owned by Seller or the loan of money secured by a security interest in tangible
personal property owned by the Lessee thereunder, except in the case of any
computer software included therein, for which Seller's interest is limited to a
non-exclusive, transferable license.
(u) All filings and recordings required to perfect the title of Trustee to
the Lease Contracts and Lease Receivables and Trustee's security interest in the
Equipment (subject to Section 2.01(d) of the Pooling and Servicing Agreement)
---------------
have been, or by the applicable Closing Date will be, accomplished and are, or
within 10 days after the applicable Closing Date will be, in full force and
effect.
(v) The Scheduled Payments due under the Lease Contracts covered by this
Agreement, if paid in accordance with the Lease Schedule, are in an amount
adequate to pay the original principal balance of the Class A Certificates and
Class B Certificates issued or to be issued under the Pooling and Servicing
Agreement in connection with this Agreement and interest thereon at the
respective interest rates set forth in such Certificates, the Back-up Servicer
Fee, the Trustee Fee and the Servicing Fee applicable to such Lease Contracts.
(w) Each Lease Contract was originated or acquired by Rockford in the
ordinary course of its business and at the time of such origination or
acquisition satisfied Rockford's origination criteria for equipment leases of
the type of the Lease Contracts (including, without limitation, credit, type of
equipment, gross receivable limitation and other criteria as set forth on
Exhibit "A").
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(x) Each Lease Contract requires that the Equipment covered thereby be
insured as of the Closing Date against loss by fire and such other hazards as
are customary for personal property of the same or similar type, such insurance
being in an amount not less than the full replacement value of such Equipment
subject to customary deductions. On the related Closing Date Seller shall
provide a certificate of insurance that each item of Equipment is currently
insured for such loss or damage under the Servicer's blanket fire and extended
coverage insurance policy and naming Seller and
Trustee as loss payee, as their respective interests may appear; provided,
--------
however, that no such certificate need be provided with respect to Lease
- -------
Contracts for which the aggregate original cost of the Equipment covered by such
Lease Contracts does not exceed $75,000. Each Lease Contract requires the Lessee
to obtain and maintain public liability insurance satisfactory to Rockford,
covering both personal injury and property damage arising out of or in
connection with the use or operation of the related Equipment, and to name
Rockford or its assignee as an additional insured on such policy.
(y) The sale, transfer and conveyance by Seller of the Lease Contracts and
the security interests of Seller in the related Equipment to Trustee are not a
"bulk transfer" within the meaning of Article 6 of the UCC as in effect in any
applicable jurisdiction.
(z) Seller has not received any notice challenging its ownership or the
priority of its security interest in the Equipment covered by any Lease
Contract, and there are no proceedings pending before any court or Governmental
Authority or threatened by any Lessee or other party, (i) asserting the
invalidity of any Lease Contract, (ii) seeking to prevent payment and
performance by any Lessee of any Lease Contract or any other agreement between
such Lessee and Seller or Rockford, or (iii) seeking any determination or ruling
that might adversely affect the validity or enforceability of any Lease
Contract.
(aa) As to each Lease Contract, there are no agreements or understandings
between Seller or Rockford, on the one hand, and the Lessee, on the other hand,
in respect of such Lease Contract or otherwise binding on Seller or Rockford
other than as expressly set forth in the written instruments contained in the
Lease Files.
(bb) None of the Lessees is a Governmental Authority.
(cc) The Lease Schedule contains a statement of the amount and number of
Scheduled Payments payable by each Lessee under each Lease Contract for periods
on and after the Cut-Off Date applicable to such Lease Contract together with
certain other information as reflected thereon. The information set forth in
the Lease Schedule is true, complete and correct in all respects.
(dd) To the best knowledge of Seller, the historical delinquency and loss
information set forth in Exhibit "H" is true and correct.
-----------
(ee) Seller has good and legal title to each of the Lease Contracts and
Equipment (except for any computer software included therein, for which Seller's
interest is limited to a non-exclusive transferable license) and a first
priority security interest in the Equipment, in all cases free and clear of any
encumbrances and adverse claims, except for the rights of the Lessees in and to
the Equipment that are expressed in and under the Lease Contracts. On or prior
to each Closing Date, Seller shall deliver the Lease Contracts to Trustee and
grant or assign a security interest in the Equipment to Trustee, in each case
free and clear of any encumbrances and adverse claims (other than the rights
described in the exception in the immediately preceding sentence), and neither
Rockford nor Seller has received any notice of conflict with respect thereto
that asserts the rights of others.
(ff) None of Rockford, Seller or any of their Affiliates is a party to any
contract for the servicing of the Lease Contracts or related Equipment, other
than the Pooling and Servicing Agreement.
(gg) Seller is not a party to any contract to sell or otherwise transfer
any of the Lease Contracts or Equipment, other than the Principal Agreements and
any purchase option rights granted to Lessees under the terms of their
respective Lease Contracts as to the Equipment covered by such Lease Contract.
(hh) Neither Rockford nor Seller has given any power of attorney
(irrevocable or otherwise) to any Person for any purpose relating to the Lease
Contracts or the Equipment, except for any power of attorney granted to any
service entity that files UCC financing statements on Rockford's or Seller's
behalf.
(ii) Each Lease Contract, when assigned to Trustee, for the benefit of the
Certificateholders and Bond Insurer, and included in the corpus of the Trust
shall have been validly assigned and delivered to Trustee, for the benefit of
the Certificateholders and Bond Insurer, by Seller (who immediately prior to
such assignment shall own full legal and equitable title to each Lease
Contract). Upon delivery to Trustee, for the benefit of the Certificateholders
and Bond Insurer, of the Lease Files, and execution and delivery of Sale
Assignments of all of the Lease Contracts by Seller in favor of Trustee, for the
benefit of the Certificateholders and Bond Insurer, all of Seller's right, title
and interest in and to the Lease Contracts shall be validly and effectively
transferred to the Trust.
(jj) Seller is not selling the Lease Contracts with actual intent to
hinder, delay or defraud any entity to which it is or will hereafter become
indebted, is not insolvent on the Closing Date and will not become insolvent as
a result of such sale, is not engaged in a business or transaction, or about to
engage in a business or a transaction, for which any property remaining with
Seller is an unreasonably small capital, and does not intend to incur, and does
not believe that it will incur, debts that would be beyond its ability to pay as
such debts mature.
(kk) Each Lease Contract constitutes an "eligible account" within the
meaning of Rule 3a-7(b)(1) under the Investment Company Act.
(ll) No Lease Contract is or has at any time been a Defaulted Lease or is
then a Delinquent Lease.
(mm) No Lease Contract has a Final Scheduled Payment that is more than 10%
of the original cost of the Equipment covered by such Lease Contract; provided,
--------
however, that (i) up to 10% of the aggregate Lease Contract Balance of all Lease
- -------
Contracts having an original scheduled term of 24 months and constituting part
of the Trust Assets may provide for a Final Scheduled Payment not to exceed 20%
of the original cost of the Equipment covered by such Lease Contracts, and (ii)
up to 10% of the aggregate Lease Contract Balance of all Lease Contracts having
an original scheduled term of 36 months and constituting part of the Trust
Assets may provide for a Final Scheduled Payment not to exceed 15% of the
original cost of the Equipment covered by such Lease Contracts; provided,
--------
further, however, that at all times the weighted average of the Final Scheduled
- ------- -------
Payments of all Lease Contracts constituting part of the Trust Assets shall not
exceed 10% of the original cost of the Equipment covered by all Lease Contracts
then constituting part of the Trust Assets.
(nn) The Discounted Lease Contract Balance of each Lease Contract: (i)
when added to the aggregate of the Discounted Lease Contract Balances of all
other Lease Contracts having the same Lessee as such Lease Contract and then
constituting part of the Trust Assets, does not exceed the lesser of (A)
$400,000 or (B) 1% of the Aggregate Discounted Lease Contract Balance; (ii) when
added to the aggregate of the Discounted Lease Contract Balances of all other
Lease Contracts then constituting part of the Trust Assets, would not cause the
aggregate of the Discounted Lease Contract Balances of all Lease Contracts with
Lessees then having the ten (10) largest Discounted Lease Contract Balances to
exceed 3.5% of the Aggregate Discounted Lease Contract Balance; (iii) when added
to the aggregate of the Discounted Lease Contract Balances of all other Lease
Contracts then constituting part of the Trust Assets, would not cause the
aggregate of the Discounted Lease Contract Balances of all Lease Contracts with
Lessees then having the five (5) largest Discounted Lease Contract Balances, to
exceed 2.0% of the Aggregate Discounted Lease Contract Balance; and (iv) when
added to the aggregate of the Discounted Lease Contract Balances of all other
Lease Contracts then constituting part of the Trust Assets, would not cause the
average of the Discounted Lease Contract Balances of all Lease Contracts then
constituting part of the Trust Assets to exceed $35,000.
(oo) Each Lease Contract has a remaining term that is not less than 12
months and an original term of not greater than 84 months; provided, however,
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that (i) the aggregate of the Lease Contract Balances of all Lease Contracts
having a remaining term greater than 72 months and then constituting part of the
Trust Assets does not exceed 5% of the aggregate of the Lease Contract Balances
of all Lease Contracts then constituting part of the Trust Assets, (ii) if any
such Lease Contract is included in the Trust Asset, it would not cause the
weighted average life of all of the Lease Contracts then constituting
part of the Trust Assets to exceed 30 months, and (iii) if any such Lease
Contract has a remaining term over 61 months, such Lease Contract provides for
equal Scheduled Payments beginning no more than six months after the
commencement date thereof, notwithstanding anything to the contrary contained in
Section 3.02(k); and provided, further, however, that a Lease Contract may have
- --------------- -------- ------- -------
a remaining term of less than 12 months but not less than 6 months, provided
--------
that the aggregate of the Lease Contract Balances of all Lease Contracts having
a remaining term of less than 12 months but not less than 6 months and then
constituting part of the Trust Assets does not exceed 5% of the aggregate of the
Lease Contract Balances of all Lease Contracts then constituting part of the
Trust Assets.
(pp) Each Lease Contract covers the leasing of Equipment to be used in the
Lessee's profession, trade or business; provided, however, that the Aggregate
-------- -------
Discounted Lease Contract Balance of the Lease Contracts with respect to which
the related Equipment is non-medical Equipment (i.e., commercial or industrial)
does not exceed 35% of the Aggregate Discounted Lease Contract Balance of all
Leases constituting part of the Trust assets.
(qq) Each Lease Contract meets the criteria for an "A Credit Lease" as set
forth in Exhibit "A".
-----------
(rr) No Lease Contract will have been selected on any basis which would
cause such Lease Contract to be more likely to default than Lease Contracts in
Seller's portfolio generally.
(ss) No Lease Contract covers the leasing of Equipment to be used in the
transportation, storage or disposal of hazardous waste.
(tt) After the transfer of the Lease Receivable with respect to any Lease
Contract to the Trust (and based upon the Discounted Lease Contract Balances):
(i) the Lessees with respect to Equipment located in any single State will be
obligated under Lease Contracts accounting for no more than 10% of the Aggregate
Discounted Lease Contract Balance; provided, however, that that Lessees with
-------- -------
respect to Equipment located in the States of California, New York, Florida or
New Jersey, respectively, may in each case be obligated with respect to Lease
Contracts accounting for no more than 25%, 20%, 15% and 15%, respectively, of
the Aggregate Discounted Lease Contract Balance; (ii) Lease Contracts with
respect to Equipment which consists of computer hardware, software or
peripherals will account for no more than 30% of the Aggregate Discounted Lease
Contract Balance; and (iii) Lease Contracts with respect to Equipment sold by
any one vendor will account for no more than 10% of the Aggregate Discounted
Lease Contract Balance.
(uu) The Lessee under such Lease Contract shall not be liable under Lease
Contracts having more than 1% of the Aggregate Discounted Lease Contract Balance
of all Lease Contracts.
Section 3.03 Other Representations.
---------------------
(a) Seller and persons acting on its behalf have offered Class A
Certificates and Class B Certificates to, or solicited offers to buy Class A
Certificates and Class B Certificates from, or otherwise approached or
negotiated with respect thereto with no prospective purchasers other than
Purchaser. Seller has not sold, offered to sell or solicited any offer to buy,
and agrees that it shall not sell, offer to sell, or solicit any offer to buy,
directly or indirectly, the Certificates or any similar securities in a manner
which would render the issuance or sale of the Certificates pursuant to the
Principal Agreements a violation of Section 5 of the Securities Act, require
registration of the Trust created by the Pooling and Servicing Agreement under
the Investment Company Act, or require qualification of the Pooling and
Servicing Agreement under the Trust Indenture Act of 1939 as presently in effect
(the "1939 Act"), nor has Seller authorized, nor shall it authorize, any person
--------
to act in such manner.
(b) The written information supplied by Seller or Rockford to Purchaser or
Bond Insurer in connection with the transactions contemplated by the Principal
Agreements did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated in order to make such information
not misleading.
(c) No tax, assessment or other governmental charge will become payable by
Purchaser or the Trust as a result of (i) the sale, assignment and transfer to
the Trust of the Lease Contracts pursuant to the Principal Agreements or (ii)
the sale of the Certificates to Purchaser as contemplated hereby (other than
taxes imposed with respect to the exchange of the Existing Certificates for new
Certificates, or otherwise upon or measured by Purchaser's or the Trust's gross
or net income, franchise taxes or tax with respect to the ownership of the
Certificates or the Trust Assets. Neither the ownership of the Certificates nor
the transfer of the Lease Contracts or any other assets to the Trust shall, in
and of itself, result in Purchaser becoming subject to taxation or in its being
deemed to be doing business in any jurisdiction in which any Lessee is located.
(d) Neither Seller nor Rockford nor any of their respective officers,
directors, employees or agents has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions to any person in
connection with the offering, issuance or sale of the Certificates except for
any fees payable to Purchaser or any Affiliate thereof.
Section 3.04 Reconfirmation. Seller agrees that its participation in the
--------------
transactions contemplated herein and in the Equipment and Lease Purchase
Agreement on each Closing Date shall constitute, without further act, a
confirmation that each of its respective representations and warranties
contained herein are true and correct on and as of such Closing Date as though
made on and as of such Closing Date (except that the representations and
warranties under Section 3.02 shall apply only to the Lease Contracts conveyed
------------
on such Closing Date and the Equipment covered thereby).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ROCKFORD
Section 4.01 Representations and Warranties. Rockford hereby represents
------------------------------
and warrants to Purchaser and the Controlling Party as follows:
(a) There has been no change in the business, operations, financial
condition, properties, prospects or assets of Rockford since June 30, 1997 which
would have a material adverse effect on its ability to perform its obligations
under the Principal Agreements.
(b) The representations and warranties made by Rockford in the Pooling and
Servicing Agreement and in Sections 3.01 and 3.03 of the Equipment and Lease
----------------------
Purchase Agreement are true and correct in all material respects. The
representations and warranties made by Rockford in Section 3.02 of the Equipment
------------
and Lease Purchase Agreement are true and correct in all material respects.
(c) Rockford and any Affiliates of Rockford who will be servicing any
Lease Contracts pursuant to the Pooling and Servicing Agreement are qualified to
do business, are in good standing and have obtained all necessary licenses and
permits in all jurisdictions in which the conduct of their respective businesses
or their activities in originating or servicing the Lease Contracts require such
qualification or such licenses or permits, except where the failure to so
qualify or to hold such licenses or permits would not have a material adverse
effect on the transactions contemplated by the Principal Agreements or the
Certificates.
(d) Rockford is the beneficial owner of 100% of the shares of the voting
and capital stock of Seller, subject to no claims, liens, encumbrances or
interests of any kind of any person.
(e) The representations and warranties of Seller under Section 7.01 of the
------------
Pooling and Servicing Agreement and under Section 3.02(dd) of this Agreement are
----------------
true and correct.
(f) Rockford has the corporate power and authority to execute and deliver
the Principal Agreements and to carry out its terms; and the execution, delivery
and performance of the Principal Agreements have been duly authorized by
Rockford by all necessary corporate action.
(g) The consummation of the transactions contemplated by and the
fulfillment of the terms of the Principal Agreements will not conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time)
a default under, or require any consent or approval under (as applicable) the
certificate of incorporation or bylaws of Rockford or any material term of any
material indenture, agreement, mortgage, deed of trust or other instrument to
which Rockford is a party or by which it is bound, or result in the creation or
imposition of any material Lien upon any of its properties pursuant to the terms
of any such indenture, agreement, mortgage, deed of trust or other instrument or
violate any law or any order, rule or regulation applicable to Rockford of any
court or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over Rockford or any of its
properties which would have a material adverse effect on the ability of Rockford
to comply with the terms of the Principal Agreements.
(h) No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any Governmental Authority having
jurisdiction over Rockford or any of its properties or assets is required to be
obtained by or with respect to Rockford in connection with the execution,
delivery and performance by Rockford of the Principal Agreements and the
consummation of the transactions contemplated hereby and thereby.
(i) The Principal Agreements have been duly and validly authorized,
executed and delivered by Rockford and constitutes a valid and legally binding
obligation of Rockford, enforceable against Rockford in accordance with its
terms as such enforceability is subject to bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights generally and
the availability of equitable remedies.
(k) There are no proceedings or investigations pending, or, to the
knowledge of Rockford, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality (i)
asserting the invalidity of any of the Principal Agreements, (ii)
seeking to prevent the consummation of any of the transactions contemplated by
any of the Principal Agreements or (iii) seeking any determination or ruling
that might materially and adversely affect the performance by Rockford of its
obligations under, or the validity or enforceability, of any of the Principal
Agreements.
Section 4.02 Reconfirmation. Rockford agrees that its participation in
--------------
the transactions contemplated herein and in the Equipment and Lease Purchase
Agreement on each Closing Date shall constitute, without further act, a
confirmation that each of its respective representations and warranties
contained herein are true and correct on and as of such Closing Date as though
made on and as of such Closing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 5.01 Generally. Purchaser represents and warrants to Seller that:
---------
(a) Purchaser has the power and authority to execute and deliver this
Agreement and to carry out its terms. This Agreement has been duly authorized,
executed and delivered by Purchaser, and constitutes a legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights in general and the
availability of equitable remedies.
(b) Purchaser is an "accredited investor" within the meaning of Rule 501
of the Securities Act.
(c) The Certificates to be purchased on each Subsequent Closing Date will
be, purchased by Purchaser hereunder for Purchaser's account for investment, and
not with a view to the resale thereof, it being understood, however, that the
disposition of Purchaser's property shall at all times be within Purchaser's
control.
ARTICLE VI
COVENANTS OF SELLER AND ROCKFORD
Section 6.01 Generally. So long as any Certificate shall be outstanding:
---------
(a) Seller shall cause Trustee to make all distributions on or with
respect to such Certificates to Purchaser to the extent of the funds available
in the applicable Accounts pursuant to the instructions attached hereto as
Exhibit "I", together with sufficient information (including interest rate,
- ------------
designation of Certificate and the issuer thereof, total payment and principal
and interest portions of such payment) to identify the source of such payment
including the nominee names in which the Certificate may be
held. While Purchaser has the right, at any time, to change the location of the
account to which payments on the Certificates should be made by giving written
notice of such change to Trustee, Purchaser represents to Trustee that it has no
present intention of changing such account location.
(b) Each of Seller and Rockford shall deliver to Purchaser and the
Controlling Party their consolidated audited annual financial statements and
unaudited quarterly financial statements (prepared for the first three quarters
of each fiscal year on a quarterly basis in the ordinary course of business),
within a reasonable time after such statements have been prepared in final form
and in any event within 45 days after the end of the period covered by such
statement in the case of a quarterly statement, or within 90 days after the end
of the period covered by such statement in the case of an annual statement.
(c) Rockford shall not, prior to the termination of the Trust pursuant to
Section 11.01 of the Pooling and Servicing Agreement, sell, assign, mortgage,
- -------------
hypothecate, transfer, pledge, create a security interest in or lien on,
encumber, give, place in trust (voting or other) or otherwise dispose of any or
all of or any rights or entitlement deriving from the voting or capital stock of
Seller, or agree to do any of the foregoing, without the prior written consent
of Purchaser and the Controlling Party, which may be given or withheld at their
sole discretion.
(d) Rockford shall maintain its corporate existence and good standing and
shall cause Seller to maintain its corporate existence and good standing, and
Rockford shall not, nor shall it cause or permit Seller to, prior to the
termination of the Trust pursuant to Section 11.01 of the Pooling and Servicing
-------------
Agreement, amend Seller's corporate charter, liquidate or dissolve or, except in
compliance with the Pooling and Servicing Agreement, consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person without the prior written consent of
Purchaser and the Controlling Party, which may be given or withheld in their
sole discretion.
(e) Seller shall not offer or sell any Certificates or any other interests
of any kind in the Trust to any Person other than Purchaser.
(f) Seller and Rockford shall comply with the terms of the Equipment and
Lease Purchase Agreement in all material respects, and, in the event that
Rockford shall fail so to comply, Seller agrees that it shall enforce the
Equipment and Lease Purchase Agreement against Rockford to the fullest extent
permitted therein and by applicable law.
(g) Rockford shall cause Seller to comply with the provisions of Sections
--------
8.01(c) and 8.03 of the Pooling and Servicing Agreement.
- ----------------
(h) As long as no default in payment on the part of any Lessee exists
under any Lease Contract, Seller will do nothing to disturb or impair such
Lessee's use and quiet enjoyment of the Equipment.
(i) Seller will not amend its Certificate of Incorporation or Bylaws in
any manner without the approval of the Controlling Party.
(j) Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of its jurisdiction of incorporation
and will preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is necessary to protect the
validity and enforceability of any of the Lease Contracts or to permit
performance of Seller's duties under the Principal Agreements. Seller shall not
merge or consolidate with or sell or transfer all or substantially all of its
property to any other Person.
(k) Seller and Rockford will not amend or terminate the Equipment and
Lease Purchase Agreement or any Lease Contract, or waive any rights or
obligations of any party under such agreements.
(l) Seller and Rockford will cause all Collections with respect to the
Trust Assets to be paid directly the Lockbox Account and agree to hold in trust
and promptly pay to the Servicer all amounts received by Seller or Rockford in
respect of the Trust Assets.
(m) Seller and Rockford will each comply, in all material respects, with
all acts, rules, regulations, orders, decrees and directions of any Governmental
Authority applicable to the Lease Contracts or any part thereof; provided,
--------
however, that Seller or Rockford may contest any act, regulation, order, decree
- -------
or direction in any reasonable manner which shall not materially and adversely
affect the rights of Trustee, Certificateholders or Bond Insurer (for the
benefit of the Certificateholders and Bond Insurer) in the Lease Receivables and
the Lease Contracts and the related Equipment. Each of Seller and Rockford will
comply, in all material respects, with all requirements of law applicable to
each such party.
(n) Each of Seller and Rockford will not, without providing at least 30
days notice to the Trustee and the Controlling Party and without filing such
amendments to any previously filed financing statements as the Trustee or the
Controlling Party may require or as may be required in order to maintain the
Trustee's perfected security interest in the Trust Assets (a) change the
location of its principal executive office, or (b) change its name, identity or
company structure in any manner which would make any financing statement or
continuation statement filed by Seller or Rockford in accordance with the
Pooling and Servicing Agreement or this Agreement seriously misleading within
the meaning of Article 9-402(7) of any applicable enactment of the UCC.
(o) At any time and from time to time upon reasonable notice during
regular business hours, permit Purchaser or the Controlling Party or any of
their agents or representatives, (A) to examine and make copies of and abstracts
from all books, records and documents (including, without limitation, computer
tapes and disks) in the possession or under the control of Seller or Rockford
relating to the Lease Receivables, including, without limitation the related
Lease Contracts and other agreements, and (B)
to visit the offices and properties of Seller and Rockford for the purpose of
examining such materials described above, and to discuss matters relating to
Lease Receivables or Rockford's or Seller's performance hereunder with any of
the officers or employees of Seller or Rockford having knowledge of such matters
and from time to time permit Independent Public Accountants or other auditors
acceptable to Purchaser and the Controlling Party to conduct a review of
Seller's and Rockford's books and records relating to the Lease Receivables and
the systems relating thereto.
(p) Seller shall notify Purchaser and the Controlling Party of any change
to the terms of the Lockbox Account or any payment instructions given to any
Lessee.
(q) Rockford shall not make any material change in its credit and
collection policy or the Servicing Procedures and shall comply with such credit
and collection policy and the Servicing Procedures including, without
limitation, the filing of appropriate financing statements against the Equipment
under each Lease Contract.
(r) Seller and Rockford shall maintain and implement administrative and
operating procedures (including, without limitation, an ability to recreate
records evidencing Lease Receivables in the event of the destruction of the
originals thereof), and keep and maintain, all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Lease Receivables.
(t) Seller and Rockford shall deliver notice to Purchaser and the
Controlling Party of any Servicer Default within two (2 ) days after such
party's knowledge thereof.
(u) Within 30 days after each Subsequent Closing Date, Seller shall
deliver to Trustee, the Controlling Party and Purchaser file-stamped copies of
all UCC-1 financing statements (with any applicable Lease Schedules annexed as
exhibits thereto) and UCC-3 assignments described in Exhibit F" or other
----------
instruments necessary to perfect the first priority ownership or security
interests granted and assigned by Seller under the Principal Agreements and Sale
Assignments to Trustee for the benefit of the Certificateholders and Bond
Insurer in the Lease Contracts, Equipment and other rights, titles and interests
referred to hereunder (other than UCC-1 financing statements naming the Lessees
under the Lease Contracts as debtors) to be filed or recorded in all such
appropriate places as are required to protect the Trust's interest in the Lease
Contracts, Equipment and such other rights, titles and interests.
(v) Seller shall promptly deliver to Purchaser and the Controlling Party
copies of all reports and registration statements filed by Seller or any
Affiliate of Seller with the Securities and Exchange Commission.
ARTICLE VII
REPURCHASE OBLIGATION
Section 7.01 Repurchase Upon Breach of Certain Representations and
-----------------------------------------------------
Warranties.
- ----------
(a) The representations and warranties of Seller set forth in Section 3.02
------------
with respect to each Lease Contract and related Equipment shall continue so long
as such Lease Contract remains outstanding. Upon discovery by Seller, Rockford,
the Controlling Party or Trustee that any of such representations or warranties
with respect to any Lease Contract and related Equipment were incorrect as of
the time made, the party making such discovery shall give prompt notice to the
other parties hereto and the Controlling Party. In the event any breach of a
representation or warranty with respect to any Lease Contract and related
Equipment materially and adversely affects the interest of the
Certificateholders or Bond Insurer in such Lease Contract and related Equipment
or the value of such Lease Contract and related Equipment, as determined by
Rockford, Purchaser, Bond Insurer or the Majority Certificateholders and set
forth in an Officer's Certificate, Seller shall eliminate or cure the
circumstance or condition causing the defect within 30 days (or such longer
period as Trustee may in its discretion consent to) after the discovery thereof
or repurchase such Lease Contract and the security interest in the Equipment
covered by such Lease Contract. In addition, in the event that (i) the Lessee
under any Lease Contract constituting part of the Trust Assets fails to pay the
first billed Scheduled Payment within 30 days after it is due under such Lease
Contract and (ii) such Lease Contract subsequently becomes a Defaulted Lease
Contract, Seller shall repurchase such Lease Contract and the security interest
in the Equipment covered by such Lease Contract on the immediately succeeding
Payment Date. The price for any such repurchase shall be the Warranty Purchase
Amount for the Lease Contract, and shall be deposited by Seller in cash in the
Investment Account on the date of closing of such repurchase.
(b) It is understood and agreed that the obligation of Seller to
repurchase any Lease Contract as to which a breach by Seller under Section 3.02
------------
occurred and is continuing and to make the payments which may be required by
this Section 7.01 shall, together with (but without duplication) the
------------
indemnification rights contained in the Principal Agreements, constitute the
sole remedies against Seller respecting such breach available to Servicer, the
Trust, the Certificateholders, Bond Insurer or Trustee on behalf of the
Certificateholders and Bond Insurer.
(c) As used herein, the term "Warranty Purchase Amount" shall mean, with
------------------------
respect to a Lease Contract repurchased hereunder, the sum of (i) the Discounted
Lease Contract Balance of such Lease Contract as of the most recent Payment Date
(adjusted, however, to include the present value of any Scheduled Payments for
which Servicer Advances have been made that Servicer in good faith believes it
would have been able to recoup from subsequent Collections under the Lease
Contract), together with interest, to the extent allowed by law, on such amount
at the Discount Pool Rate for such Lease Contract through the date on which the
repurchase of such Lease Contract occurs, plus (ii) the Prepayment Fee with
----
respect to such Lease Contract.
Section 7.02 Release of Lease Contract. Upon notification from Seller and
-------------------------
confirmation by Trustee that the Warranty Purchase Amount for a Lease Contract
has been deposited in the Investment Account, Trustee shall release to Seller
the related Lease Files and shall execute and deliver such instruments of
transfer or assignment of such Lease Contract and the security interest in the
related Equipment, in each case without recourse, representation or warranty, as
Seller shall reasonably request (as shall be prepared by and at the expense of
Seller).
ARTICLE VIII
GRANT OF SECURITY INTEREST
Section 8.01 Grant of Security Interest. To secure the performance of
--------------------------
Seller's obligations hereunder and in addition, in furtherance of the sale and
transfer contemplated hereunder, Seller, pursuant to each Sale Assignment,
assigns and grants to Trustee, for the benefit of the Certificateholders and
Bond Insurer, a first priority lien and security interest in all right, title
and interest of Seller in and to each item of Equipment subject to each Lease
Contract and certain other collateral described therein.
ARTICLE IX
INDEMNITY
Section 9.01 Indemnities.
-----------
(a) Seller shall defend and hold harmless, and hereby indemnifies, Trustee
(except to the extent the following result from the gross negligence or willful
misconduct of Trustee), the Trust, Bond Insurer, Purchaser and the
Certificateholders from and against any taxes that may at any time be asserted
against Trustee, the Trust, Purchaser or the Certificateholders or their
respective directors, officers, employees and agents, with respect to (i) the
execution and delivery of the Principal Agreements, (ii) the issuance of the
Certificates, (iii) the depositing of funds into the Cash Collateral Account,
and (iv) the sale, transfer and assignment of Lease Contracts and other rights
and interests to Trustee for the benefit of the Certificateholders, including,
without limitation, any sales, gross receipts, general corporation, tangible or
intangible personal property, privilege, or license taxes (but not including any
taxes asserted with respect to ownership of the Certificates or the Trust
Assets, gross or net income or franchise taxes arising out of the transactions
contemplated by the Principal Agreements), and reasonable out-of-pocket costs
and expenses in defending against the same.
(b) Seller shall defend and hold harmless, and hereby indemnifies,
Trustee, Bond Insurer, the Trust, Purchaser and the Certificateholders, and
their respective directors, officers, employees and agents, from and against any
loss, liability or expense incurred by reason of (i) Seller's willful
misfeasance, bad faith, or negligence in the
performance of its duties under the Principal Agreements; (ii) any action taken
or failed to be taken as required by the terms of the Principal Agreements or
the Lease Contracts, by Seller in respect of any of the Lease Contracts or
Equipment, (iii) the failure of Seller to sell the Class A Certificates and
Class B Certificates designated in a Subsequent Closing Notice to Purchaser
after delivery of such Subsequent Closing Notice, (iv) the commingling of the
funds of the Trust with the funds of any other party, (v) failure to maintain
insurance in accordance with Rockford's policies, or (vi) the failure of Seller
or Rockford to pay any taxes when due.
(c) Seller shall defend and hold harmless, and hereby indemnifies, Trustee,
the Trust, Purchaser, Bond Insurer and the Certificateholders, from and against
any and all loss, liability, damage, judgment, claim, deficiency or expense that
arises out of or is based upon (i) a breach at any time by Seller of its
representations, warranties and covenants contained in the Principal Agreements
or the Lease Contracts, (ii) any information certified in any schedule or other
writing delivered by Seller hereunder, being untrue in any respect when any such
representation was made or schedule delivered, or (iii) any act or omission in
respect of a Lease Contract or its related Equipment occurring prior to the
Closing Date on which the Lease Contract became a Trust Asset; provided,
however, that Seller shall not be so required to indemnify Trustee, the Trust,
Purchaser and the Certificateholders for or on account of or arising from or in
connection with any breach of a representation or warranty a remedy for the
breach of which is provided in Article VII, except in respect of claims, demands
-----------
and causes of action of Lessees, Governmental Agencies, or other third parties
(d) Seller shall also indemnify, defend and hold harmless Trustee, the
Trust, Purchaser, Bond Insurer and the Certificateholders and their respective
directors, officers, employees and agents, from and against any loss, liability
or expense incurred by reason of the violation by any of such parties of federal
or state securities laws in connection with the sale of the Certificates, to the
extent such violation results from (i) any information furnished by or on behalf
of Seller that in turn was furnished to the Certificateholders, or (ii) the
failure of Seller to furnish to Purchaser any information known by any officer
or agent of Seller and that was not otherwise known by any officer or agent of
Purchaser or any of its Affiliates.
(e) THE INDEMNITIES OF SELLER UNDER THIS SECTION 9.01 SHALL APPLY
------------
NOTWITHSTANDING THAT A CLAIM, DEMAND, LIABILITY, LOSS, COST OR EXPENSE IS
ATTRIBUTABLE IN WHOLE OR IN PART TO THE NEGLIGENCE OF ANY OF THE INDEMNIFIED
PARTIES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW.
(f) Indemnification under this Section 9.01 shall include reasonable out-
------------
of-pocket fees and expenses of counsel and expenses of litigation, shall survive
the execution, delivery and performance of this Agreement regardless of any
investigation made by the indemnified parties or any other Person, and shall
also survive termination of the Trust or the repurchase of a Lease Contract.
Payment of any amounts from the Seller under this Section 9.01 shall be solely
------------
from amounts distributed to the Seller pursuant to
Section 4.08(b)(xv) of the Pooling and Servicing Agreement. If Seller shall have
- -------------------
made any indemnity payments to Trustee, Purchaser, the Trust and the
Certificateholders pursuant to this Section 9.01 and Trustee, Purchaser, the
------------
Trust and the Certificateholders thereafter shall collect any of such amounts
from persons other than Seller, Trustee, Purchaser, the Trust or the
Certificateholders, as the case may be, and shall promptly upon receipt thereof
repay such amounts to Seller, without interest.
ARTICLE X
MISCELLANEOUS
Section 10.01 Expenses. Whether or not the transactions contemplated by
--------
the Principal Agreements shall be consummated, Seller and Rockford shall pay and
reimburse Purchaser and Bond Insurer for Purchaser's and Bond Insurer's cost and
expenses incurred in connection with such transactions, including without
limitation, (i) Purchaser's reasonable out-of-pocket cost and expenses incurred
in preparing and reproducing the Principal Agreements and the Certificates,
including attorneys' fees and expenses, (ii) the reasonable out-of-pocket cost
of Purchaser's performance of and compliance with all agreements and conditions
contained in the Principal Agreements to be performed or complied with by
Purchaser (including collateral audit fees for up to one year (or thereafter,
if a Servicer Default has occurred)) and (iii) Bond Insurer's actual out-of-
pocket expenses, including attorneys' fees and expenses not to exceed $30,000
and audit fees. Payment of any amounts from the Seller under this Section 10.01
-------------
shall be solely from amounts distributed to the Seller pursuant to Section
-------
4.08(b)(xv) of the Pooling and Servicing Agreement.
- -----------
Section 10.02 Survival. Each of the parties agrees that the
--------
representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the other parties hereto, notwithstanding any investigation
heretofore or hereafter made by any such other party or on its behalf, and that
the representations, warranties and agreements made by each of the parties
hereto herein or in any such certificate or other instrument shall survive the
delivery and payment for the Certificates. The provisions of this Section 10.02
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shall survive any termination or cancellation of this Agreement.
Section 10.03 [Intentionally Omitted.]
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Section 10.04 [Intentionally Omitted.]
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Section 10.05 Governing Law; Counterparts. This Agreement is to be
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governed by, and interpreted, construed and enforced in accordance with, the
internal law of the State of New York without regard to principles of conflicts
of laws. This Agreement may be executed in two or more counterparts, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument.
Section 10.06 Amendments. This Agreement or any term hereof may not be
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changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto and with the prior written consent of the
Controlling Party. Trustee shall promptly provide a copy of any amendment to
this Agreement to each Rating Agency.
Section 10.07 Headings. The headings in this Agreement are for purposes
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of reference only and shall not limit or otherwise affect the meaning hereof.
Section 10.08 Notices. All demands, notices, and communications under
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this Agreement shall be in writing and shall be deemed to have been duly given,
made and received (a) when delivered against receipt of registered or certified
mail or upon actual receipt of registered or certified mail, postage prepaid,
return receipt requested; (b) when delivered by courier with appropriate
evidence of receipt; or (c) upon transmission via facsimile transmission with
appropriate evidence of receipt at the following address of the recipient: (i)
in the case of Seller, at 10 Mountainview Road, Suite 103, South Wing, Upper
Saddle River, New Jersey 07458, (ii) in the case of Rockford, at 1851 East First
Street, Suite 600, Santa Ana, California 92705, (iii) in the case of Trustee,
at the Corporate Trust Office, (iv) in the case of Purchaser, at c/o SunAmerica
Life Insurance Company, 700 Louisiana, Suite 3905, Houston, Texas 77002, Attn:
Mr. Tom Denkler, and (v) in the case of Bond Insurer, at 885 Third Avenue, New
York, New York 10022, Attention: Head of Exposure Management or Senior Risk
Officer. Any party may alter the address to which communications are to be sent
by giving notice of such change of address in conformity with the provisions of
this Section 10.08 for giving notice and by otherwise complying with any
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applicable terms of this Agreement.
Section 10.09 Severability of Provisions. If any one or more of the
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covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or rights of the Certificateholders or Bond Insurer thereof.
Section 10.10 Assignment. This Agreement may not be assigned by Seller or
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Rockford without the prior consent of the Majority Certificateholders and Bond
Insurer. Subject to the foregoing, this Agreement shall inure to the benefit
of, and be binding on, the parties hereto, and their successors and assigns.
Section 10.11 Further Assurances. Seller and Rockford agree to do and
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perform from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by Trustee, the Controlling Party
or Purchaser more fully to effect the purposes of this Agreement in a manner
consistent with this Agreement, including, without limitation, the execution of
any financing statements or continuation statements or other documents or
instruments relating to the Trust Assets for filing under the provisions of the
UCC or other relevant laws of any applicable jurisdiction.
Section 10.12 No Waiver; Cumulative Remedies. No failure to exercise and
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no delay in exercising, on the part of Trustee, Bond Insurer or the
Certificateholders, any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
Section 10.13 Third-Party Beneficiary. Bond Insurer is an express third
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party beneficiary of this Agreement and is entitled to enforce this Agreement
as if it were a party hereto.
Section 10.14 Intention of Parties. This Agreement and the transactions
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contemplated by the Pooling and Servicing Agreement have been structured with
the intention that they will be treated as a financing transaction (and not a
sale of the Trust Assets by either Rockford or Seller) for tax purposes,
including federal, state and local income and franchise taxes and any other tax
imposed on or measured by income, and that the Certificates will be treated as
indebtedness. Seller, Rockford and Purchaser agree to take no action
inconsistent with the treatment of such transactions as a financing transaction
and the Certificates as indebtedness for tax purposes. The function of Seller
and the Trust is to provide for the segregation of the Trust Assets and to
provide a mechanism for using such assets and the proceeds thereof for the
payment of principal and interest on the Certificates. For tax purposes, Seller
and the Trust serve merely as a nominee for Rockford. Except as expressly
provided in this Agreement or in the Pooling and Servicing Agreement or the
Equipment and Lease Purchase Agreement, neither Seller nor the Trust shall
engage in any business or other activity.
Section 10.15 Non-Petition Covenant. Seller, Rockford, Bond Insurer,
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Trustee and Purchaser each hereby covenants and agrees that, prior to the date
that is one year and one day after the payment in full of the Certificates, it
will not institute against, or join any other Person or entity in instituting
against, the Trust, Seller or Purchaser, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under any
federal or state bankruptcy or similar law.
Section 10.16 Bond Insurer Default. If a Bond Insurer Default occurs and
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is continuing, Bond Insurer's right to consent hereunder and to direct the
Trustee shall be suspended until remedied and, during such suspension, in all
provisions of this Agreement where Bond Insurer's consent or direction is
required or permitted, the consent or direction of the Majority
Certificateholders shall be required or permitted unless the terms of this
Agreement require the consent or direction of a larger number of Holders.
Section 10.17 Limited Recourse. Purchaser agrees that Certificates shall
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be limited recourse obligations of Seller payable solely from Trust Assets in
accordance with the Pooling and Servicing Agreement. Bond Insurer, Rockford,
Seller and Trustee each agree that the obligations of Purchaser hereunder shall
be limited recourse obligations of
Purchaser payable solely from funds payable to Purchaser as holder of the Class
A Certificates and Class B Certificates in accordance with the Pooling and
Servicing Agreement.
- REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
ROCKFORD LIMITED I
By:
Name: Larry Hartmann
Title: President
ROCKFORD INDUSTRIES, INC.
By:
Name: Gerry J. Ricco
Title: President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee
By:
Name:
Title:
SUNAMERICA LIFE INSURANCE COMPANY
By:
Name:
Title:
EXHIBITS
A Description of "A" Credit Lease Criteria
B Form of Sale Assignment
C Form of Officer's Certificate (Seller)
D Form of Officer's Certificate (Rockford)
E Form of Opinions of Counsel for Seller and Rockford
F UCC Filing Requirements
G Capital Contribution Agreement
H Historic Delinquency and Loss Data
I Certificate Payment Instructions
J UCC Searches