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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 19, 1997
Copelco Capital Funding Corp. X
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(Exact name of registrant as specified in its charter)
United States 333-23679 22-3261117
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(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation) Number) Identification No.)
East Gate Drive
Mount Laurel, New Jersey 08054-5404
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (609) 231-9600
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Notes and the Leases
Copelco Capital Funding Corp. X, as Issuer (the "Issuer"),
has registered an issuance of up to $557,341,000 in aggregate principal amount
of lease-backed securities on Form S-1. Pursuant to the Registration Statement,
the Issuer issued $142,197,000 5.809% Class A-1 Lease Backed Notes, Series
1997-A, $54,182,000 6.05% Class A-2 Lease-Backed Notes, Series 1997-A,
$211,495,000 6.27% Class A-3 Lease-Backed Notes, Series 1997-A, $126,667,000
6.47% Class A-4 Lease-Backed Notes, Series 1997-A and $22,746,000 6.50% Class B
Lease-Backed Notes, Series 1997-A (the "Offered Notes") on June 19, 1997. The
Issuer also issued, in a private placement, $11,373,720 6.78% Class C
Lease-Backed Notes (the "Class C Notes," together with the Offered Notes, the
"Notes"). This Current Report on Form 8-K is being filed to satisfy an
undertaking to file copies of certain agreements executed in connection with
the issuance of the Notes, the forms of which were filed as Exhibits to the
Registration Statement.
The Notes were issued pursuant to an Indenture attached
hereto as Exhibit 4.1, dated as of June 1, 1997 (the "Indenture"), between the
Issuer and Manufacturers and Traders Trust Company, as Trustee (the "Trustee").
The Notes evidence debt obligations of the Issuer, a
special-purpose bankruptcy remote subsidiary of Copelco Capital, Inc. ("Copelco
Capital"), and are secured by a Trust Fund (the "Trust Fund") which consists of
a pool of healthcare, manufacturing and business equipment lease contracts,
including payments due thereunder (collectively, the "Leases") and the interest
in the related leased equipment transferred by Copelco Capital to the Issuer.
In addition, the Trust Fund includes the funds on deposit, if any, in certain
accounts established pursuant to the Indenture, to the limited extent provided
in the Indenture.
As of the Closing Date, the Leases had the characteristics
described in the Prospectus dated June 13, 1997 filed pursuant to Rule
424(b)(4) of the Act with the Commission.
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Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated as of June 13, 1997, among
Copelco Capital Funding Corp. X, Copelco Capital, Inc., Lehman Brothers Inc.,
First Union Capital Markets Corp. and Morgan Stanley & Co. Incorporated.
4.1 Indenture, dated as of June 1, 1997, between Copelco
Capital Funding Corp. X and Manufacturers and Traders Trust Company, as
Trustee.
4.2 Sales and Servicing Agreement, dated as of June 1, 1997,
between Copelco Capital Funding Corp. X, as Purchaser, and Copelco Capital,
Inc, as Seller and Servicer.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
COPELCO CAPITAL FUNDING CORP. X
By /s/ Michael C. Ritter
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Name: Michael C. Ritter
Title: Senior Vice President, Chief Financial Officer and
Treasurer (Principal Accounting Officer)
Dated: July 3, 1997
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EXHIBIT INDEX
Exhibit No. Description
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1.1 Underwriting Agreement, dated as of June 13, 1997, among
Copelco Capital Funding Corp. X, Copelco Capital, Inc.,
Lehman Brothers Inc., First Union Capital Markets Corp. and
Morgan Stanley & Co. Incorporated.
4.1 Indenture, dated as of June 1, 1997, between Copelco Capital
Funding Corp. X and Manufacturers and Traders Trust Company,
as Trustee.
4.2 Sales and Servicing Agreement, dated as of June 1, 1997,
between Copelco Capital Funding Corp. X, as Purchaser, and
Copelco Capital, Inc., as Seller and Servicer.
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EXECUTION COPY
COPELCO CAPITAL FUNDING CORP. X
5.809% CLASS A-1 LEASE-BACKED NOTES, SERIES 1997-A
6.05% CLASS A-2 LEASE-BACKED NOTES, SERIES 1997-A
6.27% CLASS A-3 LEASE-BACKED NOTES, SERIES 1997-A
6.47% CLASS A-4 LEASE-BACKED NOTES, SERIES 1997-A
6.50% CLASS B LEASE-BACKED NOTES, SERIES 1997-A
UNDERWRITING AGREEMENT
June 13, 1997
LEHMAN BROTHERS INC.
Three World Financial Center
New York, New York 10285
FIRST UNION CAPITAL MARKETS CORP.
301 South College Street
One First Union Center, TW-6
Charlotte, North Carolina 28288
MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
Copelco Capital Funding Corp. X, a corporation organized and
existing under the laws of Delaware (the "Issuer") and Copelco Capital, Inc., a
corporation organized and existing under the laws of Delaware ("Copelco"),
hereby agree with you as follows:
Section 1. Issuance and Sale of Notes. The Issuer has
authorized the issuance of $142,197,000 the "Class A-1 Initial Principal
Amount") of 5.809% Class A-1 Lease-Backed Notes, Series 1997-A (the "Class A-1
Notes"); 54,18,000 (the "Class A-2 Initial Principal Amount") of 6.05% Class
A-2 Lease-Backed Notes, Series 1997-A (the "Class A-2 Notes"); $211,495,000 (the
"Class A-3 Initial Principal Amount") of 6.27% Class A-3 Lease-Backed Notes,
Series 1997-A (the "Class A-3 Notes"); $126,667,000 (the "Class A-4 Initial
Principal Amount"; together with the Class A-1 Initial Principal Amount, Class
A-2 Initial Principal Amount and Class A-3 Initial Principal Amount, the "Class
A Initial Principal Amount") of
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6.47% Class A-4 Lease-Backed Notes, Series 1997-A (the "Class A-4 Notes";
together with the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes, the
"Class A Notes"); $22,746,000 (the "Class B Initial Principal Amount") of 6.50%
Class B Lease-Backed Notes, Series 1997-A (the "Class B Notes"; together with
the Class A Notes, the "Offered Notes") and $11,373,720 (the "Class C Initial
Principal Amount"; together with the Class A Initial Principal Amount and the
Class B Initial Principal Amount, the "Initial Principal Amount") of 6.78% Class
C Lease-Backed Notes, Series 1997-A (the "Class C Notes"; together with the
Offered Notes, the "Notes"). The Notes will be issued pursuant to an Indenture,
dated as of June 1, 1997 (the "Indenture"), between the Issuer and Manufacturers
and Traders Trust Company (the "Trustee"). The Notes are more fully described in
the Final Prospectus (as defined below), a copy of which the Issuer is
furnishing to you. The Notes will evidence secured debt obligations of the
Issuer. The assets of the Issuer will include a pool of primarily business
equipment and medical equipment lease contracts, including all payments due
thereunder (the "Leases") and certain interests in the underlying equipment (the
"Equipment"). Capitalized terms used and not defined herein shall have the
meanings specified in the Indenture.
The Class A Notes will be sold by the Issuer to all of you as
underwriters (the "Class A Underwriters"). Class B Notes will be sold by the
Issuer to Lehman Brothers Inc. and First Union Capital Markets Corp. only (the
"Class B Underwriters").
The terms which follow, when used in this Agreement, shall
have the meanings indicated:
"Effective Date" means each date that the
Registration Statement and any post-effective amendment or amendments
thereto became or become effective under the Securities Act.
"Execution Time" means the date and time that this
Agreement is executed and delivered by the parties hereto.
"Final Prospectus" means any prospectus delivered to
purchasers of the Offered Notes at or before the time of confirmation
of their purchases.
"Preliminary Prospectus" means any preliminary
prospectus included in the Registration Statement, and which, as of
the Effective Date, omits Rule 430A Information.
"Registration Statement" means the registration
statement referred to in the preceding paragraph and any registration
statement required to be filed under the Securities Act or rules
thereunder, including amendments, incorporated documents, exhibits and
financial statements, in the form in which it has or shall become
effective and, in the event that any post-effective amendment thereto
becomes effective prior to the Issuance Date, shall also mean such
registration statement as so amended. Such term shall include Rule 430A
Information deemed to be included therein at the Effective Date as
provided by Rule 430A.
"Rule 424" and "Rule 430A" refers to such rules
under the Securities Act.
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"Rule 430A Information" means information with
respect to the Offered Notes and the offering thereof permitted,
pursuant to Rule 430A, to be omitted from the Registration Statement
when it becomes effective.
"Underwriter" means any of Lehman Brothers Inc.,
First Union Capital Markets Corp. or Morgan Stanley & Co. Incorporated.
"Underwriting Information" has the meaning given to
such term in Section 8(b) hereof.
Section 2. Purchase and Sale of Offered Notes.
(a) Subject to the terms and conditions and in reliance
upon the covenants, representations and warranties set forth herein, the Class A
Underwriters agree to purchase from the Issuer the Class A Initial Principal
Amount of the Class A Notes and the Class B Underwriters agree to purchase from
the Issuer the Class B Initial Principal Amount of the Class Notes pursuant to
the terms of this Agreement on the Issuance Date at the purchase price or prices
(the "Purchase Price") set forth on Schedule A attached hereto.
(b) The obligations of each of the Underwriters
hereunder to purchase the respective Offered Notes of each Class shall be
several and not joint. Each Underwriter's obligation shall be to purchase the
aggregate principal amount of Offered Notes of the related Class as is indicated
with respect to each Underwriter on Schedule A attached hereto. The rights of
the Issuer, Copelco and the non-defaulting Underwriter shall be as set forth in
Section 13 hereof.
(c) It is understood that the Underwriters propose to
offer the Offered Notes for sale to the public in the manner set forth in the
Final Prospectus.
Section 3. Delivery and Payment. (a) Delivery of and
payment for the Offered Notes to be purchased by the Underwriters shall be made
at the offices of Dewey Ballantine, 1301 Avenue of the Americas, New York, New
York, at 10:00 A.M., New York time, on June 19, 1997 (the "Issuance Date"). The
Offered Notes shall be registered in the names of the Underwriters against
payment by the Underwriters of the Purchase Price therefor, to or upon the order
of the Issuer by one or more wire transfers in immediately available funds.
Following the Effective Date, at the request of the Underwriters, delivery of
one or more global notes (the "Global Notes") representing the Offered Notes
shall be made to the respective accounts of the Underwriters against delivery to
the Trustee of the originally issued Offered Notes (the date of such delivery
being hereinafter referred to as the "Exchange Date"). The Global Notes to be so
delivered shall be registered in the name of Cede & Co., as nominee for The
Depository Trust Company ("DTC"). The interests of beneficial owners of the
Offered Notes will be represented by book entries on the records of DTC and
participating members thereof. Definitive Notes representing the Offered Notes
will be available under the circumstances described in the Indenture.
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The Issuer agrees to have the Global Notes available for
inspection, checking and packaging by the Underwriters in New York, New York,
not later than 1:00 p.m., New York City time, on the Business Day prior to the
Exchange Date.
Section 4. Representations and Warranties. (a) The Issuer
hereby represents and warrants to, and agrees with, the Underwriters as follows:
(i) The Issuer meets the requirements for use of
Form S-1 under the Securities Act of 1933, as amended (the "Securities
Act") and has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (Registration No. 333-23679),
including the Preliminary Prospectus relating to the Offered Notes, on
such Form S-1 for the registration under the Securities Act of the
Offered Notes. The Issuer may have filed one or more amendments
thereto, including the related Preliminary Prospectus, each of which
has previously been furnished to you. The Issuer will file with the
Commission either, (A) prior to the effectiveness of such Registration
Statement, a further amendment thereto (including the form of Final
Prospectus) or, (B) after effectiveness of such Registration Statement,
a Final Prospectus in accordance with Rules 43OA and 424(b)(1) or (4).
In the case of clause (B), the Issuer will include in such Registration
Statement, as amended at the Effective Date, all information (other
than Rule 430A Information) required by the Securities Act and the
rules thereunder to be included with respect to the Offered Notes and
the offering thereof. As filed, such amendment and form of Final
Prospectus, or such Final Prospectus, shall include all Rule 430A
Information and, except to the extent you shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus which has previously been furnished to
you) as the Issuer has advised you, prior to the Execution Time, will
be included or made therein.
(ii) On the Effective Date, the Registration
Statement did or will comply in all material respects with the
applicable requirements of the Securities Act and the rules thereunder;
on the Effective Date and when the Final Prospectus is first filed (if
required) in accordance with Rule 424(b) and on the Issuance Date, the
Final Prospectus will comply in all material respects with the
applicable requirements of the Securities Act and the rules thereunder;
on the Effective Date, the Registration Statement did not or will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading; and the Final Prospectus,
as of its date and on the Issuance Date, did not or will not include
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that the Issuer makes no representations or warranties as to
the Underwriting Information.
(iii) This Agreement has been duly authorized,
executed and delivered by the Issuer and constitutes a legal, valid and
binding agreement of the Issuer enforceable
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in accordance with its terms, except that the provisions hereof
relating to indemnification of the Underwriters may be subject to
limitations of public policy.
(iv) Each of the Indenture and the Sales and
Servicing Agreement have been duly authorized by the Issuer and, when
executed and delivered by the Issuer, will constitute the legal, valid
and binding obligation of the Issuer, enforceable in accordance with
its terms.
(v) The issuance of the Offered Notes has been
duly authorized by the Issuer and, when duly and validly executed,
authenticated and delivered in accordance with the Indenture and this
Agreement, will be the legal, valid and binding obligations of the
Issuer, enforceable in accordance with their terms, and entitled to the
benefits of the Indenture.
(vi) The issue and sale of the Offered Notes and
the performance of this Agreement, the Indenture and the Sales and
Servicing Agreement by the Issuer will (A) not conflict with or result
in a breach of, and will not constitute a default under any of the
provisions of, its certificate of incorporation or any law,
governmental rule or regulation, or any judgment, decree or order
binding on the Issuer or its properties, or any of the provisions of
any indenture, mortgage, deed of trust, contract or other agreement or
instrument to which the Issuer is a party or by which it is bound or
(B) not result in the creation or imposition of any adverse claim and
no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Offered Notes or the
consummation by the Issuer of the transactions contemplated by this
Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under the Securities
Act and under state securities or Blue Sky laws in connection with the
purchase and distribution of the Offered Notes by the Underwriters.
(vii) The Issuer is not, and will not, as of the
Issuance Date, be an "investment company" under the Investment Company
Act of 1940, as amended (the "1940 Act").
(viii) The Issuer hereby makes and repeats each of
the representations and warranties set forth in Article Eleven of the
Indenture. Such representations and warranties are incorporated by
reference in this Section 4(a) and the Underwriters may rely thereon as
if such representations and warranties were fully set forth herein.
(b) Copelco hereby represents and warrants to and agrees
with the Underwriters as follows:
(i) This Agreement has been duly authorized,
executed and delivered, the Sales and Servicing Agreement has been duly
authorized, and this Agreement constitutes, and when executed and
delivered, the Sales and Servicing Agreement will constitute the legal,
valid and binding obligations of Copelco, enforceable in accordance
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with their respective terms, except that the provisions hereof
relating to indemnification of the Underwriters may be subject to
limitations of public policy.
(ii) The performance of this Agreement by Copelco,
and the consummation by Copelco of the transactions herein
contemplated, will (A) not conflict with or result in a breach of, and
will not constitute a default under any of the provisions of its
certificate of incorporation or by-laws or any law, governmental rule
or regulation, or any judgment, decree or order binding on Copelco or
its properties, or any of the provisions of any indenture, mortgage,
deed of trust, contract or other agreement or instrument to which
Copelco is a party or by which it is bound or (B) not result in the
creation or imposition of any adverse claim and no consent, approval,
authorization, order, registration or qualification of or with any
court or governmental agency or body is required for the consummation
by Copelco of the transactions contemplated by this Agreement, except
such consents, approvals, authorizations, registrations or
qualifications as may be required under the Securities Act and under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Offered Notes by the Underwriters.
(iii) Copelco hereby makes and repeats the
representations and warranties set forth in Section 2 of the Sales and
Servicing Agreement. Such representations and warranties are
incorporated by reference in this Section 4(b), and the Underwriters
may rely thereon as if such representations and warranties were fully
set forth herein.
(iv) Copelco represents and warrants it has
delivered to the Underwriters complete and correct copies of its
balance sheet and statements of income and retained earnings reported
by Copelco Capital Inc. and Copelco Financial Services Group, Inc. (the
"Copelco Entities") for the year ended December 31, 1996. Except as set
forth in or contemplated in the Registration Statement and the Final
Prospectus, there has been no material adverse change in the condition
(financial or otherwise) of the Copelco Entities since December 31,
1996.
(v) Any taxes, fees and other governmental
charges arising from the execution and delivery of this Agreement, the
Sales and Servicing Agreement and the Indenture and in connection with
the execution, delivery and issuance of the Offered Notes and with the
transfer of the Leases and the Equipment, have been paid or will be
paid by the Issuer.
(c) Each of the Issuer and Copelco represents and warrants
to you, jointly and severally, that:
(i) There is no pending or threatened action,
suit or proceeding against or affecting it in any court or tribunal or
before any arbitrator of any kind or before or by any governmental
authority (A) asserting the invalidity of this Agreement, the Sales and
Servicing Agreement, the Indenture or the Offered Notes, (B) seeking to
prevent the issuance of the Offered Notes or the consummation of any of
the transactions contemplated by this Agreement, the Sales and
Servicing Agreement or the Indenture or (C) seeking any determination
or ruling that might materially and adversely affect (x) its
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performance of its obligations under this Agreement, the Sales and
Servicing Agreement or the Indenture (as applicable) or (y) the
validity or enforceability of this Agreement, the Sales and Servicing
Agreement, the Indenture or the Offered Notes.
(ii) KMPG-Peat Marwick is an independent public
accountant with respect to the Copelco Entities and the Issuer within
the meaning of the Securities Act and the rules and regulations
promulgated thereunder.
Section 5. Covenants of the Issuer and Copelco. The Issuer
and Copelco, jointly and severally, hereby covenant and agree with you as
follows:
(a) To use best efforts to cause the Registration Statement,
and any amendment thereto, if not effective as of the date hereof, to become
effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Final Prospectus is otherwise required
under Rule 424(b), the Issuer will file the Final Prospectus, properly
completed, pursuant to Rule 424(b) within the time period prescribed and will
provide evidence satisfactory to the Underwriters of such timely filing. The
Issuer will promptly advise the Underwriters (i) when the Registration Statement
shall have become effective, (ii) when any amendment thereof shall have become
effective, (iii) of any request by the Commission for any amendment or
supplement of the Registration Statement or the Final Prospectus or for any
additional information, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose, and (v) of the receipt by the
Issuer of any notification with respect to the suspension of the qualification
of the Offered Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Issuer will not file any
amendment of the Registration Statement or supplement to the Final Prospectus to
which the Underwriters reasonably object. The Issuer and Copelco will use best
efforts to prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof.
(b) If, at any time when a Final Prospectus relating to the
Offered Notes is required to be delivered under the Securities Act, any event
occurs as a result of which the Final Prospectus as then supplemented would
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading or, if it shall be necessary to
supplement such Final Prospectus to comply with the Securities Act or the rules
thereunder, the Issuer promptly will prepare and file with the Commission,
subject to paragraph (a) of this Section 5, a supplement which will correct such
statement or omission or an amendment which will effect such compliance.
(c) As soon as practicable, the Issuer will make generally
available to Offered Noteholders and to the Underwriters an earnings statement
or statements of the Issuer which will satisfy the provisions of Section 11(a)
of the Securities Act and Rule 158 under the Securities Act.
(d) The Issuer will furnish to the Underwriters and counsel
for the Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and, so
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long as delivery of a prospectus by any of the Underwriters or any dealer may be
required by the Securities Act, as many copies of each Final Prospectus relating
to the Offered Notes and any supplement thereto as the Underwriters may
reasonably request.
(e) Copelco and the Issuer will take all reasonable actions
requested by the Underwriters to arrange for the qualification of the Offered
Notes for sale under the laws of such jurisdictions within the United States or
as necessary to qualify for DTC and as the Underwriters may designate, will
maintain such qualifications in effect so long as required for the completion of
the distribution of the Offered Notes, provided, in connection therewith the
Issuer shall not be required to qualify as a foreign corporation doing business
in any jurisdiction.
(f) For so long as the Offered Notes are outstanding, the
Issuer and Copelco shall deliver to the Underwriters by first-class mail and as
soon as practicable a copy of all reports and notices delivered to the Trustee
or the Offered Noteholders under the Indenture.
(g) For so long as the Offered Notes are outstanding, the
Issuer and Copelco will furnish to the Underwriters as soon as practicable after
filing any other information concerning the Issuer or Copelco filed with any
government or regulatory authority which is otherwise publicly available.
(h) To the extent, if any, that any rating provided with
respect to the Notes set forth in Section 6(g) hereof is conditional upon the
furnishing of documents reasonably available to the Issuer or Copelco, the
Issuer and Copelco shall furnish such documents.
Section 6. Conditions of Underwriters' Obligation. The
obligations of the Underwriters to purchase and pay for the Offered Notes on the
Issuance Date shall be subject to the accuracy in all material respects of the
representations and warranties of the Issuer and Copelco herein, in the Sales
and Servicing Agreement and in the Indenture, to the performance by the Issuer
and Copelco in all material respects of their obligations hereunder and to the
following additional conditions:
(a) The Issuer and Copelco shall each have delivered a
certificate (an "Officer's Certificate"), dated the Issuance Date, signed by its
President and its Chief Financial Officer, to the effect that:
(i) the representations and warranties made by
the Issuer or Copelco (as the case may be) in this Agreement, the
Indenture and the Sales and Servicing Agreement are true and correct in
all material respects at and as of the date of such Officer's
Certificate as if made on and as of such date (except to the extent
they expressly relate to an earlier date);
(ii) the Issuer or Copelco (as the case may be)
has complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied under this Agreement, the
Indenture and the Sales and Servicing Agreement at or prior to the date
of such Officer's Certificate;
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(iii) nothing has come to such officer's attention
that would lead him to believe that the Final Prospectus contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(iv) such officer is not aware of (A) any request
of the Commission for further amendment of the Registration Statement
or the Final Prospectus for any additional information, (B) the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation or
threatening of any proceeding for that purpose or (C) any notification
with respect to the suspension of the qualification of the Offered
Notes for sale in any jurisdiction or the threatening of any proceeding
for that purpose.
(b) You shall have received from Spencer N. Lempert, Esq., a
favorable opinion (subject to customary and usual qualifications), dated the
Issuance Date and reasonably satisfactory in form and substance to the
Underwriters and their counsel with respect to, or to the effect that: (i) the
due formation and qualification of each of the Issuer and Copelco and that the
Issuer and Copelco, as applicable, have the corporate power and authority to
perform this Agreement, the Sales and Servicing Agreement, the Indenture and the
Placement Agreement (the "Transaction Documents") and the transactions
contemplated herein and therein; (ii) the due authorization, execution, delivery
and enforceability of this Agreement and the other Transaction Documents as
applicable, by the Issuer and Copelco; (iii) each of this Agreement and the
other Transaction Documents are the legal, valid and binding obligation of the
Issuer and Copelco, as applicable, enforceable against each of them in
accordance with its terms (subject to customary exceptions relating to
bankruptcy and laws affecting creditors' rights); (iv) the Notes have been duly
authorized, executed and delivered by the Issuer and constitute the legal, valid
and binding obligations of the Issuer, enforceable in accordance with their
terms (subject to customary exceptions as to bankruptcy and laws affecting
creditors' rights) and are entitled to the benefits of the Indenture; (v) the
issuance and sale of the Notes by the Issuer, the performance of this Agreement
by the Issuer and Copelco and the compliance by the Issuer and Copelco with the
terms of the Transaction Documents, as applicable, and the consummation of the
transactions contemplated herein and therein will not conflict with the
organizational documents of the Issuer or Copelco, or to the best of such
counsel's knowledge, any other contracts to which the Issuer or Copelco is a
party or by which either of them is bound; (vi) to the best of such counsel's
knowledge, there is no legal or governmental proceeding threatened or pending
against the Issuer or Copelco which would have a material adverse effect on the
issuance of the Notes; (vii) in the event a court disregarded the intent of the
parties and characterized the transfers as a pledge of collateral, the Sales and
Servicing Agreement and accompanying documentation creates a valid security
interest in the Leases and the Equipment (or interests therein) under New Jersey
law; (viii) assuming no prior financing statements covering the Leases are in
effect based on a review of certain UCC searches, that financing statements
covering the Leases and naming (A) the Issuer as secured party and Copelco as
debtor and (B) the Issuer as debtor and the Trustee as secured party are being
filed in the appropriate filing offices of the State of New Jersey, and assuming
that the Trustee has taken possession of the Leases, the Trustee has a first
priority perfected security interest in all right, title and interest of Copelco
and the Issuer in the Leases; and (ix) on the Issuance Date the Registration
Statement is effective, and, that to the best of such
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counsel's knowledge no stop order suspending the effectiveness of the
Registration Statement has been issued or is threatened, and that although such
counsel is not passing on the factual accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus, nothing
came to such counsel's attention that leads such counsel to believe that either
the Registration Statement or the Prospectus (as of the Effective Date or the
date of the Prospectus) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made not misleading. In rendering such opinion, counsel may rely, to the extent
deemed proper and as stated therein, as to matters of fact on certificates of
responsible officers of the Issuer or Copelco and public officials and as to
matters of state law of jurisdictions other than the jurisdictions in which such
counsel is admitted to practice, on opinions of local counsel satisfactory to
the Underwriters.
(c) The Underwriters shall have received from Dewey
Ballantine, special counsel for the Underwriters, such opinion or opinions,
dated the Issuance Date, with respect to the validity of the Offered Notes, the
Registration Statement, the Final Prospectus, true sale, nonconsolidation and
other related matters as the Underwriters may require.
(d) At the Execution Time and at the Issuance Date,
KMPG-Peat Marwick shall have furnished to the Underwriters a letter or letters,
dated the date of this Agreement and the Issuance Date, respectively, in form
and substance satisfactory to the Underwriters.
(e) The Class A-1 Notes shall have been rated at least
"A-1+", "D-1", "P-1" and "F-1+/AAA" and that the Class A-2, A-3 and A-4 notes be
rated at least "AAA", "AAA", "Aaa" and "AAA" and that the Class B Notes be rated
at least "A", "A+", "A" and "A+" by Standard & Poor's Ratings Group ("S&P"),
Duff & Phelps Credit Ratings Co. ("DCR"), Moody's Investors Service, Inc.
("Moody's") and Fitch Investors Service, L.P. ("Fitch"), respectively, and that
the Class C Notes be rated at least "BBB+" and "BBB+" by DCR and Fitch
respectively, which ratings shall not have been reduced or withdrawn as
evidenced by the Officer's Certificate referred to in Section 6(b).
(f) Counsel to the Trustee shall have delivered a favorable
opinion (subject to customary and usual exceptions), dated the Issuance Date, as
the case may be, and satisfactory in form and substance to the Underwriters and
counsel for the Underwriters and to the Issuer and Copelco and their counsel
with respect to, or to the effect that: (i) the due incorporation and valid
existence of the Trustee, (ii) the due authorization, execution and delivery by
the Trustee of the Indenture, (iii) the Indenture is the legal, valid and
bending obligation of the Trustee, enforceable against the Trustee in accordance
with its terms (subject to customary and usual exceptions), (iv) no approvals or
filings with any Governmental Authority required in connection with the
execution, delivery or performance by the Trustee of the Indenture and (v) the
execution, delivery and performance of the Indenture will not cause any default
under the Trustee's organizational documents or other contracts to which it is a
party or by which it is bound.
(g) The Underwriters shall have received the approval
of each of their respective investment committees with respect to the execution,
delivery and performance of this Agreement.
10
<PAGE>
(h) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto shall be
reasonably satisfactory in form and substance to you, and you and your special
counsel shall have received such other information, certificates and documents
as you or they may reasonably request.
Section 7. Reimbursement of Expenses. In the event that (x)
no closing of the sale of the Offered Notes occurs by the Issuance Date through
no fault of the Issuer or Copelco or because the conditions set forth in
Sections 6(c), 6(d), 6(e), 6(f) and 6(g) have not been met, or (y) the
Underwriters terminate the engagement pursuant to Section 10 or because any
conditions precedent in Section 6 (other than Section 6(d)) have not been
fulfilled, then the Issuer and Copelco's liability to the Underwriters shall be
limited to the reimbursement of the Underwriters' expenses incurred through the
date of termination for its reasonable out-of-pocket and incidental expenses. In
addition, whether or not the Offered Notes are issued or sold:
(a) The Issuer or Copelco shall pay the reasonable fees and
expenses associated with the transactions contemplated hereby not paid by the
Underwriters in accordance with the provisions of Section 7(b) including,
without limitation, the following fees and expenses:
(i) Rating Agency fees payable with respect to
their ratings of the Notes;
(ii) fees charged by the firm of independent
public accountants referred to in Section 6(e);
(iii) filing fees in connection with the
transactions contemplated hereby including, but not limited to, the
Commission;
(iv) fees and expenses of counsel to the
Underwriters;
(v) Trustee's fees and fees of counsel to the
Trustee;
(vi) the costs and expenses of printing the
Registration Statement and the Prospectus;
(vii) the costs of printing or reproducing this
Agreement, the Blue Sky Survey and any other documents in connection
with the offer, sale and delivery of the Offered Notes;
(viii) all expenses in connection with the
qualification of the Offered Notes under state securities laws as
provided in section 4(a)(vi), including the fees and disbursements of
counsel in connection with the Blue Sky Survey;
(ix) the cost of preparing the Offered Notes;
(x) the cost or expenses of any transfer agent
or registrar; and
11
<PAGE>
(xi) all other costs and expenses incident to the
performance of their obligations hereunder which are not otherwise
specifically provided for in this Section 7; provided, however, that
Copelco does not hereby waive any rights to reimbursement from the
Underwriters in the event of any of the Underwriters' failure to
perform in accordance with this Agreement.
(b) It is understood and agreed that, except as
provided in Section 8 and 9, the Underwriters will pay securities transfer taxes
on resale of any of the Offered Notes by them, and any advertising expenses
connected with any offers they may make.
Section 8. Indemnification and Contribution. (a) The Issuer
and Copelco, jointly and severally, will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the Final Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will promptly reimburse such Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating, preparing to defend or defending, or appearing as
a third-party witness in connection with, any such action or claim; provided,
however, that the Issuer and Copelco shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement or the Final Prospectus or any such
amendment or supplement, in reliance upon and in conformity with the
Underwriting Information (defined below).
(b) Each Underwriter agrees severally, and not jointly, to
indemnify and hold harmless the Issuer and Copelco against any losses, claims,
damages or liabilities to which the Issuer or Copelco may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Final Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement or the Final
Prospectus or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Issuer or Copelco by or on
behalf of such Underwriter expressly for use therein; and will reimburse the
Issuer or Copelco for any legal or other expenses reasonably incurred by the
Issuer or Copelco in connection with the investigating, preparing to defend or
defending, or appearing as a third-party witness in connection with, any such
action or claim. The Issuer and Copelco acknowledge that the statements set
forth in the last paragraph of the cover page and under the heading
"Underwriting" in the Registration Statement, the Preliminary Prospectus and the
Final Prospectus constitute the only information furnished in writing by or on
behalf of the
12
<PAGE>
Underwriters for inclusion in the Registration Statement or the Final Prospectus
(the "Underwriting Information"), and each of you confirm that such statements
are correct.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party, and the indemnified party shall have been advised by
counsel that representation of such indemnified party and the indemnifying party
may be inappropriate under applicable standards of professional conduct due to
actual or potential differing interests between them, the indemnified party or
parties shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. It is understood that the
indemnifying party shall, in connection with any such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys together with appropriate
local counsel at any time from all indemnified parties not having actual or
potential differing interests with any other indemnified party. Upon receipt of
notice from the indemnifying party to such indemnified party of its election so
to appoint counsel to defend such action and approval by the indemnified party
of such counsel, the indemnifying party will not be liable for any settlement
entered into without its consent and will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence, (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in such clause (i)
or (iii). Notwithstanding the immediately preceding sentence and the first
sentence of this paragraph, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred
13
<PAGE>
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Issuer and
Copelco on the one hand and the Underwriters on the other from the offering of
the Offered Notes. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Issuer or Copelco on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Issuer or
Copelco on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion that the total net proceeds from the offering (before
deducting expenses) received by the Issuer and Copelco bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Final Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Issuer or Copelco on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Issuer, Copelco and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating,
preparing to defend or defending, or appearing as a third-party witness in
connection with, any such action or claim. Notwithstanding the provisions of
this subsection (d), the Underwriters shall not be required to contribute any
amount in excess of the total underwriting discount as set forth on the cover
page of the Prospectus. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Issuer and Copelco under this
Section 8 shall be in addition to any liability which the Issuer or Copelco may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any of the Underwriters within the meaning of the
Securities Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the Underwriters may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Issuer and Copelco and to each person, if any, who controls the
Issuer or Copelco within the meaning of the Securities Act.
Section 9. Survival. The respective representations,
warranties and agreements of the Issuer, Copelco and the Underwriters set forth
in or made pursuant to this Agreement will
14
<PAGE>
remain in full force and effect, notwithstanding any investigation heretofore or
hereafter made by or on behalf of the Issuer, Copelco or the Underwriters, and
such representations, warranties and agreements made by the Issuer and Copelco
shall survive the delivery and payment for the Offered Notes. The provisions of
Section 7 and 8 shall survive the termination or cancellation of this Agreement.
Section 10. Termination. (a) This Agreement may be
terminated by you at any time upon the giving of notice at any time prior to the
Issuance Date: (i) if there has been, since December 31, 1996, any material
adverse change in the condition, financial or otherwise, of Copelco or the
Issuer, or in the earnings, business affairs or business prospects of Copelco or
the Issuer, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any outbreak or escalation of hostilities or other
calamity or crisis the effect of which on the financial markets of the United
States is such as to make it, in your reasonable judgment, impracticable to
market the Offered Notes or enforce contracts for the sale of the Offered Notes,
or (iii) if trading generally on either the American Stock Exchange or the New
York Stock Exchange has been suspended, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices for securities have been required,
by either of said exchanges or by order of the Commission or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either federal or New York authorities. In the event of any such termination, no
party will have any liability to any other party hereto, except as otherwise
provided in Section 7 or 8 hereof.
(b) This Agreement may not be terminated by the Issuer or
Copelco, except in accordance with law, without the written consent of the
Underwriters.
(c) Notwithstanding anything herein to the contrary, in the
event the Issuer or Copelco does not perform any obligation under this Agreement
or any representation and warranty hereunder is incomplete or inaccurate in any
material respect, this Agreement and all of the Underwriters' obligations
hereunder may be immediately cancelled by the Underwriters by notice thereof to
the Issuer or Copelco. Any such cancellation shall be without liability of any
party to any other party except that the provisions of Sections 8 and 9 hereof
shall survive any such cancellation.
Section 11. Notices. All communications provided for or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered to or mailed by certified or registered mail,
postage prepaid, or transmitted by telex or telegraph and confirmed by a similar
mailed writing, if to you, addressed to you, at the addresses first stated in
this Agreement, or to such other address as you may designate in writing to the
Issuer and Copelco; if to Copelco, addressed to Copelco at East Gate Center, 700
East Gate Drive, Mount Laurel, New Jersey 08054-5400, if to the Issuer,
addressed to Copelco at East Gate Center, 700 East Gate Drive, Mount Laurel, New
Jersey 08054-5400, or such other address as Copelco or the Issuer may have
designated in writing to you.
Section 12. Successors. This Agreement will inure to the
benefit of and be binding upon the Issuer and Copelco and their successors and
assigns and the Underwriters and their respective successors and assigns.
15
<PAGE>
Section 13. Default by One of the Underwriters. If one of
the Underwriters shall fail on the Closing Date to purchase the Class A Notes or
Class B Notes, as the case may be, which it is obligated to purchase hereunder
(the "Defaulted Notes"), the remaining Underwriter(s) (the "Non-Defaulting
Underwriter(s)") shall have the right, but not the obligation, within one (1)
Business Day thereafter, to make arrangements to purchase all, but not less than
all, of the Defaulted Notes upon the terms herein set forth; if, however, the
Non-Defaulting Underwriter(s) shall not have completed such arrangements within
such one (1) Business Day period, then this Agreement shall terminate without
liability on the part of the Non-Defaulting Underwriter(s).
No action taken pursuant to this Section 13 shall relieve the
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, any of the Non-Defaulting Underwriters or the
Company shall have the right to postpone the Closing Date for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.
Section 14. Entire Agreement. This Agreement and the
documents referred to herein and to be delivered pursuant hereto constitute the
entire agreement between the parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties.
Section 15. Governing Law. (a) THIS AGREEMENT IS TO BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO
CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
(b) THE ISSUER AND COPELCO HEREBY SUBMIT TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET
FORTH IN SECTION 11 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U. S. MAILS, POSTAGE
PREPAID. THE ISSUER AND COPELCO HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
ISSUER OR COPELCO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT EITHER'S RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY
OTHER JURISDICTION.
(c) THE ISSUER AND COPELCO HEREBY WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED
16
<PAGE>
TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN
COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
Section 16. Counterparts. 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 17. Miscellaneous. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
If you are in agreement with the foregoing, please sign a
counterpart hereof and return the same to the Issuer or Copelco, whereupon this
Agreement shall become a binding agreement between the Underwriters, and the
Issuer and Copelco.
17
<PAGE>
Very truly yours,
COPELCO CAPITAL, INC.
By: /s/ MICHAEL C. RITTER
------------------------------------
Name: MICHAEL C. RITTER
Title: SENIOR VICE PRESIDENT
AND TREASURER
COPELCO CAPITAL FUNDING CORP. X
By: /s/ STEPHEN W. SHIPPIE
------------------------------------
Name: STEPHEN W. SHIPPIE
Title: VICE PRESIDENT
The foregoing Agreement is
hereby accepted and entered
into as of the date hereof.
LEHMAN BROTHERS INC.,
As Class A Underwriter and Class B Underwriter
By: /s/ NELSON SOARES
------------------------------------
Name: NELSON SOARES
Title: MANAGING DIRECTOR
FIRST UNION CAPITAL MARKETS CORP.,
As Class A Underwriter and Class B Underwriter
By: /s/ OWEN WILLIAMS
------------------------------------
Name: OWEN WILLIAMS
Title: MANAGING DIRECTOR
MORGAN STANLEY & CO. INCORPORATED,
As Class A Underwriter
By: /s/ DAVID WARREN
------------------------------------
Name: DAVID WARREN
Title: MANAGING DIRECTOR
[UNDERWRITING AGREEMENT]
<PAGE>
SCHEDULE A
Purchase Price
<TABLE>
<CAPTION>
Underwriters of the Class A Notes Principal Principal Principal Principal
- --------------------------------- Amount of Amount of Amount of Amount of
Class A-1 Notes Class A-2 Notes Class A-3 Notes Class A-4 Notes
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Lehman Brothers Inc. $63,988,650 $24,381,900 $95,172,750 $57,000,150
First Union Capital Markets $63,988,650 $24,381,900 $95,172,750 $57,000,150
Corp.
Morgan Stanley & Co. $14,219,700 $5,418,200 $21,149,500 $12,666,700
Incorporated
<CAPTION>
Underwriters of the Class B Notes Principal Amount of Class B Notes
- --------------------------------- ---------------------------------
<S> <C>
Lehman Brothers Inc. $11,373,000
First Union Capital Markets $11,373,000
Corp.
</TABLE>
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COPELCO CAPITAL
FUNDING CORP. X,
Issuer
AND
MANUFACTURERS AND TRADERS TRUST COMPANY,
Trustee
INDENTURE
Dated as of June 1, 1997
$568,660,720 in aggregate principal amount of
Lease-Backed Notes, Series 1997-A,
consisting of:
$142,197,000 of 5.809% Class A-1 Lease-Backed Notes
$54,182,000 of 6.05% Class A-2 Lease-Backed Notes
$211,495,000 of 6.27% Class A-3 Lease-Backed Notes
$126,667,000 of 6.47% Class A-4 Lease-Backed Notes
$22,746,000 of 6.50% Class B Lease-Backed Notes
$11,373,720 of 6.78% Class C Lease-Backed Notes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
COPELCO CAPITAL FUNDING CORP. X
Reconciliation and Tie between the Indenture
dated as of June 1, 1997 and the
Trust Indenture Act of 1939, as amended
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
- --------------------------- -----------------
<S> <C>
Section 310(a)(1) Section 7.08
(a)(2) 7.08
(a)(3) Not Applicable
(a)(4) Not Applicable
(b) 7.08; 7.09; 6.07;
1.05; 1.06
(c) Not Applicable
311(a) 7.14
(b) 7.14
312(a) 2.11
(b) 12.02
(c) 12.02
313(a) 7.15
(b)(1) Not Applicable
(b)(2) 7.15
(c) 7.15; 1.06
(d) 7.15
314(a) 8.12; 8.09; 1.06
(b) Not Applicable
(c)(1) 12.03
(c)(2) 12.03
(c)(3) 12.01
(d) 12.01
(e) 12.04
(f) Not Applicable
315(a) 7.01(a)
(b) 7.02; 1.06
(c) 7.01(b)
(d) 7.01(c)
(e) 6.14
316(a) (last sentence) 2.12
(a)(1)(A) 6.12
(a)(1)(B) 6.13
(a)(2) Not Applicable
317(a)(1) 6.03(c)
(a)(2) 6.04
(b) 8.03(c)
318(a) 12.01
(c) 12.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
<S> <C>
SECTION 1.01. General Definitions........................................................................ 3
SECTION 1.02. Compliance Certificates and Opinions....................................................... 22
SECTION 1.03. Form of Documents Delivered to Trustee..................................................... 23
SECTION 1.04. Acts of Noteholders, etc................................................................... 24
SECTION 1.05. Notices, etc., to Trustee, Servicer, Company
and Rating Agencies........................................................... 25
SECTION 1.06. Notice to Noteholders; Waiver.............................................................. 26
SECTION 1.07. Effect of Headings and Table of Contents................................................... 27
SECTION 1.08. Successors and Assigns..................................................................... 27
SECTION 1.09. GOVERNING LAW.............................................................................. 27
SECTION 1.10. Legal Holidays............................................................................. 27
SECTION 1.11. Execution in Counterparts.................................................................. 28
SECTION 1.12. Inspection .............................................................................. 28
SECTION 1.13. Survival of Representations and Warranties................................................. 28
ARTICLE 2.
THE NOTES
SECTION 2.01. General Provisions......................................................................... 29
SECTION 2.02. Execution, Authentication, Delivery, and
Dating........................................................................ 31
SECTION 2.03. Transfer and Exchange...................................................................... 32
SECTION 2.04. Mutilated, Destroyed, Lost and Stolen Notes................................................ 34
SECTION 2.05. Book-Entry Registration of Class A Notes and
Class B Notes................................................................. 34
SECTION 2.06. Notice to Clearing Agency.................................................................. 36
SECTION 2.07. Definitive Class A Notes and Definitive
Class B Notes................................................................. 36
SECTION 2.08. Payment of Interest and Principal; Rights
Preserved..................................................................... 38
SECTION 2.09. Persons Deemed Owners...................................................................... 38
SECTION 2.10. Cancellation .............................................................................. 38
SECTION 2.11. Noteholder Lists........................................................................... 39
SECTION 2.12. Treasury Securities........................................................................ 39
ARTICLE 3.
ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION
AND APPLICATION OF MONEYS; REPORTS
SECTION 3.01. Trust Accounts; Investments by Trustee..................................................... 39
SECTION 3.02. Collection of Moneys....................................................................... 42
SECTION 3.03. Collection Account; Payments............................................................... 43
</TABLE>
i
<PAGE>
<TABLE>
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SECTION 3.04. The Reserve Account and the Residual
Account....................................................................... 46
SECTION 3.05. Reports by Trustee; Notices of Certain
Payments...................................................................... 47
SECTION 3.06. Trustee May Rely on Certain Information from
Copelco and Servicer.......................................................... 48
ARTICLE 4.
RELEASE OF LEASES AND EQUIPMENT
SECTION 4.01. Release of Equipment....................................................................... 49
SECTION 4.02. Release of Leases Upon Final Lease Payment................................................. 49
SECTION 4.03. Execution of Documents..................................................................... 49
ARTICLE 5.
SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER
SECTION 5.01. Servicer Events of Default................................................................. 50
SECTION 5.02. Substitute Servicer........................................................................ 50
ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES
SECTION 6.01. Events of Default.......................................................................... 51
SECTION 6.02. Acceleration of Maturity; Rescission and
Annulment..................................................................... 52
SECTION 6.03. Remedies................................................................................... 54
SECTION 6.04. Trustee Shall File Proofs of Claim......................................................... 55
SECTION 6.05. Trustee May Enforce Claims Without
Possession of Notes........................................................... 56
SECTION 6.06. Application of Money Collected............................................................. 56
SECTION 6.07. Limitation on Suits........................................................................ 57
SECTION 6.08. Unconditional Right of Noteholders to
Receive Principal and Interest................................................ 58
SECTION 6.09. Restoration of Rights and Remedies......................................................... 59
SECTION 6.10. Rights and Remedies Cumulative............................................................. 59
SECTION 6.11. Delay or Omission Not Waiver............................................................... 59
SECTION 6.12. Control by Noteholders..................................................................... 59
SECTION 6.13. Waiver of Events of Default................................................................ 60
SECTION 6.14. Undertaking for Costs...................................................................... 61
SECTION 6.15. Waiver of Stay or Extension Laws........................................................... 61
SECTION 6.16. Sale of Trust Estate....................................................................... 61
ARTICLE 7.
THE TRUSTEE
SECTION 7.01. Certain Duties and Responsibilities........................................................ 63
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SECTION 7.02. Notice of Defaults or Events of Default.................................................... 64
SECTION 7.03. Certain Rights of Trustee.................................................................. 65
SECTION 7.04. Not Responsible for Recitals or Issuance of
Notes......................................................................... 66
SECTION 7.05. May Hold Notes............................................................................. 66
SECTION 7.06. Money Held in Trust........................................................................ 66
SECTION 7.07. Compensation, Reimbursement, etc........................................................... 66
SECTION 7.08. Corporate Trustee Required; Eligibility.................................................... 67
SECTION 7.09. Resignation and Removal; Appointment of
Successor..................................................................... 67
SECTION 7.10. Acceptance of Appointment by Successor..................................................... 68
SECTION 7.11. Merger, Conversion, Consolidation or
Succession to Business........................................................ 69
SECTION 7.12. Co-trustees and Separate Trustees.......................................................... 69
SECTION 7.13. Acceptance by Trustee...................................................................... 71
SECTION 7.14. Preferential Collection of Claims Against
the Company................................................................... 71
SECTION 7.15. Reports by Trustee to Noteholders.......................................................... 71
SECTION 7.16. No Proceedings............................................................................. 72
ARTICLE 8.
COVENANTS
SECTION 8.01. Payment of Principal and Interest.......................................................... 72
SECTION 8.02. Maintenance of Office or Agency; Chief
Executive Office.............................................................. 72
SECTION 8.03. Money for Payments to Noteholders to be Held
in Trust...................................................................... 73
SECTION 8.04. Corporate Existence; Merger; Consolidation,
etc........................................................................... 74
SECTION 8.05. Protection of Trust Estate; Further
Assurances.................................................................... 75
SECTION 8.06. [Reserved] .............................................................................. 76
SECTION 8.07. Performance of Obligations; Sales and
Servicing Agreement........................................................... 77
SECTION 8.08. Negative Covenants......................................................................... 77
SECTION 8.09. Information as to Company.................................................................. 78
SECTION 8.10. Taxes...................................................................................... 80
SECTION 8.11. Indemnification............................................................................ 80
SECTION 8.12. Commission Reports; Reports to Trustee;
Reports to Noteholders........................................................ 80
ARTICLE 9.
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders................................................................... 81
SECTION 9.02. Supplemental Indentures with Consent of
Noteholders................................................................... 82
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SECTION 9.03. Execution of Supplemental Indentures....................................................... 83
SECTION 9.04. Effect of Supplemental Indentures.......................................................... 83
SECTION 9.05. Reference in Notes to Supplemental
Indentures.................................................................... 84
SECTION 9.06. Compliance with Trust Indenture Act........................................................ 84
ARTICLE 10.
SATISFACTION AND DISCHARGE
SECTION 10.01. Satisfaction and Discharge of Indenture................................................... 84
SECTION 10.02. Application of Trust Money................................................................ 85
ARTICLE 11.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
SECTION 11.01. Corporate Organization and Authority...................................................... 86
SECTION 11.02. Pending Litigation........................................................................ 86
SECTION 11.03. Transactions Legal and Authorized......................................................... 87
SECTION 11.04. No Defaults .............................................................................. 87
SECTION 11.05. Governmental Consent...................................................................... 87
SECTION 11.06. Use of Proceeds........................................................................... 88
SECTION 11.07. Compliance with Law....................................................................... 88
SECTION 11.08. Restrictions on Company................................................................... 88
SECTION 11.09. Legal, Valid and Binding Obligations...................................................... 88
SECTION 11.10. Perfected Security Interest............................................................... 89
SECTION 11.11. Taxes..................................................................................... 89
SECTION 11.12. Nonconsolidation.......................................................................... 89
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls.............................................................. 90
SECTION 12.02. Communication by Noteholders with Other
Noteholders................................................................... 90
SECTION 12.03. Officers' Certificate and Opinion of
Counsel as to Conditions Precedent............................................ 91
SECTION 12.04. Statements Required in Certificate or
Opinion....................................................................... 91
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SCHEDULES
SCHEDULE 1 Leases
EXHIBITS
EXHIBIT A Forms of Notes and Form of Trustee's
Certificate of Authentication
EXHIBIT B Form of Investor Letter
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INDENTURE
This INDENTURE dated as of June 1, 1997, is between COPELCO
CAPITAL FUNDING CORP. X, a Delaware corporation (herein called the "Company"),
and MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation, as
trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the issuance of $568,660,720
in aggregate principal amount of its Lease-Backed Notes, Series 1997-A,
consisting of $142,197,000 aggregate principal amount of 5.809% Class A-1
Lease-Backed Notes (the "Class A-1 Notes"), $54,182,000 aggregate principal
amount of 6.05% Class A-2 Lease-Backed Notes (the "Class A-2 Notes"),
$211,495,000 aggregate principal amount of 6.27% Class A-3 Lease-Backed Notes
(the "Class A-3 Notes"), $126,667,000 aggregate principal amount of 6.47% Class
A-4 Lease-Backed Notes (the "Class A-4 Notes", together with the Class A-1
Notes, Class A-2 Notes, and Class A-3 Notes, the "Class A Notes"), $22,746,000
aggregate principal amount of 6.50% Class B Lease-Backed Notes (the "Class B
Notes"), $11,373,720 aggregate principal amount of 6.78% Class C Lease-Backed
Notes (the "Class C Notes"; the Class A Notes, the Class B Notes and the Class C
Notes are referred to collectively as the "Notes"), of substantially the tenor
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture. The Class A Notes, the Class B
Notes and the Class C Notes shall be entitled to payments of interest and
principal as set forth herein.
All things necessary to make the Notes, when executed by the
Company and authenticated and delivered hereunder, the valid obligations of the
Company, and to make this Indenture a valid agreement of the Company, in
accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Notes by the holders thereof, it is mutually covenanted and agreed, for the
benefit of all Noteholders, as follows:
GRANTING CLAUSE
The Company hereby Grants to the Trustee on the Issuance Date,
for the benefit and security of the Noteholders, all of the Company's right,
title and interest
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in and to (a) the Leases and all Lease Payments, Casualty Payments, Termination
Payments and other amounts now due or becoming due with respect thereto since
the Cut-Off Date (other than any prepayments of rent required pursuant to the
terms of any Lease at or before the commencement of the Lease and any payments
due before the Cut-Off Date) and all Additional Leases and Substitute Leases and
all Lease Payments, Casualty Payments, Termination Payments and other amounts
due or becoming due with respect thereto since the effective date of their
respective addition or substitution (other than any prepayments of rent required
by the terms of any Lease at or before the commencement of the Lease and any
payments due before the effective date of such addition or substitution), (b)
all rights of the Company to or under any guarantees of or collateral (including
all rights of the Company in any security deposits and the Company's right to
repayment by Copelco Capital, Inc. ("Copelco") of any inter-company loans
pursuant to Section 13.01 of the Sales and Servicing Agreement) for the Lessee's
obligations under any Lease, (c) all interests of the Company in the Equipment
at any time subject to any Lease, including any security interest of Copelco in
the Equipment, (d) all moneys from time to time held by the Trustee pursuant to
Section 3.01(a) hereof pending deposit in one of the accounts referred to
therein, (e) all moneys from time to time on deposit in any of the Trust
Accounts, including all investments and income from the investment of such
moneys, (f) all rights of the Company under the Sales and Servicing Agreement,
and (g) all proceeds of the conversion, whether voluntary or involuntary, of any
of the foregoing into cash or other property (collectively, the Granted Assets).
Such Grant is made in trust to secure (i) the payment of all amounts due on the
Class A Notes, the Class B Notes and the Class C Notes, in accordance with their
terms, equally and ratably without prejudice, priority, or distinction among any
of the Class A Notes, the Class B Notes and the Class C Notes, respectively, by
reason of differences in time of issuance or otherwise, (ii) the payment of all
other sums payable under this Indenture with respect to the Notes and (iii)
compliance with the provisions of this Indenture with respect to the Notes.
The Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions hereof, and agrees to perform the
duties herein required to the best of its ability and to the end that the
interests of the Noteholders may be adequately and effectively protected as
hereinafter provided.
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ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. General Definitions.
Except as otherwise specified or as the context may otherwise
require, the following terms have the meanings set forth below for all purposes
of this Indenture, and the definitions of such terms are applicable to the
singular as well as to the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
Act: with respect to any Noteholder, as defined
in Section 1.04.
Additional Lease: as defined in Section 12 of the
Sales and Servicing Agreement.
Additional Principal: with respect to each Payment Date, an
amount equal to (a) the difference between (i) the Discounted Present Value of
the Performing Leases as of the previous Determination Date and (ii) the
Discounted Present Value of the Performing Leases as of the related
Determination Date, less (b) the Class A Principal Payment, Class B Principal
Payment and the Class C Principal Payment to be paid on such Payment Date.
Affiliate: of any specified Person: any other Person which
directly or indirectly controls, or is controlled by, or is under common control
with, such specified Person. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
Authorized Officer: with respect to any matter,
any officer of or other Person representing the Company,
Copelco or the Servicer, as the case may be, who is
authorized to act for the Company, Copelco or the Servicer,
as the case may be.
Available Funds: With respect to any Payment Date, the amount
on deposit in the Collection Account with respect to the immediately preceding
Due Period, including, without limitation, (a) Lease Payments due during the
immediately preceding Due Period (net of any Excess Copy Charges and Fee Per
Scan Charges), (b) Residual Realizations up to the Residual Amount Cap; (c)
recoveries from Non-Performing Leases to the extent the Seller has not
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substituted Substitute Leases for such Non-Performing Leases (except to the
extent required to reimburse unreimbursed Servicer Advances pursuant to Section
4 of the Sales and Servicing Agreement); (d) proceeds from repurchases by
Copelco of Leases as a result of breaches of representations and warranties by
Copelco to the extent Copelco has not substituted Substitute Leases for such
Leases; (e) proceeds from the investment of funds in the Collection Account, the
Residual Account and the Reserve Account; (f) Casualty Payments; (g) Servicer
Advances; (h) Termination Payments; and late charges on delinquent Lease
Payments not advanced by the Servicer.
Available Reserve Amount: the amount on deposit
in the Reserve Account.
Available Funds Shortfall: as defined in Section
3.04(b).
Available Residual Amount: the excess of (a) the
Residual Amount Cap over (b) the Utilized Residual Amount.
Book-Entry Class A-1 Notes: beneficial interests in the Class
A-1 Notes, the ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 2.05.
Book-Entry Class A-2 Notes: beneficial interests in the Class
A-2 Notes, the ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 2.05.
Book-Entry Class A-3 Notes: beneficial interests in the Class
A-3 Notes, the ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 2.05.
Book-Entry Class A-4 Notes: beneficial interests in the Class
A-4 Notes, the ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 2.05.
Book-Entry Class B Notes: beneficial interests in the Class B
Notes, the ownership and transfers of which shall be made through book entries
by a Clearing Agency as described in Section 2.05.
Business Day: any day that is not a Saturday,
Sunday or other day on which commercial banking institutions
in the city in which the Corporate Trust Office and the
Servicer is located are authorized or obligated by law or
executive order to remain closed.
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Casualty Payment: any payment pursuant to a Lease on account
of the loss, theft, condemnation, governmental taking, destruction, or damage
beyond repair of any item of Equipment subject thereto which results, in
accordance with the terms of the Lease, in a reduction in the number or amount
of any future Lease Payments due thereunder or in the termination of the
Lessee's obligation to make future Lease Payments thereunder.
Casualty Pay-Through Amount: with respect to any Lease (or
portion thereof) with respect to which a Casualty Payment has been made, an
amount equal to the Discounted Present Value of such Lease (or portion thereof)
as of the Payment Date immediately preceding the date on which such Casualty
Payment is made.
Cede & Co.: the initial registered holder of the
Class A Notes and the Class B Notes, acting as nominee of
The Depository Trust Company.
Class A Notes: as defined in the Recitals hereto.
Class A Percentage: 91.999%
Class A Principal Payment: (a) while the Class A-1 Notes are
outstanding, (i) on all Payment Dates prior to the July 1998 Payment Date, the
lesser of (1) the amount necessary to reduce the Outstanding Principal Amount on
the Class A-1 Notes to zero and (2) the difference between (A) the Discounted
Present Value of the Performing Leases as of the previous Determination Date and
(B) the Discounted Present Value of the Performing Leases as of the related
Determination Date, and (ii) on the July 1998 Payment Date and thereafter, the
entire Outstanding Principal Amount on the Class A-1 Notes, and (b) after the
Class A-1 Notes have been paid in full, the amount necessary to reduce the
aggregate Outstanding Principal Amount on the Class A Notes to the Class A
Target Investor Principal Amount.
Class A Target Investor Principal Amount: with respect to each
Payment Date, an amount equal to the product of (a) the Class A Percentage and
(b) the Discounted Present Value of the Performing Leases as of the related
Determination Date.
Class A-1 Note Interest Rate: the rate at which interest
accrues on the Class A-1 Notes, which rate with respect to each Due Period shall
be at a rate per annum equal to 5.809%.
Class A-1 Note Owner: with respect to a Book-Entry Class
A-1 Note, the Person who is the beneficial owner of such Book-Entry Class A-1
Note, as reflected on the
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books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
Class A-1 Noteholder: Cede & Co. or a holder of a
Definitive Class A-1 Note.
Class A-1 Notes: as defined in the Recitals
hereto.
Class A-2 Note Interest Rate: the rate at which interest
accrues on the Class A-2 Notes, which rate with respect to each Due Period shall
be at a rate per annum equal to 6.05%.
Class A-2 Note Owner: with respect to a Book-Entry Class A-2
Note, the Person who is the beneficial owner of such Book-Entry Class A-2 Note,
as reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an indirect
participant, in accordance with the rules of such Clearing Agency).
Class A-2 Noteholder: Cede & Co. or a holder of a
Definitive Class A-2 Note.
Class A-2 Notes: as defined in the Recitals hereto.
Class A-3 Note Interest Rate: the rate at which interest
accrues on the Class A-3 Notes, which rate with respect to each Due Period shall
be at a rate per annum equal to 6.27%.
Class A-3 Note Owner: with respect to a Book-Entry Class A-3
Note, the Person who is the beneficial owner of such Book-Entry Class A-3 Note,
as reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an indirect
participant, in accordance with the rules of such Clearing Agency).
Class A-3 Noteholder: Cede & Co. or a holder of a
Definitive Class A-3 Note.
Class A-3 Notes: as defined in the Recitals hereto.
Class A-4 Note Interest Rate: the rate at which interest
accrues on the Class A-4 Notes, which rate with respect to each Due Period shall
be at a rate per annum equal to 6.47%.
6
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Class A-4 Note Owner: with respect to a Book-Entry Class A-4
Note, the Person who is the beneficial owner of such Book-Entry Class A-4 Note,
as reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an indirect
participant, in accordance with the rules of such Clearing Agency).
Class A-4 Noteholder: Cede & Co. or a holder of a
Definitive Class A-4 Note.
Class A-4 Notes: as defined in the Recitals hereto.
Class B Floor: with respect to each Payment Date, an amount
equal to the total of (a) 2.50% of the initial Discounted Present Value of the
Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect
to such Payment Date, minus (c) the sum, as of the related Determination Date,
of the Outstanding Principal Amount of the Class C Notes and the amount on
deposit in the Reserve Account after giving effect to any withdrawals to be made
on such Payment Date.
Class B Note Interest Rate: the rate at which interest
accrues on the Class B Notes, which rate shall be 6.50% per annum.
Class B Note Owner: with respect to a Book-Entry Class B Note,
the Person who is the beneficial owner of such Book-Entry Class B Note, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an indirect
participant, in accordance with the rules of such Clearing Agency).
Class B Noteholder: Cede & Co. or a holder of a
Definitive Class B Note.
Class B Notes: as defined in the Recitals hereto.
Class B Percentage: 5.334%.
Class B Principal Payment: (a) while the Class A-1 Notes are
outstanding, zero and (b) after the Outstanding Principal Amount on the Class
A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class B Notes to the greater of the Class B
Target Investor Principal Amount and the Class B Floor.
Class B Target Investor Principal Amount: with respect to
each Payment Date, an amount equal to the product
7
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of (a) the Class B Percentage and (b) the Discounted Present Value of the
Performing Leases as of the related Determination Date.
Class C Floor: with respect to each Payment Date, an amount
equal to the total of (a) 1.00% of the initial Discounted Present Value of the
Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect
to such Payment Date, minus (c) the amount on deposit in the Reserve Account
after giving effect to withdrawals to be made on such Payment Date; provided,
however, that if the Outstanding Class B Principal Amount is equal to the Class
B Floor on such Payment Date, the Class C Floor will equal the Outstanding Class
C Principal Amount utilized in the calculation of the Class B Floor Amount for
such Payment Date.
Class C Note Interest Rate: the rate at which interest
accrues on the Class C Notes, which rate shall be 6.78% per annum.
Class C Noteholder: a holder of a Class C Note.
Class C Notes: as defined in the Recitals hereto.
Class C Percentage: 2.667%.
Class C Principal Payment: (a) while the Class A-1 Notes are
outstanding, zero and (b) after the Outstanding Principal Amount on the Class
A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class C Notes to the greater of the Class C
Target Investor Principal Amount and the Class C Floor.
Class C Target Investor Principal Amount: with respect to each
Payment Date, an amount equal to the product of (a) the Class C Percentage and
(b) the Discounted Present Value of the Performing Leases as of the related
Determination Payment Date.
Clearing Agency: an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
Clearing Agency Participant: a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
8
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Collection Account: the account or accounts by that name
established and maintained by the Trustee pursuant to Section 3.01.
Commission: the Securities and Exchange Commission.
Company: the Person named as the "Company" in the first
paragraph of this instrument.
Company Order or Company Request: a written order or request
delivered to the Trustee and signed in the name of the Company by an Authorized
Officer.
Copelco: Copelco Capital, Inc., a corporation organized and
existing under the laws of the State of Delaware, and its successors.
Corporate Trust Office: the principal corporate trust office
of the Trustee located at One M&T Plaza, 7th Floor, Buffalo, New York 14203, or
at such other address as the Trustee may designate from time to time by notice
to the Noteholders, the Company and Copelco.
Cumulative Loss Amount: with respect to each Payment Date, an
amount equal to the excess, if any, of (a) the total of (i) the Outstanding
Principal Amount of the Notes as of the immediately preceding Payment Date after
giving effect to all payments made on such Payment Date, minus (ii) the lesser
of (A) the Discounted Present Value of the Performing Leases as of the
Determination Date relating to the immediately preceding Payment Date minus the
Discounted Present Value of the Performing Leases as of the related
Determination Date and (B) Available Funds for such Payment Date (including any
funds withdrawn from the Reserve Account or the Residual Account as a result of
an Available Funds Shortfall) remaining after the payment of amounts owing the
Servicer and in respect of interest on the Notes on such Payment Date over (b)
the Discounted Present Value of Performing Leases as of the related
Determination Date.
Cut-Off Date: the close of business on May 31, 1997.
DCR: Duff & Phelps Credit Rating Co, and any such successor.
Default: any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
Definitive Class A-1 Note: a definitive, fully registered
Class A-1 Note issued pursuant to Section 2.07.
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Definitive Class A-2 Note: a definitive, fully registered
Class A-2 Note issued pursuant to Section 2.07.
Definitive Class A-3 Note: a definitive, fully registered
Class A-3 Note issued pursuant to Section 2.07.
Definitive Class A-4 Note: a definitive, fully registered
Class A-4 Note issued pursuant to Section 2.07.
Definitive Class B Note: a definitive, fully registered
Class B Note issued pursuant to Section 2.07.
Delinquent Lease: as of any Determination Date, any Lease
(other than a Lease which became a Non-Performing Lease prior to such
Determination Date) with respect to which the Lessee has not paid all Lease
Payments then due.
Depository Agreement: the letter of representations, between
the Company and the Depository Trust Company, as Clearing Agency.
Determination Date: with respect to any Payment Date, the
fifth Business Day immediately preceding such Payment Date.
Discount Rate: with respect to any Determination Date,
7.2274%, which equals the sum of (a) the weighted-average interest rate of the
Class A Notes (utilizing the Class A-4 Note Interest Rate), Class B Note
Interest Rate and the Class C Note Interest Rate on the Issuance Date and (b)
the Servicing Fee rate of 0.75% per annum.
Discounted Present Value of the Leases: with respect to any
Lease as of the Cut-Off Date or any date thereafter, an amount equal to the net
present value of all Lease Payments (not including delinquent amounts) to become
due thereunder following the Cut-Off Date or the Due Period preceding the
following Payment Date, as the case may be (determined by discounting on a
monthly basis (assuming a calendar year consisting of twelve 30-day months), at
a rate equal to the Discount Rate, each such Lease Payment from the Payment Date
following such Lease Payment to such date). In determining the Discounted
Present Value of the Leases on any Determination Date or with respect to a
Payment Date, the future remaining Lease Payments will be calculated after
giving effect to any payments received prior to such date of calculation to the
extent such payments relate to Lease Payments due and payable by the Lessees
with respect to the related Due Period and any prior Due Period.
Discounted Present Value of the Delinquent Leases: with
respect to any Payment Date or Determination Date, the
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Discounted Present Value of the Leases that are not Non-Performing Leases as to
which a Lease Payment, or any portion thereof, was 63 or more days overdue as of
the last day of the Due Period immediately preceding such Payment Date.
Discounted Present Value of the Performing Leases: the
Discounted Present Value of the Leases, reduced by the Discounted Present Value
of the Leases that are Non-Performing Leases. In determining the Discounted
Present Value of the Performing Leases on any Determination Date or with respect
to a Payment Date, the future remaining Lease Payments will be calculated after
giving effect to any payments received prior to such date of calculation to the
extent such payments relate to Lease Payments due and payable by the Lessees
with respect to the related Due Period and any prior Due Period.
Due Period: with respect to any Payment Date and the
Determination Date with respect thereto, the period beginning on the first day
and ending on the last day of the calendar month prior to the month in which
such Payment Date and such Determination Date occurs.
Eligible Account: either (a) an account maintained with a
depository institution or trust company acceptable to each of the Rating
Agencies or (b) a trust account or similar account maintained in the corporate
trust department with a federal or state chartered depository institution, which
may be an account maintained with the Trustee.
Eligible Investments: any one or more of the following
obligations or securities:
(a) direct non-callable obligations of, and non-callable
obligations fully guaranteed by, the United States of America, or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America;
(b) demand and time deposits in, certificates of deposits of,
and bankers' acceptances issued by, any depository institution or trust
company (including the Trustee acting in its commercial capacity)
incorporated under the laws of the United States of America or any
state thereof, having a combined capital and surplus of at least
$100,000,000, and subject to supervision and examination by federal
and/or state banking authorities, so long as at the time of such
investment or contractual commitment providing for such investment the
commercial paper or other short-term debt
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obligations of such depository institution or trust company (or, in the
case of a depository institution that is the principal subsidiary of a
holding company, the commercial paper or other short-term debt
obligations of such holding company) have the highest short-term credit
ratings available from S&P, Moody's and, to the extent rated by DCR and
Fitch, DCR and Fitch;
(c) repurchase obligations with respect to and collateralized
by (i) any security described in clause (a) above or (ii) any other
security issued or guaranteed by an agency or instrumentality of the
United States of America, in each case entered into with a depository
institution or trust company (acting as principal) of the type
described in clause (b) above; provided that the Trustee has taken
delivery of such security;
(d) commercial paper (including both non-interest bearing
discount obligations and interest-bearing obligations) payable on
demand or on a specified date not more than one year after the date of
issuance thereof having the highest short-term credit ratings from S&P,
Moody's and, to the extent rated by DCR and Fitch, DCR and Fitch at the
time of such investment;
(e) money market funds that redeem their shares on demand,
invest only in other Eligible Investments, and are rated AAAm or AAAm-G
by S&P and Aaa by Moody's; and
(f) such other investments as may be approved by
S&P, Moody's, DCR and Fitch.
Equipment: each item of personal property, together with any
replacement parts, additions, and repairs thereto, any replacements thereof, and
any accessories incorporated therein and/or affixed thereto, subject to a Lease
or, following expiration or termination of the Lease to which the same was
previously subject, remaining subject to the lien of this Indenture in
accordance with the provisions hereof.
Event of Default: as defined in Section 6.01.
Exchange Act: the Securities Exchange Act of 1934, as
amended.
Excess Copy Charge: with respect to any Lease, means the
amount owing by such Lessee under such Lease reflecting usage of the related
Equipment in excess of a specified copy amount per month.
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Fee Per Scan Charge: with respect to any Lease, means the
amount owing by such Lessee under such Lease reflecting usage of the related
Equipment in excess of a specified scan amount per month.
Financing Statement: as defined in Section 12 of
the Sales and Servicing Agreement.
Fitch: Fitch Investors Service, L.P.
Governmental Authority: Any court or federal or state
regulatory body, administrative agency or other tribunal or other governmental
instrumentality.
Grant: grant, bargain, sell, convey, assign, transfer,
mortgage, pledge, create and grant a security interest in and right of set-off
against, deposit, set over and confirm. The Grant of the Trust Estate effected
by this Indenture shall include all rights, powers, and options (but none of the
obligations) of the Company with respect thereto, including, without limitation,
the immediate and continuing right to claim for, collect, receive, and give
receipts for Lease Payments in respect of the Leases and all other moneys
payable thereunder, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
judicial proceedings in the name of the Company or otherwise, and generally to
do and receive anything that the Company is or may be entitled to do or receive
thereunder or with respect thereto.
Granted Assets: as defined in the Granting Clause.
Holder: a holder of a Class A Note, Class B Note or a Class
C Note.
Indenture: this instrument as originally executed and as
from time to time supplemented or amended pursuant to the applicable provisions
hereof.
Initial Payment Date: July 21, 1997.
Inter-Company Loans: as defined in Section 13 of the Sales
and Servicing Agreement.
Interest Payments: as defined in Section 2.01(c).
Issuance Date: June 19, 1997.
Lease: at any time, each separate lease agreement and each
lease schedule or supplement (and each master lease agreement insofar as the
same relates to any such schedule or supplement) described in Schedule 1 hereto,
as the same
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may be amended or modified from time to time in accordance with the provisions
hereof and thereof unless and until released from the lien of this Indenture.
Lease Delinquency Payment: any payment made with respect to a
Lease in an amount equal to all or part of any specific Lease Payment due with
respect to such Lease (a) by the Servicer pursuant to Section 4.01 of the Sales
and Servicing Agreement, (b) by a transfer from the Reserve Account pursuant to
Section 3.04, or (c) by the Company in its sole discretion.
Lease Payment: each periodic installment of rent payable by a
Lessee under a Lease. Casualty Payments, Termination Payments, prepayments of
rent required pursuant to the terms of a Lease, at or before the commencement of
the Lease, payments becoming due on or before the Cut-Off Date and supplemental
or additional payments required by the terms of a Lease with respect to taxes,
insurance, maintenance (including, without limitation, any Maintenance Charges),
or other specific charges shall not be Lease Payments hereunder. For purposes of
calculating the Discounted Present Value of the Leases and the Discounted
Present Value of the Performing Leases, the amount of any Excess Copy Charges
and Fee Per Scan Charges that may be payable under such Lease shall not be
included in such calculation.
Lease Repurchase Amount: as defined in Section 12
of the Sales and Servicing Agreement.
Lessee: with respect to any Lease, the lessee thereunder.
Lien: as defined in Section 12 of the Sales and Servicing
Agreement.
Maintenance Charges: with respect to any Lease, the amount
owing by the Lessee under the terms of the related Lease in respect of
maintenance services being provided in connection therewith.
Maturity: with respect to any installment of principal of
or interest on any Note, the date on which such installment is due and payable
as therein or herein provided, whether at the Stated Maturity, by declaration of
acceleration, or otherwise.
Moody's: Moody's Investor Services, Inc. and any
successors thereto.
Monthly Delinquency Percentage: with respect to any Payment
Date, the percentage equivalent of a fraction
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(a) the numerator of which is the Discounted Present Value of the Delinquent
Leases determined as of the related Determination Date and (b) the denominator
of which is the Discounted Present Value of the Performing Leases as of the
related Determination Date.
Monthly Servicer Realization Percentage: with respect to any
Payment Date, the percentage equivalent of a fraction (a) the numerator of which
is the aggregate amount of Servicer Residual Realizations collected during the
immediately preceding Due Period and (b) the denominator of which is equal to
the aggregate Servicer Booked Residual Values with respect to the leases for
which Servicer Residual Realizations have been collected in respect of such
immediately preceding Due Period.
Nominal Buy-Out Lease: as defined in Section 12 of the
Sales and Servicing Agreement.
Non-Performing Lease: as of any Determination Date, any Lease
with respect to which at any time following the Cut-Off Date or related Transfer
Date, as the case may be, either (a) a Lease Payment, or any portion thereof,
was 123 or more days overdue as of the last day of the Due Period with respect
to such Determination Date, unless on or before such Determination Date such
Lease Payment (or portion thereof) has been paid or (b) the Servicer has
accelerated the remaining payments or has determined such Lease to be
uncollectible in accordance with the Servicer's customary practices prior to the
last day of the Due Period with respect to such Determination Date.
Non-Performing Lease Pay-Through Amount: with respect to any
Lease with respect to which a Lease Payment is made or due, an amount equal to
the Discounted Present Value of such Lease as of the Payment Date immediately
following the first Determination Date on which such Lease was a Non-Performing
Lease.
Noteholder: at any time, any Person in whose name a Note is
registered in the Note Register.
Note Interest Rate: the Class A-1 Note Interest Rate, the
Class A-2 Note Interest Rate, the Class A-3 Note Interest Rate, the Class A-4
Interest Rate, the Class B Note Interest Rate or the Class C Note Interest Rate,
as the case may be.
Note Owner: a Class A-1 Note Owner, Class A-2 Note Owner,
Class A-3 Note Owner, Class A-4 Note Owner or Class B Note Owner, as the case
may be.
Note Register: as defined in Section 2.03.
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Notes: any notes authorized by, and authenticated
and delivered under, this Indenture.
Officers' Certificate: a certificate delivered to the Trustee
and signed by the Chairman, the President, or a Vice President of the Company,
and by another Vice President, the Treasurer, and Assistant Treasurer, the
Secretary, or an Assistant Secretary of the Company who is not the same Person
as the other officer signing such certificate.
Opinion of Counsel: a written opinion, which shall be
satisfactory in form and substance to the Trustee, of counsel who may, except as
otherwise expressly provided in this Indenture, be inside or outside counsel for
the Company and who shall be satisfactory to the Trustee.
Other Lease Payments: all payments on or in respect of
leases which are not Lease Payments, Lease Delinquency Payments, Casualty
Payments, Termination Payments, Similar Transaction Payments or Residual
Realizations.
Outstanding: with respect to the Notes, as of any date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(a) Notes theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(b) Notes or portions thereof for whose payment money in the
necessary amount has been theretofore irrevocably deposited with the
Trustee in trust for the holders of such Notes; and
(c) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee is presented that any such Notes are
held by a Person in whose hands the Note is a valid obligation;
provided, however, that in determining whether the holders of the requisite
percentage of the Outstanding Principal Amount of the Notes have given any
request, demand, authorization, direction, notice, consent, or waiver hereunder,
Notes owned by the Company or any Affiliate of the Company shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, or waiver, only Notes that a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded.
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Outstanding Class A Principal Amount: The aggregate
principal amount of the Class A Notes Outstanding at any time.
Outstanding Class A-1 Principal Amount: the aggregate
principal amount of the Class A-1 Notes Outstanding at any time.
Outstanding Class A-2 Principal Amount: the aggregate
principal amount of the Class A-2 Notes Outstanding at any time.
Outstanding Class A-3 Principal Amount: the aggregate
principal amount of the Class A-3 Notes Outstanding at any time.
Outstanding Class A-4 Principal Amount: the aggregate
principal amount of the Class A-4 Notes Outstanding at any time.
Outstanding Class B Principal Amount: the aggregate
principal amount of the Class B Notes Outstanding at any time.
Outstanding Class C Principal Amount: the aggregate
principal amount of the Class C Notes Outstanding at any time.
Outstanding Principal Amount: the aggregate unpaid
principal amount of the Notes Outstanding at any time.
Paying Agent: each agent of the Company appointed for the
purpose of making payments on the Notes, including the Trustee.
Payment Date: the 20th day of each month, commencing on the
Initial Payment Date, and ending on the latest Stated Maturity.
Person: any individual, corporation, partnership, joint
venture, association, limited liability company, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
Placement Agent Agreement: the Placement Agent Agreement,
among the Company, Copelco, Lehman Brothers Inc. and First Union Capital Markets
Corp.
Predecessor Notes: with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and,
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for the purpose of this definition, any Note authenticated and delivered under
Section 2.04 in lieu of a lost, destroyed or stolen Note (or a mutilated Note
surrendered to the Trustee) shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note (or a mutilated Note surrendered to the Trustee).
Principal Payments: as defined in Section 2.01(b).
Rating Agency: DCR, Moody's, Fitch and S&P.
Record Date: with respect to any Payment Date, the last day
of the calendar month immediately preceding such Payment Date.
Required Deposit Date: as defined in Section 3.03(a).
Required Payment: as defined in Section 3.04(b).
Required Reserve Amount: shall equal the lesser of (a) 1.00%
of the Discounted Present Value of the Leases as of the Cut-Off Date and (b) the
Outstanding Principal Amount of the Notes.
Reserve Account: the account or accounts by that name
established and maintained by the Trustee pursuant to Section 3.01.
Residual Account: the account or accounts by that name
established and maintained by the Trustee pursuant to Section 3.01.
Residual Amount Cap: an amount equal to $45,492,858 which
equals 8% of the Discounted Present Value of the Leases as of the Cut-Off Date.
Residual Event: means the occurrence of one or more of the
following: (a) Copelco is no longer the Servicer, (b) with respect to the
September, 1997 Due Period and each Due Period thereafter, the Three-Month
Servicer Realization Percentage calculated on any Determination Date is less
than 100%; or (c) with respect to the September, 1997 Due Period and each Due
Period thereafter, the Three-Month Delinquency Percentage is greater than 5%;
provided, however, that the Residual Event referred to in clause (b) may be
cured if the Three-Month Servicer Realization Percentage is greater than or
equal to 100% for three consecutive months thereafter and the Residual Event
referenced in clause (c) may be cured if the Three-Month Delinquency Percentage
for any Due Period thereafter is less than or equal to 5%.
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Residual Realizations: the aggregate cash flows realized from
the sale (including pursuant to a Lessee's purchase option) or reletting of any
Equipment following the termination of the related Lease. Amounts received in
respect of Non-Performing Leases shall only be included as Residual Realizations
to the extent such amounts exceed the related Non-Performing Lease Pay-Through
Amount.
Responsible Officer: with respect to the Trustee, any person
regularly engaged in the administration or supervision of corporate trust
accounts (including, in the case of the original Trustee hereunder, any officer
in its Corporate Trust Administration) and also, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
S&P: Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies Inc. and any successor thereto.
Sales and Servicing Agreement: the Sales and Servicing
Agreement dated as of the date hereof between the Company and Copelco, as the
same may be amended or modified from time to time in accordance with the
provisions hereof and thereof.
Securities Act: the Securities Act of 1933, as amended.
Servicer: Copelco and any successor Servicer appointed
pursuant to the terms hereof and of the Sales and Servicing Agreement and, to
the extent that it at any time is performing the functions of the Servicer, the
Trustee, subject to the terms of Section 5.01 hereof.
Servicer Advance: a payment by the Servicer under clause
(a) of the definition of Lease Delinquency Payment.
Servicer Booked Residual Values: the estimated residual
value of the equipment included in the Servicing Portfolio and recorded on the
books of the Seller or its subsidiaries.
Servicer Event of Default: as defined in Section 8.01 of
the Sales and Servicing Agreement.
Servicer Order: a written order or request delivered to the
Trustee and signed in the name of the Servicer by an Authorized Officer.
Servicer Residual Realizations: the aggregate cash flows
realized from the sale (including pursuant to a
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Lessee's purchase option) or releasing of any Equipment following the
termination of the related lease for leases in the Servicing Portfolio.
Servicing Fee: with respect to any Payment Date, the
Servicing Fee payable at a rate of 0.75% per annum to the Servicer on such
Payment Date pursuant to the Sales and Servicing Agreement.
Servicing Portfolio: the leases and the related equipment
owned by the Seller and its subsidiaries or serviced by the Servicer (including
Danka leases) to the extent such leases were originated or acquired by the
Seller in its Business Technology Division, its Healthcare Division, and its
Manufacturing Technology Division, or their predecessors or successors.
Servicing Report: as defined in Section 5.01(b)
of the Sales and Servicing Agreement.
Similar Transaction Agreement: an indenture between the
Trustee and a wholly-owned special purpose subsidiary of Copelco other than the
Company, substantially similar to this Indenture, pursuant to which notes,
substantially similar to the Notes, have been issued.
Similar Transaction Amount: for each Required Deposit Date,
the amount of all Similar Transaction Payments received by the Servicer and
deposited in the Collection Account pursuant to Section 3.02(a) and reported by
the Servicer for such Required Deposit Date pursuant to Section 5.03(a) of the
Sales and Servicing Agreement.
Similar Transaction Payments: all payments on or in respect
of leases subject to the lien of any Similar Transaction Agreement.
Stated Maturity: the date on which the entire remaining unpaid
Outstanding Principal Amount of each class of Notes is due and payable, which
date is the July 1998 Payment Date with respect to the Class A-1 Notes and the
April 2005 Payment Date for the Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class B Notes and the Class C Notes, respectively.
Substitute Lease: as defined in Section 12 of the Sales and
Servicing Agreement.
Termination Payment: a payment payable by a Lessee under a
Lease upon the early termination of such Lease (but not on account of a casualty
or a Lease default) which may be agreed upon by the Servicer, acting in the name
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of the Company, and the Lessee in accordance with the provisions of Section 3.02
of the Sales and Servicing Agreement.
Three-Month Delinquency Percentage: with respect to any
Payment Date, the percentage equivalent of fraction, (a) the numerator of which
is the sum of the Monthly Delinquency Percentage for such Payment Date and the
two immediately preceding Payment Dates and (b) the denominator of which is
three.
Three-Month Servicer Realization Percentage: with respect to
any Payment Date, the percentage equivalent of a fraction, (a) the numerator of
which is the sum of the Monthly Servicer Realization Percentage for such Payment
Date and the two immediately preceding Payment Dates and (b) the denominator of
which is three.
Transaction Payment Amount: for each Required Deposit Date,
the amount of all Lease Payments, Lease Delinquency Payments, Non-Performing
Lease Payments, Casualty Payments, Termination Payments and other payments on or
in respect of a Lease received by the Servicer and deposited in the Collection
Account pursuant to Section 3.02(a) and reported by the Servicer for such
Required Deposit Date in accordance with Section 5.03(a) of the Sales and
Servicing Agreement.
Trust Accounts: the Collection Account, the Reserve Account
and the Residual Account.
Trust Estate: all money, instruments and other property
subject to or intended to be subject to the lien of this Indenture including all
proceeds thereof.
Trustee: the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Person shall have become the
Trustee pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Person; provided, that the provisions of
Section 7.07 and Section 8.11, as applicable to any Person at any time serving
as Trustee hereunder, shall survive the termination of such Person's status as
Trustee hereunder and the succession of any other Person to such status.
Trust Indenture Act: the Trust Indenture Act of 1939 as in
effect on the date on which this Indenture is qualified under the Trust
Indenture Act, except as provided in Section 9.06 hereof.
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Underwriting Agreement: the Underwriting Agreement, among
the Company, Copelco, Lehman Brothers Inc. and First Union Capital Markets Corp
and, with respect to the Class A Notes, Morgan Stanley & Co. Incorporated.
Uniform Commercial Code: with respect to a particular
jurisdiction, the Uniform Commercial Code, as in effect from time to time in
such jurisdiction, or any successor statute thereto.
Utilized Residual Amount: on any day of determination, the sum
of (a) the total Residual Realizations applied to make payments of amounts owing
the Servicer and the Noteholders (including any such amounts withdrawn from the
Reserve Account and the Residual Account, but not including any amounts paid to
the Company under Section 3.04(d)) and (b) the amount on deposit in the Reserve
Account and the Residual Account on such date allocable to Residual
Realizations.
Vice President: with respect to the Company, any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president."
Warranty Lease: a Lease subject to repurchase by the Seller
as a result of a breach of a representation or warranty in accordance with the
provisions of Section 4 of the Sales and Servicing Agreement.
SECTION 1.02. Compliance Certificates and Opinions.
Upon any written application or request (or oral application
with prompt written or telecopied confirmation) by the Company to the Trustee to
take any action under any provision of this Indenture, other than any request
that (a) the Trustee authenticate the Notes specified in such request, (b) the
Trustee invest moneys in any of the Trust Accounts pursuant to the written
directions specified in such request, or (c) the Trustee pay moneys due and
payable to the Company hereunder to the Company's assignee specified in such
request, the Trustee shall require the Company to furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and that the request otherwise is in accordance with the terms of the Indenture,
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such requested action as to which other evidence of satisfaction of the
conditions precedent thereto is specifically required by any provision
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of this Indenture, no additional certificate or opinion need be furnished.
SECTION 1.03. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company
delivered to the Trustee may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous. Any such officer's
certificate or opinion and any Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Company as to such factual matters unless such
officer or counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous. Any Opinion of Counsel may be based on the written opinion of
other counsel, in which event such Opinion of Counsel shall be accompanied by a
copy of such other counsel's opinion and shall include a statement to the effect
that such counsel believes that such counsel and the Trustee may reasonably rely
upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Wherever in this Indenture, in connection with any application
or certificate or report to the Trustee, it is provided that the Company shall
deliver any document as a condition of the granting of such application, or as
evidence of compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at the effective
date of such certificate or report (as the case may be), of the facts and
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opinions stated in such document shall in such case be conditions precedent to
the right of the Company to have such application granted or to the sufficiency
of such certificate or report. The foregoing shall not, however, be construed to
affect the Trustee's right to rely upon the truth and accuracy of any statement
or opinion contained in any such document as provided in Section 7.01(a)(ii).
Whenever in this Indenture it is provided that the absence of
the occurrence and continuation of a Default or Event of Default or Servicer
Event of Default is a condition precedent to the taking of any action by the
Trustee at the request or direction of the Company, then, notwithstanding that
the satisfaction of such condition is a condition precedent to the Company's
right to make such request or direction, the Trustee shall be protected in
acting in accordance with such request or direction if it does not have
knowledge of the occurrence and continuation of such Default or Event of Default
or Servicer Event of Default. For all purposes of this Indenture, the Trustee
shall not be deemed to have knowledge of any Default or Event of Default nor
shall the Trustee have any duty to monitor or investigate to determine whether a
default has occurred (other than an Event of Default of the kind described in
Section 6.01(a)) or Servicer Event of Default unless a Responsible Officer of
the Trustee shall have actual knowledge thereof or shall have been notified in
writing thereof by the Company, the Servicer, or any Noteholder.
SECTION 1.04. Acts of Noteholders, etc.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 7.01) conclusive in
favor of the Trustee and the Company, if made in the manner provided in this
Section 1.04.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of a witness of
such execution or by a
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certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the holder of any Note shall bind every future
holder of the same Note and the holder of every Note issued upon the
registration of transfer thereof or in exchange therefore or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Note.
(d) By accepting the Notes issued pursuant to this Indenture,
each Noteholder irrevocably appoints the Trustee hereunder as the special
attorney-in-fact for such Noteholder vested with full power on behalf of such
Noteholder to effect and enforce the rights of such Noteholder and the revisions
pursuant hereto for the benefit of such Noteholder; provided that nothing
contained in this Section 1.04(d) shall be deemed to confer upon the Trustee any
duty or power to vote on behalf of the Noteholders with respect to any matter on
which the Noteholders have a right to vote pursuant to the terms of this
Indenture.
SECTION 1.05. Notices, etc., to Trustee, Servicer, Company and
Rating Agencies.
Any request, demand, authorization, direction, notice,
consent, waiver, Act of Noteholders, or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with, the
Trustee, the Company or the Servicer shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid or certified mail return receipt requested, or sent
by private courier or confirmed telecopy. Unless otherwise specifically provided
herein, no such request, demand, authorization, direction, notice, consent,
waiver, Act of Noteholders or other document shall be effective until received
and any provision hereof requiring the making, giving, furnishing, or filing of
the same on any date shall be interpreted as requiring the same to be sent or
delivered in such fashion that it will be received on such date. Any
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such request, demand, authorization, direction, notice, consent, waiver, Act of
Noteholders, or other document shall be sent or delivered to the following
addresses:
(a) if to the Trustee, at the Corporate Trust Office,
Attention: Corporate Trust Administration (Number for telecopy:
(716) 842-4474), or at any other address previously furnished in
writing to the Company and the Servicer by the Trustee; or
(b) if to the Company, at East Gate Center, 700 East
Gate Drive, Mount Laurel, New Jersey 08054-5400, Attention: President
(Number for telecopy: 609-273-9288), or at any other address
previously furnished in writing to the Trustee and the Servicer by
the Company;
or
(c) if to the Servicer, at East Gate Center, 700 East
Gate Drive, Mount Laurel, New Jersey 08054-5400, Attention: Michael
Ritter (Number for telecopy: 609-273-9288), or at any other address
previously furnished in writing to the Trustee and the Company by the
Servicer.
(d) if to the Rating Agencies: to Moody's Investors
Service, Inc., 99 Church Street, New York, NY 10007, Attention: ABS
Monitoring Department, to Standard & Poor's Ratings Group, 26
Broadway, New York, New York 10004, Attention: Asset Backed
Surveillance Group, to Duff & Phelps Credit Rating Co., 55 East
Monroe Street, Chicago, Illinois 60603, Attention: Structured Finance
Monitoring Group and to Fitch Investors Service, L.P., One State
Street Plaza, New York, NY 10004, Attention: Wendy Geneen. Servicing
Reports should also be sent to Fitch Information Services, Inc. 1201
East Seventh Street, Powell, WY 82435.
SECTION 1.06. Notice to Noteholders; Waiver.
(a) Where this Indenture provides for notice to Noteholders of
any event, or the mailing of any report to Noteholders, such notice or report
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid or certified mail return receipt
requested, or sent by private courier or confirmed telecopy to each Noteholder
affected by such event or to whom such report is required to be mailed, at its
address as it appears in the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice or
the mailing of such report. In any case where a notice or report to Noteholders
is mailed, neither the failure to mail such
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notice or report, nor any defect in any notice or report so mailed, to any
particular Noteholder shall affect the sufficiency of such notice or report with
respect to other Noteholders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Noteholders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
(b) In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to mail or
send notice to Noteholders, in accordance with Section 1.06(a), of any event or
any report to Noteholders when such notice or report is required to be delivered
pursuant to any provision of this Indenture, then such notification or delivery
as shall be made with the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder.
SECTION 1.07. Effect of Headings and Table of Contents.
The Article and Section headings herein and in the Table of
Contents are for convenience only and shall not affect the construction hereof.
SECTION 1.08. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
or the Trustee shall bind its respective successors and permitted assigns,
whether so expressed or not.
SECTION 1.09. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THIS INDENTURE
IS SUBJECT TO THE TRUST INDENTURE ACT OF 1939 AND SHALL BE GOVERNED THEREBY AND
CONSTRUED IN ACCORDANCE THEREWITH.
SECTION 1.10. Legal Holidays.
In any case where any Payment Date or the Stated Maturity or
any other date on which principal of or interest on any Note is proposed to be
paid shall not be a Business Day, then (notwithstanding any other provision of
this Indenture or of the Notes) such payment need not be made on such date, but
may be made on the next succeeding Business
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Day with the same force and effect as if made on such Payment Date, Stated
Maturity, or other date on which principal of or interest on any Note is
proposed to be paid, provided that no interest shall accrue for the period from
and after such Payment Date, Stated Maturity, or any other date on which
principal of or interest on any Note is proposed to be paid, as the case may be,
until such next succeeding Business Day.
SECTION 1.11. Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
SECTION 1.12. Inspection.
The Company agrees that, on reasonable prior notice, it will
permit the representatives of the Trustee or any Noteholder holding Notes, or a
beneficial interest therein, evidencing at least 25% of the Outstanding
Principal Amount of the Notes, during the Company's normal business hours, to
examine all of the books of account, records, reports and other papers of the
Company, to make copies thereof and extracts therefrom, to cause such books to
be audited by independent accountants selected by the Company and reasonably
acceptable to the Trustee or such Noteholder, as the case may be, and to discuss
its affairs, finances and accounts with its officers, employees and independent
accountants (and by this provision the Company hereby authorizes its accountants
to discuss with such representatives such affairs, finances and accounts), all
at such reasonable times and as often as may be reasonably requested for the
purpose of reviewing or evaluating the financial condition or affairs of the
Company or the performance of and compliance with the covenants and undertakings
of the Company in this Indenture, the Sales and Servicing Agreement or any of
the other documents referred to herein or therein. Any expense incident to the
exercise by the Trustee at any time or any Noteholder during the continuance of
any Default or Event of Default, of any right under this Section 1.12 shall be
borne by the Company.
SECTION 1.13. Survival of Representations and Warranties.
The representations, warranties and certifications of the
Company made in this Indenture or in any certificate or other writing delivered
by the Company pursuant hereto shall survive the authentication and delivery of
the Notes hereunder.
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ARTICLE 2.
THE NOTES
SECTION 2.01. General Provisions.
(a) The Notes shall consist of $142,197,000 principal amount
of Class A-1 Notes, $54,182,000 principal amount of Class A-2 Notes,
$211,495,000 principal amount of Class A-3 Notes, $126,667,000 principal amount
of Class A-4 Notes, $22,746,000 principal amount of Class B Notes and
$11,373,720 principal amount of Class C Notes, and the forms thereof and of the
Trustee's certificate of authentication shall be in substantially the forms set
forth in Exhibit A hereto, with such appropriate insertions, omissions,
substitutions, and other variations as are required or permitted by this
Indenture.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to $568,660,720,
except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Section 2.03, 2.04,
or 9.05. The Notes shall be issuable only in registered form and only in minimum
denominations of at least $1,000 with respect to the Class A Notes and the Class
B Notes and $250,000 with respect to the Class C Notes; provided that the
foregoing shall not restrict or prevent the transfer in accordance with Section
2.03 of any Note having a remaining Outstanding Principal Amount of other than
an integral multiple of $1,000, or the issuance of a single Class A Note, a
single Class B Note and a single Class C Note with a denomination less than
$1,000.
(b) For each Payment Date, payments of principal (the
"Principal Payments") on the Notes will be made in accordance with Sections
3.03(b) or 6.06, as applicable. Except as otherwise provided in Section 6.02, no
part of the principal of any Note shall be paid prior to the Payment Date on
which such principal is due in accordance with the preceding provisions of this
Section 2.01(b), except that the Company may redeem the Notes in their entirety,
without premium, as of any Payment Date on which the Discounted Present Value of
the Performing Leases is less than or equal to ten percent (10%) of the
aggregate Discounted Present Value of the Leases as of the Cut-Off Date (after
giving effect to all Principal Payments on such Payment Date). The Company will
give notice of any such redemption to each Noteholder and the Trustee at least
30 days before the Payment Date fixed for such prepayment by certified mail
return receipt requested, hand delivery or overnight courier. Notice of such
prepayment having been so given, the remaining unpaid principal as of the
Payment Date fixed
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for prepayment together with all interest accrued and unpaid to such Payment
Date, shall become due and payable on such Payment Date.
(c) For each Payment Date, the interest due and payable (the
"Interest Payments") with respect to the Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes, Class A-4 Notes, the Class B Notes and the Class C Notes will be the
interest that has accrued on the respective Notes since the last Payment Date
or, in the case of the first Payment Date, since the Closing Date, at the Class
A-1 Interest Rate, Class A-2 Interest Rate, Class A-3 Interest Rate, Class A-4
Interest Rate, Class B Interest Rate and Class C Interest Rate, respectively,
applied to the then Outstanding Principal Amounts of the Class A-1 Notes, Class
A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, and the Class C
Notes respectively, on the preceding Payment Date. Interest Payments will be
made in accordance with Sections 3.03(b) and 6.06, as applicable.
(d) All payments made with respect to any Note shall be made
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts and shall be
applied first to the interest then due and payable on such Notes, then to the
principal thereof, and finally to premium, if any.
(e) All Class A-1 Notes issued under this Indenture shall be
in all respects equally and ratably entitled to the benefits hereof without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions of
this Indenture. Payments of principal and interest on the Class A-1 Notes shall
be made pro rata among all Outstanding Class A-1 Notes, without preference or
priority of any kind.
(f) All Class A-2 Notes issued under this Indenture shall be
in all respects equally and ratably entitled to the benefits hereof without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions of
this Indenture. Payments of principal and interest on the Class A-2 Notes shall
be made pro rata among all Outstanding Class A-2 Notes, without preference or
priority of any kind.
(g) All Class A-3 Notes issued under this Indenture shall be
in all respects equally and ratably entitled to the benefits hereof without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the
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terms and provisions of this Indenture. Payments of principal and interest on
the Class A-3 Notes shall be made pro rata among all Outstanding Class A-3
Notes, without preference or priority of any kind.
(h) All Class A-4 Notes issued under this Indenture shall be
in all respects equally and ratably entitled to the benefits hereof without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions of
this Indenture. Payments of principal and interest on the Class A-4 Notes shall
be made pro rata among all Outstanding Class A-4 Notes, without preference or
priority of any kind.
(i) The Class B Notes shall be subordinated to the Class A
Notes to the extent set forth herein. All Class B Notes issued under this
Indenture shall be in all respects equally and ratably entitled to the benefits
hereof without preference, priority or distinction on account of the actual time
or times of authentication and delivery, all in accordance with the terms and
provisions of this Indenture. Payments of principal and interest on the Class B
Notes shall be made pro rata among all Outstanding Class B Notes, without
preference or priority of any kind.
(j) The Class C Notes shall be subordinated to the Class A
Notes and the Class B Notes to the extent set forth herein. All Class C Notes
issued under this Indenture shall be in all respects equally and ratably
entitled to the benefits hereof without preference, priority or distinction on
account of the actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Indenture. Payments of
principal and interest on the Class C Notes shall be made pro rata among all
Outstanding Class C Notes, without preference or priority of any kind.
SECTION 2.02. Execution, Authentication, Delivery, and Dating.
(a) The Notes shall be manually executed on behalf of the
Company by its President or one of its Vice Presidents, under its corporate seal
reproduced thereon.
(b) Any Note bearing the signature of an individual who was at
the time of execution thereof a proper officer of the Company shall bind the
Company, notwithstanding that such individual ceases to hold such office prior
to the authentication and delivery of such Note or did not hold such office at
the date of such Note.
(c) No Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any
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purpose unless there appears on such Note a certificate of authentication
substantially in the form provided for herein, executed by the Trustee by manual
signature, and such certificate upon any Note shall be conclusive evidence, and
the only evidence, that such Note has been duly authenticated and delivered
hereunder. Each Note shall be dated the date of its authentication.
(d) The Notes may from time to time be executed by the Company
and delivered to the Trustee for authentication together with a Company Request
to the Trustee directing the authentication and delivery of such Notes and
thereupon the same shall be authenticated and delivered by the Trustee in
accordance with such Company Request.
SECTION 2.03. Transfer and Exchange.
(a) The Company shall cause to be kept at the Corporate Trust
Office a register (the "Note Register") in which, subject to such reasonable
regulations as the Trustee may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers of Notes as
herein provided.
No transfer of any Class C Note may be made unless that
transfer is made pursuant to an effective registration statement under the
Securities Act and an effective registration or a qualification under applicable
state securities laws, or is made in a transaction that does not require such
registration or qualification because the transfer satisfies one of the
following: (i) such transfer is in compliance with Rule 144A under the
Securities Act, to a person who the transferor reasonably believes is a
Qualified Institutional Buyer (as defined in Rule 144A) that is purchasing for
its own account or for the account of a Qualified Institutional Buyer and to
whom notice is given that such transfer is being made in reliance upon Rule 144A
under the Securities Act as certified by such transferee in a letter in the form
of Exhibit B hereto; (ii) after the appropriate holding period, such transfer is
pursuant to an exemption from registration under the Securities Act provided by
Rule 144 under the Securities Act; (iii) such transfer is to a transferee who is
an Accredited Investor (as defined in Rule 501 of the Securities Act) in a
transaction exempt from the registration requirements of the Securities Act, in
each case in accordance with any applicable securities laws of any State of the
United States or (iv) such transfer is otherwise exempt from the registration
requirements of the Securities Act. The Trustee will require, in order to assure
compliance with
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such laws, that the Class C Noteholder's prospective transferee referred to in
the preceding clauses (iii) or (iv) deliver an investment letter certifying to
the Company and the Trustee as to the facts surrounding such transfer in the
form of Exhibit B hereto. Except in the case of a transfer of Class C Notes to a
transferee referred to in the preceding clause (i) or, in general, a transfer
that is to be made after three years from the Issuance Date, the Trustee shall
require an opinion of counsel satisfactory to it to the effect that such
transfer may be made pursuant to an exemption from the Securities Act without
such registration (which opinion of counsel shall not be an expense of the
Trustee or the Servicer or the Company). None of the Company, the Servicer or
the Trustee is obligated to register or qualify the Class C Notes under the
Securities Act or any other securities law or to take any action not otherwise
required under this Indenture to permit the transfer of any Class C Note without
registration.
(b) Subject to Section 2.03(a), upon surrender for
registration of transfer of any Note at the office of the Company designated
pursuant to Section 8.02 for such purpose, the Company shall execute and the
Trustee upon request shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denominations and of a like aggregate original principal amount. The Trustee
shall make a notation on any such new Note of the amount of principal, if any,
that has been paid on such Note.
(c) All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
(d) Every Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed, by the holder thereof
or his attorney duly authorized in writing.
(e) No service charge shall be made for any registration of
transfer or exchange of Notes, but the Company or the Trustee may require
payment by the transferor of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Notes, other than exchanges pursuant to Section 9.05 not
involving any transfer.
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SECTION 2.04. Mutilated, Destroyed, Lost and Stolen Notes.
(a) If any mutilated Note is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefore a replacement Note of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
(b) If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of any Note
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of actual
notice to the Company or the Trustee that such Note has been acquired by a bona
fide purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
(c) In case the final installment of principal on any such
mutilated, destroyed, lost or stolen Note has become or will at the next Payment
Date become due and payable, the Company in its discretion may, instead of
issuing a replacement Note, pay such Note.
(d) Upon the issuance of any replacement Note under this
Section, the Company or the Trustee may require the payment by the Noteholder of
a sum sufficient to cover any tax or other governmental charge that may be
imposed as a result of the issuance of such replacement Note.
(e) Every replacement Note issued pursuant to this Section
2.04 in lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.
(f) The provisions of this Section 2.04 are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.05. Book-Entry Registration of Class A Notes and
Class B Notes.
Each of the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes, Class A-4 Notes and the Class B Notes, upon
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original issuance, shall be issued in the form of one or more typewritten Class
A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and one or more
typewritten Class B Notes, respectively, (the "Book-Entry Class A-1 Notes,"
"Book-Entry Class A-2 Notes," "Book-Entry Class A-3 Notes," Book-Entry Class A-4
Notes" and "Book-Entry Class B Notes", respectively) to be delivered to The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the
Company. Each of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes and the Class B Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of The Depository Trust Company,
as the initial Clearing Agency, and no Class A-1 Note Owner, Class A-2 Note
Owner, Class A-3 Note Owner, Class A-4 Note Owner or Class B Note Owner will
receive a definitive note representing such Note Owner's interest in the Class
A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes or Class B Notes,
as the case may be, except as provided in Section 2.07. Unless and until
Definitive Class A-1 Notes, Definitive Class A-2 Notes, Definitive Class A-3
Notes, Definitive Class A-4 Notes and/or Definitive Class B Notes have been
issued to the applicable Note Owners pursuant to Section 2.07:
(a) the provisions of this Section 2.05 shall be in full force
and effect with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes, Class A-4 Notes or the Class B Notes, as the case may be;
(b) the Company, the Servicer and the Trustee may deal with
the Clearing Agency and the Clearing Agency Participants for all purposes with
respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4
Notes or Class B Notes, as the case may be, (including the making of
distributions on the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes and the Class B Notes, as the case may be) as the authorized
representatives of the respective Note Owners;
(c) to the extent that the provisions of this Section 2.05
conflict with any other provisions of this Indenture, the provisions of this
Section 2.05 shall control; and
(d) the rights of the respective Note Owners shall be
exercised only through the Clearing Agency and the Clearing Agency Participants
and shall be limited to those established by law and agreements between such
respective Note Owners and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to the Depository Agreement, unless and until Definitive
Class A-1 Notes, Definitive Class A-2 Notes, Definitive Class A-3 Notes,
Definitive Class A-4 Notes or Definitive Class B Notes, as the case may
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be, are issued pursuant to Section 2.07, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive and
transmit distributions of principal and interest on the related Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class B Notes, as the case
may be, to such Clearing Agency Participants.
For purposes of any provision of this Indenture requiring or
permitting actions with the consent of, or at the direction of, holders of Class
A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes or Class B Notes,
as the case may be, evidencing a specified percentage of the Outstanding
Principal Amount of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes or the Class B Notes, respectively, such direction or consent may be
given by Note Owners (acting through the Clearing Agency and the Clearing Agency
Participants) owning Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes or Class B Notes evidencing the requisite percentage of the
Outstanding Principal Amount of such Notes, respectively.
SECTION 2.06. Notice to Clearing Agency.
Whenever notice or other communication to the Class A-1
Noteholders, Class A-2 Noteholders, Class A-3 Noteholders, Class A-4 Noteholders
or Class B Noteholders is required under this Agreement, unless and until
Definitive Class A-1 Notes, Definitive Class A-2 Notes, Definitive Class A-3
Notes, Definitive Class A-4 Notes or Definitive Class B Notes shall have been
issued to the related Note Owners pursuant to Section 2.07, the Trustee shall
give all such notices and communications specified herein to be given to such
Noteholders to the applicable Clearing Agency which shall give such notices and
communications to the related Class A-1 Note Owners, Class A-2 Note Owners,
Class A-3 Note Owners, Class A-4 Note Owners and Class B Note Owners in
accordance with its applicable rules, regulations and procedures.
SECTION 2.07. Definitive Class A Notes and Definitive Class B
Notes. If (a) (i) the Company advises the Trustee in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
under the Depository Agreement with respect to the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, Class A-4 Notes and/or the Class B Notes and (ii) the
Trustee or the Company is unable to locate a qualified successor, (b) the
Company, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system with respect to the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, Class A-4 Notes and/or the Class B Notes through the
Clearing Agency or (c) after the occurrence of a Servicer Event of Default,
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Class A-1 Note Owners, Class A-2 Note Owners, Class A-3 Note Owners, Class A-4
Note Owners and Class B Note Owners, with respect to the Class A-1 Notes, Class
A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class B Notes evidencing not
less than 50% of the aggregate unpaid Outstanding Principal Amount of the Class
A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class B Notes,
respectively, advise the Trustee and the Clearing Agency through the Clearing
Agency Participants in writing that the continuation of a book-entry system with
respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4
Notes or the Class B Notes, respectively, through the Clearing Agency is no
longer in the best interests of the Class A-1 Note Owners, Class A-2 Note
Owners, Class A-3 Note Owners, Class A-4 Note Owners or Class B Note Owners, as
the case may be, the Trustee shall notify all Class A-1 Note Owners, Class A-2
Note Owners, Class A-3 Note Owners, Class A-4 Note Owners and Class B Note
Owners with respect to the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes and Class B Notes, respectively, through the Clearing Agency, of
the occurrence of any such event and of the availability of Definitive Class A-1
Notes, Definitive Class A-2 Notes, Definitive Class A-3 Notes, Definitive Class
A-4 Notes and Definitive Class B Notes to Class A-1 Note Owners, Class A-2 Note
Owners, Class A-3 Note Owners, Class A-4 Note Owners and Class B Note Owners,
respectively, requesting the same. Upon surrender to the Trustee of the Class
A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes or Class B Notes,
as the case may be, by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Company shall
execute and the Trustee shall authenticate and deliver the Definitive Class A-1
Notes, Definitive Class A-2 Notes, Definitive Class A-3 Notes, Definitive Class
A-4 Notes or Definitive Class B Notes, as the case may be. Neither the Company
nor the Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Class A-1 Notes, Definitive Class
A-2 Notes, Definitive Class A-3 Notes, Definitive Class A-4 Notes or Definitive
Class B Notes, as the case may be, all references herein to obligations imposed
upon or to be performed by the Clearing Agency shall be deemed to be imposed
upon and performed by the Trustee, to the extent applicable with respect to such
Definitive Class A-1 Notes, Definitive Class A-2 Notes, Definitive Class A-3
Notes, Definitive Class A-4 Notes or Definitive Class B Notes, respectively, and
the Trustee shall recognize the holders of the Definitive Class A-1 Notes as
Class A-1 Noteholders, holders of the Definitive Class A-2 Notes as Class A-2
Noteholders, holders of the Definitive Class A-3 Notes as Class A-3 Noteholder,
holders of the Definitive Class A-4
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Notes as Class A-4 Noteholders and/or the holders of the Definitive Class B
Notes as Class B Noteholders hereunder.
SECTION 2.08. Payment of Interest and Principal; Rights
Preserved.
(a) Any installment of interest or principal, payable on any
Note that is punctually paid or duly provided for by the Company on the
applicable Payment Date shall be paid to the Person in whose name such Note was
registered at the close of business on the Record Date for such Payment Date by
wire transfer of federal funds to the account and number specified in the Note
Register on such Record Date for such Person or, if no such account or number is
so specified, then by check mailed to such Person's address as it appears in the
Note Register on such Record Date.
(b) All reductions in the principal amount of a Note effected
by payments of installments of principal made on any Payment Date shall be
binding upon all holders of such Note and of any Note issued upon the
registration of transfer thereof or in exchange therefore or in lieu thereof,
whether or not such payment is noted on such Note. All payments on the Notes
shall be paid without any requirement of presentment but each holder of any Note
shall be deemed to agree, by its acceptance of the same, to surrender such Note
at the Corporate Trust Office against payment of the final installment of
principal of such Note (or in the case of the Class C Notes promptly
thereafter).
SECTION 2.09. Persons Deemed Owners.
Prior to due presentment of a Note for registration of
transfer, the Company, the Trustee, and any agent of the Company or the Trustee
may treat the registered Noteholder as the owner of such Note for the purpose of
receiving payment of principal of and interest on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and neither the
Company, the Trustee, nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 2.10. Cancellation.
All Notes surrendered for registration of transfer or exchange
or following final payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The
Company may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Trustee. No Notes shall be authenticated in lieu of or in
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exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Notes held by the Trustee
may be disposed of in the normal course of its business or as directed by a
Company Order.
SECTION 2.11. Noteholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Noteholders and shall otherwise comply with Section 3.12(a) of the
Trust Indenture Act. In the event the Trustee no longer serves as the Note
Registrar, the Company (or any other obligor upon the Notes) shall furnish to
the Trustee at least five Business Days before each interest payment date (and
in all events in intervals of not more than 6 months) and at such other times as
the Trustee may request in writing a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of Noteholders,
and the Company shall otherwise comply with Section 3.12(a) of the Trust
Indenture Act.
SECTION 2.12. Treasury Securities.
In determining whether the Noteholders of the required
Outstanding Principal Amount of the Notes have concurred in any direction,
waiver or consent, Notes owned by the Company, any other obligor upon the Notes
or an Affiliate of the Company shall be considered as though not outstanding,
except that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Notes which
a Responsible Officer knows are so owned shall be so disregarded.
ARTICLE 3.
ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION
AND APPLICATION OF MONEYS; REPORTS
SECTION 3.01. Trust Accounts; Investments by Trustee.
(a) On or before the Issuance Date, the Trustee shall
establish in the name of the Trustee for the benefit of the Noteholders and the
Company to the extent of their interests therein as provided in this Indenture
and in the Sales and Servicing Agreement, the following accounts, which accounts
shall be Eligible Accounts maintained at the Corporate Trust Office:
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(i) Collection Account;
(ii) Reserve Account; and
(iii) Residual Account
Subject to the further provisions of this Section 3.01(a), the Trustee shall,
upon receipt or upon transfer from another account, as the case may be, deposit
into such accounts all amounts received by it which are required to be deposited
therein in accordance with the provisions of this Indenture. All such amounts
and all investments made with such amounts, including all income and other gain
from such investments, shall be held by the Trustee in such accounts as part of
the Trust Estate as herein provided, subject to withdrawal by the Trustee in
accordance with, and for the purposes specified in the provisions of, this
Indenture.
(b) The Trustee shall hold in trust but shall not be required
to deposit in any account specified in Section 3.01(a) any payment received by
it until such time as the Trustee shall have identified to its reasonable
satisfaction the nature of such payment and, on the basis thereof, the proper
account or accounts into which such payment is to be deposited. In determining
into which of the accounts, if any, referred to above any amount received by the
Trustee is to be deposited, the Trustee may conclusively rely (in the absence of
bad faith on the part of the Trustee) on the advice of the Servicer. Unless the
Trustee is advised differently in writing by the Lessee making the payment or by
the Servicer in writing (with the Servicer's instruction controlling), the
Trustee shall assume that any amount remitted to it by such Lessee is to be
deposited into the Collection Account pursuant to Section 3.03. The Trustee may
establish from time to time such deadline or deadlines as it shall determine are
reasonable or necessary in the administration of the Trust Estate after which
all amounts received or collected by the Trustee on any day shall not be deemed
to have been received or collected until the next succeeding Business Day.
(c) Neither the Servicer, Trustee nor the institution then
acting as Trustee shall have any right of set-off with respect to the Collection
Account, the Reserve Account or the Residual Account, or any investment therein.
(d) So long as no Event of Default shall have occurred and be
continuing, all or a portion of the amounts in the Collection Account, the
Reserve Account and the Residual Account shall be invested and reinvested by the
Trustee pursuant to a Company Order or Servicer Order in one or more Eligible
Investments. Subject to the restrictions on the maturity of investments set
forth in Section 3.01(f),
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each such Company Order or Servicer Order may authorize the Trustee to make the
specific Eligible Investments set forth therein, to make Eligible Investments
from time to time consistent with the general instructions set forth therein, or
to make specific Eligible Investments pursuant to instructions received in
writing or by telegraph or facsimile transmission from the employees or agents
of the Company or the Servicer, as the case may be, identified therein, in each
case in such amounts as such Company Order or Servicer Order shall specify. The
Company agrees to report as income for financial reporting and tax purposes (to
the extent reportable) all investment earnings on amounts in the Collection
Account, the Reserve Account or the Residual Account. Each of the Company and
the Servicer agrees to give appropriate and timely investment directions to the
Trustee so that there will not be more than two Business Days in any one
calendar year at the end of which funds in the Collection Account, the Reserve
Account or the Residual Account are not invested, directly or indirectly,
pursuant to a Company Order or a Servicer Order in Eligible Investments that
mature on or after the opening of business on the next Business Day.
(e) In the event that either (i) the Company or the Servicer,
as the case may be, shall have failed to give investment directions to the
Trustee by 9:30 A.M., New York City time on any Business Day on which there may
be uninvested cash or (ii) an Event of Default shall be continuing, the Trustee
shall promptly invest and reinvest the funds then in the Collection Account, the
Reserve Account or the Residual Account, as the case may be, to the fullest
extent practicable in one or more Eligible Investments. All investments made by
the Trustee shall mature no later than the maturity date therefore permitted by
Section 3.01(f) unless the Trustee shall have received written confirmation from
each Rating Agency, that the liquidation of such Eligible Investments prior to
their respective maturity dates, will not result in the reduction or withdrawal
of such Rating Agency's then-current rating of the Notes.
(f) No investment of any amount held in the Collection
Account, the Reserve Account or the Residual Account shall mature later than the
Business Day immediately preceding the Payment Date which is scheduled to occur
immediately following the date of investment. All income or other gains (net of
losses) from the investment of moneys deposited in the Collection Account, the
Reserve Account and the Residual Account shall be deposited by the Trustee in
such account immediately upon receipt.
(g) Any investment of any funds in the Collection
Account, the Reserve Account and the Residual Account and
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any sale of any investment held in such accounts, shall be made under the
following terms and conditions:
(i) each such investment shall be made in the name of the
Trustee or in the name of a nominee of the Trustee, in each case in
such manner as shall be necessary to maintain the identity of such
investments as assets of the Trust Estate;
(ii) any certificate or other instrument evidencing such
investment shall be delivered directly to the Trustee or its agent and
the Trustee shall have sole possession of such instrument, and all
income on such investment; and
(iii) the proceeds of any sale of an investment shall be
remitted by the purchaser thereof directly to the Trustee for deposit
in the account in which such investment was held.
(h) If any amounts are needed for disbursement from the
Collection Account, the Reserve Account or the Residual Account and sufficient
uninvested funds are not collected and available therein to make such
disbursement, in the absence of a Company Order or Servicer Order for the
liquidation of investments held therein in an amount sufficient to provide the
required funds, the Trustee shall select and cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such accounts.
(i) The Trustee shall not in any way be held liable by reason
of any insufficiency in the Collection Account, the Reserve Account or the
Residual Account resulting from losses on investments made in accordance with
the provisions of this Section 3.01 (but the institution serving as Trustee
shall at all times remain liable for its own debt obligations, if any,
constituting part of such investments). The Trustee shall not be liable for any
investment made by it in accordance with this Section 3.01 on the grounds that
it could have made a more favorable investment or a more favorable selection for
sale of an investment.
SECTION 3.02. Collection of Moneys.
(a) On or before the Issuance Date, the Servicer shall
designate an address for the receipt directly from Lessees of all Lease
Payments, Casualty Payments and Termination Payments on or in respect of each
Lease (which payments may be aggregated by the Lessee paying the same with
Similar Transaction Payments and Other Lease Payments and which designated
address may be the same designated address to which such Similar Transaction
Payments and Other
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Lease Payments may be sent). The Servicer shall, within two Business Days of
receipt of any payment at such designated address, deposit such payment in the
Collection Account. All Lease Payments, Casualty Payments, Termination Payments
and other payments relating to a Lease received at such designated address and
so deposited in the Collection Account shall constitute part of the Trust
Estate. Any Similar Transaction Payments and Other Lease Payments from time to
time received at such designated address or otherwise received by the Servicer
or deposited in the Collection Account shall not constitute part of the Trust
Estate.
(b) The Trustee shall from time to time, in accordance with
instructions of the Servicer and the provisions of the Similar Transaction
Agreements, withdraw from the Collection Account any amounts in the Collection
Account which the Servicer advises the Trustee are (i) Similar Transaction
Payments and apply such payments in accordance with the Similar Transaction
Agreements and (ii) Other Lease Payments. Prior to such payment, the Trustee
shall have rights to and an interest in such amounts to the extent (but only to
the extent) it is determined that such amounts actually constitute Transaction
Payment Amounts.
(c) If at any time the Company shall receive any payment on or
in respect of any Lease, it shall hold such Payment in trust for the benefit of
the Trustee and the holders of the Notes, shall segregate such payment from the
other property of the Company, and shall, promptly (but in no event later than
the next following Business Day) upon receipt, deliver such payment in the form
received to the Trustee.
SECTION 3.03. Collection Account; Payments.
(a) The Servicer shall within two Business Days of receipt (a
"Required Deposit Date") deposit the following funds, as received, into the
Collection Account:
(i) Lease Payments (net of any Excess Copy
Charges and Fee Per Scan Charges);
(ii) Residual Realizations up to the Residual
Amount Cap;
(iii) recoveries from Non-Performing Leases to the extent
Copelco has not substituted Substitute Leases for such Non-Performing
Leases (except to the extent required to reimburse unreimbursed
Servicer Advances);
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(iv) late charges on delinquent Lease payments
not advanced by the Servicer;
(v) proceeds from repurchases by Copelco of Leases as a
result of breaches of representations and warranties by Copelco to the
extent Copelco has not substituted Substitute Leases for such Leases;
(vi) proceeds from investment of funds in the
Collection Account, the Reserve Account and the
Residual Account;
(vii) Casualty Payments;
(viii) Servicer Advances;
(ix) Termination Payments to the extent the
Company does not reinvest such Termination Payments in
Additional Leases; and
(x) payments from the Seller to effect a
redemption pursuant to Section 2.01(b).
(b) Unless the Notes have been declared due and payable
pursuant to Section 6.02 and moneys collected by the Trustee are being applied
in accordance with Section 6.06, Available Funds on deposit in the Collection
Account and the amounts, if any, deposited into the Collection Account from the
Reserve Account and the Residual Account in accordance with the provisions of
Section 3.04 shall be withdrawn by the Servicer on or before each Payment Date
from the Collection Account, in the amounts required, for application in the
following order of priority, to make the following required payments:
(i) to pay the Servicing Fee;
(ii) to reimburse unreimbursed Servicer Advances
in respect of a prior Payment Date;
(iii) concurrently: (A) to make Interest Payments on the
Class A-1 Notes; (B) to make Interest Payments on the Class A-2 Notes;
(C) to make Interest payments on the Class A-3 Notes; (D) to make
Interest payments on the Class A-4 Notes;
(iv) to make Interest Payments on the Class B Notes;
(v) to make Interest Payments on the Class C Notes;
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(vi) to make the Class A Principal Payment (i) to the Class
A-1 Noteholders only, until the Outstanding Principal Amount on the
Class A-1 Notes is reduced to zero, then (ii) to the Class A-2
Noteholders only, until the Outstanding Principal Amount on the Class
A-2 Notes is reduced to zero, then (iii) to the Class A-3 Noteholders
only, until the Outstanding Principal Amount on the Class A-3 Notes is
reduced to zero and finally, (iv) to the Class A-4 Noteholders until
the Outstanding Principal Amount on the Class A-4 Notes is reduced to
zero;
(vii) to pay the Class B Principal Payment to the
Class B Noteholders;
(viii) to pay the Class C Principal Payment to the
Class C Noteholders;
(ix) to pay the Additional Principal, if any, as an
additional reduction of principal, first to the Class A-2 Noteholders
until the Outstanding Class A-2 Principal Amount has been reduced to
zero, second to the Class A-3 Noteholders until the Outstanding Class
A-3 Principal Amount has been reduced to zero, third to the Class A-4
Noteholders until the Outstanding Class A-4 Principal Amount has been
reduced to zero, thereafter to the Class B Noteholders as an additional
reduction of principal until the Outstanding Class B Principal Amount
has been reduced to zero and, thereafter to the Class C Noteholders
until the Outstanding Class C Principal Amount has been reduced to
zero;
(x) to make a deposit to the Reserve Account in an amount
equal to the excess of the Required Reserve Amount over the Available
Reserve Amount;
(xi) during such time as a Residual Event has occurred and
is continuing, to make a deposit to the Residual Account in an amount
equal to the balance of the remaining Residual Realizations on deposit
in the Collection Account and included in Available Funds up to the
Residual Amount Cap after giving effect to the allocations in clauses
(i) through (x) above on such Payment Date; and
(xii) to the Company, the balance, if any.
Notwithstanding the foregoing, the Trustee shall retain in the
Collection Account an amount equal to all Lease Payments received that were due
since the prior Due Period, and all Casualty Payments and Termination Payments
received by the Trustee after the Determination Date for
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such Payment Date and shall not distribute any such amounts on such Payment
Date. If at any time any amount or portion thereof previously distributed
pursuant to this Section 3.03(b) shall have been recovered, or shall be subject
to recovery, in any proceeding with respect to the Company or otherwise, then
for purposes of determining future distributions pursuant to this Section
3.03(b) such amount or portion thereof shall be deemed to have not been
previously so distributed.
(c) The total amount of Residual Realizations which are
required to be deposited into the Collection Account on any day, is an amount up
to the Available Residual Amount on such date.
SECTION 3.04. The Reserve Account and the Residual Account.
(a) On each Payment Date, the Trustee shall transfer (i) to
the Reserve Account from the Collection Account such amounts as shall be
required by Section 3.03(b)(x) and (ii) to the Residual Account from the
Collection Account such amounts as shall be required by Section 3.03(b)(xi).
(b) If by 12:00 noon, New York City time, on the third
Business Day preceding any Payment Date, the amount of collected funds on
deposit in the Collection Account available for distribution under Section
3.03(b) is insufficient to permit on such Payment Date all distributions
required by Section 3.03(b)(i) through 3.03(b)(ix) (such payments, the "Required
Payments" and such shortfall, an "Available Funds Shortfall"), then, to the
extent of the Available Reserve Amount on deposit in the Reserve Account, the
Trustee shall transfer, not later than the end of such Business Day, from the
Reserve Account to the Collection Account such amount as shall be necessary to
make on such Payment Date all Required Payments. In addition, in the event that
the Available Funds Shortfall is greater than the Available Reserve Amount,
then, the Trustee shall transfer, not later than the end of such Business Day,
from the Residual Account to the Collection Account, an amount equal to the
lesser of (i) the remaining Available Funds Shortfall and (ii) the amount, if
any, on deposit in the Residual Account and available therefore.
(c) In the event that after giving effect to all the
disbursements required to be made on any Payment Date, the Available Reserve
Amount exceeds the Required Reserve Amount, the Trustee shall transfer, not
later than the end of business on such Payment Date, an amount equal to such
excess to the Company.
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(d) In the event that there are funds on deposit in the
Residual Account, the Trustee shall transfer, not later than the close of
Business on such Payment Date after making required withdrawals, if any on such
Payment Date pursuant to Section 3.04(b), an amount equal to the amount on
deposit in the Residual Account to the Reserve Account to the extent that the
amount on deposit in the Reserve Account is less than the Required Reserve
Amount and thereafter, to the Company. Funds on deposit in the Residual Account
shall only be available for allocation pursuant to Section 3.04(b) during such
time as a Residual Event has occurred and is continuing.
(e) Upon termination of this Indenture, any balance remaining
in the Reserve Account and the Residual Account, after all obligations to the
Noteholders hereunder have been fully satisfied, shall be paid to reimburse the
Trustee for any amounts owing to it arising from the performance of its
obligations under this Indenture and, then, to the Company.
SECTION 3.05. Reports by Trustee; Notices of Certain Payments.
(a) The Trustee shall within two Business Days after the
request of the Company, the Servicer or any Noteholder, deliver to the
requesting person a written report setting forth the amounts on deposit in the
Collection Account, the Reserve Account and the Residual Account and identifying
the investments included therein.
(b) Within five Business Days following each Payment Date or
as promptly as possible thereafter but in no event later than two Business Days
following the receipt of the Monthly Status Report from the Servicer pursuant to
Section 5.01 of the Sales and Servicing Agreement, the Trustee shall mail to the
Company, Copelco, each Rating Agency and the Servicer and make available to each
Noteholder the following information:
(i) the principal amount of all Outstanding Class A-1
Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B
Notes, and Class C Notes, respectively, and of the Outstanding Class
A-1 Notes, Class A-2, Class A-3 Notes, Class A-4 Notes, Class B Notes
and Class C Notes, respectively, held by each Noteholder on the Record
Date with respect to such Payment Date;
(ii) the amount of Interest Payments and payments in
reduction of principal paid on such Payment Date with respect to all
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes,
Class B Notes and
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Class C Notes, respectively, and with respect to the Notes held by
each Noteholder;
(iii) the amount of the Servicing Fee and unreimbursed
Servicer Advances paid on such Payment Date pursuant to Section
3.03(b)(i) and Section 3.03(b)(ii);
(iv) the Available Residual Amount and the Utilized
Residual Amounts as of the date of the most recent Monthly Status
Report delivered pursuant to Section 5.01 of the Sales and Servicing
Agreement;
(v) the amounts, if any, paid to the Servicer or
Copelco pursuant to the last paragraph of Section
3.03(b); and
(vi) the amount on deposit in the Collection Account, the
Reserve Account and the Residual Account, in each case after giving
effect to all of the withdrawals and applications or transfers required
on or before such Payment Date pursuant to Sections 3.02, 3.03 and
3.04.
With each report of the Trustee furnished pursuant to this
Section 3.05(b) following any Payment Date, the Trustee shall enclose a copy of
the Servicing Report and the report required to be furnished to the Trustee by
the Servicer following such Payment Date pursuant to Section 5.01 of the Sales
and Servicing Agreement or, if such reports have not been received, a statement
to such effect.
SECTION 3.06. Trustee May Rely on Certain Information from
Copelco and Servicer.
Pursuant to Sections 3.01, 4.05 and 5.01 through 5.03 of the
Sales and Servicing Agreement and Section 3.02 hereof, the Servicer is required
to furnish to the Trustee from time to time certain information and make various
calculations which are relevant to the performance of the Trustee's duties in
this Article Three and in Article Four of this Indenture. The Trustee shall be
entitled to rely in good faith on such information or calculations in the
performance of its duties hereunder (i) unless and until a Responsible Officer
of the Trustee has actual knowledge, or is advised by any Noteholder (either in
writing or orally with prompt written or telecopied confirmation), that such
information or calculations is or are incorrect, or (ii) unless there is a
manifest error in any such information.
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ARTICLE 4.
RELEASE OF LEASES AND EQUIPMENT
SECTION 4.01. Release of Equipment.
Subject to the satisfaction of the provisions of Section 4.02,
the Trustee shall release Equipment from the Lien of the Indenture upon the
occurrence of any of the following events: (a) the sale of such Equipment
pursuant to Section 3.03(b) of the Sales and Servicing Agreement (unless
retained by the Company for re-leasing), (b) the expiration of the related Lease
upon the payment of the final Lease Payment due and payable under such Lease and
the deposit of any Residual Realization in respect thereof subject to the
Residual Amount Cap, (c) the repurchase of the related Lease in accordance with
the provisions of Section 4 of the Sales and Servicing Agreement, (d) the
addition of an Additional Lease to the extent new Equipment is provided in
replacement of such Equipment in accordance with the provisions of Section 9 of
the Sales and Servicing Agreement and (e) upon the substitution of a Substitute
Lease in accordance with the provisions of Section 9 of the Sales and Servicing
Agreement. The proceeds of any such sale, repurchase or releasing shall be
deposited in the Collection Account for disposition under this Indenture.
SECTION 4.02. Release of Leases Upon Final Lease Payment.
In the event that the Trustee shall have received notice
(either in writing or orally with prompt written or telecopied confirmation)
from the Servicer that the Trustee has received from amounts paid by the Lessee,
from the Lease Repurchase Amount or from the proceeds of the Equipment subject
to any Lease (i) the final Lease Payment due and payable under such Lease and
the deposit of any Residual Realization in respect thereof, (ii) a Termination
Payment in respect of such Lease, and the deposit of any Residual Realization in
respect thereof (iii) a Casualty Payment under such Lease (and, following such
final Lease Payment, Casualty Payment or Termination Payment, no further
payments on or in respect of such Lease are or will be due and payable), or (iv)
the full amount of any Non-Performing Lease Pay-Through Amount with respect to
such Lease, such Lease shall be released from the lien of this Indenture.
SECTION 4.03. Execution of Documents.
The Trustee shall promptly execute and deliver such documents,
including without limitation partial releases and termination statements (which
shall be furnished to the Trustee by the Company), and take such
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other actions as the Company, by Company Request, may reasonably request
(including the return of any Lease which has been released) to fully effectuate
the release from this Indenture of any Lease and interests in the related
Equipment required to be so released pursuant to Sections 4.01 or 4.02.
ARTICLE 5.
SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER
SECTION 5.01. Servicer Events of Default.
If a Servicer Event of Default shall have occurred and be
continuing, the Trustee shall, upon the written request of the holders of
66-2/3% of the then Outstanding Principal Amount of the Notes, give notice in
writing to the Servicer of the termination of all of the rights and obligations
of the Servicer under the Sales and Servicing Agreement (but none of Copelco's
obligations pursuant to Section 4 of the Sales and Servicing Agreement, which
shall survive such termination). On and after the giving of such written notice,
all rights and obligations of the Servicer under the Sales and Servicing
Agreement, including, without limitation, the Servicer's right thereunder to
receive the Servicing Fee, but none of the Servicer obligations pursuant to
Section 4 thereof, shall pass to, be vested in, and be assumed by the Trustee,
and the Trustee shall be authorized to, and shall, execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such termination and of such
passing, vesting, and assumption; provided that in performing the duties of the
Servicer under the Sales and Servicing Agreement the Trustee shall at all times
be deemed to be acting as the Trustee hereunder and shall be entitled to the
full benefit of all the protections, benefits, immunities and indemnities
provided in this Indenture for or with respect to the Trustee, including without
limitation those set forth in Article Seven hereof.
SECTION 5.02. Substitute Servicer.
Notwithstanding the provisions of Section 5.01, the Trustee
may, if it shall be unwilling to continue to act as the successor to the
Servicer in accordance with Section 5.01, or shall, if it is unable to continue
to so act or is so instructed in writing by the holders of 66-2/3% of the then
Outstanding Principal Amount of the Notes, appoint a successor to the Servicer
in accordance with the provisions of Section 8.03 of the Sales and Servicing
Agreement.
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ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES
SECTION 6.01. Events of Default.
"Event of Default," wherever used herein, means any one of the
following (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in making of Principal Payments or
Interest Payments when such become due and payable;
(b) default in the performance, or breach, of any
covenant set forth in Section 8.07(b) and Section 8.08;
(c) default in the performance, or breach, of any covenant of
the Company in this Indenture (other than a covenant dealing with a
default in the performance of which or the breach of which is
specifically dealt with elsewhere in this Section 6.01) or the Sales
and Servicing Agreement, and continuance of such default or breach for
a period of 30 days after the earliest of (i) any officer of the
Company first acquiring knowledge thereof, (ii) the Trustee's giving
written notice thereof to the Company or (iii) the holders of a
majority of the then Outstanding Principal Amount of the Notes giving
written notice thereof to the Company and the Trustee;
(d) if any representation or warranty of the Company or
Copelco made in this Indenture or the Sales and Servicing Agreement or
any other writing provided to the holders of the Notes shall prove to
be incorrect in any material respect as of the time when the same shall
have been made; provided, however, that the breach of any
representation or warranty made by Copelco or the Company in the Sales
and Servicing Agreement shall be deemed to be "material" for purposes
of this Section 6.01(d) only if the facts or circumstances causing such
representation or warranty to be incorrect shall negatively affect the
Trust Estate in some material respect, the enforceability hereof or of
the Notes; and provided further, that a material breach of any
representation or warranty made by Copelco in Section 2.04 or 2.05(b)
of the Sales and Servicing Agreement with respect to any of the Leases
or the interests in the Equipment subject thereto shall not constitute
an Event of Default if Copelco
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repurchases such Lease and interests in the related Equipment in
accordance with Section 4.05(a) of the Sales and Servicing Agreement;
(e) the entry by a court having jurisdiction in the premises
of (i) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or (ii) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of or in respect of the Company
under any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator, or other similar
official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(f) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent
by it to the entry of a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization, or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable
federal or state law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator, or similar
official of the Company or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
Company's failure to pay its debts generally as they become due, or the
taking of corporate action by the Company in furtherance of any such
action.
SECTION 6.02. Acceleration of Maturity; Rescission and
Annulment.
(a) If an Event of Default of the kind specified in Section
6.01(e) or Section 6.01(f) occurs, the unpaid principal amount of the Notes
shall automatically become due
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and payable at par together with all accrued and unpaid interest thereon,
without presentment, demand, protest or notice of any kind, all of which are
hereby waived by the Company. If an Event of Default (other than an Event of
Default of the kind described in Section 6.01(e) and Section 6.01(f)) occurs and
is continuing, then and in every such case the Trustee shall, if so directed by
the holders of Notes evidencing 66-2/3% of the then Outstanding Class A
Principal Amount (or if the Class A Notes are no longer outstanding, the holders
of Notes evidencing 66-2/3% of the then Outstanding Class B Principal Amount or
if the Class A Notes and Class B Notes are no longer outstanding, the holders of
Notes evidencing 66-2/3% of the then Outstanding Class C Principal Amount), or
the holders of such percentages of the then Outstanding Principal Amount of
Notes may, declare the unpaid principal amount of all the Notes to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Noteholders), and upon any such declaration such principal amount
shall become immediately due and payable together with all accrued and unpaid
interest thereon, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Company.
(b) At any time after such a declaration of acceleration has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the holders of
Notes evidencing 66-2/3% of the then Outstanding Class A Principal Amount of the
Class A Notes (or if the Class A Notes are no longer outstanding, the holders of
Notes evidencing 66-2/3% of the then Outstanding Class B Principal Amount of the
Class B Notes or if the Class A Notes and Class B Notes are no longer
outstanding, the holders of Notes evidencing 66-2/3% of the then Outstanding
Class C Principal Amount), by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if:
(i) the Company has paid or deposited with the
Trustee a sum sufficient to pay:
(A) all Principal Payments on any Class A Notes,
Class B Notes and Class C Notes which have become due
otherwise than by such declaration of acceleration and
interest thereon from the date when the same first
became due until the date of payment or deposit at the
appropriate Note Interest Rate,
(B) all Interest Payments due with respect to any
Class A Notes, Class B Notes and the Class C Notes and,
to the extent that payment
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of such interest is lawful, interest upon overdue
interest from the date when the same first became due
until the date of payment or deposit at a rate per
annum equal to the appropriate Note Interest Rates, and
(C) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its
agents and counsel;
and
(ii) all Events of Default, other than the non-payment of
the Outstanding Principal Amount of the Notes which has become due
solely by such declaration of acceleration, have been cured or waived
as provided in Section 6.13.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 6.03. Remedies.
(a) If an Event of Default occurs and is continuing of which a
Responsible Officer has actual knowledge, the Trustee shall immediately give
notice to each Noteholder as set forth in Section 7.02 and shall solicit the
Noteholders for advice. The Trustee shall then take such action as so directed
by the holders of Notes evidencing 66-2/3% of the then Outstanding Class A
Principal Amount (or if the Class A Notes are no longer outstanding, the holders
of Notes evidencing 66-2/3% of the then Outstanding Class B Principal Amount or
if the Class A Notes and Class B Notes are no longer outstanding, the holders of
Notes evidencing 66-2/3% of the then Outstanding Class C Principal Amount).
(b) Following any acceleration of the Notes, the Trustee shall
have all of the rights, powers and remedies with respect to the Trust Estate as
are available to secured parties under the Uniform Commercial Code or other
applicable law. Such rights, powers and remedies may be exercised by the Trustee
in its own name as trustee of an express trust.
(c) If an Event of Default specified in Section 6.01(a) occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid.
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(d) In exercising its rights and obligations under this
Section 6.03, the Trustee may sell the Trust Estate; provided that if the Event
of Default involves other than non-payment of principal or interest on the
Notes, then such sale must be for an amount greater than or equal to amounts due
under clauses first through fourth in Section 6.06. Neither the Trustee nor any
Noteholder shall have any rights against the Company other than to enforce the
Lien against the Leases and the Equipment and to sell the Trust Estate.
SECTION 6.04. Trustee Shall File Proofs of Claim.
(a) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition,
or other judicial proceeding relative to the Company, Copelco, the Servicer or
any other obligor upon the Notes or the other obligations secured hereby or
relating to the property of the Company, Copelco, the Servicer or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company, Copelco or the Servicer for the payment of overdue
principal or interest or any such other obligation) shall by intervention in
such proceeding or otherwise,
(i) file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Notes and any
other obligation secured hereby and to file such other papers or
documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Noteholders allowed in such judicial proceeding,
and
(ii) collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator, or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Noteholders
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07.
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(b) Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Noteholder in any
such proceeding.
SECTION 6.05. Trustee May Enforce Claims Without Possession
of Notes.
All rights of action and claims under this Indenture or the
Notes may be prosecuted and enforced by the Trustee without the possession of
any of the Notes or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the holders of the Notes in respect of which such judgment
has been recovered.
SECTION 6.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article,
and any moneys that may then be held or thereafter received by the Trustee shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of the entire amount due on account of
principal or interest, upon presentation of the Notes and surrender thereof:
first to the payment of all costs and expenses of
collection incurred by the Trustee and the Noteholders (including the
reasonable fees and expenses of any counsel to the Trustee and the
Noteholders);
second if the person then acting as Servicer under the
Sales and Servicing Agreement is not Copelco Capital or an Affiliate of
Copelco Capital, to the payment of all Servicer's Fees then due to such
person;
third first, pro-rata to the payment of all accrued and
unpaid interest on the Outstanding Class A-1 Principal Amount,
Outstanding Class A-2 Principal Amount, Outstanding Class A-3
Principal Amount and Outstanding Class A-4 Principal Amount,
respectively, to the date of payment thereof, including (to the extent
permitted by applicable law) interest on any overdue installment of
interest and principal from the maturity of such installment to the
date of payment thereof at the rate per annum equal to the Class A-1
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Note Interest Rate, Class A-2 Note Interest Rate and Class A-3 Note
Interest Rate and Class A-4 Note Interest Rate, respectively, second,
to the payment of all accrued and unpaid interest on the Outstanding
Class B Principal Amount to the date of payment thereof, including (to
the extent permitted by applicable law) interest on any overdue
installment of interest and principal from the maturity of such
installment to the date of payment thereof at the rate per annum equal
to the Class B Note Interest Rate, third, to the payment of all accrued
and unpaid interest on the Outstanding Class C Principal Amount to the
date of payment thereof, including (to the extent permitted by
applicable law) interest on any overdue installment of interest and
principal from the maturity of such installment to the date of payment
thereof at the rate per annum equal to the Class C Note Interest Rate,
fourth, to the payment of the Outstanding Class A-1 Principal Amount,
fifth, to the payment of the Outstanding Class A-2 Principal Amount,
Outstanding Class A-3 Principal Amount and Outstanding Class A-4
Principal Amount pro-rata, sixth, to the payment of the Outstanding
Class B Principal Amount and seventh, to the payment of the Outstanding
Class C Principal Amount; provided, that the Noteholders may allocate
such payments for interest, principal and premium at their own
discretion, except that no such allocation shall affect the allocation
of such amounts or future payments received by any other Noteholder;
fourth to the payment of amounts then due the Trustee
hereunder;
fifth if the person then acting as Servicer is Copelco
Capital or an Affiliate of Copelco Capital, to the payment of all
Servicer's Fees then due to such Person; and
sixth to the payment of the remainder, if any, to the
Company or any other Person legally entitled thereto.
SECTION 6.07. Limitation on Suits.
None of the Noteholders shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Noteholder has previously given written
notice to the Trustee of a continuing Event of Default;
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(ii) the holders of not less than 66-2/3% of the then
Outstanding Class A Principal Amount of the Class A Notes (or if the
Class A Notes are no longer outstanding, the holders of Notes
evidencing 66-2/3% of the then Outstanding Class B Principal Amount of
the Class B Notes or if the Class A Notes and Class B Notes are no
longer outstanding, the holders of Notes evidencing 66-2/3% of the then
Outstanding Class C Principal Amount) shall have made written request
to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(iii) such Noteholder or Noteholders have offered to the
Trustee adequate indemnity (which the Trustee agrees, in the case of
the original purchasers of the Class C Notes, need only be the written
promise of such Person) against the costs, expenses and liabilities to
be incurred in compliance with such request;
(iv) the Trustee for 30 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(v) so long as any of the Notes remain Outstanding, no
direction inconsistent with such written request has been given to the
Trustee during such 30-day period by the holders of a majority of the
then Outstanding Principal Amount of the Notes;
it being understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb, or prejudice the rights of any other
Noteholders, or to obtain or to seek to obtain priority or preference over any
other Noteholders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Noteholders. It is further understood and intended that so long as any portion
of the Notes remains Outstanding, Copelco shall not have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture (other
than for the enforcement of Sections 3.03(b), 3.04, 4.01 and 4.02 hereof) or for
the appointment of a receiver or trustee (including, without limitation, a
proceeding under the Bankruptcy Code), or for any other remedy hereunder.
Nothing in this Section 6.07 shall be construed as limiting the rights of
otherwise qualified Noteholders to petition a court for the removal of a Trustee
pursuant to Section 7.09(h) hereof.
SECTION 6.08. Unconditional Right of Noteholders to Receive
Principal and Interest.
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Notwithstanding any other provision in this Indenture, other
than the provisions hereof limiting the right to recover amounts due on the
Notes to recoveries from the property of the Trust Estate, the holder of any
Note shall have the absolute and unconditional right to receive payment of the
principal of and interest on such Note on the Maturities for such payments,
including the Stated Maturity, and to institute suit for the enforcement of any
such payment, and such rights shall not be impaired without the consent of such
Noteholder.
SECTION 6.09. Restoration of Rights and Remedies.
If the Trustee or any Noteholder has instituted any proceeding
to enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Noteholder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Noteholders
shall be restored severally and respectively to their former positions hereunder
and thereafter all rights and remedies of the Trustee and the Noteholders
continue as though no such proceeding had been instituted.
SECTION 6.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost, or stolen Notes in Section 2.04 (f),
no right or remedy herein conferred upon or reserved to the Trustee or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 6.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any holder of any
Note to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this Article
or by law to the Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the
Noteholders, as the case may be.
SECTION 6.12. Control by Noteholders.
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Except as may otherwise be provided in this Indenture, until
such time as the conditions specified in Sections 10.01(a)(i) and (ii) have been
satisfied in full, the holders of 66-2/3% of the then Outstanding Class A
Principal Amount of the Class A Notes (or if the Class A Notes are no longer
outstanding, the holders of Notes evidencing 66-2/3% of the then Outstanding
Class B Principal Amount of the Class B Notes or if the Class A Notes and Class
B Notes are no longer outstanding, the holders of Notes evidencing 66-2/3% of
the then Outstanding Class C Principal Amount) shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee.
Notwithstanding the foregoing,
(i) no such direction shall be in conflict with
any rule of law or with this Indenture;
(ii) the Trustee shall not be required to follow any such
direction which the Trustee reasonably believes might result in any
personal liability on the part of the Trustee for which the Trustee is
not adequately indemnified; and
(iii) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with any such direction; provided
that the Trustee shall give notice of any such action to each
Noteholder.
SECTION 6.13. Waiver of Events of Default.
(a) The holders of 66-2/3% of the then Outstanding Class A
Principal Amount of the Class A Notes (or if the Class A Notes are no longer
outstanding, the holders of Notes evidencing 66-2/3% of the then Outstanding
Class B Principal Amount of the Class B Notes or if the Class A Notes and Class
B Notes are no longer outstanding, the holders of Notes evidencing 66-2/3% of
the then Outstanding Class C Principal Amount) may, by one or more instruments
in writing, waive any Event of Default hereunder and its consequences, except a
continuing Event of Default:
(i) in respect of the payment of the principal of or
premium or interest on any Note (which may only be waived by the
holder of such Note), or
(ii) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the consent of
the holder of each Outstanding Note affected (which only may be waived
by the holders of all Outstanding Notes affected).
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(b) A copy of each waiver pursuant to Section
6.13(a) shall be furnished by the Company to the Trustee. Upon any such waiver,
such Event of Default shall cease to exist and shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Event of Default or impair any right consequent thereon.
SECTION 6.14. Undertaking for Costs.
All parties to this Indenture agree (and each holder of any
Note by its acceptance thereof shall be deemed to have agreed) that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Noteholder, or group of Noteholders,
holding in the aggregate more than 10% of the then Outstanding Principal Amount
of the Notes, or to any suit instituted by any Noteholder for the enforcement of
the payment of the principal of or interest on any Note on or after the
Maturities for such payments, including the Stated Maturity as applicable.
SECTION 6.15. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 6.16. Sale of Trust Estate.
(a) The power to effect any sale of any portion of the Trust
Estate pursuant to Section 6.03 shall not be exhausted by any one or more sales
as to any portion of the Trust Estate remaining unsold, but shall continue
unimpaired
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until the entire Trust Estate shall have been sold or all amounts payable on the
Notes shall have been paid. The Trustee may from time to time, upon directions
in accordance with Section 6.12, postpone any public sale by public announcement
made at the time and place of such sale. For any public sale of the Trust
Estate, the Trustee shall have provided each Noteholder with notice of such sale
at least two weeks in advance of such sale which notice shall specify the date,
time and location of such sale.
(b) To the extent permitted by applicable law, the Trustee
shall not in any private sale sell to a third party the Trust Estate, or any
portion thereof unless,
(i) until such time as the conditions specified in
Sections 10.01(a)(i) and (ii) have been satisfied in full, the holders
of 66-2/3% of the then Outstanding Principal Amount of each Class of
the Notes voting separately consent to or direct the Trustee in writing
to make such sale; or
(ii) the proceeds of such sale would be not less than the
sum of all amounts due to the Trustee hereunder and the entire unpaid
principal amount of the Notes and interest due or to become due thereon
in accordance with Section 6.06 on the Payment Date next succeeding the
date of such sale.
The foregoing provisions shall not preclude or limit the ability of the Trustee
to purchase all or any portion of the Trust Estate at a private sale.
(c) In connection with a sale of all or any portion of
the Trust Estate:
(i) any one or more Noteholders may bid for and purchase
the property offered for sale, and upon compliance with the terms of
sale may hold, retain, and possess and dispose of such property,
without further accountability, and any Noteholder may, in paying the
purchase money therefore, deliver in lieu of cash any Outstanding Notes
or claims for interest thereon for credit in the amount that shall,
upon distribution of the net proceeds of such sale, be payable thereon,
and the Notes, in case the amounts so payable thereon shall be less
than the amount due thereon, shall be returned to the Noteholders after
being appropriately stamped to show such partial payment;
(ii) the Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of
the Trust Estate in connection with a sale thereof;
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(iii) the Trustee is hereby irrevocably appointed the agent
and attorney-in-fact of the Company to transfer and convey its interest
in any portion of the Trust Estate in connection with a sale thereof,
and to take all action necessary to effect such sale; and
(iv) no purchaser or transferee at such a sale shall be
bound to ascertain the Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any moneys.
(d) The method, manner, time, place and terms of any
sale of all or any portion of the Trust Estate shall be commercially reasonable.
(e) The provisions of this Section 6.16 shall not be construed
to restrict the ability of the Trustee to exercise any rights and powers against
the Company or the Trust Estate that are vested in the Trustee by this
Indenture, including, without limitation, the power of the Trustee to proceed
against the collateral subject to the lien of this Indenture and to institute
judicial proceedings for the collection of any deficiency remaining thereafter.
ARTICLE 7.
THE TRUSTEE
SECTION 7.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default
known to the Trustee,
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
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(b) In case an Event of Default has occurred and is continuing
to the actual knowledge of a Responsible Officer of the Trustee, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit
the effect of subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall
be proved, subject to Section 7.03(f) hereof, that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Noteholders in accordance with Section 6.12
relating to the time, method, and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture; and
(iv) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 7.02. Notice of Defaults or Events of Default.
Within two Business Days after a Responsible Officer obtaining
knowledge of the occurrence of any Default or Event of Default hereunder, the
Trustee shall transmit, by certified mail return receipt requested, hand
delivery or overnight courier, to all Noteholders, as their names and
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addresses appear in the Note Register, and the Rating Agencies notice of such
Default or Event of Default hereunder known to the Trustee, unless such Default
or Event of Default shall have been cured or waived.
SECTION 7.03. Certain Rights of Trustee.
Subject to the provisions of Section 7.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, note, debenture, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any action of the Company may be sufficiently evidenced by a
Company Order;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel as to legal matters
and the written advice of any such counsel selected by the Trustee with
due care shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Noteholders pursuant to this Indenture,
unless such Noteholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, note, debenture, other evidence of indebtedness,
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or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
SECTION 7.04. Not Responsible for Recitals or Issuance of
Notes.
The recitals contained herein and in the Notes, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Notes. The Trustee shall not be accountable for the use or
application by the Company of the proceeds of the Notes.
SECTION 7.05. May Hold Notes.
The Trustee, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with the Company
with the same rights it would have if it were not Trustee.
SECTION 7.06. Money Held in Trust.
Money and investments held by the Trustee shall be held in
trust in one or more trust accounts hereunder, but need not be segregated from
other funds except to the extent required by law.
SECTION 7.07. Compensation, Reimbursement, etc.
Subject to Section 3.04(c) of the Sales and Servicing
Agreement, the Company agrees:
(a) to pay to the Trustee from time to time, solely from and
only to the extent that amounts are available, such compensation for
all services rendered by it hereunder as the Company and the Trustee
may agree in writing (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an
express trust); and
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(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request, solely from and only to the
extent that amounts are available under clause twelfth of Section
3.03(b) or clause first of Section 6.06(a), for all reasonable
expenses, disbursements, and advances incurred or made by the Trustee
in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement, or advance
as may be attributable to its negligence or bad faith.
SECTION 7.08. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall
(a) be a corporation organized and doing business under the laws of the United
States of America, any state thereof or the District of Columbia, authorized
under such laws to exercise corporate trust powers; (b) have a combined capital
and surplus of at least $100,000,000; (c) be subject to supervision or
examination by federal or state authority; and (d) at the time of appointment,
shall have long-term debt obligations (or, if the Trustee does not have
outstanding long-term debt obligations and is a subsidiary of a holding company,
which holding company shall have long-term obligations) having a credit rating
of at least "A-" from S&P and Baa3 from Moody's.
If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
This Indenture shall always have a Trustee who satisfies the
requirements of Section 310(a)(1) of the Trust Indenture Act. The Trustee is
subject to the provisions of Section 310(b) of the Trust Indenture Act regarding
disqualification of a trustee upon acquiring any conflicting interest.
SECTION 7.09. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this
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Article shall become effective until the acceptance of appointment by the
successor Trustee under Section 7.10.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company and by mailing notice of resignation by
first-class mail, postage prepaid, to Noteholders at their addresses appearing
on the Note Register.
(c) The Trustee may be removed at any time by Act of the
holders of not less than a majority of the then Outstanding Principal Amount of
the Notes, delivered to the Trustee and the Company.
(d) If the Trustee shall resign, be removed, or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, with the consent of the holders of 66-2/3% of the
Outstanding Principal Amount of the Notes, by an act of the Company, shall
promptly appoint a successor Trustee.
(e) If no successor Trustee shall have been so appointed by
the Company or the Noteholders as hereinbefore provided and accepted appointment
in the manner hereinafter provided within 30 days after any such resignation or
removal, existence of incapability, or occurrence of such vacancy, the Trustee
or any Noteholder may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to all
Noteholders, as their names and addresses appear in the Note Register and each
Rating Agency. Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office.
(g) The Company may remove the Trustee if the Trustee fails
to comply with Section 7.08 of this Indenture.
(h) If the Trustee after written request by any Noteholder who
has been a Noteholder for at least six months fails to comply with Section
3.10(b) of the Trust Indenture Act, such Noteholder may petition any court of
competent jurisdiction, for the removal of the Trustee and the appointment of a
successor Trustee.
SECTION 7.10. Acceptance of Appointment by Successor.
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(a) Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges and expenses, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
(b) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 7.11. Merger, Conversion, Consolidation or Succession
to Business.
Any Person into which the Trustee may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such Person
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Notes shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion,
or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Notes so authenticated with the same effect as if such successor
Trustee had itself authenticated such Notes. The Trustee shall provide prompt
written notice to each Rating Agency of any event referenced in this Section
7.11.
SECTION 7.12. Co-trustees and Separate Trustees.
(a) At any time or times, if the Company, the Trustee or any
Noteholder determines that it is necessary for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Trust Estate may at the
time be located, the Company and the Trustee shall have
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power to appoint, and, upon the written request of the Trustee or the holders of
a majority of the then Outstanding Principal Amount of the Notes, the Company
shall for such purpose join with the Trustee in the execution, delivery, and
performance of all instruments and agreements necessary or proper to appoint one
or more Persons approved by the Trustee either to act as co-trustee, jointly
with the Trustee, of all or any part of such Trust Estate, or to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section. If the Company does
not join in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default has occurred and is continuing, the
Trustee, or the holders of a majority of the then Outstanding Principal Amount
of the Notes, alone shall have power to make such appointment.
(b) Should any written instrument from the Company be required
by any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right, or power, any
and all such instruments shall, on request, be executed, acknowledged and
delivered by the Company.
(c) Every co-trustee or separate trustee shall, to the
extent permitted by law, but to such extent only, be appointed subject to the
following terms:
(i) The Notes shall be authenticated and delivered and all
rights, powers, duties, and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Trustee hereunder, shall
be exercised, solely by the Trustee.
(ii) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Trustee in respect of any property
covered by such appointment shall be conferred or imposed upon and
exercised or performed by the Trustee or by the Trustee and such
co-trustee or separate trustee jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee, except to
the extent that, under any law of any jurisdiction in which any
particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers,
duties and obligations shall be exercised and performed by such
co-trustee or separate trustee.
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(iii) The Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Company evidenced by a
Company Order, may accept the resignation of or remove any co-trustee
or separate trustee appointed under this Section, and, in case an Event
of Default has occurred and is continuing, the Trustee shall have power
to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Company. Upon the
written request of the Trustee, the Company shall join with the Trustee
in the execution, delivery and performance of all instruments and
agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so resigned
or removed may be appointed in the manner provided in this Section.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Trustee or
any other such trustee hereunder and the Trustee shall not be
personally liable by reason of any act or omission of any co-trustee or
other such separate trustee hereunder selected by the Trustee with due
care or appointed in accordance with directions to the Trustee pursuant
to Section 6.12.
(v) Any Act of Noteholders delivered to the Trustee shall
be deemed to have been delivered to each such co-trustee and separate
trustee.
SECTION 7.13. Acceptance by Trustee.
The Trustee hereby acknowledges the conveyance of the Granted
Assets and the receipt of the Leases and the other Granted Assets granted by the
Company hereunder and declares that the Trustee, through a custodian, will hold
such Leases and other Granted Assets conveyed by the Company in trust, for the
use and benefit of all Noteholders subject to the terms and provisions hereof.
SECTION 7.14. Preferential Collection of Claims Against the
Company.
The Trustee is subject to Trust Indenture Act Section 311(a),
excluding any creditor relationship listed in Trust Indenture Act Section
311(b). A Trustee who has resigned or been removed shall be subject to Trust
Indenture Act Section 311(a) to the extent indicated therein.
SECTION 7.15. Reports by Trustee to Noteholders.
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To the extent required by the Trust Indenture Act, within 60
days after each May 15, following the date of this Indenture, the Trustee shall
mail to Noteholders a brief report dated as of such reporting date that complies
with Trust Indenture Act Section 313(a), if such a report is required pursuant
to Trust Indenture Act Section 313(a). The Trustee also shall comply with Trust
Indenture Act Section 313(b). The Trustee shall also transmit by mail all
reports as required by Trust Indenture Act Section 313(c).
A copy of each such report required under Trust Indenture Act
Section 313 shall, at the time of such transmission to Noteholders be filed with
the Commission and with each stock exchange or other market system on which the
Notes are listed. The Company or any other obligor upon the Notes shall notify
the Trustee if the Notes become listed on any stock exchange or market trading
system.
SECTION 7.16. No Proceedings. The Trustee hereby agrees that
it will not, with respect to its fees and expenses, directly or indirectly
institute, or cause to be instituted, against the Company any proceeding of the
type referred to in Section 6.01(e) or (f) so long as there shall not have
elapsed one year plus one day since the latest maturing Notes have been paid in
full in cash.
ARTICLE 8.
COVENANTS
SECTION 8.01. Payment of Principal and Interest.
The Company will duly and punctually pay the principal of and
interest on the Notes in accordance with the terms of the Notes and this
Indenture.
SECTION 8.02. Maintenance of Office or Agency; Chief
Executive Office.
(a) The Company will maintain at the Corporate Trust Office an
office or agency where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company hereby appoints the Trustee
as its agent to receive all such presentations, surrenders, notices and demands.
(b) The chief executive office of the Company, and the office
at which the Company maintains its records with respect to the Leases, the
interests in the Equipment, and the transactions contemplated hereby, is
currently located in Mahwah, New Jersey; records with respect to
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certain of the Leases are maintained in Mt. Laurel, New Jersey. The Company
will not change the location of such offices without giving the Trustee at least
30 days prior written notice thereof.
SECTION 8.03. Money for Payments to Noteholders to be Held in
Trust.
(a) All payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
pursuant to Section 3.03(b) or Section 6.06 shall be made on behalf of the
Company by the Trustee, and no amounts so withdrawn from the Collection Account
for payments of Notes shall be paid over to the Company under any circumstances
except as provided in this Section 8.03 or in Section 3.03(b) or Section 6.06.
(b) In making payments hereunder, the Trustee will:
(i) allocate all sums received for payment to the
Noteholders on each Payment Date among such Noteholders, first to the
Class A Noteholders on a pro rata basis, second to the Class B
Noteholders on a pro rata basis and then to the Class C Noteholders on
a pro rata basis in accordance with the information known to the
Trustee;
(ii) hold all sums held by it for the payment of amounts
due with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided; and
(iii) comply with all requirements of the Internal Revenue
Code of 1986, as amended (or any successor statutes), and all
regulations thereunder, with respect to the withholding from any
payments made by it on any Notes of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of or interest on any Notes,
deposit with a Paying Agent a sum sufficient to pay the principal or interest so
becoming due, such sum to be held in trust for the benefit of the Noteholders
entitled to such principal or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
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The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of or interest on Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities) in the making of any payment of
principal or interest.
(c) Except as required by applicable law, any money held by
the Trustee in trust for the payment of any amount due with respect to any Note
and remaining unclaimed for three years after such amount has become due and
payable to the Noteholder shall be discharged from such trust and, subject to
applicable escheat laws, paid to the Company upon request; and such Noteholder
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof (but only to the extent of the amounts so paid to the Company),
and all liability of the Trustee with respect to such trust money shall
thereupon cease.
SECTION 8.04. Corporate Existence; Merger; Consolidation,
etc.
(a) The Company will keep in full effect its existence, rights
and franchises as a corporation under the laws of the State of Delaware, and
will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the Notes
or any of the Leases.
(b) The Company shall at all times observe and comply in all
material respects with (i) all laws applicable to it, (ii) all requirements of
law in the declaration and payment of dividends on its capital stock, and (iii)
all requisite and appropriate corporate and other formalities (including without
limitation meetings of the Company's board of directors and, if required by law,
its charter or otherwise, meetings and votes of the shareholders of the Company
to authorize corporate action) in the management of its business and affairs and
the conduct of the transactions contemplated hereby and by the Underwriting
Agreement and the Sales and Servicing Agreement.
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(c) The Company shall not issue or register the transfer of
any of its capital stock to any Person other than Copelco and will deliver any
certificate of such stock so issued to the Trustee in accordance with Section
7.02 of the Sales and Servicing Agreement.
(d) The Company shall not (i) consolidate or merge with or
into any other Person or convey or transfer its properties and assets
substantially as an entirety to any other Person or (ii) commingle its assets
with those of any other Person.
(e) At least two directors of the Company shall at all times
be people who are not, and for five years prior to such individuals' election as
a director shall not have been, a director, officer, employee or 10% beneficial
owner of the outstanding shares of common stock of its parent institution or any
of its Affiliates.
(f) The Company will, at all times, (i) maintain (A) corporate
books and records separate from those of any other Person and (B) minutes of the
meetings and other proceedings of its shareholders and board of directors; (ii)
continuously maintain the resolutions, agreements and other instruments
underlying the transactions contemplated hereby and by the Sales and Servicing
Agreement as official records of the Company; (iii) act solely in its corporate
name and through its duly authorized officers or agents to maintain an
arm's-length relationship with Copelco and its Affiliates and (iv) pay all of
its operating expenses and liabilities from its own funds.
(g) The Company shall conduct its business solely in its own
name so as to not mislead others as to the identity of the corporation with
which those others are concerned, and particularly will use its best efforts to
avoid the appearance of conducting business on behalf of Copelco or any of its
Affiliates or that the assets of the Company are available to pay the creditors
of Copelco or any of its Affiliates. Without limiting the generality of the
foregoing, all oral and written communications, including without limitation
letters, invoices, purchase orders, contracts, statements and loan applications,
will be made solely in the name of the Company.
SECTION 8.05. Protection of Trust Estate; Further
Assurances.
The Company will from time to time execute and deliver all
such supplements and amendments hereto and all such Financing Statements,
continuation statements, instruments of further assurance, and other
instruments, and
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will take such other action as may be necessary or advisable to:
(i) Grant more effectively all or any portion of the
Trust Estate;
(ii) maintain or preserve the Lien of this Indenture
or carry out more effectively the purposes hereof;
(iii) publish notice of, or protect the validity of, any
Grant made or to be made by this Indenture and perfect the security
interest contemplated hereby in favor of the Trustee in each of the
Leases, in the Equipment and all other property included in the Trust
Estate; provided, that the Company shall not be required to file
Financing Statements with respect to the interests in the Equipment in
addition to those contemplated by Section 3.01(c) of the Sales and
Servicing Agreement;
(iv) enforce or cause the Servicer to enforce any of the
Leases; or
(v) preserve and defend title to the Leases (including the
right to receive all payments due or to become due thereunder), the
interests in the Equipment, or other property included in the Trust
Estate and preserve and defend the rights of the Trustee and the
Noteholders in such Leases (including the right to receive all payments
due or to become due thereunder), interests in the Equipment and other
property against the claims of all Persons and parties.
The Company, upon the Company's failure to do so, hereby designates the Trustee
its agent and attorney-in-fact to execute any Financing Statement or
continuation statement required pursuant to this Section 8.05; provided,
however, that such designation shall not be deemed to create a duty in the
Trustee to monitor the compliance of the Company with the foregoing covenants;
and provided, further, that the duty of the Trustee to execute any instrument
required pursuant to this Section 8.05 shall arise only if a Responsible Officer
of the Trustee has actual knowledge of any failure of the Company to comply with
the provisions of this Section 8.05.
SECTION 8.06. [Reserved].
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SECTION 8.07. Performance of Obligations; Sales and Servicing
Agreement.
(a) The Company will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Notes and the
Underwriting Agreement.
(b) The Company will not take any action or permit any action
to be taken by others which would release any Person from any of such Person's
covenants or obligations under any Lease or any other instrument included in the
Trust Estate, or which would result in the amendment, hypothecation,
subordination, termination, or discharge of, or impair the validity or
effectiveness of, any Lease or such other instrument, except as expressly
provided in this Indenture or the Sales and Servicing Agreement.
(c) If any Authorized Officer shall have knowledge of the
occurrence of a default under the Sales and Servicing Agreement, the Company
shall promptly notify the Trustee and the Noteholders thereof, and shall specify
in such notice the action, if any, the Company is taking in respect of such
default. Unless consented to by the holders of 66 2/3% of the then Outstanding
Principal Amount of the Notes, the Company may not waive any default under or
amend the Sales and Servicing Agreement.
SECTION 8.08. Negative Covenants.
The Company will not:
(a) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate except as expressly permitted by this
Indenture;
(b) claim any credit on, or make any deduction from, the
principal of, or interest on, any of the Notes by reason of the payment
of any taxes levied or assessed upon any portion of the Trust Estate;
(c) engage in any business or activity other than in
connection with, or relating to the ownership of, the Leases and the
interests in the Equipment, the issuance of the Notes, and the specific
transactions contemplated hereby;
(d) become liable for, issue, incur, assume, or allow to
remain outstanding any indebtedness, or guaranty any indebtedness of
any Person, other than the Notes, except as contemplated by this
Indenture, the registration statement filed with respect to the Class A
Notes and Class B Notes (and any registration
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statement for similar securities), and the Sales and Servicing
Agreement;
(e) seek dissolution or liquidation in whole or in part or
reorganization of its business or affairs;
(f) (i) permit the validity or effectiveness of this Indenture
or any Grant hereby to be impaired, or permit the lien of this
Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations under this Indenture, except as may be expressly permitted
hereby, (ii) permit any lien, charge, security interest, mortgage or
other encumbrance to be created on or to extend to or otherwise arise
upon or burden the Trust Estate or any part thereof or any interest
therein or the proceeds thereof other than the lien of this Indenture,
or (iii) subject to Section 3.01(c) of the Sales and Servicing
Agreement, permit the lien of this Indenture not to constitute a valid
first priority security interest in the Trust Estate; or
(g) make any loan or advance to any Affiliate of the Company
or to any other Person; provided that the Company may from time to time
make Inter-Company Loans on the terms and conditions set forth in
Section 13 of the Sales and Servicing Agreement.
SECTION 8.09. Information as to Company.
The Company shall deliver to the Trustee and, the Trustee
shall deliver to each Rating Agency and to each holder of outstanding Notes
(and, upon the request of any Noteholder, to any prospective transferee of any
Notes):
(a) Quarterly Statements - within 45 days after the end of
each of the first three quarterly fiscal periods in each fiscal year of the
Company, one copy of:
(i) a balance sheet of the Company as at the end of such
quarter, and
(ii) statements of income, retained earnings and cash flow
of the Company for that quarter and for the portion of the fiscal year
ending with such quarter, setting forth in each case in comparative
form the figures for the corresponding periods in the previous fiscal
year,
all in reasonable detail and accompanied by a certificate signed by a principal
financial officer of the Company stating that such financial statements present
fairly the
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financial condition of the Company and have been prepared in accordance with
generally accepted accounting principles consistently applied;
(b) Annual Statements - within 135 days after the end of each
fiscal year of the Company, one copy of:
(i) a balance sheet of the Company, as at the end of
that year, and
(ii) statements of income, retained earnings and cash flow
of the Company for that year, setting forth in each case in comparative
form the figures for the previous fiscal year,
all in reasonable detail and accompanied by a certificate signed by a principal
financial officer of the Company stating that such financial statements present
fairly the financial condition of the Company and have been prepared in
accordance with generally accepted accounting principles consistently applied;
(c) Officer's Certificate - with each set of financial
statements delivered pursuant to Section 8.09(a) or 8.09(b), the Company will
deliver an Officer's Certificate stating that such officer has reviewed the
relevant terms of this Indenture (including without limitation Section 8.04
hereof) and the Sales and Servicing Agreement and has made, or caused to be
made, under such officer's supervision, a review of the transactions and
conditions of the Company during the period covered by the income statements
then being furnished and that the review has not disclosed the existence of any
Event of Default or, if an Event of Default exists, describing its nature.
(d) Notice of Event of Default - immediately upon becoming
aware of the existence of any condition or event which constitutes a Default or
an Event of Default, a written notice describing its nature and period of
existence and what action the Company is taking or proposes to take with respect
thereto; and
(e) Report on Proceedings - promptly upon the Company's
becoming aware of
(i) any proposed or pending investigation of it by any
governmental authority or agency, or
(ii) any pending or proposed court or administrative
proceeding which involves or may involve the possibility of materially
and adversely affecting the properties, business, prospects, profits or
condition (financial or otherwise) of the Company
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a written notice specifying the nature of such investigation or proceeding and
what action the Company is taking or proposes to take with respect thereto and
evaluating its merits.
SECTION 8.10. Taxes.
The Company shall pay all taxes when due and payable or levied
against its assets, properties or income, including any property that is part of
the Trust Estate.
SECTION 8.11. Indemnification.
The Company agrees to indemnify and hold harmless the Trustee
and each Noteholder (each an "Indemnified Party") against any and all
liabilities, losses, damages, penalties, costs and expenses (including costs of
defense and legal fees and expenses) which may be incurred or suffered by such
Indemnified Party without negligence or willful misconduct on its part as a
result of claims, actions, suits or judgments asserted or imposed against it and
arising out of the transactions contemplated hereby or by the Sales and
Servicing Agreement, including without limitation, any claims resulting from any
use, operation, maintenance, repair, storage or transportation of any item of
Equipment, whether or not in the Company's possession or under its control, and
any tort claims and any fines or penalties arising from any violation of the
laws or regulations of the United States or any state or local government or
governmental authority; provided that, all amounts payable pursuant to this
Section 8.11 shall be fully subordinated to amounts payable under the Notes,
shall be without recourse to the Company except to the extent that all amounts
otherwise due and payable under the terms of this Indenture have been fully paid
and shall not, to the extent that such amounts are unpaid, constitute a claim
against the Company except to the extent that all amounts otherwise due and
payable under the terms of this Indenture have been fully paid.
SECTION 8.12. Commission Reports; Reports to Trustee;
Reports to Noteholders.
To the extent it has not satisfied the following requirements
by reporting under Section 8.09 hereof, the Company shall:
(a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports which the Company may be
required to file with the Commission pursuant to Section 13 or Section 15(d) of
the Exchange Act (or copies
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of such portions thereof as may be prescribed by rules and regulations of the
Commission); or, if the Company is not required to file with the Commission
information, documents or reports pursuant to either Section 13 or Section 15(d)
of the Exchange Act, then the Company will file with the Trustee and with the
Commission, in accordance with rules and regulations prescribed by the
Commission, such of the supplementary and periodic information, documents and
reports required pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities exchange as may be
prescribed in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants provided for in this Indenture as may be
required by such rules and regulations, including, in the case of annual
reports, if required by such rules and regulations, certificates or opinions of
independent public accountants, conforming to the requirements of Sections 12.03
and 12.04 hereof, as to compliance with conditions or covenants, compliance with
which is subject to verification by accountants; and
(c) furnish to the Trustee for distribution to the
Noteholders, as the names and addresses of such Noteholders appear in the Note
Register, in the manner and to the extent provided in Section 7.15 hereof, such
summaries of any information, documents and reports required to be filed with
the Trustee pursuant to the provisions of Subsections (a) and (b) of this
Section 8.12 as may be required to be provided to such Noteholders by the rules
and regulations of the Commission under the provisions of the Trust Indenture
Act.
ARTICLE 9.
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders.
(a) Without the consent of any Noteholders, the Company, by a
Company Order, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
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(i) to add to the covenants of the Company for the
benefit of the Noteholders, or to surrender any right or power herein
conferred upon the Company;
(ii) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein; or
(iii) to correct or amplify the description of any property
at any time subject to the lien of this Indenture, or to better assure,
convey and confirm unto the Trustee any property subject or required to
be subjected to the lien of this Indenture;
provided such action pursuant to this Section 9.01(a) shall not adversely affect
the interests of the Noteholders in any respect.
(b) The Trustee shall promptly deliver to each Noteholder and
each Rating Agency a copy of any supplemental indenture entered into pursuant to
Section 9.01(a).
SECTION 9.02. Supplemental Indentures with Consent of
Noteholders.
(a) With the consent of the holders of not less than 66-2/3%
of the then Outstanding Principal Amount of the Notes and by Act of said
Noteholders delivered to the Company and the Trustee, the Company, by a Company
Order, and the Trustee may enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Noteholders under this Indenture; provided, that no
supplemental indenture shall, without the consent of the holder of each
Outstanding Note affected thereby,
(i) change the Stated Maturity of any Note or the
Principal Payments or Interest Payments due or to become due on any
Payment Date with respect to any Note, or change the priority of
payment thereof as set forth herein, or reduce the principal amount
thereof or the Note Interest Rate thereon, or change the place of
payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Maturity thereof;
(ii) reduce the percentage of the Outstanding Principal
Amount of the Notes the consent of whose Noteholders is required for
any such supplemental indenture, for any waiver of compliance with
provisions
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of this Indenture or Events of Default and their consequences, or for
any Act of Noteholders;
(iii) modify any of the provisions of this Section or
Section 6.13 except to increase any percentage or fraction set forth
therein or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the holder of each
Outstanding Note affected thereby;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding"; or
(v) permit the creation of any lien ranking prior to or on
a parity with the lien of this Indenture with respect to any part of
the Trust Estate or, except as provided in Sections 4.01 or 4.02,
terminate the lien of this Indenture on any property at any time
subject hereto or deprive any Noteholder of the security afforded by
the lien of this Indenture.
(b) The Trustee shall promptly deliver to each Noteholder and
each Rating Agency a copy of any supplemental indenture entered into pursuant to
Section 9.02(a).
SECTION 9.03. Execution of Supplemental Indentures.
In executing any supplemental indenture (a) pursuant to
Article 9.01 of this Indenture or (b) pursuant to Section 9.02 of this Indenture
without the consent of each holder of the Notes to the execution of the same,
the Trustee shall be entitled to receive, and (subject to Section 7.01) shall
be, fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any
supplemental indenture which affects the Trustee's own rights, duties,
projections, or immunities under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes, and
every Noteholder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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SECTION 9.05. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
SECTION 9.06. Compliance with Trust Indenture Act.
Every amendment, supplement or waiver to this Indenture or the
Notes shall comply with the Trust Indenture Act as then in effect.
ARTICLE 10.
SATISFACTION AND DISCHARGE
SECTION 10.01. Satisfaction and Discharge of Indenture.
(a) This Indenture shall cease to be of further effect (except
as to any surviving rights of registration of transfer or exchange of Notes
herein expressly provided for), and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(i) 100 days shall have elapsed since either
(A) all Notes theretofore authenticated and delivered
(other than (1) Notes which have been destroyed, lost or
stolen and which have been replaced or paid as provided in
Section 2.04 and (2) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 8.03(c))
have been delivered to the Trustee for cancellation; or
(B) the final installments of principal on all such
Notes not theretofore delivered to the Trustee for
cancellation
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(1) have become due and payable, or
(2) will become due and payable at their
Stated Maturity, as applicable, within one year,
and the Company has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the
purpose an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation, for principal and interest to the
date of such deposit (in the case of Notes which have become
due and payable) or to the Stated Maturity thereof;
(ii) the Company has paid or caused to be paid all other
sums payable hereunder by the Company for the benefit of the
Noteholders; and
(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
At such time, the Trustee shall deliver to the Company or, upon Company Order,
its assignee, all cash, securities and other property held by it as part of the
Trust Estate other than funds deposited with the Trustee pursuant to Section
10.01(a)(i)(B), for the payment and discharge of the Notes.
(b) Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Sections 7.07 and
8.11, and, if money shall have been deposited with the Trustee pursuant to
Section 10.01(a)(i)(B), the obligations of the Trustee under Section 10.02 and
Section 8.03(c) shall survive.
(c) The Trustee shall provide prompt written notice to each
Rating Agency of any satisfaction and discharge of this Indenture pursuant to
this Article 10.
SECTION 10.02. Application of Trust Money.
Subject to the provisions of Section 8.03(c), all money
deposited with the Trustee pursuant to Sections 10.01 and 8.03 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the Trustee.
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ARTICLE 11.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants as follows:
SECTION 11.01. Corporate Organization and Authority.
The Company:
(a) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to carry on its
business as now conducted (except where the failure to have such licenses and
permits would not have a material adverse effect on the business or condition
(financial or otherwise) of the Company or impair the enforceability of any
Lease) and to enter into and perform its obligations under this Indenture and
the Sales and Servicing Agreement, and the transactions contemplated hereby and
thereby, including the issuance and sale of the Notes and the performance of its
obligations thereunder; and
(c) has duly qualified and is authorized to do business and is
in good standing as a foreign corporation in each jurisdiction where the
character of its properties or the nature of its activities makes such
qualification necessary (except where the failure to be so qualified or in good
standing would not have a material adverse effect on the business or condition
(financial or otherwise) of the Company or impair the enforceability of any
Lease).
SECTION 11.02. Pending Litigation.
There are no proceedings or investigations pending, or to the
knowledge of the Company (after due inquiry) threatened, against or affecting
the Company in or before any court, governmental authority or agency or
arbitration board or tribunal, including but not limited to any such proceeding
or investigation with respect to any environmental or other liability resulting
from the ownership or use of any of the Equipment, which, individually or in the
aggregate, involve the possibility of materially and adversely affecting the
properties, business, prospects, profits or condition (financial or otherwise)
of the Company, or the ability of the Company to perform its obligations
hereunder or under the Sales and Servicing
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Agreement or the Notes. The Company is not in default with respect to any order
of any court, governmental authority or agency or arbitration board or tribunal.
SECTION 11.03. Transactions Legal and Authorized.
The sale of the Notes by the Company, the purchase of the
Leases (including the right to receive all payments due or to become due
thereunder) and the acquisition of the interests in the Equipment pursuant to
the Sales and Servicing Agreement, the granting of the Liens created by the
Indenture, and compliance by the Company with all of the provisions of this
Indenture, the Sales and Servicing Agreement and the Notes:
(a) have been duly authorized by all necessary corporate
action on the part of the Company, and do not require any stockholder approval,
or approval or consent of any trustee or holders of any indebtedness or
obligations of the Company except such as have been duly obtained;
(b) are within the corporate powers of the Company; and
(c) are legal and will not conflict with, result in any breach
of any of the provisions of, constitute a default under, or result in the
creation of any Lien upon any property of the Company (except as contemplated by
this Indenture) under the provisions of any agreement, charter instrument,
by-law or other instrument to which the Company is a party or by which it or its
property may be bound or result in the violation of any law, regulation, rule,
order or judgment applicable to the Company or its properties, or any order to
which the Company or its properties is subject, of or by any government or
governmental agency or authority.
SECTION 11.04. No Defaults.
No event has occurred and no condition exists which, upon the
issue of the Notes or with the lapse of time and/or the giving of notice, would
constitute a Default or an Event of Default. The Company is not in violation in
any material respect of any term of any agreement, charter instrument, by-law or
other instrument to which it is a party or by which it is or may be bound.
SECTION 11.05. Governmental Consent.
No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Notes or the consummation by the Company
of the transactions contemplated by this Indenture, except such
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consents, approvals, authorizations, registrations or qualifications as may be
required under the Securities Act and under state securities or Blue Sky laws in
connection with the purchase and distribution of the Notes pursuant to the
Underwriting Agreement.
SECTION 11.06. Use of Proceeds.
The proceeds from the sale of the Notes will be used by the
Company to purchase the Leases from the Seller pursuant to the Sales and
Servicing Agreement.
SECTION 11.07. Compliance with Law.
The Company:
(a) is not in violation of any laws, ordinances, governmental
rules or regulations to which it is subject;
(b) has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its properties or to the conduct of its business; and
(c) is not in violation in any material respect of any term of
any agreement, charter instrument, by-law or other instrument to which it is a
party or by which it may be bound, which violation or failure to obtain might
materially adversely affect the business or condition (financial or otherwise)
of the Company or the transactions contemplated by the Sales and Servicing
Agreement, the Notes, or this Indenture.
SECTION 11.08. Restrictions on Company.
The Company is not a party to any contract or agreement, or
subject to any charter or other corporate restriction, which materially and
adversely affects its business. The Company has not agreed or consented to cause
or permit in the future (upon the happening of a contingency or otherwise) any
of its properties, whether now owned or hereafter acquired, to be subject to a
Lien not permitted by the Indenture.
SECTION 11.09. Legal, Valid and Binding Obligations.
This Indenture, the Sales and Servicing Agreement and any
other documents executed by or on behalf of the Company in connection with the
transactions contemplated hereby or thereby each constitutes the legal, valid
and binding obligation of the Company, enforceable in accordance with the
respective terms hereof and thereof, except as the
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same may be limited by bankruptcy, insolvency, reorganization or other similar
laws relating to or affecting the enforcement of creditors' rights generally and
by equitable principles. The Notes, when issued in accordance with the
provisions hereof, will represent the legal, valid and binding obligations of
the Company, enforceable in accordance with the terms thereof, except as the
same may be limited by bankruptcy, insolvency, reorganization or other similar
laws relating to or affecting the enforcement of creditors' rights generally and
by equitable principles.
SECTION 11.10. Perfected Security Interest.
Except for the execution and delivery of the Indenture, the
delivery of the Leases to the Trustee and the filing of required Financing
Statements, no further action, including any filing or recording of any
document, is necessary or advisable in order to establish, protect and perfect
the security interest of the Trustee as of the Closing Date in (a) the Leases
(including the right to receive all payments due or to become due thereunder)
and (b) the Equipment and any proceeds thereof subject to Leases having a
Discounted Present Value of not less than 75% of the Discounted Present Value of
the Leases as of the Cut-Off Date and such Equipment relating to not less than
75% of the Booked Residual Value of such Equipment, in each case as against any
third party in any applicable jurisdiction in the United States. In the case of
each Lease which consists of a master lease and one or more exhibits or
schedules thereto, the Company has delivered the schedules relating to the
Leases to the Trustee (and is holding the leases as custodian on behalf of the
Trustee) and has neither assigned such schedules or such master lease in its
entirety, nor delivered physical possession of such schedules or such master
lease, to any Person other than the Trustee (including the trustee under another
indenture in a transaction substantially similar to the transaction contemplated
hereby, which other indenture provides for a lien insofar as it relates to the
lease schedules which are not part of the Trust Estate).
SECTION 11.11. Taxes.
The Company is not in default with respect to the payment of
any taxes levied or assessed against it or any of its assets and has not failed
to file any tax return required to be filed by it.
SECTION 11.12. Nonconsolidation.
The Company is operated in such a manner that it
would not be substantively consolidated in the bankruptcy
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estate of Copelco, such that the separate existence of the Company and Copelco
would be disregarded in the event of a bankruptcy or insolvency of the Company
or Copelco, and in such regard:
(a) the Company is not involved in the day-to-day
management of Copelco;
(b) the Company maintains separate corporate records and books
of account from Copelco and otherwise observes corporate formalities and has a
separate business office from Copelco;
(c) the financial statements and books and records of the
Copelco prepared after the Issuance Date will reflect the separate existence of
the Company;
(d) the Company maintains its assets separately from the
assets of Copelco (including through the maintenance of a separate bank
account), the Company's funds and assets, and records relating thereto, have not
been and are not commingled with those of Copelco and the separate creditors of
the Company will be entitled to be satisfied out of the Company's assets prior
to any value in the Company becoming available to the Company's equityholders or
the Copelco's creditors;
(e) all business correspondence of the Company and other
communications are conducted in the Company's own name and on its own
stationery; and
(f) Copelco does not act as an agent of the Company in any
capacity and the Company does not act as agent for Copelco, but instead presents
itself to the public as a corporation separate from Copelco.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by operation of Trust Indenture Act Section
318(a), the duties imposed by Section 318(a) shall control.
SECTION 12.02. Communication by Noteholders with Other
Noteholders.
Noteholders may communicate, pursuant to Trust Indenture Act
Section 312(b), with other Noteholders with
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respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Note Registrar and all other parties shall have the protection of
Trust Indenture Act Section 312(c).
SECTION 12.03. Officers' Certificate and Opinion of Counsel as
to Conditions Precedent.
Upon any request or application by the Company (or any other
obligor upon the Notes) to the Trustee to take any action under this Indenture,
the Company (or such other Obligor) shall furnish to the Trustee:
(a) an Officers' Certificate (which shall include the
statements set forth in Section 12.04) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel (which shall include the statements
set forth in Section 12.04) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been complied with.
SECTION 12.04. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
SECTION 12.05. Nonpetition
The Trustee shall not petition or otherwise invoke the
process of any Governmental Authority for the purpose of
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commencing or sustaining a case against the Company under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Company or any substantial part of its respective property, or ordering the
winding up or liquidation of the affairs of the Company.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and witnessed, all as of the day and year first above written.
COPELCO CAPITAL FUNDING CORP. X
/s/ STEPHEN W. SHIPPIE
------------------------------------
Name: STEPHEN W. SHIPPIE
Title: VICE PRESIDENT
[SEAL]
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
[SEAL] By /s/ RUSSELL T. WHITLEY
------------------------------------
Name: RUSSELL T. WHITLEY
Title: ASSISTANT VICE PRESIDENT
<PAGE>
SCHEDULE 1
LEASES
[THE LIST OF LEASES ARE ON FILE AT DEWEY BALLANTINE]
<PAGE>
EXHIBIT A
[FORM OF
CLASS A-1 NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
COPELCO CAPITAL FUNDING CORP. X
5.809% CLASS A-1 LEASE-BACKED NOTE, SERIES 1997-A
CUSIP NO. 217246AA5
No. R- $142,197,000
Copelco Capital Funding Corp. X, a corporation duly organized
and existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of One hundred forty-two million one hundred ninety-seven thousand
Dollars ($142,197,000), payable in monthly installments beginning on July 21,
1997, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of 5.809% per annum,
until the full amount of principal hereof is otherwise paid or made available
for payment and shall be computed on the basis of a year of 360 days and the
actual number of days in the period since the last Payment Date or with respect
to the July 1997 Payment Date, since the Issuance Date.
Principal and interest on this Class A-1 Note shall be paid on
the 20th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing July 21, 1997, either by check to the
registered
A-1
<PAGE>
address of the Holder of this Class A-1 Note as of the relevant Record Date or
by wire transfer to an account at a bank in the United States as the Holder
shall specify, as provided more fully in the Indenture; provided, that the final
payment of principal and interest in respect of the Notes shall be payable to
the Holder of this Note only upon presentation and surrender of this Note at the
Corporate Trust Office of the Trustee or at the principal office of any Paying
Agent appointed pursuant to the Indenture.
The Stated Maturity of the Class A-1 Notes is July 1998, on
which date the Outstanding Principal Amount of the Class A-1 Notes shall be due
and payable.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Class A-1 Note shall not be entitled to any benefit under the Indenture or
be valid or obligatory for any purpose.
This Class A-1 Note is one of a duly authorized issue of Class
A Notes of the Company designated as its "5.809% Class A-1 Lease-Backed Notes,
Series 1997-A" (herein called the "Class A-1 Notes") limited in aggregate
principal amount of $142,197,000, issued under the Indenture, dated as of June
1, 1997 (herein called the "Indenture"), between the Company and Manufacturers
and Traders Trust Company as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders and of the terms upon which the Class
A-1 Notes are authenticated and delivered. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings set forth in the
Indenture.
This Class A-1 Note will be secured by the pledge to the
Trustee of the Trust Estate.
If an Event of Default under the Indenture has been declared
by the Trustee, the principal of all the Class A-1 Notes (but not less than all
the Class A-1 Notes) may be declared due and payable in the manner and with the
effect provided in the Indenture. Notice of such declaration will be given by
mail to Holders, as their names and addresses appear in the Note Register, as
provided in the Indenture. Upon payment of such principal amount together with
all accrued interest, the obligations of the Company with respect to the payment
of principal and interest on this Class A-1 Note shall terminate.
A-2
<PAGE>
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Class A Notes and the Company's 6.50%
Class B Lease-Backed Notes, Series 1997-A (the "Class B Notes") at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Class A Notes and the
Class B Notes at the time Outstanding, on behalf of all the Holders, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Class A-1 Note shall be conclusive and binding upon
such Holder and upon all future Holders of this Class A-1 Note and of any Class
A-1 Note issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Class A-1 Note or any Class A-1 Note.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Class A-1 Note is
registrable in the Note Register, upon surrender of this Class A-1 Note for
registration of transfer at the office or agency of the Trustee in The City of
Buffalo, NY, and at any other office or agency maintained by the Company for
that purpose, duly endorsed by, or accompanied by a written instrument of
transfer in the form satisfactory to the Note Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Class A-1 Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Class A-1 Notes are issuable only in registered form
without coupons in minimum denominations of $1,000. As provided in the Indenture
and subject to certain limitations therein set forth, Class A-1 Notes are
exchangeable for a like aggregate principal amount of Class A-1 Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Class A-1 Note is registered as
the owner hereof for all purposes, whether or not this Class A-1 Note may be
A-3
<PAGE>
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture and this Class A-1 Note shall be deemed to be
contracts made under the laws of the State of New York and shall for all
purposes be governed by, and construed in accordance with, the laws of the State
of New York.
A-4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: , 199
COPELCO CAPITAL FUNDING CORP. X
[SEAL]
By:_______________________________
Authorized Officer
Attest:
_____________________________
Trustee's Certificate of Authentication
This is one of the Class A-1 Notes referred to in the within
mentioned Indenture.
Manufacturers and Traders Trust
Company, as Trustee
By:________________________________
Authorized Signatory
A-5
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Class A-1 Note, fill in
the form below and have your signature guaranteed:
I or we assign and transfer this Class A-1 Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ____________________, agent to transfer this Class A-1
Note on the books of the Company. The agent may substitute another to act for
him.
Dated: __________________ Signed: _______________________________
_______________________________
(sign exactly as the name
appears on the other side
of this Class A-1 Note)
Signature Guarantee _________________________________________________________
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Class A-1 Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank. Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class A-1 Note and the signed "power of attorney" in separate
envelopes. For added protection, use certified or registered mail for a Class
A-1 Note.
A-6
<PAGE>
[FORM OF
CLASS A-2 NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
COPELCO CAPITAL FUNDING CORP. X
6.05% CLASS A-2 LEASE-BACKED NOTE, SERIES 1997-A
CUSIP NO. 217246AB3
No. R- $54,182,000
Copelco Capital Funding Corp. X, a corporation duly organized
and existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of Fifty-four million one hundred eighty-two thousand Dollars
($54,182,000), payable in monthly installments beginning on July 21, 1997, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from the date of issuance, at the rate of 6.05% per annum, until the full
amount of principal hereof is otherwise paid or made available for payment and
shall be computed on the basis of twelve 30-day months and a year of 360 days.
Principal and interest on this Class A-2 Note shall be paid on
the 20th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing July 21, 1997, either by check to the
registered address of the Holder of this Class A-2 Note as of the relevant
Record Date or by wire transfer to an account at a bank in the United States as
the Holder shall specify, as
A-7
<PAGE>
provided more fully in the Indenture; provided, that the final payment of
principal and interest in respect of the Notes shall be payable to the Holder of
this Note only upon presentation and surrender of this Note at the Corporate
Trust Office of the Trustee or at the principal office of any Paying Agent
appointed pursuant to the Indenture.
The Stated Maturity of the Class A-2 Notes is April 2005, on
which date the Outstanding Principal Amount of the Class A-2 Notes shall be due
and payable.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Class A-2 Note shall not be entitled to any benefit under the Indenture or
be valid or obligatory for any purpose.
This Class A-2 Note is one of a duly authorized issue of Class
A-2 Notes of the Company designated as its "6.05% Class A-2 Lease-Backed Notes,
Series 1997-A" (herein called the "Class A-2 Notes") limited in aggregate
principal amount of $54,182,000, issued under the Indenture, dated as of June 1,
1997 (herein called the "Indenture"), between the Company and Manufacturers and
Traders Trust Company as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders and of the terms upon which the Class
A-2 Notes are authenticated and delivered. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings set forth in the
Indenture.
This Class A-2 Note will be secured by the pledge to the
Trustee of the Trust Estate.
If an Event of Default under the Indenture has been declared
by the Trustee, the principal of all the Class A-2 Notes (but not less than all
the Class A-2 Notes) may be declared due and payable in the manner and with the
effect provided in the Indenture. Notice of such declaration will be given by
mail to Holders, as their names and addresses appear in the Note Register, as
provided in the Indenture. Upon payment of such principal amount together with
all accrued interest, the obligations of the Company with respect to the payment
of principal and interest on this Class A-2 Note shall terminate.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights
A-8
Page>
of the Holders under the Indenture at any time by the Company and the Trustee
with the consent of the Holders of 66 2/3% in aggregate principal amount of the
Class A Notes and the Company's 6.50% Class B Lease-Backed Notes, Series 1997-A
(the "Class B Notes") at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Class A Notes and the Class B Notes at the time
Outstanding, on behalf of all the Holders, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Class A-2 Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Class A-2 Note and of any Class A-2 Note issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Class A-2
Note or any Class A-2 Note.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Class A-2 Note is
registrable in the Note Register, upon surrender of this Class A-2 Note for
registration of transfer at the office or agency of the Trustee in The City of
Buffalo, NY, and at any other office or agency maintained by the Company for
that purpose, duly endorsed by, or accompanied by a written instrument of
transfer in the form satisfactory to the Note Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Class A-2 Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Class A-2 Notes are issuable only in registered form
without coupons in minimum denominations of $1,000. As provided in the Indenture
and subject to certain limitations therein set forth, Class A-2 Notes are
exchangeable for a like aggregate principal amount of Class A-2 Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Class A-2 Note is registered as
the owner hereof for all purposes, whether or not this Class A-2 Note may be
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
A-9
<PAGE>
The Indenture and this Class A-2 Note shall be deemed to be
contracts made under the laws of the State of New York and shall for all
purposes be governed by, and construed in accordance with, the laws of the State
of New York.
A-10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: , 199
COPELCO CAPITAL FUNDING CORP. X
[SEAL]
By:________________________________
Authorized Officer
Attest:
____________________
Trustee's Certificate of Authentication
This is one of the Class A-2 Notes referred to in the within
mentioned Indenture.
Manufacturers and Traders Trust
Company, as Trustee
By:________________________________
Authorized Signatory
A-11
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Class A-2 Note, fill in
the form below and have your signature guaranteed:
I or we assign and transfer this Class A-2 Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ___________________, agent to transfer this Class A-2
Note on the books of the Company. The agent may substitute another to act for
him.
Dated: _____________________ Signed: ___________________________________
___________________________________
(sign exactly as the name
appears on the other side
of this Class A-2 Note)
Signature Guarantee ____________________________________________________________
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Class A Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank. Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class A Note and the signed "power of attorney" in separate envelopes.
For added protection, use certified or registered mail for a Class A-2 Note.
A-12
<PAGE>
[FORM OF
CLASS A-3 NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
COPELCO CAPITAL FUNDING CORP. X
6.27% CLASS A-3 LEASE-BACKED NOTE, SERIES 1997-A
CUSIP NO. 217246AC1
No. R- $211,495,000
Copelco Capital Funding Corp. X, a corporation duly organized
and existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of Two hundred eleven million four hundred ninety-five thousand
Dollars ($211,495,000), payable in monthly installments beginning on July 21,
1997, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of 6.27% per annum,
until the full amount of principal hereof is otherwise paid or made available
for payment and shall be computed on the basis of twelve 30-day months and a
year of 360 days.
Principal and interest on this Class A-3 Note shall be paid on
the 20th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing July 21, 1997, either by check to the
registered address of the Holder of this Class A-3 Note as of the relevant
Record Date or by wire transfer to an account at a bank in the United States as
the Holder shall specify, as
A-13
<PAGE>
provided more fully in the Indenture; provided, that the final payment of
principal and interest in respect of the Notes shall be payable to the Holder of
this Note only upon presentation and surrender of this Note at the Corporate
Trust Office of the Trustee or at the principal office of any Paying Agent
appointed pursuant to the Indenture.
The Stated Maturity of the Class A-3 Notes is April 2005, on
which date the Outstanding Principal Amount of the Class A-3 Notes shall be due
and payable.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Class A-3 Note shall not be entitled to any benefit under the Indenture or
be valid or obligatory for any purpose.
This Class A-3 Note is one of a duly authorized issue of Class
A-3 Notes of the Company designated as its "6.27% Class A-3 Lease-Backed Notes,
Series 1997-A" (herein called the "Class A-3 Notes") limited in aggregate
principal amount of $211,495,000, issued under the Indenture, dated as of June
1, 1997 (herein called the "Indenture"), between the Company and Manufacturers
and Traders Trust Company as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders and of the terms upon which the Class
A-3 Notes are authenticated and delivered. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings set forth in the
Indenture.
This Class A-3 Note will be secured by the pledge to the
Trustee of the Trust Estate.
If an Event of Default under the Indenture has been declared
by the Trustee, the principal of all the Class A-3 Notes (but not less than all
the Class A-3 Notes) may be declared due and payable in the manner and with the
effect provided in the Indenture. Notice of such declaration will be given by
mail to Holders, as their names and addresses appear in the Note Register, as
provided in the Indenture. Upon payment of such principal amount together with
all accrued interest, the obligations of the Company with respect to the payment
of principal and interest on this Class A-3 Note shall terminate.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights
A-14
<PAGE>
of the Holders under the Indenture at any time by the Company and the Trustee
with the consent of the Holders of 66 2/3% in aggregate principal amount of the
Class A Notes and the Company's 6.50% Class B Lease-Backed Notes, Series 1997-A
(the "Class B Notes") at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Class A Notes and the Class B Notes at the time
Outstanding, on behalf of all the Holders, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Class A-3 Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Class A-3 Note and of any Class A-3 Note issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Class A-3
Note or any Class A-3 Note.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Class A-3 Note is
registrable in the Note Register, upon surrender of this Class A-3 Note for
registration of transfer at the office or agency of the Trustee in The City of
Buffalo, NY, and at any other office or agency maintained by the Company for
that purpose, duly endorsed by, or accompanied by a written instrument of
transfer in the form satisfactory to the Note Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Class A-3 Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Class A-3 Notes are issuable only in registered form
without coupons in minimum denominations of $1,000. As provided in the Indenture
and subject to certain limitations therein set forth, Class A-3 Notes are
exchangeable for a like aggregate principal amount of Class A-3 Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Class A-3 Note is registered as
the owner hereof for all purposes, whether or not this Class A-3 Note may be
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
A-15
<PAGE>
The Indenture and this Class A-3 Note shall be deemed to be
contracts made under the laws of the State of New York and shall for all
purposes be governed by, and construed in accordance with, the laws of the State
of New York.
A-16
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: ________________, 199__
COPELCO CAPITAL FUNDING CORP. X
[SEAL]
By:_________________________________
Authorized Officer
Attest:
__________________________
Trustee's Certificate of Authentication
This is one of the Class A-3 Notes referred to in the within
mentioned Indenture.
Manufacturers and Traders Trust
Company, as Trustee
By: ________________________________
Authorized Signatory
A-17
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Class A-3 Note, fill in
the form below and have your signature guaranteed:
I or we assign and transfer this Class A-3 Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint __________________, agent to transfer this Class
A-3 Note on the books of the Company. The agent may substitute another to
act for him.
Dated: _________________ Signed: _______________________________
_______________________________
(sign exactly as the name
appears on the other side
of this Class A-3 Note)
Signature Guarantee ____________________________________________________________
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Class A Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank. Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class A Note and the signed "power of attorney" in separate envelopes.
For added protection, use certified or registered mail for a Class A-3 Note.
A-18
<PAGE>
[FORM OF
CLASS A-4 NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
COPELCO CAPITAL FUNDING CORP. X
6.47% CLASS A-4 LEASE-BACKED NOTE, SERIES 1997-A
CUSIP NO. 217246AD9
No. R- $126,667,000
Copelco Capital Funding Corp. X, a corporation duly organized
and existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of One hundred twenty-six million six hundred sixty-seven thousand
Dollars ($126,667,000), payable in monthly installments beginning on July 21,
1997, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of 6.47% per annum,
until the full amount of principal hereof is otherwise paid or made available
for payment and shall be computed on the basis of twelve 30-day months and a
year of 360 days.
Principal and interest on this Class A-4 Note shall be paid on
the 20th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing July 21, 1997, either by check to the
registered address of the Holder of this Class A-4 Note as of the relevant
Record Date or by wire transfer to an account at a bank in the United States as
the Holder shall specify, as
A-19
<PAGE>
provided more fully in the Indenture; provided, that the final payment of
principal and interest in respect of the Notes shall be payable to the Holder of
this Note only upon presentation and surrender of this Note at the Corporate
Trust Office of the Trustee or at the principal office of any Paying Agent
appointed pursuant to the Indenture.
The Stated Maturity of the Class A-4 Notes is April 2005, on
which date the Outstanding Principal Amount of the Class A-4 Notes shall be due
and payable.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Class A-4 Note shall not be entitled to any benefit under the Indenture or
be valid or obligatory for any purpose.
This Class A-4 Note is one of a duly authorized issue of Class
A-4 Notes of the Company designated as its "6.47% Class A-4 Lease-Backed Notes,
Series 1997-A" (herein called the "Class A-4 Notes") limited in aggregate
principal amount of $126,667,000, issued under the Indenture, dated as of June
1, 1997 (herein called the "Indenture"), between the Company and Manufacturers
and Traders Trust Company as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders and of the terms upon which the Class
A-4 Notes are authenticated and delivered. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings set forth in the
Indenture.
This Class A-4 Note will be secured by the pledge to the
Trustee of the Trust Estate.
If an Event of Default under the Indenture has been declared
by the Trustee, the principal of all the Class A- Notes (but not less than all
the Class A-4 Notes) may be declared due and payable in the manner and with the
effect provided in the Indenture. Notice of such declaration will be given by
mail to Holders, as their names and addresses appear in the Note Register, as
provided in the Indenture. Upon payment of such principal amount together with
all accrued interest, the obligations of the Company with respect to the payment
of principal and interest on this Class A-4 Note shall terminate.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights
A-20
<PAGE>
of the Holders under the Indenture at any time by the Company and the Trustee
with the consent of the Holders of 66 2/3% in aggregate principal amount of the
Class A Notes and the Company's 6.50% Class B Lease-Backed Notes, Series 1997-A
(the "Class B Notes") at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Class A Notes and the Class B Notes at the time
Outstanding, on behalf of all the Holders, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Class A-4 Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Class A-4 Note and of any Class A-4 Note issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Class A-4
Note or any Class A-4 Note.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Class A-4 Note is
registrable in the Note Register, upon surrender of this Class A-4 Note for
registration of transfer at the office or agency of the Trustee in The City of
Buffalo, NY, and at any other office or agency maintained by the Company for
that purpose, duly endorsed by, or accompanied by a written instrument of
transfer in the form satisfactory to the Note Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Class A-4 Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Class A-4 Notes are issuable only in registered form
without coupons in minimum denominations of $1,000. As provided in the Indenture
and subject to certain limitations therein set forth, Class A-4 Notes are
exchangeable for a like aggregate principal amount of Class A-4 Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Class A-4 Note is registered as
the owner hereof for all purposes, whether or not this Class A-4 Note may be
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
A-21
<PAGE>
The Indenture and this Class A-4 Note shall be deemed to be
contracts made under the laws of the State of New York and shall for all
purposes be governed by, and construed in accordance with, the laws of the State
of New York.
A-22
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: _________________, 199__
COPELCO CAPITAL FUNDING CORP. X
[SEAL]
By: _______________________________
Authorized Officer
Attest:
______________________
Trustee's Certificate of Authentication
This is one of the Class A-4 Notes referred to in the within
mentioned Indenture.
Manufacturers and Traders Trust
Company, as Trustee
By: ________________________________
Authorized Signatory
A-23
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Class A-4 Note, fill in
the form below and have your signature guaranteed:
I or we assign and transfer this Class A-4 Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ___________________, agent to transfer this Class
A-4 Note on the books of the Company. The agent may substitute another to act
for him.
Dated: ___________________ Signed: _________________________________
_________________________________
(sign exactly as the name
appears on the other side
of this Class A-4 Note)
Signature Guarantee ____________________________________________________________
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Class A Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank. Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class A Note and the signed "power of attorney" in separate envelopes.
For added protection, use certified or registered mail for a Class A-4 Note.
A-24
<PAGE>
[FORM OF
CLASS B NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
COPELCO CAPITAL FUNDING CORP. X
6.50% CLASS B LEASE-BACKED NOTE
CUSIP No. 217246AE7
No. R- $22,746,000
Copelco Capital Funding Corp. X, a corporation duly organized
and existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of Twenty-two million seven hundred forty-six thousand Dollars
($22,746,000), payable in monthly installments beginning on July 21, 1997, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from the date of issuance, at the rate of 6.50% per annum, until the full
amount of principal hereof is otherwise paid or made available for payment and
shall be computed on the basis of twelve 30-day months and a year of 360 days.
Principal and interest on this Class B Note shall be paid on
the 20th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing July 21, 1997, either by check to the
registered address of the Holder of this Class B Note or by wire transfer to an
account at a bank in the United States as the Holder shall specify, as provided
more fully in the Indenture; provided, that the final payment of principal and
interest in respect of the Class B Notes during the Principal Amortization
Period shall be payable to the Holder
A-25
<PAGE>
of this Class B Note only upon presentation and surrender of this Class B Note
at the Corporate Trust Office of the Trustee or at the principal office of any
Paying Agent appointed pursuant to the Indenture.
The Stated Maturity of the Class B Notes is April 2005, on
which date the Outstanding Principal Amount of the Class B Notes shall be due
and payable.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Class B Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
This Class B Note is one of a duly authorized issue of Class B
Notes of the Company designated as its "6.50% Class B Lease-Backed Notes, Series
1997-A" (herein called the "Class B Notes"), limited in aggregate principal
amount of $22,746,000, issued under the Indenture, dated as of June 1, 1997
(herein called the "Indenture"), between the Company and Manufacturers and
Traders Trust Company as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders and of the terms upon which the Class B
Notes are authenticated and delivered. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings set forth in the
Indenture.
If an Event of Default under the Indenture has been declared
by the Trustee, the principal of all the Class B Notes (but not less than all
the Class B Notes) may be declared due and payable in the manner and with the
effect provided in the Indenture. Notice of such declaration will be given by
mail to Holders, as their names and addresses appear in the Note Register, as
provided in the Indenture. Upon payment of such principal amount together with
all accrued interest, the obligations of the Company with respect to the payment
of principal and interest on this Class B Note shall terminate.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Company's _____% Class A Lease-Backed
Notes, Series 1997-A
A-26
<PAGE>
(the "Class A Notes"), the Class B Notes and the Class C Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Class A Notes and the
Class B Notes at the time outstanding, on behalf of all the Holders, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Class B Note shall be conclusive and binding upon
such Holder and upon all future Holders of this Class B Note and of any Class B
Note issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof, whether or not notation of such consent or waiver is made upon
this Class B Note or any Class B Note.
No sale or transfer of this Class B Note may be made unless
such sale or transfer complies with or is exempt from registration requirements
of the Securities Act and applicable state securities laws. Prospective
transferees of this Class B Note will be required to deliver a certificate
pursuant to the terms of the Indenture relating to compliance with the
Securities Act and applicable state securities law.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Class B Note is registrable
in the Note Register, upon surrender of this Class B Note for registration of
transfer at the office or agency of the Trustee in The City of Buffalo, NY, and
at any other office or agency maintained by the Company for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer in the form
satisfactory to the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Class B
Notes, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
The Class B Notes are issuable only in registered form without
coupons in minimum denominations of $1,000. As provided in the Indenture and
subject to certain limitations therein set forth, Class B Notes are exchangeable
for a like aggregate principal amount of Class B Notes of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
A-27
<PAGE>
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Class B Note is registered as
the owner hereof for all purposes, whether or not this Class B Note may be
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture and this Class B Note shall be deemed to be
contracts made under the laws of the State of New York and shall for all
purposes be governed by, and construed in accordance with, the laws of the State
of New York.
A-28
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: ______________, 199
COPELCO CAPITAL FUNDING CORP. X
[SEAL]
By:________________________________
Authorized Officer
Attest:
_____________________
Trustee's Certificate of Authentication
This is one of the Class B Notes referred to in the within
mentioned Indenture.
Manufacturers and Traders trust
Company, as Trustee
By:_____________________________________
Authorized Signatory
A-29
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Class B Note, fill in
the form below and have your signature guaranteed:
I or we assign and transfer this Class B Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ___________________________, agent to transfer this
Class B Note on the books of the Company. The agent may substitute another to
act for him.
Dated: _____________________ Signed: ______________________________
(signed exactly as the
name appears on the other
side of this Class B
Note)
Signature Guarantee_____________________________________________________________
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Class B Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank. Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class B Note and the signed "power of attorney" in separate envelopes.
For added protection, use certified or registered mail for a Class B Note.
A-30
<PAGE>
[FORM OF
CLASS C NOTE]
THIS CLASS C NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAW, AND MAY NOT BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR
OTHERWISE DISPOSED OF BY THE OWNER HEREOF (I) UNLESS SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH STATE LAWS AND (II) IN THE
CASE OF A TRANSFER TO AN ENTITY USING THE ASSETS OF AN EMPLOYEE BENEFIT PLAN,
UNLESS SUCH TRANSFER IS COVERED BY A CLASS EXEMPTION ISSUED BY THE U.S.
DEPARTMENT OF LABOR. BY ACCEPTANCE OF THIS CLASS C NOTE, THE HOLDER AGREES TO BE
BOUND BY ALL THE TERMS OF THE INDENTURE.
COPELCO CAPITAL FUNDING CORP. X
6.78% CLASS C LEASE-BACKED NOTE
PP No. 217246AF4
No. R- $11,373,720
Copelco Capital Funding Corp. X, a corporation duly organized
and existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay to [ ], or registered assigns, the principal
sum of Eleven million three hundred seventy-three thousand seven hundred twenty
Dollars ($11,373,720), payable in monthly installments beginning on July 21,
1997, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of 6.78% per annum,
until the full amount of principal hereof is otherwise paid or made available
for payment and shall be computed on the basis of twelve 30-day months and a
year of 360 days.
Principal and interest on this Class C Note shall be paid on
the 20th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing July 21, 1997, either by check to the
registered address of the Holder of this Class C Note or by wire transfer to an
account at a bank in the United States as the Holder shall specify, as provided
more fully in the Indenture; provided, that the final payment of principal and
interest in respect of the Class C Notes during the Principal Amortization
Period shall be payable to the Holder
A-31
<PAGE>
of this Class C Note only upon presentation and surrender of this Class C Note
at the Corporate Trust Office of the Trustee or at the principal office of any
Paying Agent appointed pursuant to the Indenture.
The Stated Maturity of the Class C Notes is April 2005, on
which date the Outstanding Principal Amount of the Class C Notes shall be due
and payable.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Class C Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
This Class C Note is one of a duly authorized issue of Class C
Notes of the Company designated as its "6.78% Class C Lease-Backed Notes, Series
1997-A" (herein called the "Class C Notes"), limited in aggregate principal
amount of $11,373,720, issued under the Indenture, dated as of June 1, 1997
(herein called the "Indenture"), between the Company and Manufacturers and
Traders Trust Company as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders and of the terms upon which the Class C
Notes are authenticated and delivered. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings set forth in the
Indenture.
If an Event of Default under the Indenture has been declared
by the Trustee, the principal of all the Class C Notes (but not less than all
the Class C Notes) may be declared due and payable in the manner and with the
effect provided in the Indenture. Notice of such declaration will be given by
mail to Holders, as their names and addresses appear in the Note Register, as
provided in the Indenture. Upon payment of such principal amount together with
all accrued interest, the obligations of the Company with respect to the payment
of principal and interest on this Class C Note shall terminate.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Company's _____% Class A Lease-Backed
Notes, Series 1997-A
A-32
<PAGE>
(the "Class A Notes"), the Class B Notes and the Class C Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Class A Notes and the
Class C Notes at the time outstanding, on behalf of all the Holders, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Class C Note shall be conclusive and binding upon
such Holder and upon all future Holders of this Class C Note and of any Class C
Note issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof, whether or not notation of such consent or waiver is made upon
this Class C Note or any Class C Note.
No sale or transfer of this Class C Note may be made unless
such sale or transfer complies with or is exempt from registration requirements
of the Securities Act and applicable state securities laws. Prospective
transferees of this Class C Note will be required to deliver a certificate
pursuant to the terms of the Indenture relating to compliance with the
Securities Act and applicable state securities law.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Class C Note is registrable
in the Note Register, upon surrender of this Class C Note for registration of
transfer at the office or agency of the Trustee in The City of Buffalo, NY, and
at any other office or agency maintained by the Company for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer in the form
satisfactory to the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Class C
Notes, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
The Class C Notes are issuable only in registered form without
coupons in minimum denominations of $250,000. As provided in the Indenture and
subject to certain limitations therein set forth, Class C Notes are exchangeable
for a like aggregate principal amount of Class C Notes of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
A-33
<PAGE>
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Class C Note is registered as
the owner hereof for all purposes, whether or not this Class C Note may be
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture and this Class C Note shall be deemed to be
contracts made under the laws of the State of New York and shall for all
purposes be governed by, and construed in accordance with, the laws of the State
of New York.
A-34
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: ______________, 199__
COPELCO CAPITAL FUNDING CORP. X
[SEAL]
By:________________________________
Authorized Officer
Attest:
_________________________
Trustee's Certificate of Authentication
This is one of the Class C Notes referred to in the within
mentioned Indenture.
Manufacturers and Traders Trust
Company, as Trustee
By: _______________________________
Authorized Signatory
A-35
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Class C Note, fill in
the form below and have your signature guaranteed:
I or we assign and transfer this Class C Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________, agent to transfer this Class C
Note on the books of the Company. The agent may substitute another to act for
him.
Dated: ________________ Signed: ___________________________________
___________________________________
(signed exactly as the
name appears on the other
side of this Class C
Note)
Signature Guarantee ____________________________________________________________
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Class C Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank. Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class C Note and the signed "power of attorney" in separate envelopes.
For added protection, use certified or registered mail for a Class C Note.
A-36
<PAGE>
EXHIBIT B
[FORM OF
INVESTOR'S LETTER]
(Date)
Copelco Capital Funding Corp. X
700 East Gate Center
Mount Laurel, New Jersey 08110
Ladies and Gentlemen:
We propose to purchase $11,373,720 in original aggregate
principal amount of Copelco Capital Funding Corp. X 6.78% Class C Lease-Backed
Notes, Series 1997-A, (the "Class C Notes"). The Class C Notes were issued
pursuant to an Indenture (the "Indenture"), dated as of June 1, 1997, among
Copelco Capital Funding Corp. X and Manufacturers and Traders Trust Company.
Capitalized terms used herein but not otherwise defined shall have the same
meaning as in the Indenture.
In connection with our proposed purchase of Class C Notes, we
agree to the following terms and conditions and make the representations and
warranties stated herein with the express understanding that they will be relied
upon by Copelco Capital Funding Corp. X and the parties to the Placement Agent
Agreement.
1. We understand that the Class C Notes have not been
registered under the Securities Act of 1933, as amended (the "Securities Act")
or registered or qualified under any state securities or "Blue Sky" laws and are
being sold to us in a transaction that is exempt from the registration
requirements of the Securities Act and the registration or qualification
requirements of such state laws.
2. We are (Check one):
___ (a) a "Qualified Institutional Buyer" (as
defined in Rule 144A under the Securities
Act), in the case of a transfer of
Certificates to be made in reliance on Rule
144A.
___ (b) an institutional investor that has such
knowledge and experience in financial
and business matters as to be capable of
evaluating the merits and risks of an
investment in the Class C Notes and is
B-1
<PAGE>
able to bear the economic risk of
investment in the Class C Notes.
___ (c) an "accredited investor" as defined in
Rule 501 promulgated under the
Securities Act that has such knowledge
and experience in financial and business
matters as to be capable of evaluating
the merits and risks of investment in
the Class C Notes and is able to bear
the economic risk of investment in the
Class C Notes.
3. We agree that, to the extent that Section 2(a) of this
letter is applicable, that the Class C Notes will not be transferred unless such
transfer is made in reliance on Rule 144A or unless some other exemption from
the registration requirements of the Securities Act, or any applicable state
securities law, is available.
4. To the extent that Section 2(b) or (c) of this letter is
applicable, that we are acquiring the Class C Notes (i) solely for investment
purposes for our own account or for accounts as to which we exercise sole
investment discretion and not with a view to any resale or distribution of the
Class C Notes in whole or in part, or (ii) otherwise for purposes which will not
constitute a distribution of securities under the Securities Act, or under any
state securities or "Blue Sky" laws subject, nevertheless, to the understanding
that disposition of our property shall at all times be and remain within our
control, and under no circumstances will we attempt to sell, pledge, hypothecate
or otherwise transfer all or any portion of our interest in the Class C Notes
except in accordance with the terms of the Class C Notes and the Indenture.
5. We agree not to sell the Class C Notes in whole or in
part, unless the subsequent purchaser agrees to be subject to the same
representations and warranties as were applicable to us in acquiring the Class
C Notes.
6. We understand that each of the Class C Notes shall bear
a legend to substantially the following effect:
THIS CLASS C NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAW, AND MAY NOT BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR
OTHERWISE DISPOSED OF BY THE OWNER HEREOF (I) UNLESS SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH STATE LAWS AND (II) IN THE
CASE OF A TRANSFER TO AN ENTITY USING THE ASSETS OF AN EMPLOYEE BENEFIT PLAN,
UNLESS SUCH TRANSFER IS COVERED BY A CLASS EXEMPTION ISSUED BY THE
B-2
<PAGE>
U.S. DEPARTMENT OF LABOR. BY ACCEPTANCE OF THIS CLASS C NOTE, THE HOLDER AGREES
TO BE BOUND BY ALL THE TERMS OF THE INDENTURE.
7. We understand that there is no public market for the
Class C Notes and it is unlikely that such market will develop.
8. We are authorized to invest in the Class C Notes.
9. We certify that, in acquiring the Class C Notes, we have
complied with any applicable guidelines or regulations for or limitations on
investments established by each regulatory agency or body, if any, which has
jurisdiction over investments made by us and that our acquisition and retention
of the Class C Notes will not violate the limitations on possession contained in
any such guidelines, regulations or limitations.
10. We further agree to be bound by all of the terms and
conditions of ownership of the Class C Notes contained in the Indenture, as the
same may be amended from time to time.
Very truly yours,
[TRANSFEREE]
B-3
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COPELCO CAPITAL, INC.,
SELLER AND SERVICER
AND
COPELCO CAPITAL FUNDING CORP. X,
PURCHASER
-------------------------
SALES AND SERVICING AGREEMENT
Dated as of June 1, 1997
-------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALL RIGHT, TITLE AND INTEREST IN AND TO THIS AGREEMENT OF COPELCO CAPITAL
FUNDING CORP. X HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST IN
FAVOR OF MANUFACTURERS AND TRADERS TRUST COMPANY, AS TRUSTEE, UNDER THE
INDENTURE DATED AS OF JUNE 1, 1997, FOR THE BENEFIT OF THE PERSONS REFERRED TO
THEREIN.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
R E C I T A L S........................................................................................ 1
A G R E E M E N T S.................................................................................... 2
SECTION 1. PURCHASE AND SALE........................................................... 2
1.01 Purchase of Leases................................................................... 2
1.02 Consideration and Payment............................................................ 2
1.03 Capital Contribution................................................................. 2
1.04 Transfer of Leases; Grant of Security
Interest............................................................................. 2
1.05 Servicer to Act as Custodian......................................................... 3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF
THE SELLER......................................................... 4
2.01 Corporate Organization and Authority................................................. 4
2.02 Business and Property................................................................ 5
2.03 Financial Statements................................................................. 5
2.04 Equipment and Leases................................................................. 6
2.05 Payments............................................................................. 9
2.06 Full Disclosure...................................................................... 10
2.07 Pending Litigation................................................................... 10
2.08 Title to Properties.................................................................. 10
2.09 Transactions Legal and Authorized.................................................... 11
2.10 Governmental Consent................................................................. 11
2.11 Taxes................................................................................ 11
2.12 Compliance with Law.................................................................. 12
2.13 ERISA................................................................................ 12
2.14 Ability to Perform................................................................... 13
2.15 Ordinary Course; No Insolvency....................................................... 13
2.16 Assets and Liabilities............................................................... 13
2.17 Fair Consideration................................................................... 13
2.18 Ability to Pay Debts................................................................. 13
2.19 Bulk Transfer Provisions............................................................. 14
2.20 Transfer Taxes....................................................................... 14
2.21 Principal Executive Office........................................................... 14
2.22 Servicing Provisions Customary....................................................... 14
2.23 Nonconsolidation..................................................................... 14
2.24 Sale Treatment....................................................................... 15
2.25 Leases are Chattel Paper............................................................. 15
SECTION 3. ADMINISTRATION OF LEASES.................................................... 15
3.01 Servicer to Act...................................................................... 15
3.02 Lease Amendments and Modifications................................................... 18
3.03 Non-Performing Leases................................................................ 19
3.04 Costs of Servicing; Servicing Fee;
Administrative Expenses.............................................................. 20
3.05 Other Transactions................................................................... 21
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 4. SERVICER ADVANCES AND SELLER'S SUPPORT...................................... 21
4.01 Late Lease Payments.................................................................. 21
4.02 Early Termination Leases............................................................. 22
4.03 Indemnification...................................................................... 22
4.04 Repurchases; Other Payments.......................................................... 23
4.05 Payment Advices...................................................................... 24
SECTION 5. INFORMATION TO BE PROVIDED.................................................. 25
5.01 Monthly Status Reports; Servicing Reports............................................ 25
5.02 Annual Independent Public Accountant's
Report............................................................................... 26
SECTION 6. THE SERVICER................................................................ 27
6.01 Merger or Consolidation of the Servicer.............................................. 27
6.02 Limitation on Liability of the Servicer and
Others............................................................................... 28
6.03 Servicer Not to Resign or Be Removed................................................. 28
6.04 Financial and Business Information................................................... 28
6.05 Officers' Certificates............................................................... 30
6.06 Inspection........................................................................... 30
6.07 Servicer Records..................................................................... 31
SECTION 7. THE SELLER.................................................................. 31
7.01 Merger or Consolidation of the Seller................................................ 31
7.02 Control of Company................................................................... 32
7.03 Financial and Business Information................................................... 32
7.04 Officers' Certificates............................................................... 33
7.05 Inspection........................................................................... 34
7.06 Books and Records.................................................................... 34
7.07 Communications....................................................................... 34
SECTION 8. DEFAULT..................................................................... 34
8.01 Servicer Events of Default........................................................... 34
8.02 Termination.......................................................................... 37
8.03 Trustee to Act; Appointment of Successor............................................. 37
8.04 Servicer to Cooperate................................................................ 38
8.05 Notification to Noteholders.......................................................... 39
8.06 Remedies Not Exclusive............................................................... 39
SECTION 9. SUBSTITUTION AND ADDITION OF LEASES......................................... 39
9.01 Substitution and Addition............................................................ 39
9.02 Procedure............................................................................ 41
9.03 Objection and Repurchase............................................................. 42
9.04 Seller's and Servicer's Subsequent
Obligations.......................................................................... 43
SECTION 10. ASSIGNMENT.................................................................. 43
10.01 Assignment to Trustee....................................................... 43
10.02 Assignment by Seller or Servicer............................................ 43
SECTION 11. NATURE OF SELLER'S OBLIGATIONS
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
AND SECURITY THEREFOR...................................... 43
11.01 Seller's Obligations Absolute............................................... 43
11.02 Security for Obligations.................................................... 44
11.03 Further Assurances; Financing
Statements.................................................................. 45
SECTION 12. DEFINITIONS................................................................. 45
SECTION 13. INTER-COMPANY LOANS......................................................... 51
13.01 Inter-Company Loans......................................................... 51
SECTION 14. MISCELLANEOUS............................................................... 52
14.01 Continuing Obligations...................................................... 52
14.02 GOVERNING LAW............................................................... 52
14.03 Successors and Assigns...................................................... 52
14.04 Modification................................................................ 52
14.05 No Proceedings.............................................................. 52
14.06 Notices..................................................................... 52
14.07 Counterparts................................................................ 53
Schedule 1 - Subsidiaries of the Seller
Exhibit A - Schedule of Leases and Equipment
Exhibit B - Form of Inter-Company Loan Note
Exhibit C - Form of Servicing Report
</TABLE>
iii
<PAGE>
SALES AND SERVICING AGREEMENT
This SALES AND SERVICING AGREEMENT is made and dated as of
June 1, 1997, by and between COPELCO CAPITAL FUNDING CORP. X, a Delaware
corporation, as purchaser hereunder (the "Company"), and COPELCO CAPITAL, INC.,
a Delaware corporation, as seller (in such capacity, the "Seller") and servicer
(in such capacity, the "Servicer") hereunder.
R E C I T A L S
A. The Seller wishes to sell and assign to the Company, and
the Company wishes to purchase from the Seller, all right, title and interest of
the Seller in, to and under the Leases (such term and all other capitalized
terms used herein having the meanings ascribed thereto in Section 12 hereof
unless otherwise indicated).
B. Contemporaneously with such sale and assignment, the Seller
wishes to contribute to the Company all right, title and interest of the Seller
in and to each item of Equipment subject to each Lease.
C. Pursuant to the Indenture, the Company is issuing one class
of 5.809% Class A-1 Lease-Backed Notes, Series 1997-A in the aggregate principal
amount of $142,197,000 (the "Class A-1 Notes"), one class of 6.05% Class A-2
Lease-Backed Notes, Series 1997-A in the aggregate principal amount of
$54,182,000 (the "Class A-2 Notes"), one class of 6.27% Class A-3 Lease-Backed
Notes, Series 1997-A in the aggregate principal amount of $211,495,000 (the
"Class A-3 Notes"), one class of 6.47% Class A-4 Lease-Backed Notes, Series
1997-A in the aggregate principal amount of $126,667,000 (the "Class A-4
Notes"), one class of 6.50% Class B Leased-Backed Notes, Series 1997-A (the
"Class B Notes"), in the aggregate principal amount of $22,746,00 and one class
of 6.78% Class C Lease-Backed Notes, Series 1997-A, in the aggregate principal
amount of $11,373,720 (the "Class C Notes") (the Class A Notes, the Class B
Notes and the Class C Notes are referred to collectively as the "Notes"), the
proceeds of which are being used by the Company to make payment to the Seller
for the Leases.
D. Pursuant to the Indenture, the Company is granting, inter
alia, to the Trustee, for the benefit of the holders from time to time of the
Notes, a security interest in all right, title and interest of the Company in,
to and under the Leases, the interests in the Equipment and this Sales and
Servicing Agreement.
<PAGE>
A G R E E M E N T S
SECTION 1. PURCHASE AND SALE
1.01 Purchase of Leases. By their execution and delivery of
this Sales and Servicing Agreement, the Seller hereby sells and assigns to the
Company, and the Company hereby purchases from the Seller without recourse
(except to the extent of the Seller's repurchase obligations as set forth
herein), all of the Seller's right, title and interest in and to each of the
Leases (including the right to receive all payments due or to become due
thereunder since the Cut-Off Date).
1.02 Consideration and Payment. The purchase price of the
Leases (including the right to receive all payments due or to become due
thereunder since the Cut-Off Date) is $567,317,452.33.
1.03 Capital Contribution. The Seller and the Company each
acknowledge and confirm that contemporaneously with the sale and purchase of the
Leases as hereinabove provided, the Seller, as the sole stockholder of the
Company, is contributing and transferring to the Company, and in connection with
each sale, transfer and assignment of Additional Leases and Substitute Leases
the Seller will contribute and transfer to the Company, without recourse, all
right, title and interest of the Seller in and to each item of Equipment subject
to each Lease, Additional Lease and Substitute Lease. After such contribution
and transfer by the Seller to the Company, all right, title and interest of the
Seller in and to each item of Equipment subject to each Lease shall be vested in
the Company.
1.04 Transfer of Leases; Grant of Security Interest. It is the
intention of the parties hereto that the transfer of Leases, Additional Leases,
Substitute Leases, Lease Payments and all other amounts due or becoming due with
respect thereto and Equipment (or interests therein) being made hereunder shall
constitute a purchase and sale or capital contribution and not a loan. The
Seller shall take no action inconsistent with the Company's ownership of the
Leases, the Lease Receivables and all other amounts due or becoming due with
respect thereto and the interests in the Equipment, the Seller shall indicate in
its records that ownership of each of the Leases, the Lease Receivables and the
interests in the Equipment is held by the Company, and the Seller shall respond
to any inquiries from third parties by indicating that its ownership in the
Leases, Additional Leases, Substitute Leases, the Lease Receivables and all
other amounts due or becoming due with respect thereto and the interests in the
Equipment is held by the Company and pledged to the Trustee. In the event,
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however, that a court of competent jurisdiction were to hold that any
transaction evidenced hereby constitutes a loan and not a purchase and sale or
capital contribution, it is the intention of the parties hereto that this
Agreement shall constitute a security agreement under applicable law and that
the Seller shall be deemed to have granted to the Company and the Trustee a
first priority security interest in the Leases and all Lease Payments, Casualty
Payments, Termination Payments and other amounts now due or becoming due with
respect thereto since the Cut-Off Date (other than any prepayments of rent
required pursuant to the terms of any Lease at or before the commencement of the
Lease and any payments due before the Cut-Off Date) and all Additional Leases
and Substitute Leases and all Lease Payments, Casualty Payments, Termination
Payments and other amounts due or becoming due with respect thereto since the
effective date of their respective addition or substitution (other than any
prepayments of rent required by the terms of any Lease at or before the
commencement of the Lease and any payments due before the effective date of such
addition or substitution), (b) all rights of the Company to or under any
guarantees of or collateral (including all rights of the Company in any security
deposits) for the Lessee's obligations under any Lease, (c) all interests of the
Company in the Equipment at any time subject to any Lease including any security
interest of the Seller in the Equipment and (d) all proceeds of the conversion,
whether voluntary or involuntary, of any of the foregoing into cash or other
property.
1.05 Servicer to Act as Custodian. (a) The Servicer shall hold
and acknowledges that it is holding the Leases and all other Granted Assets that
it may from time to time receive hereunder as custodian for the Trustee.
(b) The Servicer shall perform its duties under this Section
1.05 in accordance with the standard set forth in Section 3.01 as such standard
applies to servicers acting as custodial agents. The Servicer shall promptly
report to the Trustee any failure by it to hold the complete Leases as herein
provided and shall promptly take appropriate action to remedy any such failure
but only to the extent (i) any such failure is caused by the acts or omissions
of the Servicer and (ii) such remedial action is otherwise within its
capabilities or control. As custodian, the Servicer shall have and perform the
following powers and duties:
(A) hold the Leases on behalf of the
Trustee for the benefit of the Noteholders, maintain accurate records
pertaining to each Lease to enable it to comply with the terms and
conditions of this Sales and Servicing Agreement, and maintain a
current inventory thereof;
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(B) implement policies and procedures in
accordance with the Servicer's normal business practices with respect
to the handling and custody of the Leases so that the integrity and
physical possession of the Leases will be maintained; and
(C) attend to all details in connection
with maintaining custody of the Leases on behalf of the
Trustee on behalf of the Noteholders.
(c) In acting as custodian of the Leases, the Servicer agrees
further that it does not and will not have or assert any beneficial ownership
interest in such Leases. The Servicer on behalf of the Noteholders shall mark
conspicuously each original contractual document with a Lessee, and its master
data processing records evidencing each Lease with a legend, acceptable to the
Trustee, evidencing that all right, title and interest in the Leases has been
granted to the Trustee as provided in the Indenture.
(d) The Servicer agrees to maintain the Leases at either its
office in Mt. Laurel, New Jersey or Mahwah, New Jersey or at such other offices
of the Servicer as shall from time to time be identified by prior written notice
to the Trustee. Subject to the foregoing, the Servicer may temporarily move
individual Leases or any portion thereof without notice as necessary to conduct
collection and other servicing activities.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF
THE SELLER
The Seller hereby represents and warrants as follows:
2.01 Corporate Organization and Authority.
The Seller:
(a) is a corporation duly organized,
validly existing and in good standing
under the laws of its jurisdiction of
incorporation,
(b) has all requisite power and authority
and all necessary licenses and permits
to own and operate its properties and
to carry on its business as now
conducted (except where the failure to
have such licenses and permits would
not have a material adverse effect on
the business or condition (financial
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or otherwise) of the Seller or impair the
enforceability of any Lease) and to enter
into and perform its obligations under
this Sales and Servicing Agreement, and
the transactions contemplated hereby,
including performance of the duties of
the Servicer and the Seller's support
obligations hereunder, and
(c) has duly qualified and is authorized
to do business and is in good standing
as a foreign corporation in each
jurisdiction where the character of
its properties or the nature of its
activities makes such qualification
necessary (except where the failure to
be so qualified or in good standing
would not have a material adverse
effect on the Trust Estate or the
business or condition (financial or
otherwise) of the Seller or impair the
enforceability of any Lease).
2.02 Business and Property. The Prospectus and the Private
Placement Memorandum, accurately describe in all material respects the general
nature of the business of the Seller. The Seller has no subsidiaries other than
those listed on Schedule 1 hereto.
2.03 Financial Statements. (a) The consolidated balance sheet
of the Seller and its consolidated subsidiaries for the fiscal periods ended
December 31, 1996 and December 31, 1995 and the related consolidated statements
of income, retained earnings and cash flow for the respective period and fiscal
years ended on such dates, all accompanied by reports thereon containing
opinions without qualification, except as therein noted, by KPMG Peat Marwick,
independent certified public accountants, and the unaudited interim consolidated
balance sheet of the Seller and its consolidated subsidiaries as of March 31,
1997 and the related consolidated statements of income, retained earnings and
cash flow for the three months ended on such date have been prepared in
accordance with generally accepted accounting principles consistently applied,
and present fairly the financial position of the Seller and its subsidiaries as
of such dates and the results of their operations for such periods.
(b) Except as disclosed in the Prospectus, the Private
Placement Memorandum and the financial statements referred to in the preceding
Section 2.03(a), since December 31, 1996 there has been no change in the
business, condition
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or prospects (financial or otherwise) of the Seller except changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse. Neither the Seller nor any of its subsidiaries has any
material liabilities or obligations not incurred in the ordinary course of
business other than those disclosed in the financial statements referred to in
Section 2.03(a) or for which adequate reserves are reflected in such financial
statements and certain contingent obligations of the Seller relating to other
asset securitization transactions involving the Seller.
2.04 Equipment and Leases. (a) Prior to the date of each
transfer of any Leases and contribution of Equipment in accordance with Sections
1.01 and 1.03, respectively, the Seller purchased each item of Equipment from
either (i) the manufacturer or other supplier following receipt of an invoice
from such manufacturer or supplier or (ii) a Lessee following confirmation that
such item of Equipment was on such Lessee's premises. The Seller has paid in
full, to the manufacturer or supplier or Lessee, as the case may be, the
purchase price and any related charges in connection with the acquisition of the
Equipment. The sale to the Company of the Leases and all of the Seller's right,
title and interest in each item of Equipment does not violate the terms or
provisions of any Lease or any other agreement to which the Seller is a party or
by which it is bound.
(b) Upon payment of the consideration described in Section
1.02 hereof, issuance of its common stock as described in Section 1.03 hereof,
and transfer of the Seller's interest in the Equipment, the Company will (i) be
the legal owner of the Leases (including the right to receive all payments due
or to become due thereunder), (ii) have good title to each item of the Equipment
subject to any Lease other than a Nominal Buy-Out Lease, and (iii) have a valid
security interest in each item of Equipment with a purchase price in excess of
$25,000 subject to a Nominal Buy-Out Lease. At such time, the Leases (including
the right to receive all payments due or to become due thereunder) and the
Seller's interest in the Equipment will be free and clear of all Liens other
than the rights of each Lessee under the Lease to which such Lessee is a party
and the Lien created by the Indenture; and there will be no delinquent taxes or
other outstanding charges affecting the Equipment which are or may be Liens
prior to, or equal or coordinate with, the Lien of the Trustee under the
Indenture.
(c) At the time of each transfer of a Lease hereunder, each
such Lease (i) is or will be a triple-net lease and (ii) is or will be a legal,
valid and binding full
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recourse obligation of the Lessee thereunder, enforceable by the Company (and by
the Trustee as assignee of the Company) against such Lessee in accordance with
the terms thereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other similar laws relating to or affecting the
enforcement of creditors' rights and by general equity principles, is
noncancellable by the Lessee and is in full force and effect, and any and all
requirements of any federal, state or local law, including, without limitation,
usury, truth-in-lending and equal credit opportunity laws applicable to each
Lease have been complied with; and the Seller has no knowledge (after due
inquiry) of any challenge, dispute or claim by or against the Lessee under or
affecting any Lease or of the bankruptcy or insolvency of any such Lessee. As of
the initial Determination Date, or the effective date of the transfer of any
Additional Lease or Substitute Lease, each Lessee has paid at least one
installment of rent under its respective Lease.
(d) At the time that any item of Equipment (including the
Seller's security interest in any item not owned by it) is contributed
hereunder, the Seller will have no knowledge that any item of the Equipment has
suffered any loss or damage which has not been repaired.
(e) Each Lease requires the Lessee thereunder to maintain
insurance on the Equipment subject thereto in an amount at least equal to the
fair market value thereof.
(f) In addition to the insurance maintained by the Lessees
with respect to the Equipment, the Seller (or an Affiliate of the Seller)
maintains (i) one or more casualty insurance policies which, in the aggregate,
are in an amount not less than the aggregate Outstanding Principal Amount of the
Notes, (ii) a general liability insurance policy in the aggregate amount of
$1,000,000 and (iii) an excess liability insurance policy in umbrella form in
the aggregate amount of $10,000,000. Each of such policies is in full force and
effect and covers all equipment owned by the Seller and the Company. All
premiums in respect of such policies have been paid. Each of the Trustee and the
Company are named as loss payees and additional insureds, as their interests may
appear, on such casualty and liability policies maintained by the Seller.
(g) At the time of each transfer of a Lease hereunder, no
Lease had outstanding rent which was 63 or more days past due as of the Cut-Off
Date.
(h) Each Lease was entered into or acquired by the Seller in
accordance with the Seller's regular credit approval process described in the
Prospectus, and no
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selection procedures adverse to the credit quality of the Leases were employed
in selecting the Leases for sale under this Sales and Servicing Agreement.
(i) The obligation of each Lessee to pay rent under each of
the Leases throughout the term thereof is and will be unconditional, without any
right of setoff by such Lessee and without regard to any event affecting the
Equipment, the obsolescence of any Equipment, any claim of such Lessee against
the Company, the Seller or the Servicer or any change in circumstance of such
Lessee or any other circumstance whatsoever except to the extent that in the
event of a casualty of any item of Equipment, the Lessee is obligated to pay, in
lieu of the future Lease Payments with respect to such item, an amount which
equals or exceeds the Discounted Present Value of the Lease as of the Payment
Date next succeeding the making of such payment.
(j) In the case of each Lease which consists of a master lease
and one or more exhibits or schedules thereto, the Seller has neither assigned
such master lease in its entirety, nor delivered physical possession of such
master lease, to any Person other than the Company or the Trustee (including the
trustee under another indenture in a transaction substantially similar to the
transaction contemplated hereby, which other indenture provides that the lien
thereof on such master lease extends only to such master lease insofar as it
relates to lease schedules which are not part of the Trust Estate).
(k) As of the time of each transfer of Leases and Equipment
hereunder, there are no facts or circumstances which give rise, or would give
rise at any time in the future, to any right of rescission, setoff, counterclaim
or defense, including the defense of usury, to obligations of any Lessee,
including the obligation of such Lessee to pay all amounts due with respect to
any Lease to which such Lessee is a party, and neither the operation of any of
the terms of any Lease or the exercise of any right thereunder will render such
Lease unenforceable in whole or in part or subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and no such
right of rescission, setoff, counterclaim or defense has been asserted with
respect thereto.
(l) As of the time of each transfer of Leases and Equipment
hereunder, no Lease has been amended, altered or modified in any respect, except
in writing and copies of all such writings are attached to the Lease delivered
to the Trustee.
(m) As of the time of each transfer of Leases and Equipment
hereunder, no Lessee will have been released,
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in whole or in part, from any of its obligations in respect of any Lease; no
Lease will have been satisfied, cancelled or subordinated, in whole, or in part,
or rescinded, and no Equipment covered by any Lease will have been released from
such Lease, in whole or in part, nor has any instrument been executed that would
effect any such satisfaction, release, cancellation, subordination or
rescission.
(n) As of the time of each transfer of Leases and Equipment
hereunder, each Lease was either (a) originated by the Seller in the ordinary
course of its business or (b) purchased by the Seller for value and taken into
possession prior to the Cut-Off Date in the ordinary course of its business.
(o) No Lease was originated in or is subject to the laws of
any jurisdiction whose laws would make the transfer and sale thereof under this
Sales and Servicing Agreement unlawful.
(p) All parties to each Lease had authority and capacity to
execute such Lease.
(q) None of the Leases is a consumer lease and each Lessee has
accepted the Equipment leased to it.
(r) The Booked Residual Value of the Equipment as of the
Cut-Off Date equals $70,790,509.72.
(s) All parties to each Lease had all requisite authority and
capacity to execute such Lease.
(t) As of the Cut-Off Date, the Final Lease Payment on each
Lease was due and payable on or prior to April 2005.
(u) There is only one original of each Lease for purposes of
the UCC as in effect in New Jersey and in New York and such counterpart will be
delivered to the Trustee (or a custodian on its behalf) on or before the Closing
Date.
2.05 Payments. (a) The aggregate amount of Lease Payments
payable by the Lessees under the Leases during each lease payment period,
including amounts on deposit in the Reserve Account, is sufficient to cover the
Servicing Fee and pay the principal and interest on the Notes, as such payments
become due and payable.
(b) The portfolio detail delivered or to be delivered to the
Trustee on or prior to the Closing Date (i) accurately sets forth, as of the
Cut-Off Date, the amount of each Lease Payment due under each of the Leases
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and the month in which such Lease Payment is to be paid in accordance with the
terms of the Lease under which the same is to be paid, (ii) accurately sets
forth, as of the Cut-Off Date, the information with respect to certain other
characteristics of the Leases and the Equipment described in such portfolio
detail and (iii) is otherwise true and correct in all respects.
2.06 Full Disclosure. The Prospectus and the Private Placement
Memorandum (including, without limitation, the statistical and descriptive
information with respect to the initial Leases, Lessees and Equipment), as of
their respective dates, do not contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. There is
no fact peculiar to the Seller or any Affiliate of the Seller or, to the
knowledge of the Seller, any Lease, Lessee or item of Equipment, which the
Seller has not or will not disclose in the Prospectus or the Private Placement
Memorandum which materially affects adversely nor, so far as the Seller can now
reasonably foresee, will materially affect adversely the ability of the Seller
to perform the transactions contemplated by this Sales and Servicing Agreement.
2.07 Pending Litigation. There are no proceedings or
investigations pending, or to the knowledge (after due inquiry) of the Seller
threatened, against or affecting the Seller or any subsidiary in or before any
court, governmental authority or agency or arbitration board or tribunal,
including, but not limited to, any such proceeding or investigation with respect
to any environmental or other liability resulting from the ownership or use of
any of the Equipment, which, individually or in the aggregate, involve the
possibility of materially and adversely affecting the properties, business,
prospects, profits or condition (financial or otherwise) of the Seller and its
subsidiaries, or the ability of the Seller or the Servicer to perform its
obligations under this Sales and Servicing Agreement. The Seller is not in
default with respect to any order of any court, governmental authority or agency
or arbitration board or tribunal.
2.08 Title to Properties. Immediately following the transfer
by the Seller to the Company of the Leases and the Seller's interest in the
Equipment, the Leases (including the right to receive all payments due or to
become due thereunder) and the interest in the Equipment will be free and clear
of all Liens, except the Lien on the Trust Estate in favor of the Trustee
granted pursuant to the Indenture (or the Lien in favor of the Company which is
assigned to the Trustee pursuant to the Indenture).
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2.09 Transactions Legal and Authorized. The transfer by the
Seller of all of its right, title and interest in and to each item of Equipment
and each Lease (including the right to receive all payments due or to become due
thereunder) and compliance by the Seller with all of the provisions of this
Sales and Servicing Agreement:
(a) have been duly authorized by all necessary
corporate action on the part of the Seller, and do
not require any stockholder approval, or approval
or consent of any trustee or holders of any
indebtedness or obligations of the Seller except
such as have been duly obtained;
(b) are within the corporate powers of the
Seller; and
(c) are legal and will not conflict with,
result in any breach in any of the
provisions of, constitute a default under,
or result in the creation of any Lien upon
any property of the Seller under the
provisions of, any agreement, charter
instrument, by-law or other instrument to
which the Seller is a party or by which it
or its property may be bound or result in
the violation of any law, regulation, rule,
order or judgment applicable to the Seller
or its properties, or any order to which
the Seller or its properties is subject, of
or by any government or governmental agency
or authority.
2.10 Governmental Consent. No consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority is necessary or required on the part of the Seller in
connection with the execution and delivery of this Sales and Servicing Agreement
or the sale of the Leases and contribution of the Equipment or the performance
of its obligations as Servicer.
2.11 Taxes. (a) All tax returns required to be filed by the
Seller or any subsidiary in any jurisdiction have in fact been filed, and all
taxes, assessments, fees and other governmental charges upon the Seller or any
subsidiary, or upon any of their respective properties, income or franchises,
shown to be due and payable on such returns have been paid. To the best of the
Seller's knowledge all such tax returns were true and correct and neither the
Seller nor any subsidiary knows of any proposed additional tax assessment
against it in any material amount nor of any basis therefor.
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(b) The provisions for taxes on the books of the Seller and
each of its subsidiaries are in accordance with generally accepted accounting
principles.
2.12 Compliance with Law.
The Seller:
(a) is not in violation of any laws,
ordinances, governmental rules or
regulations to which it is subject;
(b) has not failed to obtain any
licenses, permits, franchises or
other governmental authorizations
necessary to the ownership of its
property or to the conduct of its
business; and
(c) is not in violation in any material
respect of any term of any agreement,
charter instrument, by-law or other
instrument to which it is a party or
by which it may be bound,
which violation or failure to obtain might materially adversely affect the
business or condition (financial or otherwise) of the Seller and its
subsidiaries.
2.13 ERISA. (a) The present value of all benefits vested under
all "employee pension benefit plans," as such term is defined in Section 3 of
ERISA, maintained by or contributed to by the Seller and its Related Persons
(other than multi-employer plans as such term is defined in Section 3 of ERISA),
as from time to time in effect (herein called the "Pension Plans"), does not
exceed the value of the assets of the Pension Plans allocable to such vested
benefits;
(b) No Prohibited Transactions, Accumulated Funding
Deficiencies, Withdrawals or Reportable Events have occurred with respect to any
Pension Plans that, in the aggregate, could subject the Seller to any material
tax, penalty or other liability; and
(c) No notice of intent to terminate a Pension Plan under a
distress termination has been filed, nor has the PBGC instituted proceedings to
terminate, or appoint a trustee to administer, a Pension Plan and no event has
occurred or condition exists which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan.
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2.14 Ability to Perform. At the date hereof, the Seller does
not believe, nor does it have any reasonable cause to believe, that it cannot
perform each and every covenant contained in this Sales and Servicing Agreement
or its ability to perform as Servicer.
2.15 Ordinary Course; No Insolvency. The transactions
contemplated by the Notes, the Indenture and this Sales and Servicing Agreement
are being consummated by the Seller in furtherance of the Seller's ordinary
business purposes and constitute a practical and reasonable course of action by
the Seller designed to improve the financial position of the Seller, with no
contemplation of insolvency and with no intent to hinder, delay or defraud any
of its present or future creditors. The Seller will not, either as a result of
the transaction contemplated by this Sales and Servicing Agreement, or
immediately before or after such transaction, be insolvent or have an
unreasonably small capital for the conduct of its business and the payment of
anticipated obligations.
2.16 Assets and Liabilities. (a) Both immediately before and
after any transfer of Leases (including the right to receive all payments due or
to become due thereunder) and the transfer of the interests in the Equipment
contemplated by this Sales and Servicing Agreement, the present fair salable
value of the Seller's assets was or will be in excess of the amount that will be
required to pay the Seller's probable liabilities as they then exist and as they
become absolute and matured; and
(b) Both immediately before and after any transfer of Leases
(including the right to receive all payments due or to become due thereunder)
and the transfer of the interests in the Equipment contemplated by this Sales
and Servicing Agreement, the sum of the Seller's assets was or will be greater
than the sum of the Seller's debts, valuing the Seller's assets at a fair
salable value.
2.17 Fair Consideration. The consideration received by the
Seller, in exchange for the Leases (including the right to receive all payments
due or to become due thereunder) and the transfer of its interests in the
Equipment, is fair consideration having value equivalent to or in excess of the
value of the assets being transferred by the Seller.
2.18 Ability to Pay Debts. Neither as a result of the
transaction contemplated by this Sales and Servicing Agreement nor otherwise
does the Seller believe that it will incur debts beyond its ability to pay or
which would be prohibited by its charter documents or by-laws. The Seller's
assets and cash flow enable it to meet its present
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obligations in the ordinary course of business as they become due.
2.19 Bulk Transfer Provisions. The sale, transfer, assignment
and conveyance of the Leases and its interests in the Equipment by the Seller
pursuant to this Sales and Servicing Agreement is not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction.
2.20 Transfer Taxes. The sale, transfer, assignment and
conveyance of the Leases (including all payments due or to become due
thereunder) and its interests in the Equipment by the Seller pursuant to this
Sales and Servicing Agreement is not subject to and will not result in any tax,
fee or governmental charge payable by the Seller to any federal, state or local
government ("Transfer Taxes"). In the event that the Company receives actual
notice of any Transfer Taxes arising out of the transfer, assignment and
conveyance of the Leases and/or its interests in the Equipment, on written
demand by the Company, or upon the Seller otherwise being given notice thereof,
the Seller shall pay, and otherwise indemnify and hold the Company, the Trustee
and the holders of the Notes harmless, on an after-tax basis, from and against
any and all such Transfer Taxes (it being understood that the holders of the
Notes and the Trustee shall have no obligation to pay such Transfer Taxes).
2.21 Principal Executive Office. The principal executive
office of each of the Seller and the Servicer is located at One International
Boulevard, Mahwah, New Jersey 07430-0631.
2.22 Servicing Provisions Customary. The servicing
arrangements hereunder, including without limitation the terms and conditions
pursuant to which the Seller will act as Servicer and the Servicing Fee to be
paid to the Seller, are consistent with the arrangements and customary practices
of the Seller when providing comparable services to non-affiliated entities and
of other servicers in the equipment leasing industry.
2.23 Nonconsolidation. The Seller is and at all times since
its incorporation has been operated in such a manner that it would not be
substantively consolidated with the Company, such that the separate existence of
the Seller and the Company would be disregarded in the event of a bankruptcy or
insolvency of the Seller or the Company, and in such regard:
(a) the Seller is not involved in the day-to- day management
of the Company;
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(b) the Seller maintains separate corporate records and books
of account from the Company and otherwise observes corporate formalities and has
a separate business office from the Company;
(c) the financial statements and books and records of the
Seller prepared after the Closing Date will reflect the separate existence of
the Company;
(d) the Seller maintains its assets separately from the assets
of the Company (including through the maintenance of a separate bank account),
the Seller's funds and assets, and records relating thereto, have not been and
are not commingled with those of the Company and the separate creditors of the
Company will be entitled to be satisfied out of the Company's assets prior to
any value in the Company becoming available to the Company's equity-holders or
the Seller's creditors;
(e) all business correspondence of the Seller and other
communications are conducted in the Seller's own name and on its own stationery;
and
(f) the Company does not act as an agent of the Seller in any
capacity and the Seller does not act as agent for the Company, but instead
presents itself to the public as a corporation separate from the Company;
provided that the Seller is the Servicer hereunder and under agreements
substantially the same as this Agreement.
2.24 Sale Treatment. The Seller will treat the transfer to the
Company of the Leases and the Lease Receivables as a sale for reporting and
accounting purposes and the Seller will treat the transfer to the Company of its
interest in the Equipment as a contribution for reporting and accounting
purposes.
2.25 Leases are Chattel Paper. Each Lease agreement is
"chattel paper" within the meaning of the Uniform Commercial Code in the states
of New York and New Jersey.
SECTION 3. ADMINISTRATION OF LEASES
3.01 Servicer to Act. (a) Notwithstanding the transfers and
assignments of the Leases (including the right to receive all payments due or to
become due thereunder) and the related interests in the Equipment contemplated
hereby, the Servicer, for the benefit of the Company, will service and
administer each Lease in accordance with the terms thereof and of this Sales and
Servicing Agreement. The Servicer shall take, or cause to be taken, all such
actions
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as may be necessary or advisable to service, administer and collect each Lease
from time to time, all in accordance with (i) customary and prudent servicing
procedures for leases of a similar type, (ii) all applicable laws, rules and
regulations, and (iii) without limitation as to its obligations under the
preceding clauses (i) and (ii), no less a standard of care than that which it
applies to Leases it services for its own account. The Servicer shall provide
the Lessees with appropriate invoices and such other notices as may be required
to ensure that all Lease Payments, Casualty Payments and Termination Payments on
or in respect of each Lease are remitted by the Lessees to the address specified
by the Servicer. The Servicer shall deposit such payments to the Collection
Account within two Business Days of the receipt thereof. Any other amount
received by the Servicer from time to time from the Seller, the Company or any
Lessee which is or is intended to be subject to the Lien of the Indenture shall
be held in trust by the Servicer, as agent for the Trustee and promptly turned
over to the Trustee or deposited into the Collection Account for application in
accordance with the provisions of the Indenture.
(b) The Servicer shall do, and shall have full power and
authority to do, subject only to the specific requirements and prohibitions of
this Sales and Servicing Agreement, any and all things in connection with the
servicing and administration of the Leases and the interests in the Equipment
which are consistent with the manner in which it services leases and equipment
constituting part of its own portfolio and consistent with the customary
practices of servicers in the equipment leasing industry, but in performing its
duties hereunder, the Servicer will act on behalf and for the benefit of the
Company, the Trustee and the holders of the Notes, subject at all times to the
provisions of the Indenture, without regard to any relationship which the
Servicer or any Affiliate of the Servicer may otherwise have with a Lessee. The
Servicer shall at all times act in accordance with the provisions of each Lease,
and shall observe and comply with all requirements of law applicable to it.
Except as permitted by the terms of any Lease following a default thereunder,
the Servicer shall not take any action which would result in the interference
with the Lessee's right to quiet enjoyment of the Equipment subject to the Lease
during the term thereof. The Servicer shall exercise with respect to each item
of Equipment all rights and remedies it, the Company or the Trustee shall have
against any vendor of the Equipment, subject to the provisions of any Lease, and
shall promptly pay all amounts realized from such actions to the Trustee for
deposit in the Collection Account.
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(c) Without limiting the generality of the foregoing, the
Servicer agrees to (i) invoice each Lessee monthly (except quarterly,
semi-annually or annually in the case of Leases which provide for quarterly,
semi-annual or annual Lease Payments, respectively) for all Lease Payments
required to be paid by such Lessee in such manner and to the same extent as the
Servicer does with respect to leases held for its own account, (ii) maintain
with respect to each Lease and each item of Equipment, and with respect to each
payment by each Lessee and compliance by each Lessee with the provisions of each
Lease, complete and accurate records in the same form and to the same extent as
the Servicer does with respect to leases and equipment held for its own account
(which records shall be at least as complete and accurate as those maintained by
the Servicer as of the date of this Sales and Servicing Agreement), and (iii)
from time to time execute, deliver and file (or cause the same to be done), and
the Servicer is hereby authorized and empowered to execute, deliver, and file on
behalf of the Company and the Trustee, any and all tax returns with respect to
sales, use, personal property and other taxes (other than corporate income tax
returns) and any and all reports or licensing applications required to be filed
in any jurisdiction with respect to any Lease or any item of Equipment and any
and all required Financing Statements and assignments of Financing Statements
and such additional Financing Statements and continuation statements with
respect thereto as may from time to time be necessary because of Lease
substitutions, equipment replacements in accordance with the provisions of any
Lease or otherwise so that the security interest contemplated by the Indenture
in favor of the Trustee in each of the Leases, at all times will be perfected by
such filings with the appropriate Uniform Commercial Code filing offices. The
Seller and the Servicer agree to file Financing Statements on Form UCC-1 to
perfect the security interest of the Trustee in the Leases and the Lease
Payments, and to the extent provided herein, the Equipment.
(d) The Servicer will maintain, or cause to be maintained,
with respect to the Leases and the Equipment casualty and liability insurance in
amounts at least as great as those described in Section 2.04(f). Each such
casualty and liability policy (i) if maintained by the Servicer, shall name the
Company and Trustee as loss payees or additional insureds and (ii) if maintained
by the Lessee, shall name the Servicer or the Trustee as loss payee and
additional insured; provided that the Servicer shall cause all such policies to
name the Trustee and the Company as loss payees and additional insureds if (A)
the Seller is no longer the Servicer, (B) an Event of Default shall have
occurred and be continuing or (C) a Servicer Event of Default shall have
occurred and be continuing.
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(e) On or prior to the Closing Date, the Servicer will file
the Financing Statements and assignments of Financing Statements in accordance
with the Filing Requirements and thereafter will file such additional Financing
Statements and continuation statements and assignments with respect to the
Leases as may be necessary because of equipment replacements in accordance with
the provisions of any Lease, purchases of Additional Leases in accordance with
Section 9 and Lease substitutions pursuant to Section 9 hereof or otherwise so
that (i) the ownership interest contemplated by this Agreement in favor of the
Company and the security interest contemplated by the Indenture in favor of the
Trustee in each of the Leases will be perfected by such filings with the
appropriate Uniform Commercial Code filing offices and (ii) the security
interest contemplated by the Indenture in favor of the Trustee in Equipment
subject to Leases having a Discounted Present Value of at least 75% of the
aggregate Discounted Present Value of the Leases as of June 1 and December 1 of
each year following the Closing Date and Equipment relating to not less than 75%
of the Booked Residual Value of such Equipment as of June 1 and December 1 of
each year following the Closing Date will be perfected by such filings with the
appropriate Uniform Commercial Code filing offices.
(f) The Servicer shall pay the Excess Copy Charges and Fee Per
Scan Charges, if any, owing the related vendor in a timely fashion.
3.02 Lease Amendments and Modifications. In performing its
obligations hereunder, the Servicer may, acting in the name of the Company and
without the necessity of obtaining the prior consent of the Company or the
Trustee, enter into and grant modifications, waivers and amendments to the terms
of any Lease except for modifications, waivers or amendments that (a) are
inconsistent with the servicing standards set forth in Section 3.01 above, (b)
would reduce the amount or extend the time for payment of any Lease Payment,
Casualty Payment or Termination Payment to be made under a Lease (other than to
permit termination of a Lease which does not otherwise provide for termination
by requiring the payment, in lieu of all future Lease Payments with respect to
the Lease or Equipment subject thereto, an amount which equals or exceeds the
Lease Repurchase Amount for such Lease as of such date) or the Lessee's absolute
and unconditional obligation to make payment of the same, (c) would reduce or
adversely affect the Lessee's obligation to maintain, service, insure and care
for the Equipment or would permit the alteration of any item of Equipment in any
way which could adversely affect its present or future value or (d) otherwise
could adversely affect the interests of any of the Company, the Trustee or the
holders of the Notes.
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In addition, following the transfer of any Lease to the
Company in accordance herewith, the Servicer may make adjustments to such Lease
which modify one or more terms of such Lease, such as payment amount or payment
date. Such administrative adjustments may result in a re-booking of such Lease
and the assignment of a new Lease number, but will not be considered to be a
substitution or prepayment of such Lease. Except to the extent the Seller
substitutes a Substitute Lease therefor in accordance with Section 9 hereof, the
Servicer may permit such adjustments so long as the following conditions
precedent have been satisfied:
(i) after giving effect to such adjustments
and any additions and substitutions pursuant to Section 9, the
aggregate Booked Residual Value of such Leases will not be
less than 90% of the aggregate Booked Residual Value of the
Leases adjusted, replaced or substituted since the Issuance
Date.
(ii) after giving effect to such adjustment,
either the final payment on such Lease must be on or prior to
April 2005 or, to the extent the final payment on such Lease
is due subsequent to April 2005, only scheduled payments due
on or prior to such date may be included in the Discounted
Present Value of such Lease for the purpose of making any
calculation under the Indenture.
(iii) after giving effect to such adjustments
and any additions and substitutions pursuant to Section 9 the
aggregate amount of Lease Payments through the term of the
Leases (including the Substitute Leases and the Additional
Leases) will not be materially less than the aggregate
scheduled Lease Payments of the Leases prior to such
adjustment, substitution or addition.
(iv) after giving effect to such adjustments,
additions and substitutions, the Discounted Present Value of
the Performing Leases must not be less than the Discounted
Present Value of the Performing Leases prior to such
adjustment, addition and substitution.
3.03 Non-Performing Leases. (a) Upon receipt of notice from
the Company, the Trustee or any other Person, or if the Servicer otherwise
learns that any Lease is a Non-Performing Lease, the Servicer will take such
action as is appropriate, consistent with the Servicer's administration of
leases in its own portfolio and consistent
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with the customary practices of servicers in the equipment leasing industry,
including such action as may be necessary to cause, or attempt to cause, the
Lessee thereunder to cure such non-performance (if the same may be cured) or to
terminate or attempt to terminate such Lease and to recover, or attempt to
recover, all damages resulting from such default. The Servicer shall demand, on
behalf of the Company, that the Seller immediately repay any Inter-Company Loan
representing the advance pursuant to Section 13.01 hereof of any security
deposit with respect to any Lease which becomes a Non-Performing Lease, and the
Servicer shall apply such security deposit in accordance with Section 3.03(d)
hereof.
(b) The Servicer will use its best efforts to sell or lease
any Equipment upon the expiration or early termination of a Lease or that is
subject to a Non-Performing Lease in a timely manner and upon the most favorable
terms and conditions available at the time. In the event of an early lease
termination, any substitute Lease must have a Discounted Present Value equal to
or greater than that of the terminated Lease and monthly payments at least equal
to those of the terminated Lease through the remaining term of such terminated
Lease.
(c) In the event that the Servicer is required to sell or
lease any item of Equipment pursuant to the provisions of this Section 3.03 at a
time when the Servicer has other similar items of equipment available to it, the
Servicer will not favor any such other item in its remarketing efforts.
(d) All amounts realized by the Servicer in the performance of
its duties hereunder with respect to any Lease or Equipment remaining subject to
the Lien of the Indenture (net of the Servicer's actual out-of-pocket expenses
reasonably incurred in such realization) shall be held in trust by the Servicer,
as agent for the Trustee and deposited into the Collection Account for
application in accordance with the provisions of the Indenture; provided that,
to the extent that (i) the Servicer has made any advances pursuant to Section
4.01 hereof with respect to any Lease which thereafter became a Non-Performing
Lease, and (ii) the Servicer has not otherwise been fully reimbursed for such
advances or payments, the Servicer shall reimburse itself for such advances or
payments from any amounts recovered with respect to such Non-Performing Lease
before depositing any such amounts pursuant to this Section 3.03(d).
3.04 Costs of Servicing; Servicing Fee; Administrative
Expenses. (a) All costs of servicing each Lease in the manner required by this
Section 3 shall be
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borne by the Servicer, but the Servicer shall be entitled to retain, out of any
amounts actually recovered by the Servicer in the performance of its obligations
under Section 3.03 hereof with respect to any Lease or the interests in the
Equipment subject thereto, the Servicer's actual out-of-pocket expenses
reasonably incurred in the course of such performance with respect to such Lease
or the interests in the Equipment. (For all purposes of this Section 3 the
Servicer's "out-of-pocket expenses" means only those expenses incurred to third
parties (e.g., reasonable fees of outside counsel in a collection suit) and not
salaries, operating costs, overtime wages and other such "overhead" costs or
expenses of the Servicer.) In addition, the Servicer shall be entitled to
receive from the Company on each Payment Date following the Closing Date a
servicing fee (the "Servicing Fee") in the amount described in paragraph (b)
below.
(b) The amount of the Servicing Fee which the Servicer shall
be entitled to receive on each Payment Date following the original issuance of
the Notes shall be determined by multiplying the Outstanding Principal Amount of
the Notes at the Determination Date for such Payment Date times one-twelfth of
0.75%.
(c) The Servicer agrees to pay, out of the Servicing Fee, all
Trustee's Fees and expenses in connection with the Notes (including the expenses
relating to the preparation and delivery of reports to Noteholders) and all fees
of accountants in connection with the Notes.
3.05 Other Transactions. Nothing in this Sales and Servicing
Agreement shall preclude the Seller or the Servicer from entering into other
leases or other financial transactions with any Lessee or selling or discounting
any such lease with any Person.
SECTION 4. SERVICER ADVANCES AND SELLER'S
SUPPORT
4.01 Late Lease Payments. On each Determination Date, the
Servicer may, but will not be required to, advance and remit to the Trustee, in
such manner as will ensure that the Trustee will have immediately available
funds on account thereof by 11:00 a.m. New York City time on the second Business
Day prior to the next succeeding Payment Date, an amount (a "Servicer Advance")
equal to any Lease Payment due during the prior Lease Payment Period but unpaid
prior to such Determination Date with respect to any Lease. In consideration of
each Servicer Advance the Servicer will be entitled to retain any late payment
fees recovered from the Lessee with respect to any Lease Payment covered by a
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Servicer Advance. In addition, the Servicer will be reimbursed for Servicer
Advances from funds in the Collection Account in accordance with the Indenture
on the second following Payment Date.
4.02 Early Termination Leases. Following the Determination
Date as of which any Lease first becomes an Early Termination Lease the Seller
may, but shall have no obligation to, either (a) substitute one or more Eligible
Leases and the Equipment subject thereto for such Lease and the Equipment
subject thereto pursuant to Section 9 hereof (if the Seller is then entitled to
substitute Leases and Equipment in accordance with the provisions of Section
9.01 hereof) on or before the second Business Day prior to the next succeeding
Payment Date, (b) repurchase from the Company such Lease and the related
Equipment by remitting to the Trustee an amount equal to the Lease Repurchase
Amount in such manner as will ensure that the Trustee will have immediately
available funds therefor by 11 a.m. New York City time on the second Business
Day prior to the next succeeding Payment Date or (c) offer for sale to the
Company one or more Additional Leases in consideration of the proceeds thereof
in accordance with Section 9 hereof. Any Early Termination Lease and the
Equipment subject thereto which is repurchased, or for which Additional Leases
have been purchased or Substitute Leases transferred, pursuant to this Section
4.02 shall nevertheless remain subject to the Lien of the Indenture until such
time as an Additional Lease or Additional Leases have been purchased or
Substitute Lease or Substitute Leases have been transferred in accordance with
the provisions of Section 9 hereof or the Lease Purchaser Amount has been
deposited into the Collection Account. A Lease will be considered to be an
"Eligible Lease" if on the date such Lease is substituted for or added in
replacement of an Early Termination Lease, such Lease satisfies the
representations and warranties set forth in Section 2.04(a) through (r) and the
requirements of Section 9 hereof.
4.03 Indemnification. The Seller, as Seller and in its
capacity as Servicer, agrees to indemnify and hold harmless the Company, the
Servicer, the Trustee and each holder of the Notes (each an "Indemnified Party")
against any and all liabilities, losses, damages, penalties, costs and expenses
(including costs of defense and legal fees and expenses) which may be incurred
or suffered by such Indemnified Party (except to the extent arising out of the
gross negligence or willful misconduct on the part of the Indemnified Party) as
a result of claims, actions, suits or judgments asserted or imposed against it
and arising out of the transactions contemplated hereby or by the Indenture,
including, without limitation, any claims resulting from any use, operation,
maintenance, repair, storage or
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transportation of any item of Equipment, whether or not in the Servicer's
possession or under its control pursuant to this Sales and Servicing Agreement,
and any tort claims and any fines or penalties arising from any violation of the
laws or regulations of the United States or any state or local government or
governmental authority; provided that the foregoing indemnity shall in no way be
deemed to impose on the Seller any obligation, other than to the extent
specifically set forth in this Section 4, to make any payment with respect to
principal or interest on the Notes or to reimburse the Company for any payments
on account of the Notes. This Section 4.03 shall bind any successor Servicer
hereunder.
4.04 Repurchases; Other Payments. (a) In the event that (i)
any of the representations or warranties made by the Seller in Sections 2.04 and
2.05 hereof with respect to any of the Leases or the Equipment subject thereto
proves at any time to have been inaccurate in any material respect as of the
Closing Date or related transfer date, as the case may be or (ii) any Lease
shall be terminated in whole or in part by a Lessee, or any amounts due with
respect to any Lease shall be reduced or impaired, as a result of any action or
inaction by the Seller (other than any such action or inaction of the Seller,
when acting as Servicer, in connection with the enforcement of any Lease in a
manner consistent with the provisions of this Sales and Servicing Agreement) or
any claim by any Lessee against the Seller and, in any such case, the event or
condition causing such inaccuracy, termination, reduction, impairment or claim
shall not have been cured or corrected within 30 days after the earlier of the
date on which the Seller is given notice thereof by the Company or the Trustee
or the date on which the Seller otherwise first has notice thereof, the Seller
will repurchase such Lease and the Equipment subject thereto by paying to the
Trustee, not later than the third Business Day after the Determination Date next
following the expiration of such 30-day period with respect to the events
referenced in Section 4.04(a)(i) and (ii), an amount equal to the Lease
Repurchase Amount, and simultaneously with such repurchase, the Seller shall
reimburse the Servicer for all amounts, if any, theretofore advanced by the
Servicer pursuant to Section 4.01 with respect to such Lease. Without limiting
the generality of the foregoing, it is agreed and understood that for purposes
of this Section 4.04, any inaccuracy in any representation or warranty with
respect to (i) the priority of the Lien of the Indenture with respect to any
Lease or (ii) the amount (if less than represented) of the Lease Payments,
Casualty Payments or Termination Payment under any Lease shall be deemed to be
material.
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(b) By the Closing Date, the Seller agrees to obtain and
provide to the Trustee UCC searches against it and the Company from the central
filing offices in New Jersey confirming the absence of any UCC filings against
either the Seller or the Company with respect to the Leases (including the right
to receive all payments due or to become due thereunder) and the Equipment,
other than those naming the Company as the purchaser of the Leases or the
Trustee as secured party. If any searches delivered pursuant to this Section
4.05(b) disclose UCC filings (which are not in the process of being released
pursuant to releases delivered on the Closing Date) against the Company or the
Seller with respect to Leases of Equipment the Discounted Present Value of which
(i) is greater than 2% but less than 5% of all the Leases, then the Seller shall
cause searches to be made in additional states within 30 days following such
disclosure so that the Discounted Present Value of Leases of Equipment in states
where searches have been performed exceeds 75% of the aggregate Discounted
Present Value of all Leases and 75% of the Booked Residual Value of Equipment or
(ii) is greater than 5% of all the Leases then the Seller shall cause searches
to be made in additional states within 30 days following such disclosure so that
the Discounted Present Value of Leases of Equipment in states where such
searches have been performed equals 100% of the aggregate Discounted Present
Value of all Leases. Without limiting the provisions of Section 4.04(a) or this
Section 4.04(b), in the event the Seller fails to provide any such searches
required by the preceding sentences of this Section 4.05(b) within the required
time period or any search reveals the existence of any conflicting Liens (which
are not removed within 30 days of receipt of such search), the Seller shall be
required to repurchase not later than the third Business Day after the
Determination Date following the expiration of the time period during which such
search was to be obtained or such Lien released, as the case may be, any Lease
of Equipment in any such state for which such searches are not provided or with
respect to which conflicting Liens are found to exist at the Lease Repurchase
Amount for such Lease.
(c) The Seller's obligations under this Section 4.04 are the
full recourse obligations of the Seller and shall in no way be limited or
discharged by the application of any funds constituting part of the Trust
Estate.
4.05 Payment Advices. Each payment by the Seller or the
Servicer to the Trustee pursuant to any of the provisions of this Sales and
Servicing Agreement shall be accompanied by written advice containing sufficient
information to identify the Lease and/or Equipment to which such payment
relates, the Section of this Sales and Servicing Agreement pursuant to which
such payment is made,
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and the proper application pursuant to the provisions of the Indenture of the
amounts being paid.
SECTION 5. INFORMATION TO BE PROVIDED
5.01 Monthly Status Reports; Servicing Reports. (a) Within
five Business Days following each Payment Date, the Servicer will send to the
Trustee (copies of which the Trustee shall send to each Rating Agency and to
each holder of the Notes as provided in the Indenture) a written report, signed
by one of the Servicer's financial officers, (i) identifying each Lease with
respect to which any Lease Payment was 30 or more days overdue as of the end of
the immediately preceding Lease Payment Period, the Discounted Present Value of
such Lease as of such Payment Date, the amount advanced by the Servicer with
respect to such Lease pursuant to Section 4.01 hereof since the Servicer's
previous monthly report (or, in the case of the first such report, since the
Cut-Off Date), (ii) identifying each Lease with respect to which any Lease
Payment was 60 or more days overdue as of the end of the immediately preceding
Lease Payment Period, the Discounted Present Value of such Lease as of such
Payment Date, the amount advanced by the Servicer with respect to such Lease
pursuant to Section 4.01 hereof since the Servicer's previous monthly report
(or, in the case of the first such report, since the Closing Date), (iii)
identifying each Lease with respect to which any Lease Payment was 93 or more
days overdue as of the end of the immediately preceding Lease Payment Period,
the Discounted Present Value of such Lease as of such Payment Date, the amount
advanced by the Servicer with respect to such Lease pursuant to Section 4.01
hereof since the Servicer's previous monthly report (or, in the case of the
first such report, since the Closing Date), (iv) identifying each Lease which
became a Non-Performing Lease as of the preceding Determination Date and
specifying the Discounted Present Value of such Lease as of such Determination
Date (or, in the case of the first such report, subsequent to the Cut-Off Date)
and the aggregate Discounted Present Value of all such Non-Performing Leases,
(v) indicating the aggregate amount recovered by the Servicer subsequent to the
preceding Payment Date (or, in the case of the first Payment Date, subsequent to
the Cut-Off Date) and on or prior to such Payment Date with respect to Lease
Delinquency Payments and Non-Performing Lease Payments previously made by the
Seller and the Servicer (and the specific amounts so recovered with respect to
any Non-Performing Lease) and (vi) indicating the Residual Realizations, the
Available Residual Amount and the Utilized Residual Amount as of the related
Determination Date. Each such report shall also describe generally what action
or actions the Servicer is then taking or proposes to take to recover from the
appropriate Lessees any amounts
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previously paid by the Servicer to the Trustee pursuant to Section 4.01 hereof.
(b) On the Business Day following the Determination Date, the
Servicer shall deliver to the Trustee a certificate signed by an officer of the
Servicer (a "Servicing Report") stating the date and in the form of Exhibit C
hereto.
(c) The Servicing Report shall include, among other items, the
total amount of all Lease Payments, Casualty Payments, Termination Payments,
Non-Performing Lease Payments, Similar Transaction Payments and Other Lease
Payments received by the Servicer and deposited in the Collection Account prior
to such Determination Date and on or subsequent to the Determination Date
preceding such Determination Date (or, in the case of the first Determination
Date, on or subsequent to the Cut-Off Date). Such report shall indicate the
amount of all Lease Payments received by the Servicer and deposited in the
Collection Account which are for any Lease Payment Period other than the Lease
Payment Period for such Determination Date and shall identify each Lease with
respect to which a Casualty Payment, Termination Payment or Non-Performing Lease
Payment was made during such time period. Such report shall also indicate (i)
the aggregate amount paid by the Servicer on or subsequent to the most recent
Determination Date with respect to Non-Performing Leases pursuant to Section
4.01 hereof, and (ii) the aggregate amount reimbursed to the Servicer prior to
the most recent Determination Date and on or subsequent to the Determination
Date preceding such Determination Date (or, in the case of the first
Determination Date, on or subsequent to the Cut-Off Date) for actual cash
payments made by the Servicer with respect to Non-Performing Leases pursuant to
Section 4.01 hereof. The Servicer hereby represents and warrants that such
calculations will be correct and accurate, and the Servicer shall be fully
responsible for, and shall reimburse and indemnify each Indemnified Party for,
any loss resulting from such Indemnified Party's reliance on any such
calculations which are not correct.
(d) If the Servicer intends to withdraw any funds from the
Collection Account in accordance with Section 3.02(b) of the Indenture after the
Payment Date relating to the Determination Date for which a Servicing Report is
submitted, the Servicer shall submit with such report a certificate (i) setting
forth the amounts to be withdrawn (on an item-by-item basis), (ii) stating that
none of such amounts are all or part of any Lease Payment, Lease Delinquency
Payment, Non-Performing Lease Payment, Casualty Payment or Termination Payment,
and (iii) identifying the lease or leases to which such amounts relate.
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5.02 Annual Independent Public Accountant's Report. The
Servicer shall cause a firm of independent public accountants (who may also
render other services to the Servicer or to the Seller) to deliver to the
Trustee, with a copy to each Rating Agency, within 135 days following the end of
each fiscal year of the Servicer, beginning with the Servicer's fiscal year
ending December 31, 1997, a written statement to the effect that such firm has
(a) obtained from the Servicer a copy of the monthly status report pursuant to
Section 5.01 for a single month during the previous calendar year; (b) compared
the information contained in such monthly status report and in the monthly
summaries prepared by the Servicer in support of such monthly status report to
the computer printouts and accounts prepared by the Servicer and supporting such
reports; and (c) selected, at random, at least twenty-five Leases included in
the Trust Estate and compared the activity in the files maintained by the
Servicer for such Leases to the activity as reported for those Leases to the
monthly summaries prepared by the Servicer and supporting the monthly status
report, and that, on the basis of such examination and comparison, such firm is
of the opinion that the Servicer has prepared such monthly status report and
summaries in agreement with the computer printouts, accounts and individual
Lease files, except in each case for (x) such exceptions as such firm shall
believe to be immaterial and (y) such other exceptions as shall be set forth in
such statement.
SECTION 6. THE SERVICER
6.01 Merger or Consolidation of the Servicer. The Servicer
will keep in full force and effect its existence, rights and franchise 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 Leases or to permit performance of the
Servicer's duties under this Sales and Servicing Agreement.
The Servicer shall not merge or consolidate with any other
Person unless (i) the entity surviving such merger or consolidation is a
corporation organized under the laws of the United States or any jurisdiction
thereof and (ii) the surviving entity, if not the Servicer, shall execute and
deliver to the Company, the Servicer and the Trustee, in form and substance
satisfactory to each of them, (a) an instrument expressly assuming all of the
obligations of the Servicer hereunder and (b) an opinion of counsel to the
effect that such Person is a corporation of the type
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described in the preceding clause (i) and has effectively assumed the
obligations of the Servicer hereunder.
6.02 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or agents of
the Servicer shall incur any liability to the Company, the Trustee or the
holders of the Notes for any action taken or not taken in good faith pursuant to
the terms of this Sales and Servicing Agreement with respect to any Lease
(including any Non-Performing Lease) or the Equipment subject thereto; provided,
however, that this provision shall not protect the Servicer or any such person
against any breach of warranties, representations or covenants made by it herein
or in any certificate delivered in conjunction with the purchase of the Notes or
for any liability which would otherwise be imposed for any action or inaction
resulting from willful misconduct or bad faith or for negligence in the
performance or nonperformance of its duties hereunder.
6.03 Servicer Not to Resign or Be Removed. The Servicer
shall not resign from the servicing obligations and duties hereby imposed on it
except upon determination that such duties hereunder are no longer permissible
under applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced by an opinion of independent counsel to the
Servicer, in form and substance satisfactory to the holders of the Notes, to
such effect delivered to the Trustee.
Except as provided in Section 8.02 hereof, the Servicer shall
not be removed or be replaced as Servicer with respect to any Lease or any of
the Equipment.
No resignation or removal of the Servicer shall in any event
(i) become effective until the Trustee or a successor servicer shall have
assumed the Servicer's servicing responsibilities and obligations in accordance
with Section 8.02 hereof, or (ii) affect the Seller's obligations pursuant to
Section 4 hereof.
6.04 Financial and Business Information. The Servicer will
deliver to the Company and the Trustee upon receipt thereof shall deliver to
each Rating Agency and upon request, to any holder of outstanding Notes
evidencing not less than 25% of the Outstanding Principal Amount of the
Notes (and, upon the request of any holder of outstanding Notes, to any
prospective transferee of any Notes) and, in the case of subsection (c) below:
(a) Quarterly Statements - within 45 days after the end of
each of the first three quarterly fiscal periods in each fiscal year of the
Servicer, a copy of:
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(1) a consolidated balance sheet of the Servicer (or its
parent) and its consolidated subsidiaries at the end of such quarter,
and
(2) consolidated statements of income, retained earnings and
cash flow of the Servicer (or its parent) and its consolidated
subsidiaries for that quarter and for the portion of the fiscal year
ending with such quarter,
accompanied by a certificate signed by a principal financial officer of the
Servicer stating that such financial statements present fairly the financial
condition of the Servicer and its consolidated subsidiaries and have been
prepared in accordance with generally accepted accounting principles
consistently applied;
(b) Annual Statements - within 135 days after the end of each
fiscal year of the Servicer, a copy of:
(1) a consolidated balance sheet of the Servicer (or its
parent) and its consolidated subsidiaries, at the end of that year,
and
(2) consolidated statements of income, retained earnings and
cash flow of the Servicer (or its parent) and its consolidated
subsidiaries for that year, setting forth in each case in comparative
form the figures for the previous fiscal year,
all in reasonable detail and accompanied by an opinion of a firm of independent
certified public accountants of recognized national standing stating that such
financial statements present fairly the financial condition of the Servicer and
its consolidated subsidiaries and have been prepared in accordance with
generally accepted accounting principles consistently applied (except for
changes in application in which such accountants concur and footnote), and that
the examination of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and such other
auditing procedures as were considered necessary in the circumstances;
(c) Notice of Servicer Event of Default - immediately upon
becoming aware of the existence of any condition or event which constitutes a
Servicer Event of Default, a written notice, by certified mail return receipt
requested, hand delivery or overnight courier, describing its nature and period
of existence and what action the Servicer is taking or proposes to take with
respect thereto;
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(d) SEC and Other Reports - promptly upon their becoming
available, one copy of each report (including the Servicer's annual report to
shareholders and reports on Form 8-K, 10-K, and 10-Q), proxy statement,
registration statement, prospectus and notice filed with or delivered to any
securities exchange, the Securities and Exchange Commission or any successor
agencies; and
(e) Report on Proceedings - promptly upon the Servicer's
becoming aware of
(1) any proposed or pending investigation of it by any
governmental authority or agency, or
(2) any court or administrative proceeding which involves or
may involve the possibility of materially and adversely affecting the
properties, business, prospects, profits or conditions (financial or
otherwise) of the Servicer, a written notice specifying the nature of
such investigation or proceeding and what action the Servicer is taking
or proposes to take with respect thereto and evaluating its merits; and
(f) Requested Information - with respect to the Class C Notes,
with reasonable promptness, any other data and information which may be
reasonably requested from time to time, including, without limitation, any
information required to be made available at any time to any prospective
transferee of any Notes in order to satisfy the requirements of Rule 144A under
the Securities Act of 1933, as amended.
6.05 Officers' Certificates. With each set of financial
statements delivered pursuant to Section 6.04, the Servicer will deliver an
Officers' Certificate stating (i) that the officers signing such Officers'
Certificate have reviewed the relevant terms of this Sales and Servicing
Agreement and have made, or caused to be made under such officers' supervision,
a review of the activities of the Servicer during the period covered by the
statements then being furnished, (ii) that the review has not disclosed the
existence of any Servicer Event of Default or, if a Servicer Event of Default
exists, describing its nature and what action the Servicer has taken and is
taking with respect thereto, and (iii) that on the basis of such review the
officers signing such certificate are of the opinion that during such period the
Servicer has serviced the Leases in compliance with the procedures hereof except
as described in such certificate.
6.06 Inspection. The Servicer will permit, on reasonable
prior notice, the representatives of the Company and the Trustee and the holder
of any Notes evidencing not
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less than 25% of the Outstanding Principal Amount of any class of Notes to
examine all of the books of account, records, reports and other papers of the
Servicer, to make copies and extracts therefrom, and to discuss the Servicer's
affairs, finances and accounts with its officers, employees and independent
public accountants (and by this provision the Servicer authorizes said
accountants to discuss the finances and affairs of the Servicer) all at such
reasonable times and as often as may be reasonably requested for the purpose of
reviewing or evaluating the financial condition or affairs of the Servicer or
the Servicer's performance of its duties and obligations hereunder. Any expense
incident to the exercise by the Company, the Trustee, or any holder of the Notes
during the continuance of any Servicer Event of Default, or any event or
condition which with the giving of notice or the lapse of time or both would
become a Servicer Event of Default, of any right under this Section 6.06 shall
be borne by the Servicer.
6.07 Servicer Records. The Servicer will indicate in its
records that it is servicing and administering each Lease in its capacity as
Servicer hereunder, and to the extent it is in possession of any original Lease
agreement, will hold such Lease, subject to the provisions of the Indenture as
Custodian for the Trustee.
SECTION 7. THE SELLER
7.01 Merger or Consolidation of the Seller. The Seller will
keep in full force and effect its existence, rights and franchise 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 Leases or to permit performance of the Seller's
duties under this Sales and Servicing Agreement.
The Seller shall not merge or consolidate with any other
Person unless (i) the entity surviving such merger or consolidation is a
corporation organized under the laws of the United States or any jurisdiction
thereof and (ii) the surviving entity, if not the Seller, shall execute and
deliver to the Company, the Servicer and the Trustee, in form and substance
satisfactory to each of them, (a) an instrument expressly assuming all of the
obligations of the Seller hereunder and (b) an opinion of counsel to the effect
that such Person is a corporation of the type described in the preceding clause
(i) and has effectively assumed the obligations of the Seller hereunder.
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7.02 Control of Company. So long as any of the Notes or the
other obligations secured by the Indenture remain outstanding, the Seller will
not (i) sell, pledge or otherwise transfer any of the capital stock in the
Company held by the Seller or (ii) vote such stock in favor of any amendment to
or alteration of the certificate of incorporation of the Company. In furtherance
of the Seller's negative covenant pursuant to clause (i) of the preceding
sentence, the Seller will deliver to the Trustee on the Closing Date each
certificate representing any share of the capital stock of the Company held by
the Seller, and the Seller will promptly deliver to the Trustee upon receipt by
the Seller each certificate representing any additional shares of the capital
stock of the Company at anytime thereafter received by the Seller.
7.03 Financial and Business Information. The Seller will
deliver to the Company and the Trustee and upon receipt thereof the Trustee
shall deliver to each Rating Agency and upon request, to any holder of
outstanding Notes evidencing not less than 25% of the Outstanding Principal
Amount Notes (and, upon the request of any holder of outstanding Notes, to any
prospective transferee of any Notes):
(a) Notice of Servicer Event of Default - immediately upon
becoming aware of the existence of any condition or event which
constitutes a Servicer Event of Default, a written notice (with a copy
to each Rating Agency) describing its nature and period of existence
and what action the Seller is taking or proposes to take with respect
thereto;
(b) SEC and Other Reports - promptly upon their becoming
available, one copy of each report (including the Seller's annual
report to shareholders and reports on Form 8-K, 10-K, and 10-Q), proxy
statement, registration statement, prospectus and notice filed with or
delivered to any securities exchange, the Securities and Exchange
Commission or any successor agencies;
(c) Report on Proceedings - promptly upon the Seller's
becoming aware of
(1) any proposed or pending investigation of it by any
governmental authority or agency, or
(2) any court or administrative proceeding,
which involves or may involve the possibility of materially and adversely
affecting the properties, business, prospects,
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profits or condition (financial or otherwise) of the Seller, a written notice
specifying the nature of such investigation or proceeding and what action the
Seller is taking or proposes to take with respect thereto and evaluating its
merits;
(d) ERISA - (i) promptly and in any event within ten days
after the Seller knows or has reason, to know of the occurrence of a
Reportable Event with respect to a Pension Plan with regard to which
notice must be provided to the PBGC, a copy of such materials required
to be filed with the PBGC with respect to such Reportable Event and in
each such case a statement of the chief financial officer of the Seller
setting forth details as to such Reportable Event and the action which
the Seller proposes to take with respect thereto; (ii) at least ten
days prior to the filing by any plan administrator of a Pension Plan of
a notice of intent to terminate such Pension Plan, a copy of such
notice; (iii) upon request of the Company and the Trustee, and in no
event more than ten days after such request, copies of each annual
report which is filed on Form 5500, together with certified financial
statements for the Pension Plan (if any) as of the end of such year and
actuarial statements on Schedule B to such Form 5500; (iv) promptly and
in any event within ten days after it knows or has reason to know of
any event or condition which might constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan, a statement of the chief financial
officer of the Seller describing such event or condition; (v) promptly
and in no event more than ten days after receipt thereof by the Seller
or any Related Person, each notice received by the Seller or any
Related Person concerning the imposition of any withdrawal liability
under Section 4202 of ERISA; and (vi) promptly after receipt thereof a
copy of any notice the Seller or any Related Person may receive from
the PBGC or the Internal Revenue Service with respect to any Pension
Plan; provided, however, that this subsection (vi) shall not apply to
notices of general application promulgated by the PBGC or the Internal
Revenue Service or notices which would not require any material payment
by the Seller or any Related Person; and
(e) Requested Information - with reasonable promptness, any
other data and information which may be reasonably requested from time
to time.
7.04 Officers' Certificates. With each set of financial
statements delivered pursuant to Section 7.03, the Seller will deliver an
Officers' Certificate stating that
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the officers signing such Certificate have reviewed the relevant terms of this
Sales and Servicing Agreement and have made, or caused to be made under such
officers' supervision, a review of the activities of the Seller during the
period covered by the income statements then being furnished and, so long as the
Seller is Servicer hereunder, that the review has not disclosed the existence of
any Servicer Event of Default or, if a Servicer Event of Default exists,
describing its nature and what action the Seller has taken and is taking with
respect thereto.
7.05 Inspection. The Seller will permit, on reasonable prior
notice, the representatives of the Company, the Servicer, the Trustee, or any
holder of the Notes evidencing not less than 25% of the Outstanding Principal
Amount of any class of Notes to examine all of the books of account, records,
reports and other papers of the Seller, to make copies and extracts therefrom,
and to discuss the Seller's affairs, finances and accounts with its officers,
employees and independent public accountants (and by this provision the Seller
authorizes said accountants to discuss the finances and affairs of the Seller)
all at such reasonable times and as often as may be reasonably requested for the
purpose of reviewing or evaluating the financial condition or affairs of the
Seller or the Seller's performance of its duties and obligations hereunder. Any
expense incident to the exercise by the Company, the Trustee or any holder of
the Notes during the continuance of any default by the Seller in any of its
obligations hereunder of any right under this Section 7.05 shall be borne by the
Seller.
7.06 Books and Records. The Seller will clearly mark its books
and records to reflect each sale of a Lease and contribution of the Equipment
subject thereto to the Company.
7.07 Communications. The Seller will reply to all inquiries by
third parties with respect to the transactions contemplated by this Agreement by
indicating that it has sold to the Company the Leases and contributed to the
Company its right, title and interest in the related Equipment.
SECTION 8. DEFAULT
8.01 Servicer Events of Default. The following events and
conditions shall constitute Servicer Events of Default hereunder:
(i) failure on the part of the Servicer
to deposit to the Collection Account or other
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applicable account within three Business Days following the
receipt thereof any monies received by the Servicer
(including, without limitation, any Lease Payments and any
Non-Performing Lease Payments) and required to be deposited
hereunder;
(ii) so long as the Seller is the Servicer
hereunder, failure on the part of the Seller to pay to the
Trustee on the date when due in accordance with the terms
hereof, any payment required to be made by the Seller pursuant
to Section 4 hereof;
(iii) failure on the part of either the Servicer
or (so long as the Seller is the Servicer) the Seller to
observe or perform in any material respect any other of their
respective covenants or agreements in this Sales and Servicing
Agreement which failure continues unremedied for a period of
30 days after the earlier of (A) the date it first becomes
known to any officer of the Seller or the Servicer, as the
case may be, and (B) the date on which written notice thereof
requiring the same to be remedied shall have been given to the
Seller or the Servicer, as the case may be, by the Trustee, or
to the Seller or the Servicer, as the case may be, and the
Trustee by any holder of the Notes;
(iv) if any representation or warranty made by
the Seller in this Sales and Servicing Agreement or in any
certificate or other writing delivered pursuant hereto or made
by any successor Servicer in connection with such successor
Servicer's assumption of the duties of the Servicer shall
prove to be incorrect in any material respect as of the time
when the same shall have been made; provided, however, that
the breach of any representation or warranty made by the
Seller or Servicer in this Sales and Servicing Agreement will
be deemed to be "material" only if it affects the Noteholders,
the enforceability of the Indenture or of the Notes; and
provided, further, that a material breach of any
representation or warranty made by the Seller in this Sales
and Servicing Agreement with respect to any of the Leases or
the Equipment subject thereto will not constitute a Servicer
Event of Default if the Seller repurchases such Lease and
Equipment in accordance with this Sales and Servicing
Agreement.
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(v) the entry by a court having jurisdiction
in the premises of (A) a decree or order for relief in respect
of the Servicer in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (B) a decree or order
adjudging the Servicer bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment, or composition of or in respect of the Servicer
under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee,
sequestrator, or other similar official of the Servicer or of
any substantial part of its property, or ordering the winding
up or liquidation of its affairs, and the continuance of any
such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive
days;
(vi) the commencement by the Servicer of a
voluntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization, or other similar
law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Servicer in an
involuntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization, or other similar
law or to the commencement of any bankruptcy or insolvency
case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief
under any applicable federal or state law, or the consent by
it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator, or similar official of the
Servicer or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or
the failure by the Servicer to pay its debts generally as they
become due, or the taking of corporate action by the Servicer
in furtherance of any such action;
(vii) the failure of the Servicer to make one or
more payments due with respect to aggregate recourse debt or
other obligations exceeding $1,000,000, or the occurrence of
any event or the existence of any condition, the effect of
which event or condition is to cause (or permit one or
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more persons to cause) more than $1,000,000 of aggregate
recourse debt or other obligations of the Servicer to become
due before its (or their) stated maturity or before its (or
their) regularly scheduled dates of payment so long as such
failure, event or condition shall be continuing and shall not
have been waived by the Person or Persons entitled to
performance; or
(viii) a final judgment or judgments (or decrees
or orders) for the payment of money aggregating in excess of
$1,000,000 and any one of such judgments (or decrees or
orders) has remained unsatisfied and in effect for any period
of 60 consecutive days without a stay of execution.
8.02 Termination. So long as a Servicer Event of Default shall
be continuing, the Trustee shall, upon the instructions of the holders of
66-2/3% in Outstanding Principal Amount of the Notes, by notice in writing to
the Servicer terminate all of the rights and obligations of the Servicer (but
not the Seller's obligations which shall survive any such termination) under
this Sales and Servicing Agreement. On the receipt by the Servicer of such
written notice, all authority and power of the Servicer under this Sales and
Servicing Agreement to take any action with respect to any Lease or Equipment
shall cease and the same shall pass to and be vested in the Trustee pursuant to
and under this Section and the Indenture; and, without limitation, the Trustee
is hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and assignment of any Lease and the related
Equipment, or otherwise.
8.03 Trustee to Act; Appointment of Successor. (a) On and
after the time the Servicer receives a notice of termination pursuant to Section
8.02 hereof, the Trustee, subject to the terms of Section 5.02 of the Indenture,
shall be the successor in all respects to the Servicer in its capacity as
servicer of the Leases under this Sales and Servicing Agreement and, to such
extent, shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof (but
not the obligations of the Seller contained in Section 4 hereof which shall
survive any such termination as above provided) and shall be entitled to receive
from the Company the Servicing Fee provided for in Section 3.04 hereof; provided
that the Trustee shall in no way be responsible or liable for any action or
actions of the
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Servicer before the time the Servicer receives such a notice of termination.
(b) Notwithstanding the above, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act, give notice of such
fact to each holder of the Notes and (i) appoint an established institution
satisfactory to the holders of 66-2/3% in Outstanding Principal Amount of the
Notes as the successor to the Servicer hereunder to assume all of the rights and
obligations of the Servicer hereunder, including, without limitation, the
Servicer's right hereunder to receive the Servicing Fee (but not the obligations
of the Seller contained in Section 4 hereof) or, (ii) if no such institution
satisfactory to the holders of 66-2/3% in Outstanding Principal Amount of the
Notes is so appointed within 60 days following the giving of such notice,
appoint a bank or other established institution, which has experience in
servicing lease contracts and equipment similar to the Leases and Equipment and
as to which each of S&P and DCR has indicated in writing that the appointment of
such Person, as the successor to the Servicer hereunder will not result in the
reduction or withdrawal of such Rating Agency's then-current rating of the Notes
or, (iii) if no such institution is so appointed, petition a court of competent
jurisdiction to appoint an institution meeting such criteria as the Servicer
hereunder. Pending appointment of a successor to the Servicer hereunder, the
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee shall cause such successor to the
Servicer to enter into a servicing agreement substantially in the form of this
Sales and Servicing Agreement except that such agreement shall not include any
of the Seller's representations, warranties or obligations and the Trustee may
make arrangements for the compensation of such successor out of payments on
Leases as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that provided for a successor to the Servicer
in Section 3.04 hereof. The Trustee shall provide Moody's with prior written
notice of the appointment of any successor to the Servicer.
8.04 Servicer to Cooperate. The Servicer hereby agrees to
cooperate with the Trustee or any successor to the Servicer appointed in
accordance with Section 8.03 hereof, as applicable, in effecting the termination
and transfer of the responsibilities and rights of the Servicer hereunder to the
Trustee or any successor to the Servicer, including, without limitation, the
execution and delivery of assignments of Financing Statements, and the transfer
to the Trustee or the successor to the Servicer for administration by it of all
cash amounts which shall at the time be held by
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the Servicer or thereafter received with respect to the Leases. The Servicer
hereby agrees to transfer to any successor to the Servicer its electronic
records and all other records, correspondence and documents relating to the
Leases and Equipment in the manner and at such times as the successor to the
Servicer shall reasonably request. The Servicer hereby designates the Trustee
and any successor to the Servicer its agent and attorney-in-fact to execute
transfers of Financing Statements (including any and all Financing Statements
naming an individual Lessee as debtor and the Servicer as secured party) and any
other filings or instruments which may be necessary or advisable to effect such
transfer of the Servicer's responsibilities and rights hereunder.
8.05 Notification to Noteholders. Upon any such termination or
appointment of a successor to the Servicer, the Company shall cause the Trustee
to give prompt written notice thereof to each Rating Agency and to each holder
of the Notes in the manner provided in the Indenture.
8.06 Remedies Not Exclusive. Nothing in the preceding
provisions of this Section 8 shall be interpreted as limiting or restricting any
rights or remedies which the Company, the Trustee or any other Person would
otherwise have at law or in equity on account of the breach or violation of any
provision of this Sales and Servicing Agreement by the Servicer, including,
without limitation, the right to recover full and complete damages on account
thereof to the extent not inconsistent with Section 6.02 hereof.
SECTION 9. SUBSTITUTION AND ADDITION OF LEASES
9.01 Substitution and Addition. (a) Subject to the
satisfaction of the requirements set forth in Section 9.01(b) hereof, the Seller
will have the right (but not the obligation) at any time to substitute one or
more Eligible Leases and the Equipment subject thereto (each, a "Substitute
Lease") for a Lease (for purposes of this Section 9 referred to as a
"Predecessor Lease") and the Equipment subject thereto if:
(i) the Predecessor Lease became (A) a
Non-Performing Lease, (B) a Warranty Lease or (C) an Adjusted
Lease during the immediately preceding Due Period;
(ii) the aggregate Discounted Present Value of
the Non-Performing Leases that are Predecessor Leases shall
not in the aggregate
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exceed 10% of the Discounted Present Value of the Leases on
the Cut-Off Date; and
(iii) the aggregate Discounted Present Value of
the Adjusted Leases and Warranty Leases that are Predecessor
Leases shall not exceed 10% of the Discounted Present Value of
the Leases on the Cut-off Date.
Subject to the satisfaction of the requirements
set forth in Section 4 and Section 9.01(b) hereof, in the event of an Early
Lease Termination which has been prepaid in full, the Company will have the
option to reinvest the proceeds of such Early Termination Lease in one or more
Additional Leases. The purchase price of such Additional Lease or Leases will be
an amount equal to the proceeds of such Early Termination Lease.
(b) Each transfer of Substitute Leases and addition of
Additional Leases will be subject to the satisfaction of the following
conditions precedent:
(i) after giving effect to such additions and
substitutions and any adjustments pursuant to Section 3.02
thereof, the aggregate Booked Residual Value of such Leases
must be not less than 90% of the Booked Residual Value of the
Leases added, substituted or adjusted since the Issuance Date.
(ii) either the final payment on such Substitute
Lease or Additional Lease must be on or prior to April 2004
or, to the extent the final payment on such Lease is due
subsequent to April 2004, only scheduled payments due on or
prior to such date may be included in the Discounted Present
Value of such Lease for the purpose of making any calculation
under the Indenture.
(iii) after giving effect to such additions and
substitutions and any adjustments pursuant to Section 3.02
thereof the aggregate amount of Lease Payments through the
term of the Leases (including the Substitute Leases and the
Additional Leases) and the Discounted Present Value of the
Performing Leases will not be materially less than the
aggregate scheduled Lease Payments of the Leases and the
Discounted Present Value of the Leases, respectively prior to
such substitution or addition or adjustment; and
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(iv) after giving effect to such adjustments,
additions and substitutions, the Discounted Present Value of
the Performing Leases must not be less than the Discounted
Present Value of the Performing Leases prior to such
adjustment, substitution or addition.
(v) such Additional Lease or Substitute Lease was
originated in the Healthcare Division, the Manufacturing
Technology Division and the Business Technology Division or
its predecessors or successors.
(c) Each addition and substitution pursuant to this Section
9.01 shall include the right to receive all amounts due or to become due under
each Substitute Lease being substituted or Additional Leases being purchased and
any security deposits paid by the related Lessee to the Seller in connection
therewith (other than any prepayments of rent required pursuant to the terms
thereof at or before the commencement of such Lease and any payments due before
the Lease Payment Period during which such substitution or addition is made). At
the time of each such substitution and addition, the Seller shall transfer to
the Trustee all Lease Payments actually received by the Seller which became due
during the current Lease Payment Period.
9.02 Procedure. (a) By 11:00 a.m. on the third
Business Day following each Determination Date, the Seller shall give written
notice to the Servicer of any substitution of Substitute Leases for Predecessor
Leases or addition of Additional Leases for Early Termination Leases which have
been prepaid in full pursuant to Section 9.01 during the preceding Lease Payment
Period. By 11:00 a.m. on the fourth Business Day following each Payment Date,
the Seller shall deliver to the Servicer and the Trustee and, to the extent not
included in the Monthly Servicer Report, the Trustee shall promptly deliver to
each Rating Agency (i) a supplement to Exhibit A hereto setting forth the
information shown thereon for each such Substitute Lease and Additional Lease,
(ii) an Officer's Certificate (A) certifying that each such Substitute Lease and
Additional Lease is an "Eligible Lease", (B) specifying each Predecessor Lease
for which a substitution has been made and each Early Termination Lease which is
being replaced by an Additional Lease and the amount of each periodic Lease
Payment and the Booked Residual Value under each such Predecessor Lease and the
amount of each periodic Lease Payment and the Booked Residual Value under each
Additional Lease and Substitute Lease being transferred thereby and (C) that all
conditions precedent to such addition or substitution have been satisfied and
(iii) such additional information concerning such Additional Leases, Substitute
Leases, Early Termination
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Leases or Predecessor Leases as may be needed for the Servicer to prepare its
monthly reports pursuant to Section 5.01 hereof and to otherwise carry out its
duties as servicer hereunder.
(b) Subject to the provisions of Section 9.03, the delivery of
any Officer's Certificate and supplement to Exhibit A pursuant to Section
9.02(a) shall be conclusive evidence, without further act or deed, that during
the immediately preceding Lease Payment Period (i) the Seller assigned to the
Company pursuant to Section 9.01 hereof all of the Seller's right, title and
interest in and to the Substitute Leases and Additional Leases identified in
such supplement and the related rights described in Section 9.01 hereof, (ii)
the Seller transferred to the Company, as a contribution to capital, all of the
Seller's right, title and interest in and to the Equipment subject to such
Substitute Leases (to the extent of the Seller's interest in such Equipment,
including the Seller's security interest in any Equipment which is not owned by
the Seller), and (iii) the Company assigned and transferred to the Seller,
without representation or warranty, all of the Company's right, title and
interest in and to the Predecessor Leases and Early Termination Leases
identified in such Officer's Certificate and the Equipment subject thereto (to
the extent of the Company's interest in such Equipment, including the Company's
security interest in any Equipment which is not owned by the Company). The
Seller shall promptly deliver to the Trustee (or a custodian on its behalf) the
original executed counterpart of each Substitute Lease and Early Termination
Lease assigned to the Company pursuant to Section 9.01 hereof and the Company
shall promptly request the Trustee to deliver to the Seller the original
executed counterpart of each Predecessor Lease for which substitution has been
made pursuant to Section 9.01 hereof.
9.03 Objection and Repurchase. If any holder of the Notes
objects to any substitution of Leases within ten days of receipt of the
Servicer's monthly report providing notice thereof pursuant to Section 5.01
above, on the grounds either that any Substitute Lease or Additional Lease is
not an Eligible Lease within the meaning of the definition thereof or that such
substitution or addition is otherwise not permitted under the provisions of
Section 9.01 hereof, the Seller shall be entitled to present such additional
information as it deems appropriate in an effort to demonstrate that such Lease
is an Eligible Lease and that such substitution is permitted under the
provisions of Section 6.01 hereof. Following such presentation, the substitution
shall remain effective if each person originally objecting to the substitution
withdraws his objection. If the conditions specified in the preceding sentence
are not satisfied, or if at any time it is
42
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established that any lease was not, at the time of substitution, an Eligible
Lease, then the Seller shall be required to repurchase such Lease in accordance
with the provisions of Section 4.05 hereof.
9.04 Seller's and Servicer's Subsequent Obligations. Upon any
substitution of Leases in accordance with the provisions of this Section 9, the
Seller's and the Servicer's obligations hereunder with respect to the
Predecessor Lease shall cease but the Seller and the Servicer shall each
thereafter have the same obligations with respect to the Substitute Lease
substituted as it has with respect to all other Leases subject to the terms
hereof.
SECTION 10. ASSIGNMENT
10.01 Assignment to Trustee. It is understood that this Sales
and Servicing Agreement and all rights of the Company hereunder will be assigned
by the Company to the Trustee pursuant to the Indenture, for the benefit of the
Trustee, the holders from time to time of the Notes as provided in the
Indenture, and may be subsequently assigned by the Trustee to any successor
Trustee or as otherwise provided in the Indenture. Each of the Seller and the
Servicer hereby expressly agrees to each such assignment and agrees that all of
its duties, obligations, representations and warranties hereunder shall be for
the benefit of, and may be enforced by, the Trustee, the holders from time to
time of the Notes, and any successor to or assignee of any thereof.
10.02 Assignment by Seller or Servicer. None of the
respective rights or obligations of the Seller and the Servicer hereunder may be
assigned without the prior written consent of the Company, the Trustee (acting
upon the instructions of the holders of 66-2/3% of the then aggregate unpaid
Outstanding Principal Amount of the Notes); provided, that nothing herein shall
preclude the Servicer from performing its duties hereunder through the use of
agents to the extent that such use is consistent with the Servicer's business
practices in dealing with leases and equipment for its own account.
SECTION 11. NATURE OF SELLER'S OBLIGATIONS
AND SECURITY THEREFOR
11.01 Seller's Obligations Absolute. The obligations of the
Seller hereunder, and the rights of the Trustee, as assignee of the Company, in
and to all amounts payable by the Seller hereunder, shall be absolute and
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unconditional and shall not be subject to any abatement, reduction, setoff,
defense, counterclaim or recoupment whatsoever, including, without limitation,
abatements, reductions, setoffs, defenses, counterclaims or recoupments due or
alleged to be due to, or by reason of, any past, present or future claims which
the Seller may have against the Servicer, the Company, the Trustee, and any
holder of the Notes or any other Person for any reason whatsoever; nor, except
as otherwise expressly provided herein, shall this Sales and Servicing Agreement
terminate, or the respective obligations of the Company, the Seller or the
Servicer be otherwise affected, by reason of any defect in any Lease or in any
unit of Equipment or in the respective rights and interests of the Company, the
Seller and the Trustee therein, or by reason of any Liens, encumbrances,
security interests or rights of others with respect to any Lease or any unit of
Equipment, or any failure by the Company or the Servicer to perform any of its
obligations herein contained, or by reason of any other indebtedness or
liability, howsoever and whenever arising, of the Company, the Servicer, the
Trustee, or any holder of the Notes to the Seller or any other Person or by
reason of any insolvency, bankruptcy, or similar proceedings by or against the
Seller, the Servicer, the Company, the Trustee or any other Person or for any
other cause whether similar or dissimilar to the foregoing, any present or
future law to the contrary notwithstanding, it being the intention of the
parties hereto that all obligations of the Seller hereunder and all amounts
payable by the Seller hereunder shall continue to be due and payable in all
events and in the manner and at the times herein provided unless and until the
obligation to perform or pay the same shall be terminated or limited pursuant to
the express provisions of this Sales and Servicing Agreement.
11.02 Security for Obligations. As security for the full and
timely performance by the Seller and the Servicer of each of its obligations
hereunder, and by the Company of each of its obligations hereunder and under the
Notes and the Indenture, the Seller hereby pledges and grants to the Trustee (as
a precaution in the event that, contrary to the intent of the parties to the
transactions contemplated hereby, it is contended that the Seller has any
continuing interest in any Lease or item of Equipment subject to the Indenture)
a first priority Lien on and security interest in all right, title and interest
of the Seller now or hereafter acquired in and to each Lease (including the
right to receive all payments due or to become due thereunder) and each item of
Equipment at any time subject to the Indenture. The foregoing security interest
is granted upon and is subject to the same terms and provisions as are set forth
in the Indenture and shall continue in full force and effect until the same is
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discharged in accordance with the terms therein, notwithstanding any waiver or
modification of any of the terms hereof or thereof or of any of the Notes,
whether with or without the consent of the Seller.
11.03 Further Assurances; Financing Statements. Each of the
Seller and the Servicer severally agrees that at any time and from time to time,
at its expense, it shall promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable
or that the Company or the Trustee may request to perfect and protect the
assignments and security interests granted or purported to be granted herein
with respect to the Leases and the Lease Payments or to enable the Company or
the Trustee to exercise and enforce its rights and remedies under this Agreement
with respect to any Leases and the Lease Payments. Without limiting the
generality of the foregoing, the Seller shall execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices as may be necessary or desirable or that the Company or the Trustee may
request to protect and preserve the assignments and security interests granted
by this Agreement with respect to the Leases.
SECTION 12. DEFINITIONS
As used in this Sales and Servicing Agreement, the following
terms have the respective meanings set forth below or set forth in the Section
hereof or in any other agreement indicated:
Accumulated Funding Deficiency - a funding deficiency
described in Section 302 of ERISA.
Additional Lease - each separate lease agreement and each
lease schedule or supplement (and each master lease agreement insofar as the
same relates to any such schedule or supplement) acquired by the Company from
the Seller with all or a portion of the proceeds of an Early Termination Lease
that has been prepaid in full pursuant to Section 9 hereof.
Adjusted Lease - a Lease which has had one or more non-credit
related terms adjusted or modified by the Servicer.
Affiliate - Section 1.01 of the Indenture.
Available Residual Amount - Section 1.01 of the Indenture.
45
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Booked Residual Value - the estimated residual value of the
Equipment recorded on the books of the Seller.
Business Day - any day that is not a Saturday, Sunday or other
day on which commercial banking institutions in the city in which the Corporate
Trust Office or the Servicer is located are authorized or obligated by law or
executive order to remain closed.
Casualty Payment - any payment pursuant to a Lease on account
of the loss, theft, condemnation, governmental taking, destruction, or damage
beyond repair of any item of Equipment subject thereto which results, in
accordance with the terms of the Lease, in a reduction in the number or amount
of any future Lease Payments due thereunder or in the termination of the
Lessee's obligation to make future Lease Payments thereunder.
Class A Notes - the Company's Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and Class A-4 Notes.
Class A-1 Notes - the Company's 5.809% Class A-1 Lease-Backed
Notes, Series 1997-A.
Class A-2 Notes - the Company's 6.05% Class A-2 Lease-Backed
Notes, Series 1997-A.
Class A-3 Notes - the Company's 6.27% Class A-3 Lease-Backed
Notes, Series 1997-A.
Class A-4 Notes - the Company's 6.47% Class A-4 Lease-Backed
Notes, Series 1997-A.
Class B Notes - the Company's 6.50% Class B Lease-Backed
Notes, Series 1997-A.
Class C Notes - the Company's 6.78% Class C Lease-Backed
Notes, Series 1997-A.
Closing Date - June 19, 1997, the date on which the Notes are
originally issued pursuant to the Prospectus and the Private Placement
Memorandum.
Code - the Internal Revenue Code of 1986, as amended.
Collection Account - Section 1.01 of the Indenture.
Company - the corporation so identified in the first paragraph
of this Sales and Servicing Agreement and any successor corporation.
46
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Corporate Trust Office - Section 1.01 of the Indenture.
Cut-Off Date - close of business on May 31, 1997.
Delinquent Lease - Section 1.01 of the Indenture.
Determination Date - Section 1.01 of the Indenture.
Discounted Present Value of the Leases - Section 1.01 of the
Indenture.
Early Termination Lease - a lease which has been terminated.
Eligible Lease - Section 4.02 hereof.
Equipment - all units or items of equipment from time to time
subject to any Lease and all such units or items of equipment (to the extent of
the Company's interest therein) remaining subject to the Lien of the Indenture
following the expiration or termination of the Lease to which the same was
previously subject.
ERISA - the Employee Retirement Income Security Act of 1974,
as amended.
Event of Default - Section 1.01 of the Indenture.
Excess Copy Charges - Section 1.01 of the Indenture.
Fee Per Scan Charges - Section 1.01 of the Indenture.
Filing Requirements - Financing Statements necessary to
perfect the ownership interest of the Company and the perfected security
interest of the Trustee in the Leases and as of the Closing Date and as of June
1 and December 1 of every year following the Closing Date, in Equipment (i)
subject to Leases having a Discounted Present Value of at least 75% of the
aggregate Discounted Present Value of the Leases and (ii) relating to not less
than 75% of the Booked Residual Value of such Equipment.
Financing Statement - a statement filed pursuant to the UCC
which evidences a perfected security interest in an asset.
Governmental Authority: Any court or federal or state
regulatory body, administrative agency or other tribunal or other governmental
instrumentality.
47
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Granted Assets - The assets of the Granting Clause of the
Indenture.
Indemnified Party - Section 4.03 hereof.
Indenture - the Indenture dated as of the date hereof, between
the Company and the Trustee, as the same may be supplemented, modified or
amended from time to time in accordance with the terms thereof.
Inter-Company Loans - Section 13.01 hereof.
Issuance Date - June 19, 1997.
Lease - each separate lease agreement and each lease schedule
or supplement (and each master lease agreement insofar as the same relates to
any such schedule or supplement) described on Exhibit A hereto, as the same may
be amended or modified from time to time in accordance with the provisions
hereof and thereof.
Lease Delinquency Payment - Section 1.01 of the Indenture.
Lease Payment - Section 1.01 of the Indenture.
Lease Payment Period - with respect to any Payment Date and
the Determination Date with respect thereto, the calendar month prior to the
month in which such Payment Date and Determination Date occur.
Lease Receivables - with respect to any Lease, all amounts
owing by the Lessee thereunder.
Lease Repurchase Amount - at any date with respect to any
Lease, an amount equal to the Discounted Present Value of the Lease as of the
next following Payment Date plus any amounts previously due and unpaid.
Lessee - each lessee under a Lease.
Lien - means a security interest, lien, charge, pledge,
equity, or encumbrance of any kind other than tax liens, mechanics liens, and
any liens that attach to a Lease by operation of law.
Nominal Buy-Out Lease - each Lease identified on Exhibit A
hereto as having an estimated residual value of $0 or $1 in the column under
the-heading "RESIDUAL".
Non-Performing Lease - Section 1.01 of the Indenture.
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Nonrecoverable Advance - any advance made or to be made by the
Servicer pursuant to Section 4.01 hereof which, in the good faith judgment of
the Servicer, will ultimately not be recoverable by the Servicer under the terms
of this Sales and Servicing Agreement and the Indenture.
Noteholder - at any time, any Person in whose name a note is
registered in the Note Register (as defined in the Indenture)
Notes - the Class A Notes, Class B Notes and Class C Notes
issued pursuant to the Indenture and all notes issued in exchange therefor
pursuant to the Indenture.
Officers' Certificate - with respect to the Seller or
Servicer, a certificate delivered to the Trustee and signed by the Chairman, the
President, or a Vice President, and by another Vice President, the Treasurer, an
Assistant Treasurer, the Secretary, or an Assistant Secretary of the Seller or
Servicer, as the case may be, who is not the same person as the other officer
signing such certificate.
Original Principal Amount of the Notes - the principal amount
of the Notes originally issued on the Closing Date.
Other Lease Payments - Section 1.01 of the Indenture.
Outstanding Principal Amount - Section 1.01 of the Indenture.
PBGC - the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
Payment Date - the 20th day of each calendar month.
Predecessor Lease - Section 9.01 hereof.
Pension Plan - Section 2.13 hereof.
Person - an individual, partnership, corporation, joint
venture, association, limited liability company, trust (including any
beneficiary thereof) or unincorporated organization, or a government or agency
or political subdivision thereof.
Prime Rate - the Manufacturers and Traders Trust Company prime
lending rate.
Private Placement Memorandum - the final Private Placement
Memorandum used in connection with the private offering of the Class C Notes.
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Prohibited Transaction - any transaction described in Section
406 of ERISA which is not exempt by reason of Section 408 of ERISA or the
transitional rules set forth in Section 414(c) of ERISA and any transaction
described in Section 4975(c) of the Code which is not exempt by reason of
Section 4975(c)(2) or Section 4975(d) of the Code, or the transitional rules of
Section 2003(c) of ERISA.
Prospectus - the form of final prospectus to be used in
connection with the public offering of the Class A Notes and the Class B Notes
as filed with the Securities and Exchange Commission pursuant to Rule 424(b).
Rating Agency - Standard & Poor's Ratings Services, a Division
of the McGraw-Hill Companies, Moody's Investors Services, Inc., Fitch Investors
Service, L.P. or Duff & Phelps Credit Rating Co.
Registration Statement - the registration statement (File No.
333-23679) filed with the Securities and Exchange Commission for the
registration of the Class A Notes and the Class B Notes.
Related Person - any Person (whether or not incorporated)
which is under common control with the Seller within the meaning of Section
414(c) of the Internal Revenue Code of 1986, as amended, or of Section 4001(b)
of ERISA.
Reportable Event - any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, a withdrawal from a Pension Plan
described in Section 4063 of ERISA, or a cessation of operations described in
Section 4062(e) of ERISA.
Reserve Account - Section 1.01 of the Indenture.
Residual Account - Section 1.01 of the Indenture.
Residual Realization - Section 1.01 of the Indenture.
Seller - Copelco Capital, Inc., a Delaware corporation, and
any successor.
Servicer - the corporation so identified in the first
paragraph of this Sales and Servicing Agreement and any successor thereto in
accordance with the provisions hereof.
Servicer Event of Default - Section 8.01 hereof.
Servicing Fee - Section 3.04(a) hereof.
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Servicing Report - Section 5.01(b) hereof.
Similar Transaction Amount - Section 1.01 of the Indenture.
Similar Transaction Payments - Section 1.01 of the Indenture.
Substitute Lease - Section 9.01(a) hereof.
Stated Maturity of the Notes - The July 1998 Payment Date for
the Class A-1 Notes; the April 2005 Payment Date for the Class A-2 Notes, Class
A-3 Notes, Class A-4 Notes, Class B Notes and Class C Notes.
Termination Payment - Section 1.01 of the Indenture.
Transaction Payment Amount - Section 1.01 of the Indenture.
Trust Estate - Section 1.01 of the Indenture.
Trustee - Manufacturers and Traders Trust Company, and any
successor thereto, as trustee under the Indenture.
Underwriting Agreement - the Underwriting Agreement dated June
13, 1997 among the Company, Lehman Brothers Inc. and First Union Capital Markets
Corp. and, with respect to the Class A Notes, Morgan Stanley & Co. Incorporated
for the purchase and sale of the Class A Notes and the Class B Notes.
Uniform Commercial Code or UCC - with respect to a particular
jurisdiction, the Uniform Commercial Code, as in effect from time to time in
such jurisdiction, or any successor statute thereto.
Utilized Residual Amount - Section 1.01 of the Indenture.
Warranty Lease - Section 1.01 of the Indenture.
SECTION 13. INTER-COMPANY LOANS
13.01 Inter-Company Loans. With the purchase of the Leases,
the Company has acquired the right to hold and apply in accordance with the
provisions of certain of the Leases, security deposits. The Company may from
time to time, to the extent permitted by law, lend such security deposits and
any amounts disbursed to the Company pursuant to Sections 3.03(b) or 6.06 of the
Indenture to the Seller
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(each such advance, an "Inter-Company Loan"). Each Inter-Company Loan shall be
on a demand basis, shall bear interest at an annual rate equal to the Prime Rate
plus one percent, shall be in the form attached hereto as Exhibit B and shall
otherwise be on such arm's-length terms and conditions as the Company and the
Seller may agree.
SECTION 14. MISCELLANEOUS
14.01 Continuing Obligations. This Sales and Servicing
Agreement shall continue in full force and effect until each of the Notes and
any other amounts due to any holder of the Notes have been paid in full and all
other obligations, if any, secured by the Lien of the Indenture have been fully
satisfied.
14.02 GOVERNING LAW. THIS SALES AND SERVICING AGREEMENT SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK. IF ANY PROVISION OF
THIS SALES AND SERVICING AGREEMENT IS DEEMED INVALID, IT SHALL NOT AFFECT THE
BALANCE OF THIS SALES AND SERVICING AGREEMENT.
14.03 Successors and Assigns. This Sales and Servicing
Agreement shall be binding upon and inure to the benefit of the successors and
assigns of the Company, the Seller, the Servicer and the Trustee and shall inure
to the benefit of the successors and assigns of the holders, from time to time,
of the Notes.
14.04 Modification. The terms of this Sales and Servicing
Agreement shall not be waived, modified or amended without the written consent
of the party against whom such waiver, modification or amendment is claimed and,
in any case, the Trustee (acting upon the instructions of the holders of 66-2/3%
of the then aggregate unpaid Outstanding Principal Amount of the Notes).
14.05 No Proceedings. The Seller and the Servicer, each hereby
agree that it will not, directly or indirectly, institute, or cause to be
instituted, against the Company any proceeding of the type referred to in
Section 6.01(e) or (f) of the Indenture so long as there shall not have elapsed
one year plus one day since the latest maturing Notes have been paid in full in
cash.
14.06 Notices. All notices and other communications given in
connection with this Sales and Servicing Agreement shall be sufficient for every
Person hereunder (unless otherwise herein expressly provided) if in writing and
mailed, first-class postage prepaid or certified
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mail return receipt requested, or sent by private courier or confirmed telecopy,
in case of the Seller, to East Gate Center, 700 East Gate Drive, Mount Laurel,
New Jersey 08054- 5400, Attention: Michael Ritter (telecopy: 609-273-9288) and
in the case of the Company, the Servicer and the Trustee and the holders of the
Notes, to such addresses as are provided pursuant to Sections 1.05 and 1.06 of
the Indenture or to such other address as either party may specify to the other
from time to time in accordance with this Section 14.06.
14.07 Counterparts. This Sales and Servicing Agreement may be
executed in any number of counterparts, each counterpart constituting an
original, but all together constituting only one Agreement.
14.08 Nonpetition Covenant. Seller shall not petition or
otherwise invoke the process of any Governmental Authority for the purpose of
commencing or sustaining a case against the Company under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Company or any substantial part of its respective property, or ordering the
winding up or liquidation of the affairs of the Company.
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IN WITNESS WHEREOF, the parties hereto have executed this
Sales and Servicing Agreement as of the date and year first written above.
COPELCO CAPITAL, INC., as
Seller and Servicer
By: /s/ MICHAEL C. RITTER
------------------------------
Name: MICHAEL C. RITTER
Title: SR. VICE PRESIDENT
COPELCO CAPITAL FUNDING CORP. X
By: /s/ STEPHEN W. SHIPPIE
------------------------------
Name: STEPHEN W. SHIPPIE
Title: VICE PRESIDENT
Address:
The undersigned hereby acknowledges
receipt of a copy of the foregoing Sales
and Servicing Agreement and agrees to,
and to be bound by, each of the
provisions thereof applicable to the
undersigned.
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By: /s/ RUSSELL T. WHITLEY
-------------------------------
Name: RUSSELL T. WHITLEY
Title: ASSISTANT VICE PRESIDENT
<PAGE>
Schedule 1
SUBSIDIARIES OF COPELCO CAPITAL, INC.
1. Copelco Lease Funding Corp. IV, a New Jersey corporation.
2. Copelco Lease Funding Corp. V, a New Jersey corporation.
3. Copelco Lease Funding Corp. VI, a New Jersey corporation.
4. Copelco Capital Funding Corp. I, a Delaware corporation.
5. Copelco Capital Funding Corp. II, a Delaware corporation.
6. Copelco Capital Funding Corp. III, a Delaware corporation.
7. Copelco Capital Funding Corp. IV, a Delaware corporation.
8. Copelco Capital Funding Corp. V, a Delaware corporation.
9. Copelco Capital Funding Corp. VI, a Delaware corporation.
10. Copelco Capital Funding Corp. VIII, a Delaware corporation.
11. Copelco Capital Funding Corp. IX, a Delaware corporation.
12. Copelco Capital Funding Corp. X, a Delaware corporation.
13. Copelco Credit Funding Corp. VII, a New Jersey corporation.
14. Copelco Credit Funding Corp. VIII, a New Jersey corporation.
15. Copelco Credit Funding Corp. IX, a New Jersey corporation.
16. National Equipment Rental Program, Inc., a Delaware
corporation.
17. CDRI, Inc., a Delaware corporation.
18. Copelco Equipment Leasing Co., a Delaware corporation.
19. Copelco Specialized Finance Corp., a Delaware corporation.
<PAGE>
EXHIBIT A
SCHEDULE OF LEASES AND EQUIPMENT
ON FILE AT DEWEY BALLANTINE
A-1
<PAGE>
EXHIBIT B
[FORM OF INTER-COMPANY LOAN NOTE]
ALL RIGHT, TITLE AND INTEREST IN AND TO THIS PROMISSORY NOTE ON THE PART OF
COPELCO CAPITAL FUNDING CORP. X HAS BEEN ASSIGNED TO AND IS SUBJECT TO A
SECURITY INTEREST IN FAVOR OF MANUFACTURERS AND TRADERS TRUST COMPANY, AS
TRUSTEE, UNDER AN INDENTURE DATED AS OF JUNE 1, 1997, FOR THE BENEFIT OF THE
PERSONS REFERRED TO THEREIN.
$__________ [Date]
COPELCO CAPITAL, INC., a Delaware corporation (the
"Maker"), with its principal office at _______________________________
_________, FOR VALUE RECEIVED, hereby promises to pay to the order of
Copelco Capital Funding Corp. X, a corporation with its offices located at or
its assignee (the "Payee"), for its account, at __________________, the
principal sum of _______________ Dollars ($____________) (or such lesser amount
as shall equal the aggregate unpaid principal amount of the Loans made by the
Payee to the Maker under the Sale Agreement (as defined below)), together with
interest per annum on the unpaid principal amount hereof at the Prime Rate plus
one per cent, in lawful money of the United States of America and in immediately
available funds immediately on the demand of the Payee.
The date, amount and interest rate, of each Loan made by the
Payee to the Maker, and each payment made on account of the principal thereof,
shall be recorded by the Payee on its books and, prior to any transfer of this
Note, endorsed by the Payee on the schedule attached hereto or any continuation
thereof.
This Note evidences certain Inter-Company Loans from Payee to
Maker pursuant to Section 13.01 of that certain Sales and Servicing Agreement
dated as of June 1, 1997, between the Maker and the Payee (the "Sale
Agreement"). Capitalized terms used in this Note have the respective meanings
assigned to them in the Sale Agreement.
B-1
<PAGE>
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
COPELCO CAPITAL, INC.
By_________________________
B-2
<PAGE>
EXHIBIT C
Form of Servicing Report
Line
1 Transaction Cash Flow - see computer detail
1/1 Beginning Net Present Value
1/2 Less: Lease Receivables - current month
1/3 Add: Actual Interest Payment (Weighted Avg A, B & C notes)
1/4 Add: 0.75% Servicing Component
1/5 Less: Current month Nonperforming
1/5a Less: Warranty Leases
1/6 Less: Amounts on Early Terminations
1/7 Add: Amounts due to Substitutions
1/8 Add: Amounts due to Additional leases (Prepaid leases)
1/9 Ending Net Present Value
2 Overdue Lease Payments - see computer detail
2/1 Beginning Balance
2/2 (Memo) Overdue Payments Received
2/3 Less: Reimbursed Per This Report
2/4 Less: Past Dues on Disqualified Leases - Early Terminations
2/5 Less: Past Dues on Disqualified Leases - Nonperforming and
Warranty
2/6 Add: Last Month's Current Payments that became Past due
2/7 Add: Received on Replacements Leases
2/8 (MEMO) Net New Advances
2/9 Ending Balance
3 Residual
3/1 Beginning Availability
3/2 Less: Amount Used
3/3 Ending Maximum Availability
3/4 (Memo) Amount Realized
3/5 LTD Residuals of Nonperforming, Warranty, and Prepaid leases
substituted
3/6 LTD Residuals of Substitutions
4 Collection account-Advance Lease Payments
4/1 Beginning Balance
4/2 Less: Applied to Current from Prepaid
4/3 Less: Advance on Disqualified Leases
4/4 Add: Received This Month
4/5 Add: Received on Replacement Leases
4/6 Ending Balance
C-1
<PAGE>
5 Residual Event Calculation
5/1 Delinquency condition exist (payments over 62 days performing
leases only)
5/2 Overdue payments and PV on leases over 62 but less than 122 days
5/3 PV of performing leases
5/4 Delinquency Rate Current Month
5/5 Second Preceding Month
5/6 Third Preceding Month
5/7 Average
5/8 Residual Realization > 100% (Yes/No)
5/9 Copelco Capital as Servicer (Yes/No)
6 Cash Reserve Account
6/1 Beginning Balance
6/2 Less: New Obligations: Total Shortfall (B9)
6/3 Plus: Interest earned on Cash Reserve Acct.
6/4 Ending Balance
6/5 ___% of Outstanding Note Value
6/6 Lesser of __% of $__________ and Outstanding Note Value
6/7 Target Cash Reserve (Greater of 6/5 & 6/6)
6/8 Cash Reserve Release (6/4-6/7)
6/9 Ending Balance Cash Reserve Account
7 Residual Account
7/1 Beginning Balance
7/2 Plus Current Month Addition
7/3 Less Disbursements
7/4 Ending Balance
8 Nonperforming Leases
8/1 Beginning Balance of Nonperforming Leases
8/2 Plus Current Month Additions
8/3 Plus Past Due Payments on Nonperforming Leases
8/4 Less Current Month Recoveries
8/5 Ending Balance
Cash Receipts
Line
A/1 Regular monthly payments
A/2 Overdue payments
A/3 Overdue Payments due on Early Termination and Termed Out
Leases (From Seller)
A/4 Advance Payments of monthly rentals
A/5 Residual Values
A/6 Recoveries on Defaulted Leases
A/7 Proceeds from investment of Collection Accounts funds
A/8 Draws upon Residual Account
C-2
<PAGE>
A/9 Casualty and Termination Payments
A/10 Servicer Advances
A/11 Total Receipts
Disbursement Requirements
Line
B/1 Past Due Payments Collected, Due Servicer (COLLECTION ACCT)
B/2 Overdue Payments Advanced, on Disqualified Leases
(COLLECTION ACCT)
B/3 Servicing Fee (COLLECTION ACCT)
B/4 Advanced Payments on Disqualified Leases (COLLECTION ACCT)
B/5 Total to Servicer
B/6 Collection Account - Advanced Rents (Monthly-Increase/(Decrease))
B/7 Net cash receipts
B/8 Shortfall (1/1-1/9+C/1+C/2+C/3-B7)
B/9 Draw on Cash Reserve
B/10 Draw on Residual Account
B/11 Total Available Funds
C Noteholders
C/1 Class A-1 Interest Paid ____%
C/2 Class A-2 Interest Paid ____%
C/3 Class A-3 Interest Paid ____%
C/4 Class A-4 Interest Paid ____%
C/5 Class B Interest Paid ____%
C/6 Class C Interest Paid ____%
C/7 Beginning Class A-1 Note Balance
C/8 Class A-1 Note Value Target (___% of 1/9)
C/9 Class A-1 Principal Paid (min((C/4-C/5),B11-C/1-C/2-C/3)
C/10 Beginning Class A-2 Note Balance
C/11 Class A-2 Note Value
C/12 Ending Class A-2 Note Balance
C/13 Class A-2 Principal Paid
C/14 Beginning Class A-3 Note Balance
C/15 Class A-3 Note Value
C/16 Ending Class A-3 Note Balance
C/17 Class A-3 Principal Paid
C/18 Beginning Class A-4 Note Balance
C/19 Class A-4 Note Value
C/20 Class A-4 Principal Paid
C/21 Ending Class A-4 Note Balance
C/22 Beginning Class B Note Balance
C/23a Class B Note Value Target (__% of 1/9)
C/23b Class B Note Value Floor (__% of $__________ + Cum.
Losses-C/12-6/4)
C/24 Class B Principal Paid
((min((C/8-max(C/9a,C/9b)),B11-C/1-C/2-C/3-C/6))
C-3
<PAGE>
C/25 Ending Class B Note Balance
C/26 Beginning Class C Note Balance
C/27a Class C Note Value Target (__% of 1/9)
C/27b Class B Note Value Floor (__% of $__________ + Cum. Losses-6/4)
C/28 Class C Principal Paid
(min((C/12-max(C/13a,C/13b)),B/11-C/1-C/2-C/3-C/6-C/10))
C/29 Ending Class C Note Balance
C/30 Balance Available for Distribution to Copelco
D Miscellaneous Tracking Items
D/1 % of Total Nonperforming and Warranty substituted as per
Initial Outs, Note Value
D/2 (MEMO) Cumulative amounts on Early Lease Terminations due to
modification of leases
D/3 (MEMO) Cumulative amounts of additional leases purchased
D/4 (MEMO) Avg. residual realization greater than booked residual by
Document Imaging and Major Accounts division for last three
months (Yes/No)
D/5 % of Total Variance of Residuals substituted for Nonperforming &
Prepaid leases and residuals of Substituted leases to Initial
pool booked residuals
C-4
<PAGE>
SCHEDULE OF LOANS
This Note evidences demand Loans made under the
within-described Sale Agreement to the Maker, on the date, at
the interest rate, and in the principal amounts set forth below, subject to the
payments and prepayments of principal set forth below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Principal Amount Unpaid
Amount of Interest Paid or Principal Notation
Date Loan Rate Prepaid Amount Made By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
C-5
