Sale And Contribution Agreement

EXHIBIT 10.66


LEASE RECEIVABLES
SALE AND CONTRIBUTION AGREEMENT


Dated as of August 19, 1998


Between


CAI LEASE SECURITIZATION-II CORP.


as the Buyer


and


CAPITAL ASSOCIATES INTERNATIONAL, INC.


as the Originator


TABLE OF CONTENTS


Page
----


ARTICLE I
DEFINITIONS


SECTION 1.01. Certain Defined Terms...........................................1 SECTION 1.02. Other Terms.....................................................5 SECTION 1.03. Computation of Time Periods.....................................5


ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES


SECTION 2.01. Agreement to Purchase...........................................5 SECTION 2.02. Making Purchases from the Originator............................6 SECTION 2.03. Security Deposits and Taxes.....................................7 SECTION 2.04. Collections.....................................................7 SECTION 2.05. Transfer of Records to the Buyer................................7 SECTION 2.06. Perfection of Liens; Further Assurances.........................8


ARTICLE III
CONDITIONS OF PURCHASES


SECTION 3.01. Conditions Precedent to Initial Purchase........................8 SECTION 3.02. Conditions Precedent to All Purchases...........................8 SECTION 3.03. Effect of Payment of Purchase Price.............................9


ARTICLE IV
REPRESENTATIONS AND WARRANTIES


SECTION 4.01. Representations and Warranties of the Originator................9


ARTICLE V
GENERAL COVENANTS OF THE ORIGINATOR


SECTION 5.01. Affirmative Covenants of the Originator........................12 SECTION 5.02. Reporting Requirements of the Originator.......................13 SECTION 5.03. Negative Covenants of the Originator...........................13


-i-


ARTICLE VI
ADMINISTRATION AND COLLECTION


SECTION 6.01. Designation of Servicer........................................14


ARTICLE VII
INDEMNIFICATION; REPURCHASES


SECTION 7.01. Indemnities by the Originator..................................15 SECTION 7.02. Repurchase of Lease Receivables................................16


ARTICLE VIII
MISCELLANEOUS


SECTION 8.01. Amendments, Etc................................................16 SECTION 8.02. Notices, Etc...................................................17 SECTION 8.03. No Waiver; Remedies............................................17 SECTION 8.04. Binding Effect; Assignability..................................17 SECTION 8.05. GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF JURY TRIAL.................................18 SECTION 8.06. Costs, Expenses and Taxes......................................18 SECTION 8.07. Execution in Counterparts; Severability........................19 SECTION 8.08. No Proceedings.................................................19


-ii-


LEASE RECEIVABLES SALE AND CONTRIBUTION AGREEMENT
Dated as of August 19, 1998


CAI LEASE SECURITIZATION-II CORP., a Delaware corporation (the "Buyer"), and CAPITAL ASSOCIATES INTERNATIONAL, INC., a Colorado corporation (as the "Originator"), agree as follows:


PRELIMINARY STATEMENTS.


(1) The Originator is in the business of leasing, financing and providing associated services with respect to equipment;


(2) The Buyer is a special-purpose subsidiary of the Originator established to purchase and otherwise acquire Lease Receivables, related Equipment and other related Purchased/Contributed Assets;


(3) The Originator wishes from time to time to offer to sell or contribute as capital to the Buyer Lease Receivables, related Equipment and other related Purchased/Contributed Assets; and


(4) The Buyer desires to procure such Lease Receivables, related Equipment and other related Purchased/Contributed Assets from the Originator.


NOW, THEREFORE, the parties agree as follows:


ARTICLE 1.


DEFINITIONS


SECTION a. CERTAIN DEFINED TERMS. Unless otherwise defined herein, all capitalized terms shall have the meanings set forth in the Credit Agreement defined below. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):


"AGENT" means Key Corporate Capital Inc., a Michigan corporation, in its capacity as "Agent" for the Lenders pursuant to the Credit Agreement, together with its successors and assigns.


"BUSINESS DAY" means any day other than a Saturday, Sunday or public holiday or the equivalent for banks in New York City, Denver, Colorado or Cleveland, Ohio.


"COLLECTIONS" means all cash collections and other cash proceeds of a Purchased Lease Receivable and all related Remarketing Proceeds, including, without limitation, all cash proceeds of Related Security and other related Purchased/Contributed Assets with respect to such Purchased Lease Receivable and the Repurchase Price received with respect to each Lease Receivable repurchased by the Originator under SECTION 7.02; provided, that Collections shall not


-1-


include any cash collections or cash proceeds that have been paid with respect to a Lease prior to the first day of the month in which it became a Purchased/Contributed Asset.


"CREDIT AGREEMENT" means that certain Credit Agreement dated as of August 19, 1998, among the Buyer, as borrower, the Originator, as servicer, Concord Minuteman Capital Company, LLC as senior lender, Key Corporate Capital, Inc., as junior lender, residual lender and as the Agent.


"DOL" means the United States Department of Labor and any successor department or agency.


"ELIGIBLE LEASE RECEIVABLE" means, at any time, a Lease Receivable which would be an "Eligible Lease Receivable" under the Credit Agreement.


"EQUIPMENT" means any equipment leased or financed by the Originator as lessor together with all additions, replacements, substitutions, parts, repairs, accessories, accessions or attachments to such equipment; and, to the extent added pursuant to an addendum to the related Lease, upgrades to such equipment.


"LEASE" means a contract in the form of a lease, installment sales contract, unsecured promissory note, promissory note/security agreement or other similar type of chattel paper pursuant to which the Originator leases Equipment to or finances the acquisition of Equipment by an Obligor.


"LEASE RECEIVABLE" means, with respect to any Lease at any time, any Periodic Installments of Rent then or thereafter payable by the Obligor under such Lease, or any supplemental or additional payment, if any, required by the terms of such Lease with respect to insurance, maintenance, ancillary products and services and other specific charges, excluding any such payments or charges which constitute sales or use taxes, personal property taxes, or the price for a purchase option.


"OBLIGOR" means a Person obligated to make payments on a Lease Receivable pursuant to a Lease.


"OBLIGOR UCC FILING REQUIREMENT" means, with respect to any Lease, that the Originator has obtained appropriate UCC financing statements (Form UCC-1) executed by the Obligor of such Lease which UCC financing statements have been filed in all applicable jurisdictions, so that, if such Lease is a Finance Lease, the Originator would reasonably be expected to have a first priority perfected security interest in the Equipment subject to such Lease.


"PERIODIC INSTALLMENTS OF RENT" means, with respect to any Lease, the aggregate amount of rent installments payable by the Obligor under such Lease, excluding however, (i) all interim rents and (ii) all supplemental or additional payments, if any, required by the terms of such Lease with respect to sales and use taxes, personal property taxes, insurance, maintenance, purchase option payments, ancillary products and services and other specific charges.


"PERMITTED ENCUMBRANCE" means any of the following:


-2-


(a) liens, charges or other encumbrances for taxes and assessments (i) which are not yet due and payable or (ii) the validity of which are being contested in good faith by appropriate proceedings and with respect to which the Originator, as applicable, is maintaining adequate reserves in accordance with generally accepted accounting principles;


(b) liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which the Originator shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall have been secured;


(c) liens, charges or other encumbrances or priority claims incidental to the conduct of business or the ownership of properties and assets (including mechanics', carriers', repairers', warehousemen's and attorneys' liens and statutory landlords' liens) and deposits, pledges or liens to secure statutory obligations, surety or appeal bonds or other liens of like general nature incurred in the ordinary course of business and not in connection with the borrowing of money, PROVIDED in each case, the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate actions or proceedings the effect of which is to stay the enforcement of any such lien, charge or encumbrance; and


(d) with respect to Equipment, the interest of an Obligor in such Equipment under the related Lease.


"PURCHASE" has the meaning assigned to that term in SECTION 2.01.


"PURCHASE DATE" means each "Settlement Date" under the Credit Agreement on which the Originator has requested in writing that a Purchase occur hereunder.


"PURCHASE PRICE" has the meaning assigned to that term in SECTION 2.02.


"PURCHASED/CONTRIBUTED ASSETS" means, at any time, all then outstanding Purchased Lease Receivables, the Lease and Equipment related thereto, Related Security with respect to such Purchased Lease Receivables and Collections with respect to, and other proceeds of, such Purchased Lease Receivables, including, without limitation, all Collections of Purchased Lease Receivables relating to payments due thereunder at any time during the month in which such Lease Receivable became a Purchased Lease Receivable.


"PURCHASED LEASE RECEIVABLE" means any Lease Receivable which is listed in a Sale Notice at any time hereafter submitted to and accepted by the Buyer pursuant to SECTION 2.02, whether purchased by the Buyer or contributed to the capital of the Buyer. Once a Lease Receivable appears on any such Sale Notice, and has been accepted by the Buyer, it shall remain a Purchased Lease Receivable; PROVIDED, HOWEVER, that with respect to any Lease Receivable that is repurchased by the Originator pursuant to SECTION 7.02, following the Buyer's receipt of the Repurchase Price for such Lease Receivable, "PURCHASED LEASE RECEIVABLE" shall not include the Lease Receivable so repurchased.


-3-


"RECORDS" means all Leases and other documents, books, records and other information (including without limitation, computer programs, tapes, discs, punch cards, data processing software and related property and rights) maintained by the Originator with respect to Leases included in the Purchased/Contributed Assets and the related Obligors and Equipment.


"RELATED SECURITY" means with respect to any Lease:


(i) all security interests or liens and property subject
thereto from time to time purporting to secure payment of the Lease
Receivable arising under such Lease, whether pursuant to such Lease or
otherwise;


(ii) the assignment to the Buyer of all UCC financing
statements or other filings covering any collateral securing payment of
the Lease Receivable arising under such Lease;


(iii) all guarantees, indemnities, warranties, letters of
credit, insurance policies and proceeds and premium refunds thereof and
other agreements or arrangements of whatever character from time to
time supporting or securing payment of the Lease Receivable arising
under such Lease whether pursuant to such Lease or otherwise;


(iv) all of the Originator's right, title and interest in and
to any proceeds of the sale or lease of Equipment that was repossessed
from or returned by an Obligor of a Lease Receivable that was the
subject of such Lease;


(v) all Records related to such Lease; and


(vi) all proceeds of the foregoing.


"REPURCHASE PRICE" means, with respect to a Lease Receivable, an amount equal to the Purchase Price attributable to such Lease Receivable recalculated as if the date of Repurchase were the "PURCHASE DATE" and using the same assumptions for such Lease Receivable as were used in connection with its original acquisition.


"SALE NOTICE" has the meaning assigned to that term in Section 2.02.


"TERMINATION DATE" has the meaning assigned to the term "Termination Date" in the Credit Agreement.


"UCC" means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.


SECTION 1.02. OTHER TERMS. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.


-4-


SECTION 1.03. COMPUTATION OF TIME PERIODS. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding."


ARTICLE II.


AMOUNTS AND TERMS OF THE PURCHASES


SECTION 2.01. AGREEMENT TO PURCHASE. Prior to the Termination Date and subject to the conditions of this Agreement, the Buyer shall, on each Purchase Date, purchase, or agree to have contributed to it, all the Originator's right, title and interest in and to the Lease Receivables arising under the Leases described in the Sale Notice for such Purchase Date, together with all right, title and interest of Originator in and to the Purchased/Contributed Assets related thereto, including, without limitation, the Equipment related thereto (each, a "Purchase"), from the Originator on the terms hereof.


(b) Although the parties hereto intend that each transfer made hereunder shall constitute a sale of chattel paper with respect to Purchased Lease Receivables and related Leases, and a capital contribution of the other related Purchased/Contributed Assets, to protect the Buyer in the event that, contrary to the express intent of the parties hereto, the transactions contemplated hereunder are characterized as loans from the Buyer to the Originator, the Originator hereby pledges, grants a security interest in and assigns to the Buyer, all of the Originator's right and title to and interest in the Purchased Lease Receivables and the other Purchased/Contributed Assets as security for such loans and for the payment and performance of all obligations of the Originator hereunder. The foregoing pledge, grant of a security interest and assignment from Originator to Buyer is an unconditional, present pledge, grant of a security interest in, and assignment of the Purchased Lease Receivables and the other Purchased/Contributed Assets.


SECTION 2.02. MAKING PURCHASES FROM THE ORIGINATOR.


(a) At least 10 Business Days before each Purchase Date, the Originator shall give the Buyer, the Servicer and the Agent written notice of the Purchase to occur on such date (in each case, a "SALE NOTICE") including (i) a schedule listing all Leases and related Equipment subject to such Purchase (which shall only include Lease Receivables that are Eligible Lease Receivables), (ii) a list of Related Security with respect to such Lease Receivables (to the extent such information is available to Buyer after reasonable diligence), (iii) the amortization schedule (in the aggregate) of the Lease Receivable arising under such Leases, and (iv) the applicable Purchase Price Discount Rate (as hereinafter defined),


(b) The purchase price (the "PURCHASE PRICE") payable for the Purchased/Contributed Assets transferred to the Buyer on any Purchase Date shall be an amount equal to the aggregate present values of the aggregate amount of the remaining Periodic Installments of Rent under each Lease listed in the related Sale Notice, with such aggregate amount discounted to present value using the Purchase Price Discount Rate applicable on such Purchase Date and a


-5-


payment schedule of the first day of each month commencing with the first day of the month in which the Purchase Price is calculated. "PURCHASE PRICE DISCOUNT RATE" means, for purposes of the foregoing calculation, the rate set forth in each Sale Notice (and agreed to by the Buyer), which rate is a reflection of actual historical losses of the Originator with respect to similar Leases (taking into account, among other things, the credit quality of the Obligors, the type of Equipment and the remaining term on the Leases) and the anticipated carrying costs of the Buyer (which may include a weighted average of the Senior Discount Rate and the Junior Discount Rate).


(c) Except as otherwise provided below in this SECTION 2.02, the Purchase Price for the Purchased/Contributed Assets sold by the Originator under this Agreement shall be payable in full in cash by the Buyer, in each case on the applicable Purchase Date, except that the Buyer may, with respect to any Purchase, offset against such Purchase Price any amounts owed by the Originator to the Buyer hereunder with respect to repurchase obligations which remain unpaid. On the date of each Purchase, the Buyer shall, upon satisfaction of the applicable conditions set forth in Article III, make available to the Originator the portion of the Purchase Price payable in cash referred to above in same day funds.


(d) Notwithstanding SECTION 2.02(c) above, if, on any Purchase Date, the Buyer has insufficient funds to pay in full the Purchase Price owed on such day, then the Originator shall be deemed to have contributed to the capital of the Buyer Purchased/Contributed Assets having a Purchase Price equal to the portion of the total Purchase Price owed on such day which is not paid in cash.


SECTION 2.03. Security Deposits and Taxes.


(a) The amount of any security deposits received by Originator attributable to any Lease included in any Sale Notice shall be held by Originator and either returned to the Obligor or applied to the Obligor's lease obligations by remitting to Buyer, both in accordance with the terms of such Lease.


(b) ...